IDB Invest made a $5 million investment in Good Karma Impact Fund, a Brazilian fund that aims to invest in early-growth-stage Brazilian companies with proven business models and high-growth potential that promote a measurable and disruptive solution to main challenges in health, education and climate change.

Good Karma Partners, a leading independent impact investment firm in Brazil, aims to increase the availability of long-term financing to innovative growth companies to generate positive development outcomes. By combining tailored financing, strategic expertise and business guidance, the Fund will support companies to scale up disruptive solutions while creating positive effects on the environment.

The Fund will invest approximately 80% of the capital in six to eight mature venture-backed companies (Series B+) and the remaining 20% in three to six early-stage companies in climate, health and education. The Fund’s current portfolio is invested in companies dedicated to mental health, education on agri-sustainability, decarbonization of industrial processes, and artificial intelligence for early detection of chronic diseases. The Fund’s indicative pipeline covers companies dedicated to forest restoration, industry decarbonization, bio-inputs, waste sorting plants or recycling, outpatient healthcare, post-acute care, and sustainable agriculture, among others.

Latin America and the Caribbean historically lagged other regions in attracting venture capital investments and fostering an ecosystem for innovation. This started to change five years ago when investment began increasing significantly, reaching a record $15.9 billion in 2021. As a percentage of GDP, venture capital investments in the region are still behind other emerging economies.

In Brazil, the early-growth financing gap is evidenced by the fact that less than 2% of tech-enabled small and medium enterprises (SMEs) reach Series D. While the country’s innovation ecosystem in the health, education, and climate sectors continues to evolve and nurture the next generations of successful startups, the region will need to increase its availability of early-growth financing as well as expert advice and specialized networks to support their consolidation, expansion and achieve their full potential.

This transaction seeks to support all stages of a company’s lifecycle, closing gaps in the early growth stage, as well as providing access to co-financing opportunities in developmentally strategic sectors.

IDB Invest will provide advisory services in climate and sustainable finance to support the Fund’s sustainable strategic approach along the first investment phase. IDB Invest will support the Fund in creating a guide for the due diligence investment phase, reinforcing climate risk analysis and specific key performance indicators for climate risk & Paris Alignment. IDB Invest will also facilitate sustainable capacity building among the Fund´s staff to enable knowledge sharing on sustainability and adopt climate mitigation and resilience measures.

Additionally, the Fund will enhance its Environmental and Social Management System following the Environmental and Social Action Plan to align it with IDB Invest requirements and IFC Performance Standard 1, and implement it across the entire investment portfolio.

This deal is expected to contribute to the following United Nations Sustainable Development Goals (SDGs): Good Health and Well-Being (SDG 3), Quality Education (SDG 4), Decent Work and Economic Growth (SDG 8), Industry, Innovation & Infrastructure (SDG 9), Responsible Consumption and Production (SDG 12), Climate Action (SDG 13), and Life on Land (SDG 15).

About IDB Invest

IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $16.3 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.

About Good Karma Partners

Good Karma Partners is the leading mission-driven and climate investor in Latin America. We exist to activate intellectual and financial capital to grow and scale companies that are solving global challenges and generating strong returns. Our investment team brings in-depth knowledge of regional markets, skilled deal origination, and strong execution capabilities. The team is driven by the mission to deliver impact and is grounded on a strong entrepreneurial culture and resistance to the status quo. The partners at Good Karma have a combined experience of more than 60 years in the Private Equity industry, building solid partnerships with companies in the sectors that the strategy will invest in, including climate change, healthcare equity and people development.