The Importance of ESG for the VC Industry in Latam

The Importance of ESG for the VC Industry in Latam

In the dynamic world of Venture Capital, every investment is much more than a financial transaction; it represents a bet on the future. However, today, this future is framed by significant challenges: from global water scarcity to persistent gender wage gaps. Furthermore, recent extreme weather events, such as severe conditions in the United States claiming lives, underscore the urgent need to address sustainability in all aspects of our lives and businesses.

Sustainability: The New Imperative in Venture Capital

In the world of Venture Capital, the most promising investments are those that can anticipate and adapt to this new reality. Sustainability is no longer just an added value, but a strategic element for survival and business success. Adopting sustainability criteria is not only a demonstration of alignment with a progressive agenda, but also a powerful introduction to attract capital and establish strong relationships with investors.

Internationally, governments are strengthening their regulatory frameworks to drive the adoption of sustainable practices. More and more countries are developing policies that require sustainability as the only acceptable business model. This trend is transforming the landscape of Venture Capital, where sustainability has become the new standard.

Perspectives from the Investment Community

In this exciting journey towards a more sustainable future in the world of Venture Capital, it is essential to listen to the voices of those leading the change from within. Two prominent figures in this movement are Lina Cuervo, from Cube Ventures, and Elizabeth Acuña, from AVP Ventures.

According to Lina Cuervo from Cube Ventures: "The world is changing, and we have a broad view of the gaps that exist today at the social, economic, and environmental levels. Working to enhance solutions for that is our responsibility. Being able to enhance them, measure that impact, structure it, and generate capabilities in our organizations will permeate the market."
On the other hand, Elizabeth Acuña from AVP Ventures states that :"For us, having diverse teams is quite valuable. We have seen it in the results of the companies in our portfolio. In our first fund, we had 59 female founders, and we see it in the execution and how teams with diverse perspectives function. Venture Capital businesses, and mostly in the stage where we invest, which is a very early stage, are businesses of trust. So, the more transparency there can be with the founders, the more information they can share, the more ethically they can show their businesses."

Perhaps you might also be interested in reading: CMI’s ESG Strategy: Envisioning a Sustainable Future

Latin America: Potential and Commitment

These words highlight the importance of diversity, transparency, and ethical responsibility in the investment process, emphasizing how these practices not only promote a more sustainable world but also generate greater value and long-term returns for all involved parties.

In Latin America, the Venture Capital ecosystem is experiencing rapid growth, but to stand out globally, it is necessary to join this sustainability agenda. The region has the opportunity to lead this revolution, charting a roadmap for the rest of the world. Adopting sustainable practices is not only ethical, but also improves the quality of investment analysis and strengthens the relationship with investors.

According to Estefanía Rubio Zea, Director of SusTECHnability, sustainability has now arrived to revolutionize the way investments are evaluated and portfolios are managed in venture capital, offering a much more comprehensive and holistic perspective. This encompasses not only the business itself and the risks and opportunities it faces but also the market dynamics and the teams involved.

Better Tech Latam: Leading the Transformation

Investors increasingly recognize the close relationship between financial stability and the management of environmental and social risks. Investment with sustainability criteria has experienced significant growth in recent years, and more and more studies support the idea that companies with sustainable practices tend to outperform their competitors in the medium and long term.

To drive this transformation in Latin America, Better Tech Latam has been created, a community committed to building a more prosperous and sustainable entrepreneurship ecosystem. This initiative seeks to prepare the ecosystem to face the challenges of sustainability, share knowledge and tools adapted to the regional reality, and position Latin America as a leader in this global agenda.

The future of Venture Capital and sustainability are intertwined inextricably. As we move towards a more conscious and responsible world, sustainability becomes the new standard of business excellence. We invite all ecosystem actors to join Better Tech Latam and be protagonists of this exciting transformation towards a more sustainable and prosperous future for all.