45903 - Valor IV

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Summary of Investment Information

Project Number

45903

Company Name

VALOR IV

Date SPI Disclosed

Oct 8, 2021

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Dec 9, 2021

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Dec 21, 2023

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Dec 9, 2021
Signed : Dec 22, 2021
Invested : Mar 1, 2022

Sector

Venture Capital Fund

Project Description

The proposed is an equity investment of up to $20M in Valor Venture Fund IV (“Fund IV”). Fund IV is Cayman domiciled, investing in early stage technology companies in Latin America (“LAC”), predominantly in Brazil

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	16.0

Development Impact

1. Increased access to early stage equity and operational value add for technology companies in Brazil. The fund will provide access to equity and value-creation for investees by helping raise follow-on capital, introducing experts into portfolio companies to accelerate growth and leveraging their networks and relationships to enable scale. The fund has demonstrated success with their previous funds. Access to VC in Brazil has increased significantly over the last few years but remains low compared to the size of its economy. The country's penetration rate (VC investment volume relative to the size of the economy) of 0.07 percent is only half that of the total emerging market penetration rate. 2. Increased disruption of key markets through the support of market-disrupting digital business models: The Fund is supporting investees developing tech-led innovative solutions to disrupt various real sector business models. IFC expects this will increase competitiveness across markets in Brazil that are characterized by low productivity, poor efficiency and low competition. The investees' innovative businesses models can strengthen supply chains by reducing the role of brokers and intermediaries, improve price transparency, and have a demonstration effect by catalyzing replication from new entrants. In markets where investees grow rapidly and become sizeable market players, innovation at scale can generate large impacts on a market's competitiveness by pushing traditional players to innovate or reducing traditional incumbents' market share.

1. Own Account Equity: While VC Fundraising activity in Brazil has increased significantly over the last few years, it remains below levels seen in developing regions with similar or lower GDP per capita, such as India and China. Within this context, IFC's re-commitment through its own-account equity in Fund IV will enable the fund to reach their target size, while also getting operational support from a long-term patient investor with local knowledge in the region. 2. Non-commercial risk mitigation: Although the Manager has experience, most of its previous funds remain young. Given this relatively early track record in an asset class that most investors perceive as risky, it is expected that IFC's continued support will provide a signal of confidence to existing and new LPs who value IFC's governance, standard settings, LPA and board participation. 3. Knowledge, innovation and capacity building: As with previous funds, IFC will continue to deliver additionality by sharing its knowledge and networks with the Manager and its investee companies. Valor seeks investors who can provide more than just capital and is keen on drawing lessons from IFC's operations in other emerging markets and values access to our investees and network of institutional investors. The latter is particularly an attractive value add for the Manager as they seek assistance in facilitating the global expansion of their startups.

E&S Category Rationale / Risks and Mitigation

The Project will invest in Valor Venture Fund IV, which is focused on supporting early-stage SMEs in Latin America. Aiming a 25-30 portfolio, the expected sectors of the fund include: i) education technologies; ii) fintech and digital assets; iii) health-tech and wellness; iv) logistics; v) SaaS; and vi) digital marketing. Overall E&S risks associated with the potential pipeline are of a medium to low nature, therefore the Project has been classified as Category FI-2 according to the IFC's Sustainability Framework. Coal related activities or any activities with significant E&S impacts such as (a) involuntary resettlement, (b) risk of adverse impacts on Indigenous Peoples, (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or (d) significant occupational health and safety risks will not be eligible. IFC’s applicable E&S requirements for this project will be the Exclusion List, relevant E&S laws and regulations, and the IFC's Performance Standards (as applicable).

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
Kilvo	Brazil	S-AC - Other Health Services
BAYZ	Brazil	X-XX - Other
Aroda	Brazil	X-XX - Other
Quaddro	Brazil	R-BA - Computer Systems Design and Related Services (System Integration, Custom Computer Programming, IT Services etc.)
ADVOLVE AI LLC	Brazil	X-XY- Other
AGL Holding	Brazil	X-XX- Other (For Non-Investment Projects)
Arado	Brazil	Q-BF- Internet Retailers (e-Commerce Companies, platforms, marketplace etc.)
BeerOrCoffee	Brazil	R-AC- Other Services (Including IT Enabled Services)
Bhub	Brazil	X-XY- Other
Capim	Brazil	Y-YY- Non-Sector Specific Advisory Services
Clubbi	Brazil	X-XY- Other
ComunicaIn	Brazil	X-XY- Other
Conta Simples	Brazil	X-XY- Other
Credix Finance	Belgium	X-XY- Other
Crown Digital	Brazil	R-AC- Other Services (Including IT Enabled Services)
DEUNA	Mexico	X-XY- Other
Floki	Brazil	X-XY- Other
HamsaPay	United States	O-ME- Online payments, ecommerce payments
Joyride	United States	X-XY- Other
Kaleido Inc	United States	R-AC- Other Services (Including IT Enabled Services)
Kanastra	Brazil	O-ID- Capital Markets Financing Company (Including Investment Banking)
Metatech Holdings	Mexico	X-XY- Other
Nextron	Brazil	X-XY- Other
Ohalo Genetics	United States	X-XY- Other
Oico	Brazil	X-XY- Other
Open Forest	Brazil	X-XY- Other
Origami Inc	United States	X-XY- Other
Partior	Singapore	X-XY- Other
Principia	Brazil	X-XY- Other
Ribon	Brazil	X-XY- Other
Sanii	Brazil	X-XY- Other
Sooper	Brazil	X-XY- Other
Spot-Tech Holdings	Mexico	X-XY- Other
Terradot	United States	X-XY- Other
Velotax	Brazil	X-XY- Other
Vixtra	Brazil	X-XY- Other
Waitroom	United States	R-BA- Computer Systems Design and Related Services (System Integration, Custom Computer Programming, IT Services etc.)
Wandilla Holdings Limited	Brazil	X-XX- Other (For Non-Investment Projects)
Zap Solutions	United States	R-AC- Other Services (Including IT Enabled Services)

The key E&S risks related to the Project derive from the Fund’s capacity to identify and manage E&S risks of the investments of the fund, which are expected to be of a low to medium nature and related primarily to labor and working conditions, including Occupational Health and Safety (OHS) risks. As part of this project Valor will be required to enhance its ESMS procedures to screen potential investees against the Performance Standards as applicable, in addition to the IFC Exclusion List and applicable E&S laws and regulations. Valor will also be required to, provide training and to submit the Fund first three E&S Due Diligences conducted prior to investment, as well as a periodic report to IFC. E&S Risk Management System Valor is an existing client, having developed and implemented an ESMS that includes policy, procedures, responsibilities and tools for undertaking E&S risks management. All potential investments are categorized and screened against the IFC exclusion list, legal E&S review and key E&S risks questionnaires through desk review and/or site visits. For potential investees with E&S performance gaps, a corrective action plan is included in the investment documentation. Valor periodically monitors its investees and portfolio companies must report both financial and non-financial performance indicators, including E&S themes, on a quarterly basis. One of Valor’s managing partners is directly responsible to oversee the implementation of the ESMS and review of ESDDs. Investment officers and analysts are involved in the E&S risk screening and receive regular training. Through website, corporate phone (voice and text) contact, Valor can receive and respond to third party concerns.

Contacts

For Inquiries About the Project, Contact

Valor Capital Group
Scott Sobel
Partner
212-803-7170

http://valorcapitalgroup.com

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Fax: 202-974-4384

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

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Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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Online form: available at https://www.cao-ombudsman.org/
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Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Title & Description	Anticipated Completion Date
ESMS enhancement	11/19/2021
Implement staff training	01/30/2022

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