Interview with Alberto Gómez-Obregón - Managing Partner of CO Capital
Co Capital is a Mexican impact fund, a founding member of Latimpacto, that works in Latin America to scale early-stage social enterprises that seek to reduce inequality and poverty, mitigate climate change and promote gender equity.
The fund was born out of CO_Platform, an ecosystem builder that has been operating since 2012 and is redefining the meaning of capital success; aligning financial returns with positive social and environmental impact. Today CO is a B-certified company in the process of raising $7 million, already committed by local investors.
It has been included in the ImpactAssets 50™, in the Emerging Impact Manager category. The AI 50 is the most recognized database of impact investment fund managers and is a gateway to the world of impact investing for investors, financial advisors and philanthropists. It was also included in the Transformative 25 of Integrated Capital Investing 2022, a regular list of funds, banks and initiatives that are demonstrating the power of capital to reimagine the financial system and make it work for people and the planet.
Photo taken from www.nvgroup.org
More recently, CO Capital was included in Best For The World 2022 Lists among more than 5,000 companies in at least 80 countries, this list recognizes the top-performing B Corporations that create high impact through their businesses.
We spoke with Alberto Gómez-Obregón, Managing Partner of the fund, about his work and the achievement of these important awards.
Latimpacto: What does Co_Capital do differently that led it to obtain these distinctions?
AG-O: in recent years there has been a trend of impact and impact investing. There are many funds in the world that bring these strategies, however I think what makes us different is the depth and rigor with which we invest:
- We set out the impact thesis through which we want to invest.
- We do impact analysis before investing in companies. We get into the detail, understand their theories of change and if they do not have them well developed, we help them to develop and clarify them; to better understand their metrics for impact and to propose them if they do not have them developed.
- We include clauses or provisions in legal contracts, which align our capital to be allocated to activities that have an impact.
- We do an impact rating of the companies we invest in and monitor them during the life of the investment. Private equity funds make a distribution of profits at the end, both to the investors and to the manager. In most funds this distribution is given by the achievement of the financial return, in our case, this is measured in addition to the financial return, by the fulfillment of an impact rating. There are economic incentives aligned to the fund achieving impact.
In conclusion:
- We set out the strategy.
- We conduct in-depth impact analyses.
- We monitor throughout the life of the investments.
- We qualify investments and align incentives.
Our intention with this fund is to demonstrate that through market solutions it is possible to combat social and environmental problems and our investors are aligned with this premise, they want to learn how to do it and use their capital for this purpose.
Additionally, we believe in collaboration and community. We have learned in our career, from sister organizations like Latimpacto, what it really means to invest with and for impact and have integrated it into our practices. This intentionality has led us to take impact with the same importance that financial returns are taken with in investment funds.
Latimpacto: Why invest in funds like Co_Capital that put impact at the center?
AG-O: Because it is the right thing to do. The economic systems that have developed since the beginning of humanity are extractive not only of the resources of planet earth, but also of people's labor: from slavery (as in the cocoa value chain) to bad labor practices (precarious wages). We have to change these systems because we already see their harmful effects on the environment, on society and on the people who suffer from them.
What we are trying to propose, from funds like ours, is a new capitalism. We use the tools of this economic system such as the strength of markets, bringing products and services and integrating supply chains, but in a conscious and appropriate way so that the value is distributed correctly among all stakeholders and not only among a few. It is also an evolution of philanthropy, because philanthropy is not self-sustaining and can create circles of co-dependence, so it can be harmful.
Therefore, models that treat you as a customer, offer you opportunities and allow you to buy productive assets (which is the only way we believe poverty can be overcome) are more sustainable proposals that seek to improve the quality of life of people who have been neglected by the economic system. At the same time, they allow us to be less extractive with natural resources that are very limited.
Latimpacto: A practice to share with peers in the region who want to learn from Co_Capital.
AG-O: Going back to the name CO (COlaboration + COmunity). We are operating within complex systems, where there are many interests of individuals or corporations that do not want things to change and the status quo because it benefits them, even in the short term.
There are many opposing forces and therefore we must work multidimensionally to achieve systemic change. The only way to achieve this is to collaborate and we follow this practice almost philosophically: we work with transparency, openness and collaboration. We do not see other investors in this sector as our competition, we see them as our allies.
We know that our resources will never be enough, so we always invite other funds to co-invest with us; likewise, if an investment does not work out, we share it openly so that others do not make those mistakes and can turn around situations that were not successful for us. It is through working together that we can really bring about change.
