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Market Overview Chile’S Solid Macroeconomic Framework Has Produced Strong Market Builders Growth in Recent Decades

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Market Overview Chile’S Solid Macroeconomic Framework Has Produced Strong Market Builders Growth in Recent Decades COUNTRY PROFILE Chile Market Overview Chile’s solid macroeconomic framework has produced strong Market Builders growth in recent decades. The country reduced the share of the A 2016 study identified at least 37 agents in Chile’s social 1 population living in poverty from 30% in 2000 to 6.4% in 2017. It entrepreneurship ecosystem. These organizations provide advice, has a well-established entrepreneurship and innovation ecosystem, finance, train and promote social enterprises, and offer access to with multiple organizations offering seed capital, angel investment, professional networks and coworking spaces. collaborative working spaces and other support for start-ups and social enterprises. There are several private seed and angel funds, multiple government players in the space, and active international 2 development institutions in the market. IndicatorsA The Chilean National Advisory Board (NAB) was officially GDP PPP (2011 US$, billions) 411.1 established in May 2018. It is currently discussing strategic plans with the government and public sector. Specific work on the Total Population (millions) 18.1 issue began in 2010, when a government unit was established to GINI Index 47.7 support certain elements of the impact economy. Between 2014 HDI 0.843 and 2015, a group of interdisciplinary professionals conducted a feasibility analysis on the issue. This process culminated in the 2017 MPI N/A creation of IMPACTA, a non-profit focused on boosting the impact- EPI 57.49 investment ecosystem. KEY PLAYERS IMPACT INVESTMENTS HIGHLIGHTS3,4 Asset Owners Asset Managers Impact Entrepreneurs Supply of Impact Capital IADB NESsT TriCiclos Multilateral DFIs such as the IADB, FOMIN, CAF and IFC have played a role as impact investors in Chile, making direct FOMIN FIS - Ameris Lumni investments in local funds and co-investing in high-impact social CAF Sembrador Algramo and environmental projects, often with a focus on renewable Confuturo Fen Ventures Open Green Road energy. Chile receives only 3% of the total equity investments in the LAC region Corfo Sudamerik Late! HNWIs and family offices have a high level of understanding of Ameris Capital Fundación Chile Portal Educativo the concept of impact investment. Almost half (46%) say they would be interested in impact-first investments. raftSPOTLIGHT DEALSB Intermediation of Impact Capital4 Company Total Investor Sector Impact-investment funds currently manage upward of an Funding estimated USD 138mn in assets, employing investment strategies ranging from debt and equity to convertible loans. Mariscos $7M Encourage Capital Seafood Strategy Crowdfunding has grown steadily since 2012. One notable Compara Online $33.1M Bamboo CP, IFC, Google FinTech example is 2ble Impacto, which is led by a group of civil society Launchpad, KasZek, organizations including Avina and Sistema B. This began in 2015 Endeavor as a crowdfunding platform exclusively focused on funding D NotCo $30M Bezos Expeditions, Food double- and triple-bottom-line projects. KasZek, The Craftory, SOSV Demand for Impact Capital Destacame $3.1M Accion VL, Fen Ventures, FinTech There are more than 130 certified B Corps in Chile, representing Cremona VC, Catalyst 27% of all such firms registered in Latin America (477). The Fund movement has attracted multinational companies operating Triciclos $2.6M FIS - Ameris, MOV, FCP Waste from Chile such as Hortifrut.5 EeI SP Government and Regulation Although there is currently no special legal form for social enterprises, an in-development bill would create a legal framework for such entities. The bill is being developed by a Ministry of Economy, Development and Tourism unit. Chile has been recognized as the region’s most favorable market for venture capital and private equity funds, thanks to its investor- friendly legal environment.6 ABCs of the Chilean Impact EconomyC An impact economy is a just and equitable economic system The following table describes actions undertaken by a variety of in which positive impact is produced in an environment of risk stakeholders in Chile for the adoption of strategies intended to and return. In an impact economy, governments, organizations, Avoid harm, Benefit all stakeholders andC ontribute to solutions. investors and consumers are motivated to include marginalized Thanks to state funding, active universities and the availability of a and underserved sectors of the society in the mainstream skilled workforce, Chile is a hotspot for the impact economy and for economy, while also giving consideration to the needs of our planet social innovation. and its environment. Avoid Harm Benefit all stakeholders Contribue to Solutions Impact in Listed companies are obliged Chile has over 130 B Corps. Chile boasts the region’s highest BUSINESS to perform a self-assessment entrepreneurship rate. For every 10 According to a 2013 survey by with regard to the adoption of male entrepreneurs there are seven KPMG, 73% of the 100 largest good corporate governance and female entrepreneurs, indicating a companies in Chile report on their sustainability practices.7 high degree of inclusiveness.9 sustainability performance in some form or other.8 Impact in Led by the Santiago Exchange and The Santiago Stock Exchange AUM in Chile’s impact-investment INVEstmENT Principles for Responsible Invest- developed green-bond guidelines sector totaled USD 9mn between ment (PRI), institutional investors in 2018. The country’s first sovereign 2016 and 2017, a considerable including two pension funds and green bond (USD 1.5bn) will increase from USD 1.1mn between eight asset managers have signed a finance electrified public transport 2014 and 2015.13 statement promoting and encour- (trains, buses); solar; energy aging responsible investment.10 efficiency; renewable energy; water management; and green building projects.11,12 Impact in Stationary emission sources over State-owned enterprises must Two new government funding POLICY 50MW are subject to a carbon tax report on their sustainability mechanisms promote social set at USD 5 per tCO2e, as well as performance based on the GRI innovation. a tax on local pollutants (SO2, NOx, guidelines. Funds from one such program and particulate matter). An emis- were distributed for the first time sions trading system for the energy in 2015.15 sector is being considered.14 The Impacta Foundation has begun rafta process of technical analysis for the country’s first SIB, aimed at financing programs facilitating the adoption of technology.16 Impact on The Chilean society is one of the most environmentally aware in Latin America. Market research suggests a growing CONSUMPTION trend among ChileanD consumers to make choices on the basis of sustainability.17 SDG Dashboard and Trends CURRENT ASSESSMENT – SDG DASHBOARD Major challenges Significant challenges Challenges remain SDG achieved Information unavailable SDG TRENDS Decreasing Stagnating Moderately improving Mantaining On track Information unavailable Key Initiatives Finding market champions within the government accelerator, providing capital and capacity-building services to Following the current government’s accession to power in March entrepreneurs and small businesses, including impact businesses. of 2018, policies are now beginning to be put in place and defined CORFO has also facilitated access to seed, early-stage and growth more clearly. Policy direction has remained relatively stable despite capital in the form of grants and subsidies. the change in government. The current Presidential Program states Fiscal incentives that the government will strongly support the creation and growth There is currently a bill of law in process that addresses the issue of of impact businesses. The Chilean NAB is in close communication tax incentives for philanthropists. This is a highly beneficial source with a number of governmental ministers. The NAB itself has a of capital, since philanthropists are normally the first to invest number of very senior former government officials as members. in early-stage social impact ventures in Chile. This Bill of Law is These close ties have helped to catalyze discussions on impact expected to be sent to Congress by the middle of 2019. investment and the necessary policies required to enhance the ecosystem. Given that there is no central unit dedicated to impact Educational incentives investment within the government, these relationships along In 2009, the Catholic University of Chile was one of the first with the actions of market champions will continue to be vital in universities to create a specific program for social entrepreneurship pushing forward policy objectives. and innovation, with the creation of the Laboratory of Social Innovation and Entrepreneurship (LEIS). Today, several universities Capacity building and access to capital have their own incubators providing support for students’ start-up Chile has a long history with regard to accelerator programs businesses, some specializing in social innovation. In addition, the and capacity-building programs for entrepreneurs and small NAB has collaborated with public and private universities to create businesses. The Corporación de Fomento de la Producción de graduate and undergraduate educational programs, with the aim Chile (CORFO), the Chilean economic-development agency that of expanding the educated workforce in the impact sector. sits within the Ministry of Economy, has been an important player in the overall development of Chile’s economy. CORFO acts as anraft D Road to Impact Economy Path TO TIPPING POINT 2020 method
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