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21 October 2014

When venture capital meets quinoa 

The microfinance industry, which makes low-value loans to self-employed people and owners of very small businesses to enable their purchase of productive assets, is usually associated with farmers in emerging countries in Asia, Africa and Latin America. Venture capitalists, by contrast, tend to be looking for the next Google, Facebook or Skype in Silicon Valley or Europe.

Geneva-based Impact Finance, which makes loans averaging $560,000 to small businesses, mostly in the agricultural and food processing industries, is somewhere in the middle.

According to Benjamin Firmenich, one of the firm’s three partners, they aim to reproduce the success of debt funds in lending to smaller companies.

Impact Finance’s role goes beyond pure financial support and includes boosting the production capacity and market access of small producers. Using a tool they developed in-house called the Kharmax Impact Monitoring System, the partners measure projects against criteria including working conditions, respect for human rights, environmental impact and good governance.

Typical clients are Anka Food, founded by a Turkish-origin entrepreneur, which exports hazelnuts from more than 700 producers in Georgia around Europe; Boréal, a Geneva coffee roaster that buys beans directly from co-operatives in Latin America, Indonesia and Ethiopia; and Inagrofa, which trades in quinoa in Bolivia and Ecuador.

Firmenich says the firm’s philosophy is to return banking to its origins as a provider of entrepreneurial assistance extending well beyond finance. Set up three years ago, Impact Finance currently has $19 million in assets invested in the Luxembourg fund from which it distributes loans. With the support of a new institutional investor this year, its aim is to reach $35 million in 2015.