cmymyy my k - New Ventures
Transcripción
cmymyy my k - New Ventures
NEW VENTURES: 10 YEARS CATALYZING SOCIAL AND ENVIRONMENTAL COMPANIES TABLE OF CONTENTS SUCCESS STORIES NEW VENTURES ACKNOWLEDGMENTS We thank our partners, mentors, entrepreneurs, and investors as well as the academic community, foundations, organizations, government entities and our current and former New Venturians, all of whom have made the New Ventures’ mission possible over the past 10 years. We especially want to thank the following people who participated in the making of this publication: ABIGAIL NOBLE | ARMANDO LABORDE | CARMEN CORREA | CECILIA TURRIAGO CHARLIE Y LISA KLEISSNER | DAVID SPRENG | ENRIQUE JACOB ROCHA | EUGENIO LEBRIJA | EZEQUIEL PADILLA | FERNANDO FABRE | GUADALUPE CASTAÑEDA HARRY HALLORAN | IAN M. REIDER | IRMA ACOSTA | JAVIER DE LA CALLE | JOSÉ IGNACIO ÁVALOS | JUAN CARLOS DOMENZAIN | LEO SCHLESINGER | LORENZO ROSENZWEIG | LUIS LÓPEZ PANADERO | LUIZ ROS | MARTHA SMITH | MAXIMILIANO ECHEVERRÍA AGUILAR | MICHEL CAVELIER | MIGUEL LAPORTA | PEDRO CASTILLO | RANDALL KEMPNER | RAÚL MEDINA MORA | RENÉ FERNÁNDEZ TONY CARR | TUFIC SALEM And finally, the 14 social and environmental entrepreneurs featured in this book. They have proven that social and environmental issues can be resolved using innovative, profitable, and scalable business models. 4 Prologue 17 5 The Heart that Guides the Invisible Hand of the Market Aires de Campo The Winds of Change 21 9 A Passion for Sustainable Change: The History of New Ventures in Mexico AliBio Reinventing the Future 25 15 Epilogue: The New Ventures of Today and of the Future Aventones Stumbling Forward 29 Bioconstrucción y Energía Alternativa How to Emerge from a Crisis Stronger Than Ever 33 Biorganimex The Art of Alliances 37 Café Ruta de la Seda The Road to Opportunity 41 FINAE How to Give Credit to Education 45 Las Páginas Verdes Building a Green Community 49 Los Danzantes Brand-Name Mezcal 53 MIA Thinking Outside the ‘House’ 57 Natgas The Opportunity of Contrasts 61 Nopalmilli When Health and Tradition Come Together 65 Salauno A Company with a Vision for Change 69 Sistema Biobolsa Fermenting a Grand Idea “This craziness is possible. When you are on the path to making something happen, you feel as if you are in a dream-like state, like sleepwalking. But your slow approach goes so fast that it’s surprising when you reach your goal.” Roberto Arlt THE HEART THAT GUIDES THE INVISIBLE HAND OF THE MARKET Building a dream isn’t about pondering over the journey. In order to make that dream a reality, first you must firmly believe that it is possible. And when you decide to take the first steps, you are unconsciously transported to live out that dream, as if it were a reality. The traditional and often only approach to addressing social and environmental issues was philanthropy. And the only people interested in resolving these issues were labeled environmentalists, idealists, and in the eyes of the critics, hippies. Generally speaking, an economic strategy was rarely used to tackle these problems. This is exactly what happened when New Ventures was born. The journey was uncertain, but the mission was clear: to catalyze social and environmental companies. Gradually, more people joined, and we were all unaware what we would have to face, but working toward these goals was our dream. Today, New Ventures is celebrating a decade of making that dream come true. Meanwhile, the business world stood at the other extreme. And its main objectives were to obtain financial profitability, maximize return on investment, pursue sustainable revenue growth, and promote the reduction of costs. Regardless of the line of business, the underlying logic was to make money, even if that involved negative effects on the environment or on society. New Ventures has become the leading platform dedicated to financing, accelerating, and promoting companies that generate positive economic, environmental, and social impact. That dream became a reality, but in our wildest dreams, we never imagined what we would encounter along the way. It is tempting to be precious about our dreams — when and how they should occur — but flexibility and creativity have afforded us freedom and the opportunity to have fun along the way. Today, the planet is facing numerous challenges and we are in desperate need of a new approach that accentuates the strengths of these two sides, while minimizing the negative repercussions as a result of operating separately. In these pages, we invite you to learn about the ten years of our history. We have included a series of success stories, which demonstrate that the journey itself is what has brought us to where we are today. We aim to inspire everyone who believes that the industry can be different. We need to find a tool that can be integrated into traditional capital markets, which would solve these issues on a large scale. The dream is the same, but now is the opportunity for our story to make a significant impact. An impact that doesn’t simply mean connecting people and companies with our mission, but creating a community where people can inspire each other in the pursuit of actions that truly lead to radical change. The problems that must be addressed are enormous and all too familiar: the scarcity of natural resources, climate change, hunger, extreme poverty, and other obstacles that have led to social instability. To paraphrase Sir Ronald Cohen, the father of venture capital in the United Kingdom and pioneer of the changes we are proposing here: “What would happen if we let the invisible hand of markets be guided by an invisible heart?” PHILANTHROPY + FINANCIAL PROFITABILITY = IMPACT INVESTING The underlying concept of this approach is a movement that has come to be called impact investing: investing in companies, organizations, and funds with the intention of creating a social and environmental impact, while generating financial returns. 7 6 CONTEXT PROLOGUE According to the Global Impact Investing Network (GIIN), this type of investment includes financial profitability and an intentional impact that is both tangible and measurable. The result is a positive correlation between the impact and the return on investment. In other words, impact and profitability are not mutually exclusive. The goal is to bring them into alignment in order for them to expand together. Rodrigo Villar Founding Partner New Ventures To continue along this path, we need to promote and help generate more social entrepreneurs. We need more people to introduce large-scale social and environmental change, in a way that is systematic and sustainable. We need to focus on the creation of social and environmental value and optimize the creation of financial value. We need to build new products, new services, and new perspectives on social and environmental issues. DEVELOPMENTAL STAGES OF SOCIAL AND ENVIRONMENTAL COMPANIES: PRIMARY NEEDS AND ACTIVITIES Internal Rate of Return * SOURCE: FROM BLUEPRINT TO SCALE: THE CASE OF PHILANTHROPY IN IMPACT INVESTING. MONITOR GROUP, APRIL 2012 FULFILLS FINANCIAL AND IMPACT EXPECTATIONS What’s more, most expectations for financial returns among those who have made this type of investment have been fulfilled or exceeded. * SOURCE: SPOTLIGHT ON THE MARKET. JPMORGAN AND GIIN, MAY 2014 In other words, as Klaus Schwab, creator the World Economic Forum, proposes: social entrepreneurs must combine the qualities of Richard Branson and Mother Teresa. CONTEXT And the potential is quite encouraging. According to the same sources, the amount of impact investing could reach US$1 trillion by 2020. FUNDS 8 CONTEXT Investments in sustainable industries, through impact investments, have witnessed steady growth worldwide over the past five years. According to a study by The Impact Investor Project, from 2007 to 2012, the number of impact investing funds nearly doubled, from 181 to 354. According to JPMorgan and the GIIN, in 2013, nearly 5,000 investments totaling US$10.6 billion in instruments were made. The most popular sectors included food, agriculture, health, and financial services. IRR OBJECTIVES OF IMPACT INVESTING FUNDS 9 As this movement has developed, there have been various trends and repeated outcomes that allow us to be optimistic about the range of possibilities. A prime example is the radical shift in mindset of the Millennial Generation. According to a study conducted by the World Economic Forum in 2013, their main motivation behind doing business was to “improve society,” ranking above other factors, such as “generating profits” or “creating wealth,” which were the top motivations in the past. A PASSION FOR SUSTAINABLE CHANGE: What drives the expansion of social entrepreneurship? New Ventures has compiled a list of the leading participants, along with their respective activities, who help drive the development of social and environmental companies, as explained in the following chart: THE HISTORY OF NEW VENTURES IN Mexico PLAYERS AND ACTIVITIES THAT PROMOTE THE EXPANSION OF SOCIAL AND ENVIRONMENTAL COMPANIES In the winter of 1994, the Silva Reservoir, located in the western part of the state of Guanajuato, transmuted into a pool of dead birds. Thousands of them died due to pollution generated by local industries, and their bodies washed up in the River Turbio, which flows into the Silva Reservoir. That was one of the main incidents that called attention to the problem of environmental pollution in Mexico. But the history of ecological degradation did not begin there. In fact, the worst period of air pollution in Mexico occurred during the 1980s. Government measures, when severe contamination occurred, were called “environmental contingencies,” in which concentrations of ozone or suspended particles in the air reached levels that put the general population’s health at risk. This gradual awakening took place on three levels: the people, the government, and the private sector. Citizens started to became aware of the degradation of the environment. The government instituted the Ministry of the Environment in 1994. And the private sector slowly began taking interest in creating businesses that acted more responsibility in environmental matters. “Environmental contingencies were very common,” remembers Lorenzo Rosenzweig, general director of the Mexican Fund for the Conservation of Nature (FMCN). “During that period, the topic of air quality and the environment were very serious and led to a gradual awakening,” mentions Lorenzo. Up until that time, the mindset was that only governments, non-governmental organizations (NGOs), and the social sector were responsible for taking care of the environment. In 2000, an initiative emerged in the United States with the intention of shifting this paradigm: New Ventures. Born within a research center known as the World Resources Institute (WRI), New Ventures was created to prove that environmental issues could be resolved from a business perspective, on the basis that it was financially profitable to invest in companies that addressed these issues. 10 CONTEXT Over the past 10 years, New Ventures has participated in this movement as a capacity developer and financing provider. It has promoted new generations of innovative companies that, in addition to being profitable and scalable, help to solve the most pressing social and environmental issues. Today, there is a responsibility and an opportunity for everyone to transform the economy — and the way things have been done up until now — into one that leads to sustainable development. It was then decided that the best way to support these businesses would be to provide them with accelerator services, which included mentorships and consulting. The participating entrepreneurs were required to propose projects that comprised the following basic elements: innovation, scalability, an experienced management staff, and above all, a business model that addressed an environmental issue. The program first operated in Washington and later extended to other countries, which, besides being emerging economies, represented a larger percentage of the world’s biodiversity. “The objective was to demonstrate that it was possible to make profits with businesses that solved environmental problems in China, Indonesia, India, Colombia, Brazil, and Mexico.” “It was a very innovative program,” says Luiz Ros, who left Brazil’s National Environment Fund management team to join the WRI and oversee this new program. 11 * SOURCE: MODEL CREATED BY NEW VENTURES HISTORY OF NEW VENTURES The idea was to find environmentally-focused businesses, train them, and connect them with investors. Among other activities, the projects included sustainable fishing, organic agriculture, recycling, and alternative energy. By early 2000, Mexico already had a few accelerators and support networks for entrepreneurs and companies, like the NGO Endeavor, but none of them were specifically focused on promoting green or sustainable businesses. This was a great opportunity for Mexico to develop high-impact environmental companies. The FMCN set aside a space for New Ventures in its offices, lending them furniture and offering them support in administrative matters. FMCN also allocated New Ventures a budget for it to begin searching for potential candidates for acceleration among environmental companies. “But there were barely any around,” Rodrigo Villar remembers. “You had to look for them under every nook and cranny.” In 2001, Luiz Ros proposed to Lorenzo Rosenzweig that they should partner WRI with FMCN to bring the New Ventures acceleration model to Mexico. They had met two years earlier, when they were part of the Latin American and Caribbean Network of Environmental Funds (RedLAC). “Creating green companies seemed like an interesting project,” Lorenzo remembers. The partnership came to fruition, and FMCN functioned as a New Ventures incubator in Mexico. During its first years, FMCN worked with New Ventures to organize events on topics related to green and socially-responsible companies. In 2001, they organized the first conference in Mexico about the Bottom of the Pyramid, the world’s largest socio-demographic group, consisting of 3 billion people who survive on less than US$2.5 per day. 12 HISTORY OF NEW VENTURES The next step was to set up a regional office of New Ventures in Mexico. By early 2004, they started to look for a director who would oversee office operations. Luiz Ros personally interview the candidates. “I was impressed by all of them, but especially by Rodrigo Villar. I loved his energy, his technical skill, and his ability to get people engaged.” They organized their search by industry and found an association for organic products, located near Chapingo University in the State of Mexico, the leading university in agricultural studies. “I was so excited, it was a major discovery,” comments Rodrigo Villar. The team went to track down company representatives that were members of the association, but were discouraged when they realized that it was an association of researchers, not business people. Rodrigo Villar was a public accountant who graduated from the Monterrey Institute of Technology and Higher Education (ITESM) in 1999, and he earned an MBA from the Royal Melbourne Institute of Technology in Australia. His professional experience included work in the auditing and treasury departments of large corporations, such as Grupo Desc (today, Grupo KUO), which, at that time, was one of the largest industrial conglomerates in the country. In addition to the lack of projects, entrepreneurs couldn’t believe that New Ventures’ acceleration service was offered free of charge. What’s more, at that time, people associated the concept of entrepreneurship with unemployment and failure, not with success. “In the past, people would undertake entrepreneurship because they had no other options,” says Ian Reider, former chairman of New Ventures’ board of directors. However, the main problem was that many entrepreneurs believed they did not need support to grow. “I was excited when I saw the New Ventures vacancy,” remembers Rodrigo Villar. “It was exactly the job I was looking for: a high-impact company, removed from the corporate world.” For Luiz Ros, a difficult start was foreseeable. In Mexico, there was no precedent of this nature. “No one had taken the initiative to demonstrate to the private sector that one can earn money by making investments in companies with an environmental purpose.” Luiz Ros asked him if he had experience in event organization. “I told him about the time I organized a party to celebrate Mexican Independence Day, while I was studying in Australia. Over 400 Mexicans participated,” he recounted. That story took the interviewer by surprise. “More than the party itself, that anecdote clearly illustrated his ability to be creative and his power to engage,” Luiz explains. “I have always had an entrepreneurial spirit,” says Rodrigo Villar. When he was a child, he hunted grasshoppers that he later tried to sell; he organized fairs with his friends and charged an entry fee; he bought and sold toy cars with his classmates. By April 2004, he joined New Ventures and began the accelerator’s operations in Mexico. “Their entrepreneurial spirit and the desire to do things differently led me to accept the position.” One day, it was announced on the radio that a company had developed a type of road surface, which allowed rainwater to flow down to the subsoil. The New Ventures team immediately went to look for its creator, Nestor de Buén. He had the type of project they were seeking. The team was, once again, invigorated. In its first invitation for company proposals, New Ventures found 16 companies, nine of which were selected for acceleration. They were assigned consultants to strengthen their business plans, and in November 2004, they were presented before a group of investors in Mexico City. In terms of transactions, the event was not what they had expected. But it made New Ventures shine in the entrepreneurial world and put them on the radar of business-oriented media. New Ventures immediately launched another invitation to find a second generation of companies. They identified 40 entrepreneurs, 10 of whom were selected. This triggered a movement for New Ventures, and little by little, they started meeting companies specialized in environmental issues, while an increasing number of consultants and mentors started joining the New Ventures network. Soon after, they began looking for other sources of financing. “Rodrigo Villar and I sat down to talk with Sergio García de Alba, the then Minister of the Economy, and we told him that if he wanted to support small and medium companies, he had to support entrepreneurs and accelerators as well,” comments Fernando Fabre, the former director of the Endeavor office in Mexico. In 2005, New Ventures received financing from the Ministry of the Economy for the first time, through the SMEs Fund. New Ventures also began generating revenues through the selling of sponsorships for the forums it organized. That same year, C. K. Prahalad, pioneer of the Bottom of the Pyramid concept, joined the WRI board and promoted the topic of social impact. This led New Ventures to expand its area of interest, as it started to look for companies with high-social impact, in addition to environmental. HISTORY OF NEW VENTURES A COMPLICATED START 13 PIONEERS OF THE SECTOR THE FIRST FRUITS THE IDEAL FORUM At the end of 2006, a separation between New Ventures and FMCN was proposed, given that the team had expanded and there was just not enough space. By then, the organization had more sources of income, besides the resources it received from the FMCN. The proposal was approved in early 2007. The hope of recovering from the crisis took form during a regional meeting that assembled the main players in impact investing. This sparked a regional movement, which led to the birth of the Latin American Impact Investing Forum (FLII). From the new office emerged another New Ventures project: Las Páginas Verdes (or The Green Pages), a free directory of sustainable companies with the objective of building a movement toward sustainable consumption in Mexico. The Green Pages became one of New Ventures’ main channels for locating sustainable companies. In business terms, the directory exceeded their expectations, but its greatest contribution was that the team at New Ventures gained a better understanding of the required mindset, operations, and the challenges of being a social entrepreneur. 14 HISTORY OF NEW VENTURES Armando Laborde, director of the Ashoka offices in Mexico and Central America, an organization that supports social entrepreneurs worldwide, remembers that he had invited Rodrigo Villar that year to join its ‘fellows’ network and to receive a three-year scholarship. “We were really impressed by his vision on green and social businesses, and his boldness in advocating the use of business models to support social causes,” Armando Laborde declares. “In Ashoka, there were panelists who entered into a very intense discussion about the freedom with which Rodrigo spoke about money and profit when addressing topics about the environment.” In 2007, Halloran Philanthropies began operations in the United States, a foundation created by Harry Halloran, director of ARG, one of the most important companies in the country, with the vision of seeking organizations around the world that supported social entrepreneurs. Tony Carr, Halloran chairman, found New Ventures and its efforts in social innovation quite appealing, and so they met the team in Mexico and began discussions on potential collaborations. LESSONS FROM THE CRISIS The international economic crisis, which began in the last quarter of 2008, also wreaked havoc on New Ventures. Little by little, it became increasingly complicated to find resources that would allow its operations to continue to expand. Although New Ventures had diversified its sources of income, it depended to a large extent on government funds. And with the fall of the Mexican economy in 2009, the government abruptly cut back on public spending. The following year marked the most difficult for the organization in terms of financing. During that period, New Ventures received an invitation to join the Aspen Network of Development Entrepreneurs (ANDE), which supports entrepreneurs in emerging countries. Randall Kempner, executive director of ANDE, recalls that New Ventures’ services were strategic to spur the country’s economic growth. That made it even more important for New Ventures to follow its goal, despite the crisis. “For young companies, achieving self-sustainability is complicated. In 2009, New Ventures was no exception,” comments Michel Cavelier, director and founding partner of the consultancy firm Barlovento and member of the New Ventures’ mentors network. “It is always a problem if you depend on government funds,” says Fernando Fabre. “Fortunately, the New Ventures team knew how to keep moving forward.” A number of the measures that were taken were painful. Expenses were cut and extensions for pending accounts were requested from a few service providers. For six months, the general director did not receive a salary, although he never stopped paying the payroll for the rest of his staff. Part of the team began to lose motivation. They were worried about the future of the project. “We had to use the little oxygen that we had for something big,” Rodrigo Villar recalls. Gradually, other key players in the sector joined. “The New Ventures team informed us of their idea to host an event on impact investing in Mexico,” says Carmen Correa, operations director of Avina Foundation, which was created in the mid-1990s by Swiss entrepreneur Stephan Schmidheiny to build leadership in sustainable development among social actors. “It seemed like an excellent idea because there was nothing of the kind in the region.” That year, Avina became a founding partner of the FLII. New Ventures also contacted Halloran Philanthropies to suggest they become founding partners of the forum. “I was easily convinced that the Forum was a great idea,” declares the foundation’s president, Tony Carr. “One unique quality of New Ventures is that it is constantly searching for new projects that benefit the high-impact entrepreneurial sector.” The organizers wanted to decentralize the entrepreneurial activities that were concentrated in the major cities of Guadalajara, Monterrey, and Mexico City. At first, they thought of San Cristóbal de las Casas, Chiapas, but later realized it would be too difficult to reach for most. Then they thought of Mérida, Yucatán, a great place to organize an event due to its great accessibility, security, not to mention its cultural appeal. The FLII marked a milestone in the region’s sustainable capital industry. The first year welcomed the participation of the leading agents in the investment industries of Colombia, Brazil, Argentina, and Uruguay. “Latin Americans would always attend events normally held in the United States or Europe, but granted, our participation was much less,” says Carmen Correa. “Some people thought that if we held the FLII in Mérida, no one would come because of the distance,” explains Armando Laborde. “But I think in the end, it was the best decision. It stimulated entrepreneurial The forum incorporated new players into the financing industry of high-impact social activity outside of the urban centers and environmental companies. One example is Nacional Monte de Piedad, which for and became a highly strategic place 30 years, only donated the surplus that was generated by personal loans under tradi- for an international audience.” tional schemes, until Martha Smith invited them to this forum. “We asked ourselves how we could increase the social impact of the donations that we were giving out,” comments Max Echeverría, who joined the board in March 2010. “Attending the FLII opened the eyes of the board to the existence of a world focused on a type of entrepreneurship that has social objectives,” says Raul Medina Mora, former chairman of Nacional Monte de Piedad. HISTORY OF NEW VENTURES They established new offices in a colonial-style house in Coyoacán, one of the most traditional districts of Mexico City. Martha and Juan Carlos were the ideal allies for this initiative. Martha was the president of the US-Mexican Foundation and the Foundation of Mexican Entrepreneurs (FUNDEMEX). Juan Carlos was the director of Promotora Social Mexico, the entity that emerged from Grupo Compartamos, whose mission is the development of underserved people, through venture philanthropy activities that can foster sustainable projects. 15 As a result of the separation, New Ventures was more flexible and more efficient in its operation, and began to create its own identity. “That was the birth of the ‘New Venturians,’ as many people call us,” remarks Rodrigo Villar. The team defines the nickname as someone who is highly capable, passionate, and ready to apply their skills and energy to promote social and environmental development. In 2010, Martha Smith, Juan Carlos Domenzain, and Rodrigo Villar met in Miami, at a forum that included Latin American investors who were interested in high-impact projects. Having left the event disappointed about the quality, they were convinced of the need for a better forum in Mexico. “Coming from social welfare, we were entering something completely new, which is why we looked into the possibility of changing that and of making a positive impact on the ecosystem,” recounts Raúl Medina Mora about the FLII. The FLII has become a compulsory meeting place for those interested in the region’s impact investing. “Every time I speak with entrepreneurs, they always refer to the Forum, mentioning the name of a fundraiser, an investor, or a partner,” says Martha Smith. THE MISSING LINK After organizing the first FLII, Rodrigo Villar realized that the next step for New Ventures should be to support companies in their financing efforts. “That was when we decided to develop an impact investing fund.” Rodrigo began searching for the ideal fund administrator: someone who shared the same passion for social and environmental issues and someone who could manage the fund with the same discipline and rigor as any private capital fund. We began by redefining our mission: Catalyzing companies with social and environmental impact. In early 2013, as our tenth anniversary approached, we held a special strategy meeting. At that moment we realized that we had fulfilled many of our original objectives: the distinctive qualities of the entrepreneur were already widely recognized and an ecosystem to support entrepreneurs was already in place. And this, in addition to one thing that still makes us proud: social and environmental entrepreneurship was already acknowledged as a viable concept. We also reformulated our objectives: Fostering a new generation of innovative companies that, in addition to being profitable, help solve the main environmental and social issues. We are no longer the organization we were in 2004, which only provided acceleration services to environmental projects. We have evolved into a support platform for social and environmental entrepreneurs, which offers three areas of service: financing, acceleration, and promotion. The objective of the financing division is to promote the expansion and success of companies through flexible financing and technical assistance, which is provided through the Adobe Capital fund. The acceleration division provides strategic support, working toward strengthening businesses in the building and accumulation of success stories. NEW VENTURES PLATFORM The fund’s project was very new and instigated skepticism among some potential investors. “We were forced to seek out investors who wanted to be pioneers and who were willing to risks,” comments Erik Wallsten. Over the course of two and a half years, they visited some 150 investors, 13 of whom accepted, including the Nacional Financiera’s Fund of Funds, the German Investment and Development Corporation (GIDC), the Development Bank of Latin America (CAF), the Inter-American Investment Corporation (IIC), and Promotora Social Mexico. EPILOGUE HISTORY OF NEW VENTURES 16 In February 2014, Adobe Capital surpassed its initial investment-raising goal, closing at US$20.2 million. AND OF THE FUTURE OF TODAY We also recognized that with the expansion of our organization and the creation of brands as important as the Adobe Capital A few months after their first encounter, Erik Wallsten quit his job and began to work with Rodrigo to create a fund to invest in models whose fundamental aim was to address social and environmental issues. Erik suggested the name Adobe Capital. Adobe Capital began operations in November 2012. During the first year, the team reviewed about 200 companies interested in receiving financing. Among the candidates, the fund invested in only one: FINAE, a company that offers educational loans to young people who cannot afford to pay for private university. The second investment was in Biorganimex, a manufacturer of ecological cleaning products. Its third undertaking was with Salauno, a clinic specialized in visual healthcare that offers low-cost treatments. fund and FLII, there was some confusion about our activities. This led us to design a new communications strategy that would illustrate this new facet of New Ventures. At that meeting, we decided that we had to redefine our role and rethink how we could maintain our leading position within the industry, using innovative methods and offering assistance and services that were not yet available on the market, but are required to order to allow social and environmental businesses to reach their full potential. The search was already underway when Rodrigo Villar received a call from Erik Wallsten, who told him he was thinking about creating an impact investing fund. They had met a few years earlier, when Erik was directing a private capital fund and was approached by Rodrigo, who sought financing for companies that had participated in New Ventures’ acceleration program. They designed a US$20 million fund, which is smaller than traditional funds, allowing them to make smaller investments. The idea was to finance what they call in the industry “the missing middle,” which is the financing gap between nascent companies who receive financial support from family, friends, or an angel investor, and those who have access to financing from traditional venture capital funds or commercial banks. The fund would create a distinct financial structure for each entrepreneur and leverage New Ventures’ technical assistance. Moreover, Adobe would work toward becoming the first mezzanine fund in Mexico, thereby meeting the principal needs of the sector. THE NEW VENTURES 17 Two years after attending the FLII for the first time, efforts got underway to create the Social Impact Investing Fund of Nacional Monte de Piedad, which is already in the process of analyzing investment opportunities. For Javier de la Calle, general director of Nacional Monte de Piedad, New Ventures marked the gateway for the foundation to enter into the entrepreneurial ecosystem. “We went from being an institution accustomed to donating to one that was considering the idea of supporting companies with our own resources,” he explains. COMPANY: Aires de Campo COMMUNITY PROMOTION LEVERAGE INDUSTRY: Food Ten years after our arrival in Mexico, we want to show the traditional business world that it is possible to combine business sense with sustainability and social impact, and shatter the bohemian stereotype that is often still associated with solving social and environmental issues. The future of impact investing is full of challenges, but these social and environmental challenges cannot be solved with the tools used today. We believe, now more than ever, that social and environmental companies have the means to solve these issues in a convincing, definitive, and scalable way. That’s why, at New Ventures, we are already preparing a series of projects that we expect will continue to spur growth within the industry and take it to the next level. These projects not only include those in our current portfolio, but many being conducted abroad, as we retrace the steps we have made in Mexico, but this time, across Latin America. We want to continue to set off the domino effect, in hopes that the stories that we helped make a reality inspire other entrepreneurs to initiate ambitious projects to tackle these challenges. We want to attract more resources to support these projects and we want to continue to promote the expansion of sustainable industry. ACTIVITY: Commercialization and distribution of organic food INTEGRATION OPENNESS SELECTION DIRECTION DYNAMISM MOVEMENT = SOCIAL/ENVIRONMENTAL IMPACT: Collaborates with a network of more than 80 local producers, including family farmers, agricultural cooperatives, and small and medium agri-businesses Certified by the European Union and the United States as an organic food distributor for complying with international sanitary standards Their products are sold in more than 420 points of sale in Mexico From 2012 to 2013, the producer network increased the surface area of organicallymanaged land by more than 100%: from 20,000 to 41,000 hectares Commercial relationship with over 1,000 direct clients THE PLATFORM FOUNDED IN: 2001 18 EPILOGUE THAT CATALYZES With 10 years under our belt, we are stronger, wiser, more professional, and ready to continue to launch innovative and radical projects to meet our objectives. If we compare our current operations with our long-term goals, we see there is still much to do. We recognize that our mission is ambitious. Far from being discouraged, we are motivated to work harder and more effectively in an effort to bring us just a little closer to that mission each day. ACCELERATED BY NEW VENTURES IN: 2005 British newspaper The Guardian published a revealing story in February 2000: one of every four people consumed some form of organic food, even though it was more expensive than non-organic products. The story, based on a survey of 2,000 people, reflected the impact that these products were making in the United Kingdom, where fruits and vegetables were the preferred choice when buying organic. That same year, Guadalupe Latapí proved that in the United States, where she was studying her master’s degree in Food Sciences at the University of California, consumers were increasingly choosing foods free of pesticides, insecticides, synthetic hormones, genetically-modified organisms, and artificial colorings and flavorings — a common characteristic in products with organic labels. “It seemed like it was a growing trend in many countries,” Guadalupe remembers. Companies like Wild Oats, Hain Celestial Group, and United Natural Foods were among the preferred consumer brands, and it appeared that the global organic market was starting to gain momentum, as organic products began filling the shelves in supermarkets. “The idea I had, when I returned from my studies, was to open up a tiny shop to sell these types of products. But I didn’t have a business plan,” Guadalupe confesses. To do so, she first had to find suppliers and she began her search immediately. After some time, Guadalupe realized that, unlike what was happening in the United Kingdom and the United States, there were very few organic products in Mexico, and not much of a market either. During her quest, Guadalupe found an organic fair in Puebla, organized by the Ministry of Agriculture, Livestock, Rural Development, Fishing, and Food (SAGARPA). That is where she met Enrique del Toro, an organic milk producer, and she told him about her project and the challenges she faced due to the lack of suppliers in the country. Together, they began to come up with a solution to the problem, and by the end of 2001, Guadalupe, Enrique, and Elsa de la Garza founded Aires de Campo, a company that would help build a network of organic Mexican producers, making it easier for them to reach consumers. The next challenge was to create a virtually non-existent market within the country. “The objective was to support the development of rural areas and organic agriculture in Mexico,” comments Guadalupe. SUCCESS STORIES ENTREPRENEUR: Guadalupe Latapí Within our promotion division, we work toward advocating the companies that have participated in our acceleration programs, along with the industries in which they operate, by creating and running promotional and strategic networking projects, such as the FLII and Páginas Verdes. Our current focus is to become the tipping point of business models that, in addition to resolving social and environmental issues, these businesses are profitable, innovative, have potential for scale, and are led by talented, passionate teams. We have solidified this transformation by adding a series of changes to our visual communication, designed to reinforce our values. A major example of this is adapting our logo and using a symbol that truly represents us. THE WINDS OF CHANGE OUR NEW LOGO 19 We achieve this through acceleration programs that we conduct independently and through those designed with our strategic partners, with whom we seek to provide the resources needed to increase the number of social and environmental companies in Mexico and across Latin America. Some examples include: New Ventures’ Strategy Boot Camp, BBVA Bancomer’s Momentum Project, I3 LATAM, Ashoka, the Swiss Agency for Development and Cooperation (SDC), and Hystra. LITERALLY ORGANIC GROWTH In 2000, there were nearly 103,000 hectares dedicated to organic production, equivalent to more than 150 times the total surface area of the Chapultepec Forest, the largest forest in Mexico City. The figure seems high, but it’s not. In Mexico, there are 26 million hectares of land that can be farmed, but only half is active. The initial mission for the founders of Aires de Campo was to locate the 33,587 producers who were working on that land and to convince them to join the network. They began with the producers who were closest to the project: the milk producers. Enrique’s organic milk project was the first to join the network, and by 2002, one year after the company’s foundation, it had already incorporated five organic producers of rice, amaranth, and coconut oil. “It would have been easier to import products than to develop domestic producers,” Guadalupe declares, “but we decided to focus on Mexico. That was our challenge.” During the first three years, Aires de Campo focused on promoting the development of organic products. They used the fair trade model as their main tool to attract new members to the network. The 20 network members attended the training course for a period of three days. Some of the attendees included Felipe Hernández from Amarantos Mexiquenses, Luis Enrique Castañón from Miel Mexicana, and Carlos Malcher from Coco Colima. New Ventures also invited Aires de Campo to sign up for their acceleration program, which helped strengthen its human resources and marketing departments, and facilitated the implementation of performance indicators. What’s more, the training helped them face the international economic crisis of 2008. “It was a very complicated time for us, with a complete lack of capital,” she admits. “What got us through the crisis was the fact that everybody helped each other. We made a long-term commitment with our suppliers who stayed on with us that we would continue to work with them after the crisis passed.” Keep a close eye on what trends are going on in other markets. It is likely that sooner or later, they will come to Mexico, and you can be the first to jump at the opportunity. SUCCESS STORIES For them, the way to help producers to become self-sustainable was professionalization. “In 2005, I told the director of New Ventures, Rodrigo Villar, about our needs, and they supported us by providing us with a basic business course to offer our producers,” Guadalupe comments. “That was the most valuable aid that New Ventures has offered us,” she says. “It helped us understand our relationship with producers in an effort to meet the existing demand. Without a doubt, that training program set the course for future relations with our producers.” PHOTO: COURTESY OF AIRES DE CAMPO 21 20 SUCCESS STORIES In her opinion, the benefit of belonging to the network is that members can focus on producing, without worrying about sale prices. But Guadalupe acknowledges that starting out wasn’t easy. “We suffered quite a bit during the first five years, because in the beginning, we had to absorb the cost of integrating organic production into the market.” PHOTO: ANA HOP “There are swindlers out there who bring the prices down. These people go to the communities to buy product at very low cost, and then take the goods to cities or distribution centers to sell them at a higher price,” Guadalupe explains. “They are the ones taking home most of the earnings.” REINVENTING THE FUTURE ENTREPRENEUR: Alfredo Suárez COMPANY: Alianza con la Biósfera (AliBio) PHOTO: COURTESY OF AIRES DE CAMPO The company’s main obstacle is accessing the self-service market. Negotiations, she explained, are very complicated. In late 2006, Aires de Campo entered Walmart, and currently, its products are sold in large supermarkets, like Soriana, Chedraui, and Comercial Mexicana. “Sometimes the toughest thing is stepping out of your comfort zone and building new markets.” Their network is made up of over 80 producers who offer products to be sold in refrigerated and frozen foods, and in local grocery stores. Guadalupe says that the products that sell the best are: chicken, eggs, amaranth, rice, juice, nuts, and honey. In 2011, Grupo Herdez, one of the largest food corporations in the country, bought Aires de Campo. “New Ventures invited us to the first Latin American Impact Investing Forum in Mérida,” remembers Guadalupe. “This was an important stepping stone for us, because we managed to perfect our pitch, and it was the place where we proposed our project to Grupo Herdez.” In 2012, Impulso Orgánico reported that there were 512,246 hectares of organic crops in Mexico. That figure is five times higher than 12 years earlier, when Guadalupe, Héctor, and Elsa were just starting out. Aires de Campo has held its certification as an organic food distributor for nine years, and it has participated in national forums on drafting guidelines for organic production in Mexico, in the National Council of Organic Production and in Impulso Orgánico. It was also one of the 25 finalists in the Iniciativa Mexico, a national television entrepreneurial program. 22 SUCCESS STORIES Guadalupe says that despite the fact that organic products are now on the market, there are still opportunities for growth in the segment. “I see a heighten level of consumer awareness, an increasing number of producers selling their products, and a large market for organic products, with a 30% annual growth rate.” Aires de Campo’s plans for the future are to continue to supply the main supermarket chains, to spark the development of new products among domestic farmers, and to remain the leaders of a market that, before 2000, was virtually non-existent. Just because there is no obvious market for a product or service, does not mean it cannot be developed. As an entrepreneur, it is crucial to have patience and faith in your project. ACTIVITY: Researches, develops, and sells biotechnological solutions to improve nutrition and the environment INDUSTRY: Biotechnology SOCIAL/ENVIRONMENTAL IMPACT: Improves the quality of agricultural and aquaculture processes, by developing biological products and solutions based on beneficial microorganisms that increase crop production by up to 40% AliBio products are alternatives to the use of agrochemicals or pesticides, which affect the soil and cause nutrient loss, among other effects The AliBio Science Center for Research and Development examines over 2,000 types of microorganisms with the goal of restoring biological water and soil ecosystems The company treats more than 40 million liters of wastewater every year and more than 35 million liters of aquaculture “I wanted to be the Bernardo Quintana of the 21st Century,” Alfredo remembers. His motivation was to contribute to the development of infrastructure in Mexico, as Quintana did with ICA during the previous century. With that in mind, Alfredo began studying Civil Engineering at Mexico’s National Autonomous University (UNAM). During the third semester of his program, a friend invited him to work with his father on a project to rebuild city sidewalks. Alfredo, a 20-year-old student, accepted the offer, and that is how his dream began to materialize. As a student, he founded the company Intra Construcción, and began winning contracts and earning wide recognition within the industry. Over the next decade, in the 1980s, he founded four more companies, all related to the construction sector, never once giving up his childhood dream. Then came 1994, the year of “The Error of December,” the name attributed to the Mexican peso devaluation of that year. The crisis had a dual impact on Alfredo’s companies. “The first sector to be affected by a crisis is construction,” he explains. And just before the economic collapse, one of Alfredo’s companies had obtained a loan for US$33 million, when the exchange rate was 3 pesos on the dollar. With the crisis, the peso devaluated and the exchange rate jumped to 7.8 pesos to the dollar. “It was a very hard time in my life,” comments Alfredo, who was 38 years old at the time. The companies that he had started from scratch were now bordering on bankruptcy. FOUNDED IN: 2003 ACCELERATED BY NEW VENTURES IN: 2005 SUCCESS STORIES Aires de Campo was the first company to sell and distribute organic foods in Mexico. As Guadalupe declares, holding that strategic position in the market has not been easy. “The greatest personal challenge is having patience and believing in your project,” she says. “It’s hard because you are going against the grain.” The first time that Alfredo Suárez heard Engineer Bernardo Quintana give a talk, Alfredo was only 18 years old. At the time, in the mid-1970s, the company that Quintana founded, the Associated Civil Engineers (ICA) was one of the largest construction companies in Mexico and among the most emblematic in Latin America. Many of his buildings were — and continue to be — Mexican architectural icons, including the Olympic Stadium, the Sports Palace, Ciudad Satelite, and the Mexico City Metro System. 23 THE REWARDS OF HAVING FAITH A NEW PATH ON THE RADAR One of Alfredo’s companies built water-treatment plants. Due to the great need for potable water in Mexico and in many parts of the world, the entrepreneur thought that this area could become the new focus of his business. One afternoon in 2005, Alfredo got a call from Diego Alcázar, whom he didn’t know and who introduced himself as a member of a new organization that supported entrepreneurial projects like Alfredo’s: that organization was New Ventures. Diego wanted to meet with him to explore how AliBio could benefit from the services of his organization. 24 SUCCESS STORIES In an interest to learn more about topics related to water and to preserving the environment, Alfredo completed two degrees in these areas. That was the moment when he noticed that a number of major shifts concerning environmental issues were about to take place in Mexico. Those changes occurred at the end of 1996, when Congress approved a law promoting ecological practices that affected numerous industries. One of the most important changes was the mandatory “Environmental Impact Assessment,” an analysis that assessed the possible negative outcomes that construction could generate, followed by several recommendations to prevent negative effects on the environment. Alfredo and Ricardo imported biotechnological products for five years. But in 2002, after finishing a degree in business administration at the ITAM University, Alfredo terminated the partnership over differences regarding the company’s management. Subsequently, he started to design a new business plan to develop biotechnological solutions for the agriculture and aquaculture industries, and to offer waste water treatment solutions. He looked for a group of investors, and after some time, six investors agreed to get involved in the project. Among this group of investors was Raj Metha, the creator of the biotechnological products that Alfredo and Ricardo used to buy from Organica and import from the United States. One of AliBio’s most pivotal strategies has been achieving compliance with the Global Reporting Initiative (GRI), an international sustainability assessment that evaluates the economic, environmental, and social performance of companies. The companies that earn this certification have more opportunities to win contracts, especially international ones. When AliBio was evaluated in 2008, only 400 companies in the world had done so. In Mexico, the only ones that had this recognition were PEMEX, FEMSA, Bimbo, and CEMEX — some of the largest corporations in the country. With the support of New Ventures, AliBio was the first SME of Mexico and Latin America to obtain this certification. “New Ventures provided us support through mentorships and financing, in order to be able to present and pass the evaluation,” exclaims Alfredo. In 2009, Rafael, Alfredo’s mentor, introduced him to Fondo Sinaloa, a fund that receives resources from the Sinaloa state government and from CONACYT (the government office that promotes innovation and technological development). After 11 months of negotiation, AliBio received an investment in exchange for 20% of the company. They invested the money in technology to produce biotechnological products in Mexico, which they had previously imported from the United States. They also built their first lab in Culiacán, Sinaloa, which they later moved to Querétaro due to security reasons and its proximity to Mexico City. Never be afraid to start from scratch, because when you do, you are equipped with more knowledge to make it even better. SUCCESS STORIES Alfredo and Ricardo’s business vision coincided and they created an environmental division within Ricardo’s company to sell biotechnological products for various industries, including agriculture and aquaculture. The products were purchased from a US company, called Organica, and they repackaged and relabeled them at the facilities of one of Ricardo’s companies. In 2006, Alfredo met Rafael Jiménez through New Ventures, who would be his mentor during the years to follow. In 2007, New Ventures nominated AliBio to participate in “Entrepreneurs of the Year,” a special edition of Expansión magazine. “This gave us a lot of exposure,” Alfredo exclaims. In 2008, Endeavor invited them to join its network of entrepreneurs. 25 During that same meeting, Alfredo told Luis about his concerns over what was happening in the field of biotechnology and its applications to water treatment. Luis put Alfredo into contact with Ricardo Orbet, who knew more on the subject, and who was the owner of Productos Químicos Mardupol, a chemical distributor. “I presented them the project and they expressed their interest,” asserts Alfredo, who remembers feeling a mutual connection with them. In just a few months, AliBio became one of the next companies to enter into New Ventures’ acceleration program. PHOTO: ANA HOP In May 1996, Alfredo contacted Luis Escudero, an old friend and client. Luis had a company called Convermex, for which Alfredo had built a water-treatment plant. Alfredo approached Luis about an idea, proposing that they scout out more investors to found a company solely dedicated to water treatment. Luis accepted. STUMBLING FORWARD THE SETBACKS ALONG THE WAY Nevertheless, the construction industry continued to suffer and the effects of the crisis, which had begun a year earlier, were coming down even harder. And once again, those times proved to have two major repercussions on AliBio: on one hand, the sale it had agreed on with Grupo Urbi had fallen through; on the other, Homex, its main distributor of treatment plants, started to have cash flow problems, and in the end, it owed AliBio US$2 million. In 2011, although AliBio received the Entrepreneur of the Year award in the technology division from the consulting firm EY, on the whole, times were very tough. “We were trying to build up the company again, focusing solely on biotechnology,” Alfredo explains. A few years ago, as a result of receiving GRI certification, AliBio began negotiating with a Norwegian-Chilean company named EWOS, which produces salmon. This company faces a water problem that affects two thirds of its salmon production, and the intention behind these talks is to have AliBio develop a biotechnological solution. “If we close this deal, we’ll be back on top,” exclaims Alfredo. AliBio’s strategy is to identify the needs of its clients for the development of biotechnological solutions. The entrepreneur is also seeking financing with the goal of attracting not only capital, but “smart money,” which means, finding a partner who, in addition to financial resources, can also offer know-how. But he realizes that a partnership like that will happen when the time is right. COMPANY: Aventones ACTIVITY: Online system to promote carpooling INDUSTRY: Transportation SOCIAL/ENVIRONMENTAL IMPACT: Promote the optimized use of vehicles to reduce traffic and carbon dioxide levels Aventones offers its services to more than 80 companies They have saved 972 tons of carbon dioxide Avoided 76 million kilometers of travel SUCCESS STORIES 26 PHOTO: COURTESY OF ALIBIO “It’s obvious that something is wrong in Mexico City,” says Cristina, who is the founding partner of Aventones, a company that carries the name of what is known in Mexico as carpooling. “In Mexico City, there is traffic all day, every day.” For Cristina, the environmental need is clear: to reduce the avalanche of vehicles that congests Mexico City, which has a negative impact on the environment owing to the high levels of pollutants that heavy traffic produces. In her opinion, the key is to look at the details: many of the cars that circulate the city are occupied by just one person, meaning that at least three available seats are wasted. “We had to build a project that promoted the carpooling culture in closed communities in Mexico City, like companies,” Cristina comments. “It had to be more than just a hippy or friendly way to share a car, it also had to be a viable business model that would create major savings in terms of transportation and parking.” In early August 2010, when she was still working at Scotiabank — one of the most important banks in Mexico — Cristina met up with a friend from high school, Ignacio Cordero, to tell him about her idea and proposed that they band together to found the initiative. Ignacio had recently quit his job as a supply chain manager for the company Artículos Higiénicos, and accepted her proposal. Next, Alberto Padilla joined the team; he had the same idea as Cristina, but wanted to apply it to Monterrey. “A friend introduced us to Alberto, and we decided to work together, instead of competing against one another,” Cristina remembers. Saved 520,000 liters of gas FOUNDED IN: 2010 Old or new, as long as your partnerships add value and complement your efforts, they will always help your project advance at a much quicker pace. When Cristina Palacios was studying at the Universidad Iberoamericana in Mexico City, she would spend up to two hours stuck in traffic in Santa Fe — home to numerous headquarters of the largest corporations. ACCELERATED BY NEW VENTURES IN: 2012 The three of them defined the project to be an online platform and software program that would allow members of an organization — a company, university, or government office — to see the routes of their colleagues and share vehicles. That way, they thought, people could save car trips by traveling as a group. The business model was to charge organizations an initial fee in order to launch the project and later fix a price based on how much they used the platform. Their main goals were to optimize the use of vehicles and make a positive environmental impact, while ensuring profitability. In Mexico, the market was huge. Aventones performed a survey to measure the need for their product and found that 78% of employees drove their car to work. The business opportunity was there; the challenge was to render their company sustainable and to export it to other big cities in Latin America, where heavy traffic is generally a severe problem. SUCCESS STORIES That same year, Alfredo took up discussions with the partners of Urbi, another housing developer, to sell them the business unit, and soon after, they reached a sale-purchase agreement. “We were delighted,” Alfredo recalls. ENTREPRENEURS: Cristina Palacios Ignacio Cordero Alberto Padilla 27 In 2009, the representatives of Fondo Sinaloa recommended that AliBio position and sell its water treatment plants through Homex, the country’s largest housing developer. AliBio took the Fund’s advice, and a year later, Homex accounted for 80% of the sales in that division of AliBio. Test your product or service as soon as possible. You can use tools like the Minimum Viable Product proposed by the book entitled The Lean Start-up. THE KEY IS TO ATTRACT CLIENTS One option to expand more quickly is to partner up with your potential competitors. Using the data collected from their market survey, the founders decided that the next step was to present a project to a potential client. Equipped with a PowerPoint slideshow, Cristina and Ignacio pitched their project to Costco, the warehouse chain. It was October 2010, only a month after Cristina and Ignacio had met and agreed on initiating the project. “We sold the platform to Costco as if the product were already up and running, but we didn’t have a thing,” Cristina says, laughing. “What surprised us most was that, right from the first meeting, they told us they wanted it immediately.” At that moment, Cristina finally understood a tip that a university professor had given her, a few years back: better to stumble forward, than to suffer the paralysis of analysis. “You never have the perfect platform, but we had to release it, which is the only way we can get closer to what the client really wants.” The interest shown by the directors of Costco propelled Aventones forward. The creators immediately traveled to Monterrey, where they met the technical team that would develop the platform. By January 2011, the product was ready, and Costco, its first client, began using it a month later. “Our biggest challenge continues to be the battle against the belief that cars are a symbol of success,” Cristina declares. Despite this constant struggle, they were ready to take the next step: to become the leaders of the Mexican market and to expand into other Latin American countries. BOLSTERING STEADY EXPANSION For the Aventones team, expansion has been essential, with the ultimate goal of achieving economies of scale. In late 2011, Aventones began preparing its model in order to export it to Chile, where their company was selected to participate in Start-up Chile, a government program that attracts foreign entrepreneurs to test their models on Chilean soil. “Just when we were getting ready to enter into the Chilean market, we met New Ventures,” Cristina recalls. “They invited us to participate in their acceleration program, which made a lot of sense, because we didn’t know of any other accelerator programs that believed in supporting impact projects.” Aventones accepted the invitation and began the process in early 2012. For eight months, they worked hand in hand with mentors, who advised them on sales strategies and how to establish corporate governance, among other topics. As a result, Aventones’ next objective was to seek investment that would finance their expansion and product diversification. “Before entering New Ventures, we hadn’t built a corporate governance framework within the company. We made all the decisions,” Cristina says. “And without corporate governance, it is hard to find investors.” SUCCESS STORIES In 2011, they focused on positioning the product across the national market. After 12 months, they were providing services to 15 organizations within Mexico. But it wasn’t easy, Cristina remembers. They had to convince people of the benefits of carpooling and optimizing the use of their cars. To do this, Aventones began providing internal communication campaigns within their clients’ organizations, including discussions on the environmental impact and training sessions on how to use the platform. 28 SUCCESS STORIES “It was clear from the beginning that the trick was to sell: to get out there and bring in sales as a form of proof that the project was working,” Cristina comments. “Entrepreneurs should always have a sales-focused approach. That’s the key. Before getting capital, you need to generate cash.” PHOTO: ANA HOP 29 That was their first success — not bad, considering that even some of their family members were skeptical about the business model. They decided that they would finance their official launch with the income of sales, as a way of demonstrating the project’s viability. Thus, the start-up’s rise, stability and expansion would depend on the amount of revenue they made. “They gave us a lot of feedback. We learned everything from how to sell and what the clients want to hear, to the impact that would be made,” Cristina explains. After this process, they started to assign an economic value to the benefits of using Aventones and to use indicators to highlight the environmental impact. For example, now, the Aventones staff knows that they have to report the liters of gas and the number of tons of carbon dioxide that users save through carpooling. HOW TO EMERGE FROM A CRISIS STRONGER THAN EVER ENTREPRENEUR: Ulises Treviño To date, in addition to Mexico, Aventones is present in five other countries: Chile, Argentina, Peru, Colombia, and Venezuela. Rides also operates in Chile and is already preparing for further expansion. COMPANY: Bioconstrucción y Energía Alternativa Cristina’s plans are to continue positioning the company’s products and to develop more mobility solutions for Latin Americans. And she continues to be guided by the principle: “better to stumble forward, than to suffer the paralysis of analysis.” ACTIVITY: Specialized consultancy in sustainable construction, building engineering, LEED certification, and design and installation of eco-technologies, such as green rooftops, green walls, and solar paneling INDUSTRY: Construction Really paying attention to the details of everyday activities can reveal great business opportunities. SOCIAL/ENVIRONMENTAL IMPACT: First certification in Latin America for sustainable LEED-NC Platinum-level buildings, with a project located in Monterrey Always avoid the trap of falling into the paralysis of analysis. 240 projects completed Consults 150 private companies and public offices 50,000 people have benefited from its developments 1,200 m² of sustainable construction 22 national and international awards FOUNDED IN: 2001 PHOTO: COURTESY OF AVENTONES 30 SUCCESS STORIES 248 conferences and classes offered ACCELERATED BY NEW VENTURES IN: 2012 In late 2008, Ulises Treviño got a call at his office in Monterrey, Nuevo León — one of Mexico’s top entrepreneurship cities. On the phone was one of his clients, to whom Ulises provided consulting services on the construction of a sustainable building in Mexico City. The client was calling to ask that Ulises suspend his services, and the reason was that the economic crisis was taking its toll, and the client had decided that the best thing to do was to terminate his financial commitments with Bioconstrucción y Energía Alternativa — the consultancy company that Ulises founded in 2001, whose objective is to promote sustainable construction. At that time, Ulises had a portfolio of 25 clients. However, that client wasn’t the only one to request a suspension; other clients had asked him to hold off until further notice, both for new projects and for those already in progress. And that is how Ulises’s consulting firm was hit by the economic crisis that broke out in 2008, which was a direct consequence of the real estate bubble that was bursting in the United States. “We were never on the brink of death,” Ulises remembers, but company growth had plummeted to half, and the medium-term outlook, didn’t look so good. The real estate and construction markets, where his main clients worked, were collapsing spectacularly. The housing sector fell into a deep recession, affecting housing developers, like Geo, Homex, and Urbi, who, to this day, are still up against the wall. For the construction sector, the years and months that followed the crisis were synonymous with catastrophe. The Great Recession, as the crisis has come to be known around the world, made it clear that Bioconstrucción y Energía Alternativa needed to make changes within its operations. The consulting firm had to develop a strategy that would strengthen the company and help it endure or postpone projects. The goal then, was not only to overcome the economic crisis, but to emerge even stronger. PIONEERS IN THE INDUSTRY Bioconstrucción y Energía Alternativa offers specialized consulting services in sustainable construction, building engineering, LEED certification, and in the design and installation of eco-technologies, including green rooftops, green walls, and solar paneling. It began operating in Monterrey 13 years ago, and since then, it has provided services to over 150 companies and government offices. The consulting firm was one of the first companies to introduce the concept of sustainability in Mexico. And one of the greatest challenges has been building awareness among its clients. During the first few years, from 2001 to 2007, the company, on the whole, was poorly received by potential clients. Ulises remembers that after presenting the project, people would always ask him: “Why should we change the way we build, if what we are doing now, works for us?” SUCCESS STORIES Despite Aventones’ sales success with its first 15 clients, the start-up still needed to strengthen its sales strategy. New Ventures assigned mentors who were specialized in social responsibility and who helped Aventones understand the needs of its clients and expand its network of contacts. In just over four years of operation, Aventones has reached more than 80 companies, universities, and government offices, including Bayer, GNP, the National Banking and Securities Commission, the Ministry of Agriculture, Land and Urban Development, the Mexico City Government, the Asset Administration and Disposal Service, the ABC Hospital, BMV, and Coca-Cola FEMSA. 31 Aventones has a board of directors that includes independent members who provide support in decision-making. In 2012, the company raised its first round of investments, totaling US$350,000. The money was used to develop a brand-new product, entitled Rides, a platform that allowed users to share their cars for intercity trips. PHOTO: COURTESY OF BIOCONSTRUCCIÓN Y ENERGÍA ALTERNATIVA THE RIGHT TIME TO EXPAND One afternoon, in late 2010, Ulises received an e-mail from an organization he was unfamiliar with: that organization was New Ventures. They told him that because his company promoted sustainable practices, it was eligible for a free 10-month acceleration program at New Ventures. The program included the Strategy Boot Camp and an acceleration methodology course, developed by New Ventures. After getting the e-mail, Ulises asked around about New Ventures and what it meant to sign on to its program. “We found out that it was an organization focused on company acceleration, and that the primary requirement to apply was sustainability, like our company,” Ulises explains. “New Ventures had great references, and so, we finally reached the conclusion that signing up was an excellent way to get through the crisis.” 32 SUCCESS STORIES Today, Ulises explains to his clients that by implementing these principles, they will lower their operating costs, improve building durability, stand out in the market, and improve the health and productivity of the people who work in these sustainable spaces. In 2004, HSBC Financial Group wanted to build a sustainable corporate building that would distinguish it as a bank that was environmentally responsible. One of the people in charge of the project called the offices of the US Green Building Council, a non-profit organization that promotes sustainability in the design, construction, and operations of buildings in the United States. Staff from this office referred him to Ulises, who in 2002 was the first professional in the region with LEED certification, which stands for “Leadership in Energy and Environmental Design” and is a certification system that measures the degree of building sustainability. “HSBC called me, we reached an agreement, and we got down to work,” Ulises recounts. “I’ll always be grateful to them, because they could have hired any consultant in the world, but they believed in us and we designed a project that became a major milestone.” His company collaborated in the architectural design and engineering of the HSBC Tower, located on Paseo de la Reforma, one of Mexico City’s main avenues. He ensured that the sustainable guidelines were properly executed, he applied for LEED certification, and the building was completed in 2006. Other projects started rolling in after this success, including L’Oreal’s Stimulus manufacturing plant in San Luis Potosí, the Roberto Garza Sada Center in Nuevo León, and the Innovation and Transfer of Technology Park in Chihuahua. In 2010, the construction industry started to slowly recover from the crisis, but the real estate and construction markets were still sluggish. “We took advantage of the state of affairs, by working from the inside out, in order to strengthen the company,” Ulises explains. A couple of months later, the members of Ulises’s management team were in the offices where they would receive their first consulting session from the world leader in business strategy, The Boston Consulting Group — a connection set up by New Ventures. “During the program, they went into detail about work methods and the commitments that we were taking on, which we were happy to accept.” The main commitments involved: following the recommendations of the assigned consultants and mentors; dedicating the required time to the acceleration process; and implementing the proposed improvement models. “It was clear that staying the same was not an option,” Ulises adds. “That exercise opened our eyes to the importance of other areas of production, which entrepreneurs tend to ignore,” Ulises comments. “We were able to strengthen our knowledge on topics related to the market, financial forecasts, and administrative issues. The exercise got us in touch with various key areas of cooperation and business development, which we have found to be very useful.” “We still have a lot to do, but we attribute the main improvements in our company to our participation in the acceleration program offered by New Ventures, a catalyzer of businesses with a social or environmental mission,” declares Ulises. “I think we capitalized on the crisis quite well, thanks to that acceleration process.” Pinpoint the key areas of your company and avoid the mindset that the most important are those that you know the best as an entrepreneur. SUCCESS STORIES “To a certain degree, I understood them. Mexico’s green culture was almost non-existent,” Ulises comments. “I studied in England, where I did my post-graduate degree, and afterwards in Oslo, where I worked for four years for the Norwegian Building Research Institute. I became interested in these topics just by being there.” 33 PHOTO: COURTESY OF BIOCONSTRUCCIÓN Y ENERGÍA ALTERNATIVA COMPANY: Biorganimex ACTIVITY: Produces indoor cleaning solutions, which are safe for the environment and use recycled containers and biodegradable formulas INDUSTRY: Sustainable cleaning products SOCIAL/ENVIRONMENTAL IMPACT: Ecological cleaning products that do not pollute aquifers, and are packaged in cardboard and biodegradable recipients Its products are offered in over 400 supermarkets in Mexico PHOTO: COURTESY OF BIOCONSTRUCCIÓN Y ENERGÍA ALTERNATIVA The first 100% Mexican ecological cleaning products company RESULTS IN SIGHT 34 SUCCESS STORIES Through strengthening its processes, understanding the importance of the different operating areas, and fortifying its internal capacity, Bioconstrucción y Energía Alternativa became much more disciplined. The company has achieved significant growth, in terms of the level and quality of the services it offers. “Our capacity and professionalization of services grew by nearly 40% since we went through the New Ventures process.” The consulting firm is currently working on 40 projects, simultaneously. According to Bioconstrucción’s founder, the sustainable construction industry, and of course his own company, have a very bright future ahead of them. But for now, the chal- The first recyclable cardboard bottle in Mexico lenge is to remain the national leader in consultancy services for sustainable building. He also sees an important niche in highly-specialized services concerning renewable energy and high-performance eco-technologies. And while the Mexican market is still very large, the firm is already making plans to begin operations in a number of Central and South American countries. For Ulises, the 240 sustainable projects his company has been involved in, thus far, is a small number in comparison to its capacity. His ultimate goal is to establish a new way of life. “We hope that green design isn’t just a fad,” he says. “We are working toward making this a modern way of living that is here to stay.” FOUNDED IN: 2008 ACCELERATED BY NEW VENTURES IN: 2013 INVESTMENT MADE BY ADOBE CAPITAL IN: 2014 In early 2008, Héctor Pinto, who was a manager at Unilever’s Communication Channel, made a few quick calculations in his mind after reading a story in the newspaper. It was about Whole Foods Market, the largest organic supermarket chain in the United States, which reported US$6.6 billion in sales in 2007 and had reached an average annual growth rate of 30% over the course of 16 years. For Héctor, it was obvious: “Green is business.” In those days, there were very few organic brands in the local market and most were farms in other countries that were just beginning to explore the Mexican market. Héctor knew intuitively that the population’s interest in sustainable brands was rising. Héctor had spent most of his professional career in finance. He studied business administration at the Universidad Iberoamericana and took a sixmonth course at Harvard. The article on Whole Foods and the desire to become an entrepreneur led him to think that it was a good idea to launch a green business, even though he knew absolutely nothing on the topic. When he began, his business plan was divided into three parts: a line of organic food, which were popular at health food stores; a line of healthy drinks, based on a ranking of the 10 super fruits that Héctor had read “somewhere”; and a line of cleaning products called Greenland, which had pleasant aromas, were environmentally safe, and used recycled containers and biodegradable formulas that did not pollute aquifers. One day, as a he perused the aisles of Comercial Mexicana, one of the country’s largest retail stores, Héctor asked an employee if they sold those types of products. The employee said yes, except for the cleaning products. Héctor saw the opportunity and was lucky that afternoon because the chain’s purchasing manager was visiting the store. At that stage, Héctor’s company started to produce small quantities of each product. Héctor sought out the retail store’s buyer and met with her two weeks later. During the meeting, he presented his three lines of products, but what most drew her attention were the cleaning products. “Oddly enough, I thought Greenland would interest her least,” Héctor remembers. “She proposed starting out with selling my products at two or three City Market stores, which are also owned by Comercial Mexicana.” And he was lucky they only started with two stores, Héctor comments. “We barely had time to make enough products, even though it was artisanal.” SUCCESS STORIES ENTREPRENEUR: Héctor Pinto THE ART OF ALLIANCES 35 Taking advantage of moments of crisis by putting your house in order will make you stronger when you finally re-emerge. Expand your options and when you find a great opportunity, persevere to make it a reality. show any interest in Héctor’s company. Ricardo accepted the partnership, but warned him that he was getting ready to leave soon to study his master’s degree at the Kellogg School of Management in the United States. Halfway through 2010, Alejandro, his first partner, made the decision to leave the project. “That hit hard,” Héctor remembers, “but we managed to agree on a price for his shares and we both moved forward.” Ricardo only helped Héctor during the summer, when he returned to Mexico. Héctor invited other Unilever colleagues to his company, but they didn’t last long, because every one of them expected that the business would be successful from the get-go. Only Adriána Partido, who Héctor had met at the Makken agency, stayed on, and she took over the responsibilities of the operations department. At that time, Biorganimex was delivering products to only two City Market stores, and things were getting increasingly tight. By mid2010, Héctor had to sell his car in order to pay off the debt that his company had accumulated. THE MACROECONOMIC EFFECT Ricardo returned to Mexico and began working for Bain, a consulting firm. Héctor changed jobs to work for Samsung, as mobile phone marketing director. None of these changes improved Biorganimex’s predicament. Héctor was up against a massive cleaning products market, and his first direct competitors were just entering. “Clorox was beginning to gain momentum with its Green Works brand. There’s another one as well, but I can’t remember the name of the brand. And there was me, with Greenland. There were three of us competing in a virtually unexploited market in Mexico.” Héctor went for his first job interview, where he met Enrique Tron, who would become his boss. Tron later comments: “He was a really interesting guy. I spoke with him for about an hour and a half, and it dawned on me that he would be a good strategic partner for my business.” Héctor then returned to the life of a salaried worker, and his partner, Alejandro, took over the reins of Biorganimex. At Unilever, Héctor tried to convince a few of his co-workers to work for him at Biorganimex, but all of them declined. A few months later, he met Ricardo Sanroman, who also worked at Unilever and was the only one to In early 2011, the organic market began to slowly recover, which for Héctor and Ricardo, meant a new opportunity to help Biorganimex push forward. Listen to your intuition and to that desire you have to improve your surroundings through business ventures. Héctor continued working for Samsung, but that did not stop him from going to a few retail stores and supermarkets to reposition Biorganimex, which still only sold to City Market. To his surprise, doors started to open, and within a short period of time, Greenland was back on the shelves of 150 stores, with very little competition. In 2012, Héctor resigned from Samsung to dedicate himself solely to Biorganimex. That same year, Ricardo Sanroman invited his brother, Alejandro, to the company, who was working in the retail division of Microsoft. His experience was a strategic move for Biorganimex and this set the stage for a new phase in the company. That year, Héctor and the Sanroman brothers had their first encounter with Adobe Capital, the financial division of New Ventures. They had a casual breakfast meeting with Erik Wallsten, the director of the fund. Later on, they met Rodrigo Villar, a founding partner of New Ventures. In May 2013, Héctor received the news that he and his team had been chosen for the New Ventures acceleration process. SUCCESS STORIES By 2009, Mexico was beginning to feel the global economic crisis that broke out in September 2008. People began to look for low-cost products, and so, the more expensive organic products became less of a priority. Héctor remembers that many organic stores, where he sold his products, began to close, and those that remained open, suffered in sales. Biorganimex decided pulled its products from these outlets, because of their low sales potential, and although this sacrificed the brand’s presence, it implied a significant reduction in costs. Around that time, one of his former co-workers, who was still working at Unilever, informed Héctor that there was an opening in the marketing department, where he had always wanted to work. “When I was working there, I asked to be transferred to that department, but was refused. They said my career was in finance. Among other things, that was the main reason why I left in 2007.” GOOD ALLIES 37 36 SUCCESS STORIES The employee asked him where his products were sold. Héctor mentioned Comercial Mexicana and that was enough leverage to win his confidence. They began negotiating the possibility for Greenland to be sold in Walmart stores, and soon thereafter, he was in. Subsequently, the buyer offered to sell his products in Superama, another supermarket chain with more select products. Héctor also persuaded Chedraui, and in Monterrey, he began negotiations with the HEB chain. PHOTO: ANA HOP Héctor partnered with Alejandro López-Tello and together they created Biorganimex. They began operating from a rented office with just the basics: a table, a chair, and a phone, which Héctor used to call potential clients, especially supermarkets. Most of them ignored him, until he met with a Walmart buyer. Héctor understood that an entrepreneur’s journey was more difficult than he had imagined. But he also understood that to create a company, one needs to partner up with the right people. “No one told me, and I would’ve appreciated it if they had. When you create a new company, the most important thing is to choose your team carefully. Now, I know.” Héctor and his team hope more people will follow their example, leading to the creation of more start-ups and investment funds that adopt the sense of responsibility that the market needs. And one of his primary conclusions from the whole process is the vital importance of having a business partner who shares the same ideals. “When we were negotiating with the financing department of the New Ventures platform, we were constantly asked about what we were going to do about the water problem and what we were going to do in order to stay focus on our social impact if we expanded. I honestly can’t imagine other funds inquiring about these topics during financial negotiation,” confesses Alejandro. ENTREPRENEURS: Yuny Legorburo Adrián Muñoz COMPANY: Café Ruta de la Seda ACTIVITY: First organic pastry shop in Mexico INDUSTRY: Organic foods and beverages SOCIAL/ENVIRONMENTAL IMPACT: Organic ingredients prepared via ecological processes Over 25 small, sustainable suppliers that comply with fair trade practices and originate from Protected Nature Reserves 80% of its products are organic and the majority are certified 90% of packaging used is biodegradable Promotes good dietary habits, a healthy lifestyle, and consumer awareness 38 SUCCESS STORIES FOUNDED IN: 2008 To create a great company you must partner up with the right people. Choose your team wisely. ACCELERATED BY NEW VENTURES IN: 2012 When Gabriel Calaforra — a polyglot and retired Asian art professor — is in a room filled with animated discussion, the conversation comes to a grinding halt when he opens his mouth. Every Monday, since 1997, Calaforra would open the doors of his home in Habana, Cuba, to dozens of young people who gathered to listen to his teachings. Yuny Legorburo, who was 19 and studying her art history degree at the Universidad de La Habana, was one of his students. The professor talked about everything from Asian art to religion and philosophy, and even languages, like Hindi and Sanskrit. Gabriel and his students called it the ‘Monday Club,’ an open house that is still in session, drawing Cubans and foreigners alike. Yuny attended the weekly meetings up to the age of 24. Her interest in Asian culture began on her childhood farm, in Artemisa, Cuba, where she read One Thousand and One Nights, a collection of traditional stories from the East. “I was always an avid reader,” Yuny says. For many years during the club gatherings, Yuny made tea, each time circulating cups among those present, as they passed them around. Each session focused on a different topic, but the tea was just as vital. Many of the students were sent by friends who were international students and who, during their stay in Cuba, learned about the Monday Club. “These meetings were a part of my growing passion for the East,” Yuny comments. Enchanted by the world of tea and Asian culture, while studying her bachelor’s degree, Yuny started giving classes in Islamic art under the tutelage of Calaforra, who was her mentor and teacher. “I became an avid reader, I participated and even organized talks, conferences, exhibitions, and debates on these topics, for magazines, universities, and museums,” she remembers. Between 1998 and 2002, Yuny offered classes at the Universidad de La Habana and the University of the Arts (ISA). During her childhood in Cuba, Yuny remembers that everything on and around the table had been produced on the farm where she grew up: from the wood for the fireplace to the harvested crops and the animals they raised. In Cuba, the 1990s were a time of crisis. The collapse of the Soviet Union in 1991 and the United States embargo that led to what is known as the “Special Period in Time of Peace.” The scarcity of resources forced Cubans and the government to take drastic measures to cut their costs. This included resorting to organic agriculture, and Cuba quickly became the pioneer across all of Latin America. “In my country, recycling and the reuse of materials are everywhere. These practices were imposed on us. We didn’t have any other option,” Yuny asserts. “Sustainability is something that has been a part of my life since I was a little girl.” SUCCESS STORIES Today, Biorganimex is present in close to 400 retail stores, including the country’s largest supermarket chains, like Walmart, Chedraui, Comercial Mexicana, City Market, Superama, and the HEB stores in Monterrey. THE ROAD TO OPPORTUNITY 39 Biorganimex had only a month to go before completing the accelerator program when Erik called them to report that the financing they were expecting was finally ready. “We were in that tug of war for over a year, and we had started to lose hope, but in the end, we managed to gain access to capital,” Héctor recounts. When Yuny arrived in Mexico in 2002, she was surprised by the amount of waste she saw. “The mountain of paper lying around would drive me crazy,” she says. The reason Yuny went to Mexico was because of her desire to study a master’s degree on Middle East studies at El Colegio de Mexico, one of the few institutions in the entire Spanish-speaking world that offers this program. Enrolling in the master’s degree led her to meet her current husband, Adrián Muñoz, a professor of Sanskrit at the same institution. During that period, Yuny gave independent courses on Asian culture at the UNAM, the National Center for the Arts (CENART), and the Universidad Iberoamericana (UIA). Upon finishing her master’s in 2004, she and Adrián went to live in India, where Adrián did research for his doctorate degree, while Yuny took music, dance, and cooking MATERIALIZE YOUR PASSION classes. Her connection with Asian culture grew even deeper, and so did her taste for tea and the culinary arts. They lived in India for a year. When they returned to Mexico in 2006, Yuny felt the need to do something new. She began translating and cooking pastries for friends and family. Gradually, she became recognized for her culinary talents, and the orders started rolling in. At the time, the idea of opening a shop to expand her small business seemed but a distant calling. The ingredients she always used in her recipes were organic, because she preferred their pure flavor. “They don’t have chemicals, or hormones, or contaminants of any kind,” she declares. “For me, it’s not a trend, it’s simply part of my lifestyle. I don’t like buying those harmful products, I prefer to use fresh, quality products, and at the same time, help the local producer.” Customers must like your product. And it’s just as important that they know how it’s made. That was when the opportunity came into Yuny’s life to turn that life vision into a business — a business that was not only successful, but would also allow her to share her values with other people. In late 2007, a friend called to let her know that space for a coffee shop came available in Mexico City’s Coyoacán district. “She told me that some friends had a café, but they had to close it down,” Yuny remembers. She met with them and after the meeting, both parties agreed with the decision. “There was an immediate rapport,” Yuny asserts. The initial investment amount was a bank loan for approximately 120,000 pesos. “We asked the bank and family members for money so we could quickly transfer the business and only use a small sum of cash to invest in kitchen appliances,” she comments. On January 15, 2008, Café Ruta de la Seda opened its doors under the management of Yuny and her husband, Adrián. Café Ruta de la Seda is a café and teahouse, whose specialty is pastries. The items on the menu reflect Middle Eastern and Asian influences, the regions which were once part of the ‘Silk Road.’ The first years after it opened were very quiet, but Yuny saw them as an opportunity to get to know her customers. Coyoacán residents came mainly for something to drink, as they did at the previous café. “Most of them just came for coffee, because that’s what they were used to,” Yuny says. “And so we started introducing the organic concept to almost everyone who stopped by.” In addition to continuing to build relationships with their customers, they also took advantage of those quiet times to research new ingredients and new suppliers. Know and embrace your past. “I consider myself a self-taught person. I began teaching myself French pastry techniques and experimenting with the ingredients. I even started to design my own tea menu,” she comments. It may reveal some clues to the path that you should take as an entrepreneur. Over time, Yuny has had more than 100 suppliers who specialize in the production and distribution of organic products. The selection process is complex, but it is all based on their research. In fact, 90% of their suppliers are Mexican and only 10% are foreign. The main products they import are teas and a line of chocolates. A POLISHED PROFILE “For me, it was the first business class I had taken in my life,” Yuny declares. “When I arrived, I had no knowledge about a lot of things, especially about business management.” SUCCESS STORIES The café started out with the pre-acceleration program. Subsequently, it was selected to be part of the Momentum Project, a BBVA Bancomer initiative and operated in Mexico by New Ventures, which seeks to promote the activities and impacts of social entrepreneurship projects that are aimed at creating social, environmental, and economic value. 41 PHOTO: COURTESY OF CAFÉ RUTA DE LA SEDA 40 SUCCESS STORIES Yuny knows that her relationship with New Ventures has helped her refine her profile as an entrepreneur. Yuny is aware of the fact that she needs to strengthen her business in order to achieve the level of success she wants. “I’m interested in consolidating the company in terms of its basic structures, before thinking about expansion,” she says. “Everything should work like a well-oiled machine.” For ten months, Yuny and her team have been looking for a plot of land in Mexico City to create their own production center in order to increase their production, which would also serve as a point of sale. “Today, I see myself as a passionate pastry chef, because up until just recently, I would introduce myself as a professor of Asian art history,” she says. Only one minor detail is missing from her title: a passionate “organic” pastry chef. ENTREPRENEUR: Francisco Vizcaya COMPANY: FINAE ACTIVITY: Financial institution that offers higher education loans to low-income students INDUSTRY: Financial SOCIAL/ENVIRONMENTAL IMPACT: Granted 6,027 loans to students to study at private universities, totaling 572 million pesos Agreements with 13 private universities in Mexico at over 100 campuses Close to 70% of the students who receive loans, are the first in their families to study a bachelor’s degree 80% of students are from low-income families 42 SUCCESS STORIES You don’t need to be an expert in business to launch your project. But you should enrich and strengthen your passion by gaining knowledge. FOUNDED IN: 2006 ACCELERATED BY NEW VENTURES IN: 2010 INVESTMENT MADE BY ADOBE CAPITAL IN: 2013 Every year, large groups of young people meet at one of Mexico City’s grand public squares to demand their right to study at public university, namely at the National Autonomous University of Mexico (UNAM) and the National Polytechnic Institute (IPN). It is these young adults, who each academic year are rejected by the education system and who demand a solution to education exclusion, which prevents approximately 500,000 young Mexicans every year from studying at a public university. According to Francisco Vizcaya, founder and director of FINAE, this shortcoming at the higher education level is a monumental challenge. “Year after year, hundreds of thousands of young people graduate from high school,” Francisco declares. “Most of them take admissions exams at saturated public universities and are refused.” Few students have the resources to bear the costs of tuition at Mexico’s 1,620 private universities. A major problem like this one creates a major business opportunity. “I’m no expert in education, but what I am, is a finance specialist,” asserts Francisco. “In 2006, it occurred to me that I could help close the gap through a financial business focused on education.” His dream has been more than just reducing the gap in higher education, but eliminating it all together. Up until 2006, Francisco had worked as an executive director of institutional banking at Santander. After he resigned, he started to work on a model on his dining room table: a model in which student loans would be provided to young people who lacked the resources but had the desire to study at a university. He used this scheme to found FINAE, which granted its first loans in November 2007. “At the beginning, our goal was to reach thousands of young people. We wanted to support everyone who was unable to enroll in public university,” Francisco declares. “It later turned out that the model that we had designed wasn’t well received by the market.” And the reason for that was because students and their parents didn’t understand the model’s financial scheme. FINAE’s model involved financing a percentage of tuition and the student paying the rest directly to the university. “We explained to them that we were going to pay interest on unpaid balances while they were studying,” Francisco states. “At the end of their studies, they would have a schedule of incremental payments, but we didn’t know the initial amount because we didn’t know how much tuition would rise.” The model was well-designed, according to the FINAE founder; however, potential candidates didn’t understand it, because most of them were from low-income families. “When in doubt, people shy away.” SUCCESS STORIES Today, Café Ruta de la Seda has an organizational chart, with clear descriptions of everyone’s position and duties, in addition to an operations manual. The whole team now knows what their responsibilities are. HOW TO GIVE CREDIT TO EDUCATION 43 The first point they underlined was her lack of a clear organizational chart. “It’s something I hadn’t prepared,” she admits. Up until now, the business had always been operated under Yuny’s supervision, but the team didn’t understand the extent of her role within the company. “When I wasn’t there, almost everything would start to unravel,” she remembers. “The café would often run out of product because the team didn’t place the orders on time. They simply waited until we sold out of each item.” The situation was compounded by the economic crisis of 2008, which limited resources even further. As a result, in their first two years of operations, FINAE granted very few loans, despite the growing number of students whose university enrolment applications were refused. “We had a very high percentage of people interested, but very few were accredited,” Francisco remembers. PROGRESS IN LOW MONTHLY PAYMENTS embarked on more in-depth research to understand why the service was not well received. Having dedicated over 30 years of his professional life to the financial sector and equipped with experience in helping educational institutions, Francisco remembers an anecdote, which eventually led to the reconfiguration of his financial model. FINAE A representative of FINAE asks the parents of a student who has been recently refused admission to public university: “What is your opinion on loans?” “They are very bad. People only use them when they fall into serious problems, but loans only get you into more trouble,” one of the parents replies. The representative takes a minute to think about the answer, and while he does, he looks around the room. The conversation continues. “That’s a nice television. How much did it cost?” the curious representative asks. “Oh, we’re making small payments for it at Elektra,” the father answers. PHOTO: ANA HOP “At that moment, we realized that our target market didn’t view payment plans as loans,” Francisco states. “What’s more, they understood these plans very well, which would make it much easier for them to make a decision.” 44 SUCCESS STORIES Francisco learned about New Ventures through members of Luiz Ros’s team —the former director of New Ventures’ global operations and the current director of the Opportunities for the Majority program. “We entered into New Ventures’ selection process to see if we were eligible to participate in their acceleration program.” FINAE was indeed selected, and in mid-2010, the team began the process. As part of its program, New Ventures assigned three mentors to work with FINAE. During those eight months of acceleration, Francisco and his team prepared new market studies, developed strategies to reach a larger student population, and strengthen the company’s operating systems, which required a few adjustments. Take a good look at the problems within your immediate environment. For each problem, there is a potential business opportunity. “What New Ventures came to do was to supplement the needs of our company,” affirms Francisco. “It wasn’t that we had a specific problem, but because we were a new company, we lacked the tools which they were able to provide us.” The teams at New Ventures and FINAE worked together to lay the groundwork in order to create a social-network marketing scheme; expand their market capacities; and put the final touches on the adjustments made to the company’s operating systems. “Working with them helped accelerate our maturation process.” The changes made within FINAE and their relationship with New Ventures helped the company build a better image to attract investors. “We were among the first to attend the First Latin American Forum on Impact Investing in 2011,” Francisco remembers. “We had the opportunity to connect with people from a variety of capital funds and we started to build a name for ourselves.” Prior to the acceleration process, FINAE had the support of social impact investors like Oasis Fund and Social Alpha Investment Fund. Upon completing the acceleration program, FINAE received additional capital through New Ventures’ financial division, Adobe Capital. They also managed to build partnerships with major organizations, including KIVA, Oikocredit and the Inter-American Development Bank. “All the support we received from New Ventures allowed us build a better image among investors,” confirms Francisco. “They taught us how to promote ourselves within the market and how to attract other social impact investment funds.” SUCCESS STORIES “Just after we launched the second model, we approached New Ventures,” Francisco remembers. The idea was to take advantage of the organization’s experience in helping to expand companies with a high social impact product or service. 45 Consequently, in January 2010, the company launched its second payment scheme, based on a payment plan that had pre-determined amounts. BUILDING A GREEN COMMUNITY To date, FINAE has provided student loans to nearly 6,000 students. Its goal, however, is to reach hundreds of thousands more. FINAE serves a market that in Mexico covers only 1% of the private university student population. In countries like Colombia, Chile, and the United States, on the other hand, over 50% of university students have student loans. “We are still a long ways away from that, but we’re slowly getting there,” Francisco assures. Francisco has a very clear plan for the future: to create more services designed to provide further support to education in Mexico; to become a financial firm solely for the people (currently, the company can offer other types of loans); and to export their model to other Latin American countries where support in the sector is needed. “The objective is to continue to help young people who can’t get into public university,” Francisco announces. “What we want is for them to receive a quality education and to have the chance to get better employment.” ENTREPRENEURS: Rodrigo Villar Paulina Moreno COMPANY: Las Páginas Verdes ACTIVITY: Promotion of sustainable consumption through communication tools, including the annual publishing of a directory for sustainable products, the EcoFest festival, and the Sector Verde fair for institutions INDUSTRY: Sustainable consumption SOCIAL/ENVIRONMENTAL IMPACT: Informs the population on consumption decisions The Green Pages has a current press run of 150,000 copies Seven editions of green directories, the most recent with a listing of 5,150 companies 46 SUCCESS STORIES Organized five responsible consumption festivals by the name of EcoFest Get to know your market. Sit down with your potential clients and have a good heart-to-heart. Organized Sector Verde, the first fair on sustainable products targeted at institutional buyers Expansion of the project to Colombia FOUNDED IN: 2008 ACCELERATED BY NEW VENTURES IN: 2009 On March 10, 2012, one of the heaviest storms in recent memory hit Mexico City. That day, in the Chapultepec Forest, where the third festival that celebrates the building of environmental awareness and sustainable consumption, the EcoFest, was just getting started, organizers and participants got caught in the middle of the downpour and were forced to withstand the rain for over an hour. When the rain stopped, the aftermath was discouraging. More than half of the festival’s stands were in ruins. Cables were strewn across the ground, the merchandise was sopping wet, and all of the stalls had completely collapsed. “We had hail up to our knees,” remembers Paulina Moreno, the current director of Las Páginas Verdes (or The Green Pages), which is the organization that runs the festival. Virtually in tears, the team debated on whether to cancel the festival, which for the first time, would cover the entire weekend. But, they decided to push on. “We came up with a plan of action,” says Araceli Campos, who was head of the communications department. “We scouted for help among the producers, coordinated the suppliers to rebuild what had been damaged, and sent out a message to the exhibitors.” At 9:30 a.m. the next day, the festival was ready to receive visitors once again. That day, some 30,000 people showed up, making it the most successful EcoFest up until that year. “Now we know that even if the situation is bad, things will always move forward,” says Paulina. THE FIRST PAGES Since it was founded in 2004, New Ventures, the platform that accelerates, promotes, and finances high-impact entrepreneurial projects, has had the challenge of finding projects in environmental and social sectors that would be interested in participating in its acceleration program. The program, which is based on a method that includes mentorship with experts from different industries, has the aim of helping entrepreneurs expand their projects and improve their business models. “It’s been 10 years since we started, and we have never had more than 20 companies interested in participating in the acceleration program at a time,” remembers Rodrigo Villar, the New Ventures director and founder. “It was very difficult to come across companies with an environmental purpose. We didn’t know where to look for them, where to find them.” In 2007, it occurred to the New Ventures team to design a tool that would facilitate the search process and increase the accessibility of sustainable products. The idea emerged in the form of a free directory that they called The Green Pages, in reference to the famous Yellow Pages. SUCCESS STORIES Within Mexico, FINAE is the leading financial firm specializing in student loans and is one of the few companies worldwide that have managed to put the stock market to the service of those at the bottom of the pyramid. “We have become a well-recognized company in the social impact sector,” he declares. “Over the years, we have proven that our model works.” 47 EDUCATION FOR THOSE AT THE BOTTOM OF THE PYRAMID Don’t do things out of force of habit. Question why and how you do things. THE INCUBATION OF A GREEN IDEA 48 SUCCESS STORIES “The main obstacle had to do with a general lack of awareness,” Rodrigo remembers. “It was a very difficult niche to find, primarily dominated by researchers and academics.” One of this study’s results was that buyers of sustainable products were upper-middle to upper-class men and women between the ages of 19 and 59. Since then, The Green Pages has focused on changing that perception. “To be green, you don’t have to spend money,” Paulina confirms. Another challenge is to break the stereotype of the “green consumer,” who is often seen as “a sandal-wearing hippie, dressed in white,” says Paulina. “We want to show that we are all green consumers.” The second step was fundraising, and Milissa and Rodrigo began the process. The first to embrace the project was Fomento Ecológico Banamex, a civil association with the aim of promoting environmental conservation. Other major donations came from Deutsche Bank and Grupo Peñoles. The team had to be creative, because many projects of this type survive on donations. A business model, akin to that of a magazine, was created, which separated the advertising sales of their key accounts from SME advertisers. The team also designed a business exchange model where advertisers were allowed to make electronic transfers instead of having to go to bank branches to do so. In October 2008, The Green Pages published its first issue, and the response was incredible. “Our goal was to have 500 companies and 20,000 directories printed,” Rodrigo asserts. “But in the end, we had over a thousand companies and printed 90,000 copies of the first edition.” That same year, Paulina went to Monterrey, and with the support of Milissa, Paulina convinced nine of the 10 companies she visited to get on board as project sponsors. “That year, Fundación FEMSA joined as a sponsor, and they are still with us today,” she recalls. INVALUABLE LESSONS In mid-2009, as a result of the Bain & Company study, The Green Pages team devised a green festival that would put the general population in touch with sustainable consumption. That was how EcoFest was born. The event was held in Mexico City’s Chapultepec Forest, and it drew some 20,000 people and 90 exhibitors. In the middle of the forest stood a large stage that hosted a variety of musical performances. Attendees watched local artists working with recycled materials. “We gave away almost all of the spaces,” Paulina says. “The vibe was spectacular.” The mistakes made, however, have taught the directing team a number of important lessons. For the first EcoFest, for example, organizers developed and produced a merchandising line for The Green Pages. The results were a disaster. “We made a mistake,” Paulina admits. “We wanted to do something that wasn’t of our expertise.” Paulina also remembers several failed investments. In August 2009, they launched a green discounts card and only one person signed up for it. On another occasion, they leased a toll-free service (01-800-PAG-VERD) and never got a single call. “But, we’ve also learned from New Ventures that when you are building a business, growing as an entrepreneur, or growing as a company, it is good to make mistakes,” she says. “At the beginning of the project, they would make decisions without a clear, long-term strategy,” Paulina confesses. All of that changed in 2011, when the project entered New Ventures’ Strategy Boot Camp, in which four mentors helped them redefine where they were going. SUCCESS STORIES To conduct their exploration, they approached government offices, such as the Ministry of the Environment and Natural Resources. Once they identified the companies, they invited them to be included on the list. Many companies in the first edition are still in The Green Pages, such as Aires de Campo, AliBio, and Creartón. During that time, The Green Pages received support from New Ventures, through a mentorship granted by consultancy Bain & Company. The consulting firm did a study that yielded data on their readership’s socio-economic status, education levels, and consumption habits, and they designed a matrix of potential projects for the directory. 49 “The first step,” Milissa recounts, “was to amass a national database of all small and medium companies that offered sustainable products or services.” Rodrigo goes on to clarify, “The directory’s goal was not to certify if they were truly sustainable. If that had been our lens, we would have been left with a tiny project and a very narrow scope.” After that success, in early 2009, Rodrigo began efforts to professionalize the company. He hired Araceli, as marketing manager, and Paulina, who was only 26 years old, as business director. Nadir Vela remained at the helm of the project. PHOTO: ANA HOP The original team of this initiative included four members: Dania Martínez, who served as coordinator; Milissa Barrena, the current director of key accounts and sponsors; Rodrigo himself, as project manager; and Maricarmen Sierra, an intern. “Why did you print 200,000 copies of the directory?” was one of the mentors’ questions, regarding that year’s edition. Paulina didn’t know the answer. The only thing that came to mind was: “Because that’s the way it was when I BRAND-NAME MEZCAL In April 2012, Paulina traveled to Colombia to expand the horizons of the company. Prior to her departure, she researched the contacts that could be helpful during her trip, by consulting with their Mexican contacts and looking on the Internet. And in December 2012, The Green Pages debuted in South America. This year, the directory’s Colombian version will include 1,200 companies. COMPANY: Los Danzantes The Green Pages’ history is being built by everyone who is and has been part of the team. ACTIVITY: Its mission is to rediscover and celebrate the gastronomic treasures of Mexico through artisanal mezcal restaurants, while respecting Mexican traditions, communities, and the environment. Los Danzantes’ vision is to promote the identity of and love for Mexico “We’ve never remained in our comfort zone,” Paulina announces. “Every year, we come out with something new.” In addition to Colombia, they are also considering operations in Chile or Peru. “We inherited that from New Ventures: always exploring new territory and never settling.” PHOTO: ANA HOP INDUSTRY: Food and beverages, agroindustry Making mistakes is perfectly normal. It is part of our development. SOCIAL/ENVIRONMENTAL IMPACT: Production of mezcal with a sustainable agave-planting program and fair-trade policies for its providers The first mezcal brand with luxury packaging for a premium market Positioning mezcal as a cultured beverage in higher social classes Professional and robust agave-planting program Support in the development of rural economies 50 SUCCESS STORIES FOUNDED IN: 1995 ACCELERATED BY NEW VENTURES IN: 2012 Those who know the Jaime and Gustavo Muñoz twins know that they have entrepreneurship in their veins. By the age of 15, they were selling grapes on kilometer 177 of the Mexico-Querétaro Highway. Over the years, Jaime has had a cement distributing company and was an organizer of athletic events. Gustavo, meanwhile, specialized in finance, worked at a brokerage firm, and at Mexico’s National Banking and Securities Commission. He was also the new-projects manager at Videomax. Their love for Mexico and for Mexican traditions led them to open Los Danzantes restaurant in 1995, in the historic center of Coyoacán, one of the oldest and most traditional districts of Mexico City. The name Los Danzantes refers to the dancers who praised the sun in pre-Hispanic cultures. The cultural heritage of Coyoacán’s main square was perfect for the concept of high-quality Mexican cuisine. “It went really well from the start, and over time, we gradually defined the concept and identity until we came up with what is now known as Los Danzantes,” Gustavo remembers. Jaime and Gustavo wanted to serve Mexico’s iconic drink to their customers: mezcal. “Mezcal emerged from the blending of two cultures, the pre-Hispanic and Spanish cultures, and was born at the same time as an entirely new culture, that of Mexico,” Jaime explains. In the early days, this beverage had a bad reputation among certain social classes. Most mezcal was sold in the same towns where it was produced, without any type of branding or regulation. And it was mainly consumed by the rural classes and was viewed as poor quality. The brothers had to change that perception. In 1997, they bought a former artisanal mezcal factory in Santiago Matatlán — known as the world capital of mezcal — in the state of Oaxaca, and created Los Danzantes mezcal, the first on the market with a dignified presentation for a discerning public. The label clearly presented its ingredients and projected an image that mirrored its quality, all in an effort to earn the confidence of its target consumers. “We wanted to produce our own mezcal, as opposed to buying and reselling. We needed to do it from the ground up,” Gustavo declares. In 1999, they launched Alipús Mezcal onto the market, which “promotes the diversity and native soil of the mezcal-producing regions of Oaxaca,” which includes white mezcals made from agave, produced using traditional methods by local farmers. SUCCESS STORIES One year prior, The Green Pages consolidated its formal business plan thanks to an acceleration process provided by New Ventures. “The fact that both organizations go hand in hand has been invaluable,” Paulina says. “They have opened many doors for us.” ENTREPRENEURS: Gustavo y Jaime Muñoz 51 got there.” After researching the market profile and making some calculations on the target population, a strange coincidence justified the number of copies. “I came up with 199,965 copies, but that was dumb luck,” Paulina says. Even then, the lesson was to question and justify every decision. “Those things are very logical, but in your everyday work, you are doing other things and all of a sudden someone questions something and you later realize that it makes a lot of sense.” A COMPANY THAT’S MORE THAN JUST RESPONSIBLE If something sets Los Danzantes apart from other mezcal brands, it is the company's activism to promote and defend the artisanal mezcal process. A STEADY CAREER For years, some specialists in the mezcal industry have warned that there could be an agave scarcity in the near future due to overexploitation. Jaime, Gustavo, and Marco Antonio also became aware of this, and have fortified their sustainable cultivation strategy. Since 2001, Jaime has lived in the capital of Oaxaca, located in a state whose cultural wealth and traditions have been an influence on Los Danzantes’ vision: to be a company that defends the cultural roots and traditions of Mexico. From Oaxaca City, he oversees the beverage’s production and Los Danzantes restaurant, which opened its doors in 2001. He also supervises La Contra, a mezcal and Mexican wine store that opened in 1999. Since 2009, the company has an agave planting project in an effort to render the company completely self-sufficient in terms of its raw materials, thereby, preventing this type of crisis from affecting the development of the company. “We don’t let ourselves get carried away by the craze of wild agaves; our agaves are controlled under a planting system,” maintains Jaime. “We are concerned about this issue and continue to promote the conscious use of the agave.” It was that year, 1999, when Jaime and Gustavo welcomed Marco Antonio Bernal as a partner to the company, who, up until then, was an employee of the Coyoacán restaurant. “One day, Gustavo told me that we were going to be partners, and that’s how I got a share of the company,” remembers Marco Antonio. “But I earned it through hard work.” Besides being a partner, he is also the administrative director of the restaurants and marketing director of the distillery. Today, as we have seen, Los Danzantes’ vision of social responsibility is clearer than ever. “What’s more,” Jaime says, “we are much more than responsible. Not only do we practice fair trade, we include our partners, who are our suppliers and distributors, in the equation.” PHOTO: ANA HOP PHOTO: COURTESY OF LOS DANZANTES Eleven years after mezcal production began in 2008, Los Danzantes opened Corazón de Maguey, a mezcal bar located across from the restaurant in Coyoacán. The entrepreneurs met with Rodrigo again in Mexico City, where they talked about their proposals on social responsibility, the growing and controlled exploitation of agaves, and the philosophy of Los Danzantes: that the local farmers and distillery workers should be viewed as partners of the company. At the end of the acceleration program, BBVA Bancomer organized a Social Investment Day, during which it was announced that the graduates would receive a loan with preferential conditions. Jaime and Gustavo used the loan to help expand their company and to consolidate its presence on the market. “For us, New Ventures was the start of the institutionalization of our processes,” Gustavo says. New Ventures recommended a list of certain scholarships for which they should apply. The first led them to consulting firm EY. Next, New Ventures encouraged them to participate in the Expansión magazine contest, where, as Gustavo recounts, they met the staff of Endeavor, with whom they are still in negotiations about joining their network. “New Ventures is like a vine: you grab onto one, swing on it toward another, and then another, and another.” SUCCESS STORIES At the event, Jaime and Gustavo met many representatives of the Mexican and international entrepreneurial ecosystem. One of the people with whom they chatted briefly was New Ventures director Rodrigo Villar. “We had never considered the idea of entering an acceleration program,” Jaime says. “In fact, at the time, we hadn’t heard much about this type of program.” Villar invited them to the Momentum Project, a four-month acceleration program for social entrepreneurs, organized by BBVA Bancomer and operated by New Ventures. The entrepreneurs accepted. “They helped us realize that we were, in fact, running a social impact business, but we hadn’t been calling it that,” Jaime admits. 53 52 SUCCESS STORIES In 2012, the twins traveled to Mérida, Yucatán, to attend the Latin American Impact Investing Forum (FLII), an event organized by New Ventures to promote and connect the region’s ecosystem of social and environmental entrepreneurs. The two traveled as representatives of Hub Oaxaca, a collaboration platform for social companies or companies that focus on social responsibility, including Los Danzantes. THINKING OUTSIDE THE ‘HOUSE’ In Jaime’s own words, Los Danzantes is a company that recognizes and empowers its producers, by putting their names and signatures on each bottle and sharing the benefits that come with being part of the company. In 2013, Los Danzantes opened La Mezcaloantojería Alipús, a mezcal bar located in the historic center of Tlalpan, in the southern part of Mexico City. The following year, it opened yet another in the Condesa district, called Alipús Endémico, which offers traditional cuisine and mezcals from other Mexican states. ENTREPRENEUR: Guillermo Jaime Calderón In 1994, when Guillermo completed his civil engineering degree at the Universidad Iberoamericana (UIA), the debt that was outstanding from his studies prevented him from receiving his diploma. COMPANY: Mejoramiento Integral Asistido (MIA) This was not the first time he had problems paying for his education. Years earlier, Guillermo had moved from Mexico City to Monterrey to study a degree at the Monterrey Institute of Technology and Higher Education (ITESM). Four semesters in, he left his studies due to financial issues. Guillermo returned to the capital city and looked for a job in order to be able to go back to school. He began as an intern at ICA, the largest construction company in the country at that time. “I was earning only enough to pay for gas,” he remembers. The only way to earn more money was by graduating. ACTIVITY: Offers to rural and low-income families comprehensive low-cost models for assisted do-it-yourself construction, viable financial options and construction technology Jaime, Gustavo, and Marco Antonio are taking advantage of the frenzy that mezcal is causing among Mexicans, especially the younger generations, since mezcal has become very fashionable. “We didn’t see it coming, we could have never predicted it, but we are pleased to be part of the celebration of mezcal,” exclaims Jaime. INDUSTRY: Construction SOCIAL/ENVIRONMENTAL IMPACT: Helps families who live in rural and marginalized areas to acquire a home, with a payment plan Product innovation lies not only in what you sell, but in how you sell and in who you sell to. Attends to a third of the housing market in Mexico, equivalent to 8.7 million units Its system permits the construction of homes in 13 days and reduces costs by 30% Builds 6,000 homes per year The social impact of a company begins with improving your team’s lifestyle. Has given some 25,000 families access to housing Participated in different rebuilding efforts following natural disasters SUCCESS STORIES FOUNDED IN: 2009 Guillermo graduated, and a former ITESM classmate invited him to work for CEMEX, the main concrete and cement company in the country, which was experiencing frenetic international growth, thanks to its good management and a leveraged procurement strategy. Guillermo moved back to Monterrey. THE IMPORTANCE OF INNOVATION The directors of CEMEX were convinced of the strong correlation between a company’s growth and its innovation. With that in mind, in 1998, CEO Lorenzo Zambrano created a department solely dedicated to innovation. CEMEX trained 10 employees from different areas, and Guillermo was one of them. At the end of his training, Guillermo was selected to be Leader of the Innovation Platform. His new position consisted in looking for business opportunities and presenting them in the form of a business plan to CEMEX directors. “It was one of the best jobs I’ve ever had in my life.” Guillermo presented a project called Construcción Acelerada, which was focused on the housing industry. One of the campaign proposals of the recent President-elect Vicente Fox was to increase by threefold the 250,000 homes that were built each year in Mexico. The project involved attracting and converting housing developers into loyal customers, in exchange for resources for consulting services and construction. 55 PHOTO: ANA HOP 54 ACCELERATED BY NEW VENTURES IN: 2010 Guillermo convinced ITESM dean Carlos Vigil Ávalos to allow him to graduate and pay off his debt in flexible installments. SUCCESS STORIES Los Danzantes maintains a series of commitments with its producers: the company shares its know-how with them to improve mezcal production, it trains them in agave care, it helps them improve their work facilities, and it even assists them with administrative and tax matters. “If it’s hard for us to understand these things, imagine how it would be for them. We can’t just leave them in the dark.” The project was approved, but Guillermo noted that almost all the focus of this public policy was aimed at formal housing. He had discovered that the informal market was just as big, but it was completely unexplored, and decided to begin devising proposals for that sector. In mid-2006, the owner of Mexalit, Guillermo’s main supplier of fiber cement roofs, asked to speak with him. Guillermo didn’t know it was Antonio del Valle Ruiz, one of the country’s most important businessmen, with several companies in the financial, petrochemical, and construction sectors. The purpose of the meeting was to invite Guillermo to become Antonio’s new partner. Guillermo accepted. At the end of a conference he gave about CEMEX, a vendor from the company invited Guillermo to learn about a system developed in Ecuador, which was building homes in 13 days while reducing average costs by 30%. After the acquisition, Antonio offered him the position of CEO of Walltech. Guillermo did not want to go back to being an employee. Up until then, there were two lines of businesses identified in the new project: the manufacture of the construction system (Walltech) and the logistics of assisted construction. With the aim of focusing on the latter, Guillermo and Grupo Kaluz, the company owned by the del Valle family, founded Mexicana de Servicios para la Vivienda (MexVi). Guillermo traveled to Guayaquil to learn about the system, which involved using prefabricated cement and iron walls, reducing the costs of housing construction and rendering the whole process much more flexible. “I fell in love with the system,” he remembers. The project was supported locally by a powerful Ecuadorian businessman, Isidro Romero. Guillermo presented the system to the CEMEX committee, but the project was rejected when it was discovered that the savings generated by the system were in the purchase of the concrete. Guillermo’s efforts to convince the committee to reconsider their decision were futile. Over time, MexVi bought Walltech’s shares and they created a single company. In 2009, two and a half years after having started the company, MexVi had 400 employees and revenues of over US$30 million. In 2002, Isidro invited Guillermo to partner up with him. After considering the proposal, and despite his fears and doubts, Guillermo quit his job, moved to the State of Mexico, and set out on this new stage in his life. Isidro, who held 80% of the company’s shares, also invited César Baquerizo, one of the most important builders in Ecuador. A few months later, Walltech was born, a company that built homes with materials akin to Lego pieces. Instead of bricks, the walls were made with panels composed of two steel mesh sheets, separated by wire frames welded to the mesh. In the midst of this dilemma, the Ignia capital fund showed interest in the company’s capital. The company’s offer was very good, leading Guillermo to sell his stake. Guillermo left MexVi and launched his third enterprise, this time completely on his own. He named his company MIA, Mejoramiento Integral Asistido. The first two months were difficult. “You realize that the life of an entrepreneur isn’t as glamorous as it seems from the outside,” he confesses. 56 SUCCESS STORIES Guillermo drafted an assisted do-it-yourself prototype where residents were given the materials so that, with a bit of training and support, they could build the homes themselves. His most important contract was with the Ministry of Social Development (SEDESOL), with whom Walltech built their first 100 homes in the Sierra Negra of Puebla. It was CEMEX, a company with whom Guilllermo had always maintained a cordial relationship, who had recommended him for the job. His model worked, and soon after the company built another 100 homes in the State of Mexico. With these types of projects, Walltech earned its first National Housing Award in 2005. Even if your idea is rejected by some, trust your instinct and your passion, and make it a reality. PHOTO: SHARY M. FERNÁNDEZ STARTING WITH THE ROOF The first differentiating element of MIA would be its business model. Until then, the housing units that Walltech and MexVi had built were being financed by the government. Guillermo wanted MIA to sell the housing units directly to those who would live in them. SUCCESS STORIES Discussions emerged in the company on where to look for growth. Up until that point, the company’s focus had been on the bottom of the pyramid, but there was a trend among the del Valle family to migrate toward the social interest projects sector, as the majority of housing developers were doing. But Guillermo was still convinced that the true potential was in the low-income population. 57 LAYING THE FOUNDATION PHOTO: COURTESY OF GRUPO MIA When faced with a problem, think outside the box. You may just find the key to move forward. In 2010, MIA participated in Iniciativa Mexico, a reality show where different social projects competed to obtain financing. Guillermo reached the end and won 1.5 million pesos. That was the moment in which his relationship with New Ventures also emerged, since Rodrigo Villar was on the show as judge. participated in the New Ventures acceleration program and consolidated its business model. Guillermo also received support in the preparation of his first sustainability report under the parameters of the Global Reporting Initiative (GRI), which certifies the social impact of companies. MIA One year later, Guillermo won the Endeavor Entrepreneur Prize of the Year, and in 2012, he was one of 20 finalists of the “Entrepreneurs of the Year,” an award given out by Expansión magazine. A few months ago, the state governor of Guerrero invited MIA to participate in the reconstruction of the state after Hurricane Manuel devastated the region. MIA has built more than 100 homes in the community of El Paraíso, one of the most affected. The company is also considering Chiapas, where the government has announced it would build 10,000 new homes. 58 SUCCESS STORIES Recently, Guillermo contacted the dean of his university, who finally approved the completion of his studies. “Without his help, I told him, I wouldn’t have had the opportunity to help others.” is an example of how profitability and social impact can be built alongside one another to create a perfect harmony. MIA PHOTO: COURTESY OF GRUPO MIA COMPANY: Natgas ACTIVITY: Offers and promotes natural gas as a cleaner fuel alternative, mainly for the public transportation sector. Through state subsidies, it finances the conversion and replacement of vehicles. It has a filling station in the city of Querétaro INDUSTRY: Energy SOCIAL/ENVIRONMENTAL IMPACT: Natural gas is the fossil fuel that produces lower emissions of air pollutants This fuel represents a savings of over 50% compared to gasoline It helps reduce the noise created by heavy vehicles More than 750 public transportation units have been converted to natural gas vehicles (16% of the taxis in circulation) A reduction of 400,000 tons of carbon dioxide A total savings for users of over 40 million pesos FOUNDED IN: 2011 ACCELERATED BY NEW VENTURES IN: 2014 In 2008, while Josué Hernández was working in the financial planning department of the company called Gas and Power, he had an idea that he could not get out of his head: why was it that Mexico, with the world’s fourth-largest natural gas reserves, was only using it for housing and industries, but not as a fuel for vehicles? It didn’t make sense not to use this fuel, which would allow car owners to save up to 55%. Natural gas emits considerably less pollutants than gasoline, and in Mexico, transportation accounts for nearly one third of greenhouse gas emissions. Josué’s concern about the issue did not materialize at a specific moment in time. “It was gradual. I did some research and realized that in countries like Argentina, Colombia, and Peru, the use of natural gas as a fuel for vehicles also developed over the course of several years.” The business opportunity was just waiting to be discovered. That year, the largest natural gas distribution company in Mexico reported that 98% of its customers were homes and the rest were industries and businesses. Another sign was that, in Argentina, 17% of the vehicles were using natural gas, while in Mexico, the rate was only 0.04%. What did Mexico need to develop this industry? Over time, Josué started to make his first conclusions: few people were aware of the benefits of using natural gas in their vehicles; Mexico lacked the infrastructure; and there was an absence of political will to provide incentives for its use. A PILOT PROJECT WITH ENVIRONMENTAL IMPACT Josué spent all his free time researching natural gas. He quit his job at Gas and Power and began working at a brokerage firm, Casa de Bolsa Accival, as a fund manager. He also started studying his master’s degree in finance. The more he researched the topic, the more he realized what the success stories in other countries had in common: the active participation of the government and transportation companies. He thought about developing a pilot project that would convey the benefits of this change. The country’s major cities were not a good option, because of their size. And then came up with the idea of conducting the test in a medium-sized city, and he immediately thought of Querétaro, where he spent much of his childhood. Every weekend and on vacations, he would go to Querétaro to “evangelize,” the word he uses to describe the talks he would give to promote the use of natural gas to the local government and the transportation sector, in an attempt to spark interest and to get their support. SUCCESS STORIES The other advantage was that the payments would be in stages. The next phases were building the walls and the floor. “Without realizing it, I was giving poor families the opportunity to attain something they had always wanted and completely within their reach,” he says. ENTREPRENEUR: Josué Hernández 59 The second element was a construction model called “Rural Progressive Housing.” The model involved building the house in stages, beginning with the roof, something rather unusual in the world of construction. Starting with the roof, however, allowed you to use the space immediately, whether as a storage site or as a shelter for animals. “I’ve always liked thinking outside the box.” THE OPPORTUNITY OF CONTRASTS During one of these meetings, Melisa spoke about a plan to install a testing station that would show the conversion in units to MaxiGas’s industrial clients. The station would be located within their facilities and would not be open to the public. “I immediately proposed that once it was ready, we had hoped to have the opportunity to conduct our testing there,” Josué recounts, but MaxiGas refused his request. Find out about your counterparts in other countries. They may show you the path to take. In mid-2011, after about 80 meetings, Josué managed to crystallize what was called Alianza Pro Gas Natural Vehicular, an alliance which included three taxi driver unions. They sent dozens of documents to numerous government agencies, highlighting the benefits of natural gas. This did not imply an outright acceptance of the proposal; however, they were willing to find out more about its benefits for their businesses. At the time, Josué was still working at Casa de Bolsa Accival, but he was spending increasingly more time each day on his project. And at one point, he had to make a decision, and in December 2011, he opted to quit the firm. Oddly enough, before going through with his resignation, Josué found his first angel investor right within the firm: María Fernanda Ramírez, a colleague of his at Casa de Bolsa Accival. “He was always so concentrated on his work, and I thought, ‘it must be amazing what he is doing because he puts so many hours into it,’” María comments. PHOTO: COURTESY OF CONTENIDO NETO PRODUCCIONES PHOTO: COURTESY OF NATGAS Later, Francisco introduced Josué to Miguel Inzunza, the Minister of Transportation in Querétaro, to present to him the economic and environmental benefits of his project. Inzunza and his collaborators warmly welcomed the proposal, but Josué sensed some skepticism from them. FULL-THROTTLE ACCELERATOR Alejandro Violante was a professor within Josué's master’s degree program. He was also a member of the Mexican Institute of Finance Executives (IMEF). Josué thought that perhaps he could help him get the capital he needed for his project. 60 In early 2011, the government itself introduced Josué to the head managers of the local taxi companies. That year, Josué continued his “evangelization” process, but this time, with a more specific goal in mind: to build an alliance that would convince the government that the use of natural gas by transportation companies was in their best interest. Melisa Munguía, regional director of MaxiGas, who had a concession to use natural gas in Querétaro attended some of these meetings. “She is Argentinean, and has shared some of her experience in Argentina with us,” explains Josué. Believe in your idea, despite the obstacles you will have to face and the 80 meetings you will have to organize. “We went to a roadshow event and every investor we met offered us capital to build the first station,” he explains. There were a total of 12 investors who contributed resources to continue with the project. The MaxiGas director, Melisa Munguía, reconsidered her original decision and agreed to lend Josué the testing station that they were using for their industrial clients. “If this is what is going to generate credibility and validate the technology, then please do proceed with the testing,” Melisa told Josué. Josué partnered with Ulises Pérez, a Colombian who had a car shop in Mexico City where they adjusted cars to run off natural gas. “Given that I didn’t have the technical know-how, for the pilot test, I sought out a strategic partner who did,” he explains. SUCCESS STORIES SUCCESS STORIES This discouraging news dashed Josué’s hopes of receiving a subsidy for his pilot project. So Josué decided to adapt his strategy. “If the government wasn’t convinced that transportation workers wanted the change, then, what we had to do was prove to them that not only did they want change, they needed support from the government,” he asserts. Meetings got underway with the transportation drivers, but no major progress was made. Their skepticism about natural gas was a reality, thinking that natural gas would damage their engines. But it wasn’t enough. Josué needed more money to install the first service station and start conducting test. Raising capital was a pressing issue. 61 At this early stage, he first approached Francisco García, the owner of Taxibuses, which is the largest public transportation company in Querétaro. Francisco was a friend of a friend of his father. After presenting him the project, in late 2010, Francisco invited Josué to speak with the company’s drivers. María Fernanda learned about the project during a coffee break and asked Josué if she could lend a hand. “She told me she could invest capital into the venture, and I immediately accepted,” he recounts. “If the project is backed by someone who puts their body and soul into it, that’s more than a guarantee.” WHEN HEALTH AND TRADITION COME TOGETHER ENTREPRENEURS: Esteban and Horacio Olvera COMPANY: Nopalmilli A few months after this meeting, in March 2012, Josué received a call from the Ministry to inform him that Natgas would receive its first subsidy for a much larger pilot project. The subsidy was for 1.2 million pesos, and he would have it by the end of the year. Josué was elated to find out that the government would finally join forces to develop Natural Gas Vehicles. ACTIVITY: Production and distribution of organic nopal Josué had already spent a long time researching different sites for setting up his own station. Once he received the money from the investors, he immediately began construction within an industrial zone of Querétaro, located fairly close to the downtown area. “I decided to design the station myself, with the help of a consultant, because paying an architectural firm was not a possibility for me at that moment,” he confesses. INDUSTRY: Food SOCIAL/ENVIRONMENTAL IMPACT: Produces 120 tons of organic nopal per year It was in December 2012 that Josué finally quit his job at Casa de Bolsa Accival. And in April 2013, he inaugurated his service station. One month later, Natgas formally began its operations. Promotes agricultural work, employing 56 people in a marginalized, rural area In early 2014, Natgas received a visit from Rodrigo Villar and Erik Wallsten, members of New Ventures. “I knew it had something to do with my business project, but I honestly didn’t really put two and two together,” he comments. Yet again, it was Alejandro Violante, Josué’s professor, who put them into contact. Instead of hiring temporary workers, it hires them permanently, since natural foods require constant supervision Natgas entered the Momentum Project, a New Ventures acceleration program and a BBVA Bancomer initiative, which offers mentorships and consulting services. Upon completion of the program, participants are eligible for a bank loan with preferential terms and conditions. Its workers have access to a café and earn an above-average salary FOUNDED IN: 1995 The process took place from May to October 2014. “Working with New Ventures has meant having several pairs of fresh eyes,” exclaims María Fernanda. “Sometimes, we are just so worn out from working on the project that we miss a lot of things.” ACCELERATED BY NEW VENTURES IN: 2010 62 SUCCESS STORIES Some 15 months into operations, Natgas has converted 16% of all taxis and another considerable percentage of public transportation vehicles in Querétaro. Natgas has yet to recover its investment, but this year alone, the company has already reached a positive cash flow. Today, Josué is planning to expand his project. He wants to open a second station in Querétaro and penetrate the San Luis Potosí market. “Our goal is to participate in every Natural Gas Vehicle project across Mexico, whether it is about consulting services or working with the government and transportation workers; if the Natural Gas Vehicle project becomes part of national policy, we want to be the first on their radar,” Josué explains. One of the things that Esteban Olvera remembers most about growing up in the 1950s was that there were many elderly people in his neighborhood and that everyone was in good health. After high school, Esteban studied medicine and became a trusted physician within his community, located in Milpa Alta, a low-income district in the southern part of Mexico City. By that time, the circumstances were very different from his childhood memories. The neighborhood had fewer elderly people than he remembered, and his clinic was full of young people with ailments that were affecting their quality of life. In his opinion, there were several problems at stake, but one of the biggest was the change in the quality of the food that the people within his community were consuming. The first issue was the intensive use of chemicals in farming, and the second, were the additives and preservatives used to process these products. From that moment on, he constantly asked himself: “How can I help improve the health and living conditions of my community?” In 1995, he decided to start producing organic nopal, alongside his son Horacio, who was studying agronomy at the time. They chose the nopal — an edible, fleshy type of cactus — because it was affordable for the majority of people. “We thought that health shouldn’t be exclusive to those who can pay for it,” Esteban asserts. “Besides, health starts at the mouth.” The first farm was half a hectare, planted on a plot of land he had inherited from his grandparents. Esteban admits that, at first, they saw farming as a hobby and as an additional source of income. “We made the entire process organic, but we weren’t certified as organic producers because we didn’t see the need at the time,” he remembers. Nopalmilli operated this way for 15 years. Like any family business, Esteban and Horacio sold their products to the Central de Abasto wholesale market in Mexico City, at the Centro de Acopio nopal co-op in Milpa Alta, and for a few years, they also worked with the retailer Carrefour (now called Chedraui). And in 1999, it was Carrefour who helped them get their first certification under the “Carrefour Natural Quality” label. But in 2003, Nopalmilli stopped selling to the retailer. Horacio had been in charge of sales but stopped to study a master’s degree in agricultural sciences. His father, meanwhile, continued working as a physician. “We didn’t have a fixed clientele, we didn’t invoice, we didn’t have any type of formal administration,” Horacio remembers. PHOTOS: COURTESY OF NATGAS SUCCESS STORIES The pilot project that he had initiated months earlier, along with the pressure he had been putting on the government for their support, finally started to bear its first fruits. Sergio Tapia, the Minister of Sustainable Development, met with Josué and his team. “He told us he viewed the project as very viable, and he couldn’t envision any problems finding money.” 63 The first test involved three taxis, one from each participating union, as well as a public transportation bus. Natgas used the MaxiGas mini-station all day. Make strategic decisions and pinpoint where your investments will achieve the highest yield in the long-term. LIVING THE DREAM In 2006, Esteban and his son suddenly had the urge to revive their nopal project, and they came up with the company, Nopalmilli, marking the beginning of their formal enterprise. “A good friend of my father, who speaks Nahuatl, was the one to give us the idea for the name,” Horacio remembers. Nopalmilli means ‘field of nopales.’ They started out by processing nopal, producing pickled and marinated nopales, but after six months, they were still not making a profit and decided it was best to return to the production and sale of fresh nopal. “We had to stop production,” Horacio says. “We were producing 100 tons of processed nopal, but only selling 10. The rest we were forced to put in storage.” For over a year, Nopalmilli returned to its first system, selling informally, whenever they could. Esteban was still working at the clinic, although he did so increasingly sporadically, and Horacio worked at the Ministry of Agriculture. “Each of us had our own careers, so we didn’t really see the company as a way to make a living,” Horacio explains. At the end of 2007, they met Aires de Campo, a company that distributes organic food. “We were introduced to them by a former buyer at Carrefour,” Horacio says. “They approached us and we immediately signed an exclusivity agreement with them.” CHANGE OF COURSE One day, Horacio got a call from Guadalupe Latapí, director of Aires de Campo. The purpose of her call was to invite them to participate in an acceleration process with New Ventures. “We made an appointment to meet at her office, and there, she told me about an opportunity with an organization that was helping companies like ours,” Horacio remembers. With no formal customers or a defined business plan, upon their first encounter with New Ventures, Esteban and Horacio were asked to think about where they wanted to take their business. “During this first meeting, they told us that we couldn’t have just one client. One client can make you expand just as fast as it can make you crumble to the ground,” Horacio remembers. Both Horacio and Esteban felt they had to focus more of their attention on the company, which is what led Esteban to close his clinic and Horacio to leave his government job, dedicating themselves fully to Nopalmilli. SUCCESS STORIES One of the basic lessons they learned was calculating their production costs. Up until then, Esteban believed that expansion meant buying more plots of land, but the mentors, assigned by the New Ventures acceleration program, called into question that idea. For instance, buying more land would mean not having the money to invest in production. Their recommendation was they start by renting land to use for production, and then later, if the time was right, they could buy the land. To date, Nopalmilli owns four hectares of land and rents two. 65 “We arrived at their offices and met with the director of New Ventures, Rodrigo Villar, who went into more detail about the organization,” Horacio explains. Soon after, Nopalmilli started the New Ventures acceleration program. “When we began the process, we started to realize that Nopalmilli, as a business, had to be profitable,” Horacio admits. PHOTO: SHARY M. FERNÁNDEZ 64 SUCCESS STORIES The following year, in 2010, Horacio got another e-mail from New Ventures. In the message, New Ventures informed them that, after reviewing their project, the organization was interested in building a formal partnership and extended an invitation to participate in the acceleration process. A COMPANY WITH A VISION FOR CHANGE Now equipped with a well-structured business model, the father-and-son duo started to create a good reputation based on the quality and professionalism of their work. Instantly, a former client sought them out and they began working with Chedraui, the brand that had bought out Carrefour. Among the other formal and noteworthy clients they took on at that time, there was Costco and Green Corner, a restaurant and supermarket chain that sold organic products. In addition, Horacio and Esteban signed an agreement with Rancho Medio Kilo, to whom they now supply 400 tons of nopal every year. If you have an idea for a small business that you want to pursue, take the time to give it your all. Nowadays, instead of following their old motto, “whatever comes along is fine,” Nopalmilli works toward meeting set objectives and deadlines. Last year, for instance, they had planned to buy a trailer, to solve some of the logistic problems they were having, as well as a plot of land. Both goals were met. SUCCESS STORIES ACTIVITY: Ophthalmic services and ocular surgeries in Mexico City for the general public, with preferential prices for low-income families SOCIAL/ENVIRONMENTAL IMPACT: Ocular surgeries for low-income families, who are charged a third of the market price Partnerships with foundations that subsidize part of the surgeries, including the Televisa Foundation, the Cinépolis Foundation, and charity pawnshop chain Nacional Monte de Piedad “We are not in the business of stealing other’s clients. If a producer can’t meet the client’s needs, we can step in to help. But if things are going well between the producer and the client, there is no reason for us to interfere,” Horacio declares. “The problem with farmers is that none of them goes out to look for their own market. All of us are watching to see who is selling to who and then flock toward the same buyer.” 66 COMPANY: Salauno INDUSTRY: Health A few months ago, Horacio spoke with a buyer from Walmart, who manages the Vips restaurants, which are under the ownership of the major retailer. When the buyer mentioned that Walmart was already purchasing nopal from a neighboring producer, Horacio immediately suspended negotiations. In three years, it has attended over 85,000 patients and has performed over 8,000 cataract surgeries Today, the Olvera family agenda is focused entirely on Nopalmilli’s operations. In addition to taking care of their existing clients and to seeking out new ones, they are now keenly interested in expanding their knowledge and in obtaining quality certifications as an organic nopal producer. “At the moment, we are working on the Mexico Supreme Quality certification. We have already earned two: one which is valid in the United States and the other, in Europe,” Horacio boasts. After six years since the company was first founded, the production of organic nopal is not just another source of income. With 56 staff members, Nopalmilli is now a fully-fledged company, run by two entrepreneurs, Esteban and Horacio, who have proven that there is a growing market for organic products. ENTREPRENEURS: Javier Okhuysen Carlos Orellana Won the National Entrepreneur Prize in 2014 FOUNDED IN: 2011 INVESTMENT MADE BY ADOBE CAPITAL IN: 2014 PHOTO: COURTESY NOPALMILLI When Javier Okhuysen and Carlos Orellana started talking about the idea of creating a new company — an ophthalmological clinic for low-income patients — they were flooded with words of caution and criticism. The first argument was that they would be competing against the medical industry, which is widely known to be one of the most protective. The second argument was they would be competing against them at lower prices, which in the health sector, tends to raise suspicions among patients and could lead to a loss in credibility within the medical community. Despite the warnings, the entrepreneurs moved forward with their plans and created Salauno, a clinic that provides cataract surgeries at a third of the cost of the market average, made possible through a very efficient process. With this project, they are able to attend to a population that cannot afford the treatments that already exist on the market. Equipped with a unique business model and social vision, they stood out as a rarity within the medical field. “We had a difficult time in the beginning. The physicians we wanted to hire would hear rumors among their colleagues and walk away,” Carlos remembers. “But somehow, we knew that was going to happen. So we just accepted it, focused on our business, and moved on.” The story behind the creation of Salauno began in 2005, when Javier and Carlos, engineers by profession, met while they were both working at a bank in Madrid. Carlos had recently read The Fortune at the Bottom of the Pyramid by C. K. Prahalad, a book on how to solve the world’s problems through responsible models and companies based on social philosophies, as opposed to philanthropy. The case in the book that particularly drew his attention was an ophthalmic clinic in India, whose model was focused on attending to low-income households. “Why doesn’t that exist in Latin America if we need it as well?” Carlos asked himself. Javier and Carlos knew nothing about medicine, but they did know that the medical industry had everything they needed to embark on the project they had been dreaming about: a financially profitable company that, at the same time, would have a positive impact within society. The desire was there, but the project lacked experience and maturity. Carlos traveled to California to study a master’s degree and Javier went to work in London. The time to think and new life experiences helped them give form to a project that would fit Mexico’s context. They spent the summer of 2010 to conduct more formal market surveys in Mexico, speaking with businessmen and doctors who could advise them. In early 2011, Javier and Carlos traveled to India, where they spent five weeks at the ORBIS Hospital, learning about how it worked, what business model they used, and the philosophy of its founders. SUCCESS STORIES COMPANY 67 A FULL-FLEDGED They returned to Mexico and began setting up their company, and in March 2011, Javier and Carlos founded Salauno. “We wanted to make a brand that would allow us to provide visual healthcare, but also allow us to explore other specialties in the future,” Javier explains. “We chose a clean, easy-to-remember name: ‘Sala,’ which means ‘room,’ a place where you’re comfortable and happy, and ‘uno,’ which means one, because we want to be the number one in quality, attention, and service.” The solution came with the Cinépolis Foundation in April 2011. Javier contacted his friend Gina Badenoch, who created the Fundación Ojos que Sienten (“Eyes that Feel Foundation”). Javier mentioned to her that he needed a “They were very willing to help,” Carlos says. “That same month, we signed an agreement with them to do 100 surgeries per month: Cinépolis would fund the surgeries and we would perform them.” In the first month, they did only 75 of the 100 surgeries included as part of the agreement. Over time, they soon became the company that would practice between 35% and 40% of the program’s surgeries, the equivalent to 120 surgeries per month. Their partnership with Cinépolis Foundation gave them the impetus they needed to open their first clinic in Mexico City, in August of that year. “The lesson is that when you have a new project, you need to look for people who are aligned with your mission. The people at Cinépolis weren’t looking for financial gain, they were seeking people who were doing what they were looking for, and they saw that in us.” Salauno was forced to fire 10% of its staff, it closed down its Vision Centers, and restructured the company, focusing more on the commercial aspect and promoting unsubsidized yet low-cost services. They had met Erik two years earlier, at the First Latin American Impact Investing Fund (FLII), when they were just creating Salauno and the investor had just created the fund. “When we embarked on negotiations, Seguro Popular had just taken us out of the picture and we were forced to create affordable services without government support,” Carlos remembers. “One of the first things that New Ventures helped us with, was finding a way to do that.” In May 2014, Javier received a call from the fund. Finally, they were going to receive resources, but not just from New Ventures. They were going to receive financing from the World Bank, which they had once considered when examining an investment option through the International Finance Corporation (IFC). Don’t give up on your project because of criticism. Keep an open mind and only hold onto the advice that you can apply to your project. PHOTO: ANA HOP 68 SUCCESS STORIES Before jumping into building a physical clinic, they first needed to ensure that they would have patients. “We needed to build an initial alliance,” Carlos says. “It is perfectly normal. At the beginning, no one knows you and you don’t yet have a roster of patients, so before opening our clinic and hiring our staff, we had to make sure that we would have work.” partner and she proposed that he get in touch with Lorena Guillé, the executive director of the Cinépolis Foundation. The entrepreneurs were lucky: the foundation was looking for people to help them with a program called Del Amor Nace la Vista (“Seeing Comes from Love”), in which people with cataract problems are diagnosed and offered surgery at no charge. Salauno hired more staff and bought new medical equipment. It also opened 15 Vision Centers, offering consultations and diagnostics in Mexico City to detect vision problems in patients. But in February 2013, the Seguro Popular removed this surgery from its services, and that changed everything. “These surgeries were a very important part of our income. We had invested a lot in that area, and all of a sudden, all of that collapsed,” Carlos laments. In mid-2013, Javier and Carlos began looking for capital. They then remembered Erik Wallsten, the director of the impact investing fund, Adobe Capital, which is the financing division of New Ventures. “I think we were both looking for each other,” Javier adds. “They liked our model and we liked their investment profile, and them as people.” SUCCESS STORIES “It was a very inspiring trip,” Carlos remembers. “There’s a lot of information on the ORBIS Hospital, but what surprised us most was its service-oriented culture, and everyone was so eager to create change. No book can teach you that. We lived it.” The year 2012 started off well. A few years earlier, the federal government had launched Seguro Popular, which is an assistance program that offers free medical services to low-income families and to anyone who is not covered by social security. The Seguro Popular included cataract surgery as a free service for the community, and in June 2012, Salauno began conducting these surgeries. The first month they performed 20, the following month, 40, and in January 2013, they did 250 surgeries. 69 PHOTO: COURTESY OF SALA UNO A BLURRED VIEW Some members of the Adobe Capital fund are part of the directing board, who helped them to improve their corporate governance and to make better decisions. campaign (“A Goal for Mexico”), from the same foundation, whose services include cornea transplants and care for other visual ailments for low-income patients. The company has just opened a new center in Mexico City, a center that diagnoses vision problems and refers patients to their clinic, as it did previously with their Vision Centers network. “We are slowly extending our collaboration networks with one objective in mind: to have a greater social impact and improve the quality of our services,” declares Carlos. In 2014, Salauno was one of 12 projects to win the National Entrepreneur Prize, given out by Mexico’s National Entrepreneur Institute (INADEM), an entity run by the Ministry of the Economy, which promotes and finances entrepreneurial projects. Javier and Carlos both recognize the importance of having more and more physicians joining this vision of change toward increased social responsibility, a vision that has helped their own company grow. And above all, they want to continue to help more and more people see the world with clarity. Similarly, the clinic has an agreement with the Televisa Foundation, which includes free surgeries in exchange for advertising. It is also involved in the Un Gol por Mexico FERMENTING A GRAND IDEA ENTREPRENEURS: Camilo Pagés Alex Eaton When the jury of the 2010 BiD Challenge International unanimously announced Sistema Biobolsa as the entrepreneurial project of the year, founders Camilo Pagés and Alex Eaton were ecstatic. COMPANY: Sistema Biobolsa This comes as no surprise, because the contest is one of the most important in the region. It is organized by Business in Development (BiD), a Dutch foundation whose aim is to link profitable and innovative projects located in emerging markets, with investors from around the world. ACTIVITY: Rural company that manufactures and distributes biodigester systems for the rural sector INDUSTRY: Biotechnology If you have already found a business opportunity, have a look at those who are doing it successfully in other parts of the world. SOCIAL/ENVIRONMENTAL IMPACT: Biodigester system converts organic waste from homes or farms into methane gas, which can be used as a fuel in domestic or production processes The biodigester also produces biol, a highly efficient organic fertilizer The contest that Camilo and Alex won was for their business plans. And the entrepreneurs’ project was a company that manufactures and distributes biodigesters, on a small scale, for the rural sector. Biodigesters are sealed bags, which biogas and organic fertilizer are produced by fermenting livestock manure and adding a certain amount of water. The prize was 10,000 euros, which Camilo and Alex could use to incorporate their company and design a website to show the features of their product. “It was a long process of making small advancements, step by step. In each phase, we incubated the company and worked toward improving our proposal,” says Camilo. “We always had a clear vision. We knew that Sistema Biobolsa was a project that would win competitions and be very successful. FOUNDED IN: 2010 ACCELERATED BY NEW VENTURES IN: 2012 Winning the BiD Challenge gave them the opportunity to present their project to a few angel investors, including Lennart Grebelius, a Swede and the owner of investment fund Sätila Holdings, which supported projects focused on the bottom of the pyramid. The investor bought 30% of the capital from the company for US$200,000. “That’s how we began to operate in January 2011,” Camilo says. PHOTO: ANA HOP In fact, his thesis was on biodigesters. According to his research, biodigesters played a very important role in reducing greenhouse gas emissions while improving the living conditions of small farm owners in Mexico. 71 70 SUCCESS STORIES In 2009, Alex was the director of the Biogas Program at the International Institute of Renewable Resources (IRRI), a civil organization that develops and promotes initiatives involving renewable resources for the rural community. Soon after, Alex finished his master’s thesis at Humboldt State University. SUCCESS STORIES FROM THESIS TO MARKET However, given that IRRI is a non-profit organization and was mainly interested in research and development, the biodigesters of this program could not be sold. In 2008, Alex was looking for a partner to create a company that would expand the use of biodigesters. Ilan Adler, Alex’s predecessor in IRRI management, introduced him to Camilo, who was working as a social marketer for other companies and had experience in the field of environmental products thanks to a business his father had. “Alex invited me to the project because I already had the skills to manage the manufacturing part,” Camilo says. They used the IRRI facilities to manufacture 10 systems. “The project brought us about 300,000 pesos,” says Camilo. “With that, we paid for the project and we used the earnings to live for a few months.” The event comprised a televised contest, in which 20 social projects competed in a type of reality show, hosted by the country’s main TV personalities. The categories included: quality of life, community development, environment, justice, and human rights. Among the 20 participants, the viewers selected five finalists who defended their projects on broadcast television. The winner received 2 million pesos and the four remaining competitors would each win 1 million pesos. As soon as the project submission period began, Alex and Camilo didn’t hesitate for a second to register Sistema Biobolsa. “We knew the impact and potential of our project. There wasn’t anything like it,” Camilo exclaims. But unfortunately, their project wasn’t among those selected. In 2011, they tried to enter again, and this time it was accepted. Their participation in the contest opened many doors for Sistema Biobolsa. “We were able to meet people, to see society,” he says. “Since it was a project within Iniciativa Mexico, people were able to identify with us and were able to learn about this technology.” As a result of the exposure they gained, during a conference they gave at the University of Puebla, a professor from the Agribusiness program and representative of the Tlaxcala state government invited them to participate as suppliers within the state’s rural development programs. Since then, Tlaxcala has become the number one state with the most small-scale biodigesters in all of Mexico. During the five-month acceleration process, in 2012, New Ventures helped them shape the company that it is today. For example, New Ventures suggested they rethink the Loans Fund, a program whereby the company lent money to its customers so they would buy the biodigester. “They suggested that we separate it from the normal operations of the business, which was selling biodigesters,” Camilo clarifies. At that time, they didn’t see it as an urgent issue, and taking that step meant investing resources they didn’t have, in addition to the fact that they would be introducing a new structure within the organization. However, the company is now in a better place to make these changes, and this year, they will separate the two activities. In 2012, a few months after finishing the acceleration program, Camilo got an e-mail from New Ventures, informing him of a technical assistance program for high-impact projects, sponsored by the Multilateral Investment Fund (MIF), which is administered by the Inter-American Development Bank (IDB). “We have always been registering for those types of grants. We saw it as yet another one, but we also realized that it had a lot of potential,” Camilo says. New Ventures helped with the communication and invited them talk with the IDB staff. The process lasted for about a year and a half, with interviews and due diligence. In May 2014, they finally signed the agreement with IDB, and during the next 18 months, they received grants totaling US$260,000, which they used to develop strategic areas in the organization. Their goal was to position themselves within the industry, which would allow them to continue to receive financing from the bank. To date, Sistema Biobolsa is the market leader in the installation of biodigesters in Mexico. It operates in 20 states, as well as other countries in the region, including Nicaragua, Honduras, Costa Rica, and Haiti. “Our objective is to reach an annual rate of 10,000 biodigester installations within the next four or five years,” Camilo declares. This is just one aspect of what a young company and a bag of manure have achieved. A good way to do it honors is the tagline of its logo: “There’s no waste, only resources.” Consider having another look at ideas that have impassioned you in the past. One of them could be a good idea for a business. Tlaxcala was the first, but the last. Months later, the governments of Querétaro, Hidalgo, Morelos, and the State of Mexico, came on board. That same year, they set up their regional office in Puebla. “It was a strategic move, mainly because of its proximity,” Camilo explains. PHOTO: ANA HOP 72 SUCCESS STORIES Camilo and Alex partnered up and formed Buen Manejo del Campo, which is the company’s official name. Together they prepared a business plan, and in 2009, Orgánica, a partner group of IRRI that is dedicated to promoting and selling projects of an ecological nature, invited them to participate in the installation of 10 biodigester systems, together with the state government of Puebla. That was their first contract. As part of Mexico’s Bicentennial of Independence and Centennial of the Revolution in 2010, the largest media companies in the country organized Iniciativa Mexico, with the aim of “reviving and celebrating a dynamic and entrepreneurial Mexico.” Tania Esparza, director of Iniciativa Mexico, introduced Camilo to Rodrigo Villar, founding partner of New Ventures. That would mark the start of a relationship in which Sistema Biobolsa would begin its acceleration process. SUCCESS STORIES The source of his interest in the topic emerged a few years earlier, when he was involved in the project called Biogás Mexico, which he co-founded in 2004. The project’s purpose was to support the individual efforts of Catallana Nambo, a woman from Michoacán who pressured the local government to disseminate and promote the use of biodigesters in Mexico after having learned how to use them in Colombia in the 1990s. The first Biogás Mexico project was the installation of a biodigester, in June 2006. A FACTORY THAT BUILDS BUSINESSES AND DREAMS ALCHEMY IN THE FIELD 73 Alex’s explanation was that by using manure as the base ingredient, biodigesters would reduce the risks of contamination from water pollution, unpleasant odors, and insect populations. And by producing biogas and biofertilizer, users also saved money on supplies and helped fight greenhouse gas emissions from the burning of trees. “In order for impact investing to achieve its full potential, we must collaborate to create a scalable, profitable business model that will permanently solve one of the many social and environmental issues we face today. Only then, will this success case prove impact investing’s effectiveness to solve the world’s most pressing social and environmental challenges and transform the way that we create wealth and do business.” Research and writing were overseen by Carolina Lomelí from New Ventures, and by VenturaMx including Aminetth Sánchez, Selene Mazón, Alejandro Maciel, and Adolfo Ortega. Designed by Na Sodio, including Shelly Balas, Gabriela Bustillos, Iñaki Bustillos, Cristina Robles, and Tania Villalobos, with the Big Caslon and Avenir fonts. Translation made by Bronson Pettitt and style correction made by Paige Mitchell. 75 NEW VENTURES: 10 YEARS CATALYZING SOCIAL AND ENVIRONMENTAL COMPANIES was translated on June 2015, Mexico." SUCCESS STORIES Antony Bugg-Levine, CEO of the Nonprofit Finance Fund and pioneer of impact investing, while addressing a group of social entrepreneurs at New Ventures. 76 SUCCESS STORIES