OBJECTIVE OF THE CALL
Through its investment in Venture Capital (VC) funds, IDB Lab seeks to contribute to tackle critical barriers for greater development impact and social inclusion with a special focus on poor and vulnerable populations across Latin America and the Caribbean (LAC), bridging key financing gaps in countries, sectors and business models in which there is an unsatisfied demand for investments from early-stage entrepreneurs.
IDB Lab is launching this Call for Proposals for investment management firms seeking IDB Lab´s equity financing for VC funds with focus on LAC.
For more information please read the guidelines.
CRITERIA FOR ELIGIBILITY OF FUND MANAGERS
Fund managers who wish to participate in the selection process must comply with the following key requirements:
ALIGNMENT WITH IDB LAB´S INVESTMENT THESIS. IDB Lab seeks to invest in VC funds aligned with at least one of the following four approaches:
- Nascent and Emerging Ecosystems. Funds investing primarily in nascent or emerging early-stage ecosystems such as Central America, Caribbean, and selected markets in South America -such as Peru, Ecuador, Paraguay, Bolivia, and Uruguay.
- Regionalizing Funds. Funds with regional strategy, which in addition to targeting more developed early-stage ecosystems include nascent or emerging ecosystems to promote regional integration and knowledge transfer from more mature to emerging VC markets within LAC.
- Sector Specific Funds: Funds specializing in high-impact investments and sectors with pronounced structural capital gaps resulting from unmet demand by early-stage entrepreneurs, such as Health/Biotech, Edtech/Workertech, Agtech/Foodtech and Climatetech, among others.
- Diversity Lens Investing Fund. Funds led by a diverse team in terms of ethnicity, race, and gender whose thesis are equally focused on diversity, in accordance with IDB´s Lab goal of anchoring the first LAC VC fund with such an approach.
GEOGRAPHIC FOCUS. Mandate must be to invest at least 80% of the fund in companies in LAC.
STAGE OF TARGET INVESTMENTS AND MINIMUM FUND SIZE. Early-stage investment funds (Pre-seed to Series B investments) with a minimum size of USD 20M.
TEAM. Qualified management team with:
• Track record or experience in making and managing early-stage investments.
• Experience and presence in LAC region.
• Full- or significant-time dedication to the fund.
• Complementary skills in management team (financial, operational, entrepreneurial, etc).
• Expertise in eligible sector-related projects and/or companies.
• Demonstrated ability to source deals from LAC countries, with a relevant pipeline of potential investments.
IMPACT MAINSTREAMING AND MEASUREMENT. Fund manager following a transformational or impact-oriented mission clearly incorporated into the fund´s investment strategy.
GENDER AND DIVERSITY. Strong commitment or intentions to advance gender and diversity both at the fund manager and portfolio company level.
Investment management firms interested in being considered for IDB Lab´s investment should apply through an online form and submit the firm´s investment deck including the following information:
- A brief description of the firm.
- Management team´s track record (individual/as a firm): financial performance, operational experience, sectoral expertise, impact track record, etc.
- Management team’s key responsibilities and time commitment to the fund.
- Other investment team members’ key qualifications, relevant experience and time commitment to the fund.
- Fund’s investment thesis: i) target markets (primary and secondary), ii) focus sectors & rationale/opportunities, iii) stage of target companies, iv) range of investment amounts, v) investment instruments, vi) key areas for value creation, vii) other relevant parameters.
- Fund’s impact thesis and measurement. Demonstration of how fund’s investments may have a positive and sustainable impact on: i) vulnerable populations with access to essential goods and services, ii) micro, small and medium sized companies with increased digitalization, productivity and income growth and iii) environmental benefits. Proposed KPIs.
- Fund’s approach for gender and diversity. Proposed KPIs.
- Sourcing strategy and indicative pipeline of potential investments.
- Fund’s key data, including target size, target dates for first & final close, fund term/investment period, management fee and carry structure.
- Fund’s legal structure/jurisdiction.
- Fund’s key governance bodies.
- Cost structure of the management firm, estimated annual budget to manage the fund, and compensation structure.
- Fundraising status (committed/due diligence process).
- In case the candidates are managing other similar funds in the capital raising, investment or divestment phases, explanation of how the candidate plans to manage the proposed fund vis-à-vis other funds under management to avoid conflict of interests.
Each proposal will be reviewed by a committee of professionals from IDB Lab utilizing the above outlined key criteria as well as IDB Lab’s internal policies and procedures.
The selection process is very competitive, and IDB Lab may receive proposals from many highly qualified applicants. Regrettably, IDB Lab may not have the capacity to support all of the worthy candidates that apply. Those applicants not selected for eligibility and further due diligence review will be notified via email.
ELIGIBILITY AND DUE DILIGENCE.
A project team will be assigned for those candidate firms selected for further consideration. Upon IDB Lab’s internal eligibility, the project team will conduct a comprehensive due diligence (on-site and/or virtual) of each candidate´s firm.
Upon the successful completion of due diligence, final approval of the investment will be subject to the decision of IDB Lab’s Donors Committee.
Launch date: February 1st, 2021
Submission of proposals: Proposals will be received on a rolling basis, with quarterly reviews. To be considered for March 2021 review, proposals should be submitted by February 26th, 2021.
For inquiries please email: VCFUNDS@iadb.org
IDB Lab is the innovation laboratory of the Inter-American Development Bank Group, the leading source of development, finance and know-how for improving lives in Latin America and the Caribbean. The purpose of IDB Lab is to drive innovation for inclusion in the region, by mobilizing financing, knowledge, and connections to co-create solutions capable of transforming the lives of vulnerable populations affected by economic, social or environmental factors. Since 1993, IDB Lab has approved more than US$2 billion in projects deployed across 26 LAC countries. www.idblab.org