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ImpactAssets 50: A Global Landscape of Impact Investment Fund Managers
The ImpactAssets 50 (IA 50) is the first open-source, publicly published database of experienced private debt and equity impact investment fund managers.
https://www.impactassets.org/impactassets-50

ImpactAssets 50

An Annual Showcase of Impact Investment Fund Managers

IA 50 2021 PROFILE

Root Capital

Total Assets Under Management: $50 – 99M
Asset Class: Cash / Cash Alternatives, Private Debt - Absolute Return / Notes
Primary UN Sustainable Development Goal: 1 – No Poverty
Fair Trade
Sustainable Agriculture
Diversity, Equity and Inclusion

Firm Overview

Category: Private Debt - Smallholder Farmers

Root Capital is a nonprofit with a mission to serve agricultural businesses that connect smallholder farmers to world markets. Our approach includes lending capital, delivering financial and other client relevant trainings, and strengthening market connections for small and growing agricultural businesses. Over the past two decades, Root Capital has cumulatively loaned more than $1.2 billion to over 700 businesses reaching more than 2.3 million farm families (6 million people) and provided training to over 1,300 businesses. As a result, Root Capital has contributed more than $6 billion in revenue for our clients with more than 80 percent of that being paid directly to smallholder farmers.

Firm Headquarters: US & Canada
Years of Operation: 10 years or more
Total Assets Under Management:
$50 – 99M
Total Number of Investors: More than 25
% of Capital from Top 3 Investors: 25% – 49%
Investment Thesis:

Root Capital invests in the growth of agricultural enterprises in rural, environmentally vulnerable places in Africa, Latin America and Indonesia, so that the businesses become engines of impact that transform their communities by increasing incomes, creating jobs, preserving ecosystems, empowering women and giving young people the opportunity to lead.

Investment Overview:

Root Capital invests in the growth of agricultural enterprises so that they can transform rural communities. These businesses purchase crops such as coffee, cocoa or grains from smallholder farmers. With growth, they become engines of impact that can raise incomes, create jobs,, empower women and young people, sustain peace and preserve vulnerable ecosystems. We provide loans, deliver training and strengthen market connections for small and growing agricultural businesses. We place capital where it's needed most: in the businesses at the end of the dirt have the hardest time accessing the resources they need to grow, but have the greatest potential for impact. We've learned to lend wisely, without losing focus on where we can have the greatest effect. We blend philanthropic and borrowed capital in order to supply these businesses with critical resources: access to credit, trade and technical partners and essential training in business skills and conservation practices.

Company Differentiator:

At the highest level, Root Capital seeks to lead in shaping the market for smallholder finance such that it fully integrates social and environmental impact alongside financial risk and return. This builds upon our field building and sector leadership in recent years: namely we co-founded the recognized leader of the Council on Smallholder Agricultural Finance, an alliance of 12 financial institutions that lend to agricultural businesses in emerging markets. As a direct service provider, we have one of the longest track records in this peer group with 20 years. We seek to push the frontier and reach high-impact agricultural businesses that are the hardest to serve. We also provide them with what they need to grow which is the combination of financing augmented with advisory services that strengthen and support those businesses to a point of resilience.

Investment Example

The Ankole Coffee Producers Cooperative Union (ACPCU) was founded in 2006 to connect 3,800 smallholder coffee farmers with better livelihoods. In order to achieve this mission, the cooperative union needed access to financing to buy the coffee. But no financial institution would meet their credit needs. In 2008, Root Capital provided ACPCU with its first-ever loan, allowing the cooperative to export directly and access higher prices on the international market. “The loan that Root Capital extended to us marked the turning point,” said John Nuwagaba, general manager. That credit, paired with advisory training from Root Capital, has helped ACPCU grow its sales fifty-fold, reaching more than 15,000 farmers. The enterprise has also constructed a new processing plant, expanding opportunities for farmers and workers in the region. In the face of the COVID-19 pandemic, ACPCU has begun using its Fairtrade premium to supply farmers with hand sanitizer, soap, and PPE. 

Leadership and Team

Cumulative Leadership Experience in Investing:
30 years or more
Cumulative Impact Experience of Top Three Firm Leaders:
30 years or more
Willy Foote – CEO More Info

Willy Foote is founder and CEO of Root Capital, a nonprofit impact investor that offers farmers around the world a path to prosperity by investing in the agricultural businesses that serve as engines of impact in their communities. Root Capital provides these businesses with the capital, training, and access to markets they need in order to grow, thrive, and create opportunities for thousands of farmers at a time. Since its founding in 1999, Root Capital has provided more than $1 billion in loans to 630 agricultural businesses in Africa, Asia, and Latin America. Together, these businesses have generated more than $6 billion in revenue, 80 percent of which has been paid directly to the 1.2 million smallholder farmers whose crops they collect and market.

Frances Reid – Chief Operating Officer More Info

I joined Root Capital from the CDC Group in London where I served as the Chief Investment Officer and Managing Director for Investment Risk and Analytics from 2014 to 2019. In that role I chaired the Investment Committee, managed the investment decision-making process, and conducted “deep dives” into risk identification and management. I also headed the Analytics and Development Impact Teams to design and apply analytics tools across the organization and assess the impact investment program. Before that, I spent 40 years working in finance at nearly all levels of management in both the private and public sectors, including as a program director at the European Bank for Reconstruction and Development, CIO at the Millennium Challenge Corporation, Senior Adviser to the Undersecretary of the US Treasury for International Affairs, and Managing Director at Lehman Brothers and COO of Lehman/American Express Global Asset Management.

Darcy Salinger – Chief Credit Officer More Info

Darcy joined Root Capital in 2011 as Chief Credit Officer and leads the credit risk management function, which includes credit policy and procedures, underwriting standards and tools, lending operations, credit administration, portfolio risk management, and collections and workout. She came to Root Capital after a combined eleven years in commercial lending to middle market, not-for-profit, and corporate businesses across multiple industries at Bank of America, RBS Citizens, and TD Bank. From 1986 – 2000 she worked at the microfinance pioneer, ACCION International, where she held various positions, including Director of Credit and Investment Analysis and Director of Financial Analysis. Darcy has an MBA from Simmons University.

Percentage of Investment Professionals who identify as women:
50% or more
Percentage of Investment Professionals who identify as a person of color:*
Less than 25%
Percentage of Senior Management Team who identify as women:
50% or more
Percentage of Senior Management Team who identify as a person of color:*
Less than 25%
*People of color include: Black, Latinx, Asian, Native American/Alaskan Native, Pacific Islander, Middle Easterm and multi-racial Americans

Financial Performance

Target Financial Returns Relative to Benchmark:
Concessionary Rates
Actual Performance Relative to Target Financial Returns in the Past Three Years:
In line with initial target returns
Financial Reporting Frequency to Investors or Donors
Quarterly

Impact Performance

Percentage of Total Assets Under
Management that are Impact Investments:
100%
Primary Impact Outcomes:
Addressing climate change and environmental issues
Alleviating poverty
Conserving land, ecosystems and natural resources
Creating jobs
Increasing access to financial services
Secondary Impact Outcomes:
Increasing access to education and improving educational outcomes
Increasing access to water and sanitation
Addressing Racial Inequality
Value-added Services Offered:
Business and legal training
Financial literacy training
Technology training
Other: We customize our advisory services to the needs of our clients.

Investments systematically target companies where social and/or environmental impact is integral to the product/service being created:

We asses the businesses we lend to on their financial viability as well as social environmental impact. We target early-stage businesses who often are unable to secure financing from other commercial lenders due to their small size, lack of collateral, limited managerial experience and perceived risk. Our clients generally operate in areas in which individuals live below $4 per day or even $2.50 in Africa. We seek to serve businesses that will improve livelihoods of individuals in the following ways: - Paying higher prices relative to the local market, - Giving farmers access to agronomic assistance and inputs and credit to invest in their farms - Supporting community initiatives in education, health and infrastructure -supporting Women led/owned businesses through our Women in Agriculture Initiative (WAI).

Investments systematically include social and environmental sustainability practices in the due diligence process:

We seek to invest in small and growing agricultural businesses that value environmental stewardship and build sustainable livelihoods in local communities. As part of the credit evaluation process for each business, Root Capital's loan officers use our proprietary social and environmental scorecards in order to evaluate the business's social and environmental practices and impact. These tools include metrics developed by the Impact Reporting and Investment Standards (IRIS), a subset of which we report in our Quarterly Performance Reports and online Performance Dashboard. As part of our underwriting process, we are conducting an in-depth analysis of the context in which the business is operating from poverty levels to climate change hotspots as well as the social and environmental practices that the business conducts.

Impact Tracking and Monitoring

Impact is Tracked:
Yes
Social and/or Environmental Impact is Reported to Investors and Donors:
Yes – to the public
Third Party Validations:
Participant on steering committees or leadership roles within impact industry associations
Publisher or contributor to industry white paper or other research in impact investing

Learn More

Key Contact Name: Jean Forrester
Phone: 617-661-5792
Mailing Address:

130 Bishop Allen Drive, 2nd Floor, Cambridge, MA 02139 USA

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