49712 - CANARY IV, L.P.

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Summary of Investment Information

Project Number

49712

Company Name

CANARY IV, L.P.

Date SPI Disclosed

Jul 12, 2024

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Aug 12, 2024

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Nov 13, 2024

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Sep 27, 2024
Signed : Oct 23, 2024
Invested : Nov 11, 2024

Sector

Venture Capital Fund

Project Description

The proposed Project is for an equity investment of up to US$15 million into Canary IV, L.P. (the “Fund”, “Fund IV”). The Fund will primarily concentrate on investing in Brazilian technology companies at pre-Seed and Seed stages.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	15.0

Development Impact

The Fund is expected to increase access to early-stage venture capital financing and value creation services for technology startups in Brazil and Latin American and the Caribbeans (LAC) region, resulting in business growth. A material share of investees is expected to have a woman co-founder, thereby addressing gender divides. The project is also expected to strengthen market integration in the traditional real and financial sectors in Brazil, through the expansion of investees with disruptive business models, via demonstration and replication and/or competition and innovation channels.

IFC additionality is both financial and non-financial. Financial additionality involves the provision of IFC’s own account equity, as IFC’s participation, along with other DFIs, will enable the fund manager to achieve its first close target for a larger Fund in a challenging fundraising context. Non-financial additionality includes non-commercial risk mitigation, as IFC's participation as one of the main anchors of the Fund and its support in fully negotiating a Limited Partnership Agreement (LPA) up to institutional standards will help signal confidence in the Fund Manager, thereby potentially crowding in new investors for final close. Furthermore, IFC will increase the Fund’s professionalization by providing environmental and social (E&S) standard setting and strengthen the Fund’s gender policies.

E&S Category Rationale / Risks and Mitigation

The proposed Project is an up to US$15 million equity investment in Canary IV. The Fund is a venture capital fund with a target size of US$100 million and a cap of US$150 million. Canary IV will be sector-agnostic but will focus on fintech, healthtech, edtech, retail and software. The Fund’s pipeline includes 35 to 40 minority investments (ownership level between 10-20%) in seed stage and selectively pre-seed companies. Investments will be mainly in Brazil with up to 30% of investments in other LAC countries, notably in Colombia and Mexico. E&S risks associated with the potential pipeline are low to medium in nature and mostly related to labor and working conditions, therefore, the Project has been classified as Category FI-2, according to the IFC’s Sustainability Framework.

IFC will periodically disclose the names, locations and sectors for Category A sub-projects that have been supported by IFC investments through financial intermediaries, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of July 1, 2020.

IFC will periodically disclose the names, locations, and sectors for qualifying sub-projects that have been supported by this IFC investment through financial intermediaries, subject to regulatory constraints and market sensitivities. Any qualifying sub-project(s) will be disclosed during the annual reporting cycle established with the client.

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
ADVOLVE AI LLC	Brazil	X-XY- Other
Cado	Brazil	O-CA- Finance Companies
Handshake	Brazil	R-AC- Other Services (Including IT Enabled Services)
Infleet	Cayman Islands	E-BD- Other Support Activities for Transportation (Grain Terminals, Cargo Terminals)
Liora Energia	Brazil	R-AC- Other Services (Including IT Enabled Services)
Meliuz	Brazil	N-BB- Content (B2C Companies)
Settle	Brazil	R-AC- Other Services (Including IT Enabled Services)
Taya	Brazil	O-CA- Finance Companies
Title Labs	United States	R-AC- Other Services (Including IT Enabled Services)
We handle	Cayman Islands	R-AC- Other Services (Including IT Enabled Services)

Canary is a new client and has an existing E&S risk policy and procedures. The framework outlines ESG procedures, controls, and monitoring mechanisms for both portfolio companies and those to be invested, in compliance with relevant local laws and regulations and the exclusion list. The Fund Manager specializes in investing in early-stage companies (startups), which, by their nature, have limited E&S risks. Given the Fund’s investment thesis i.e. supported companies with high potential to grow, the nature of E&S risks can evolve, as such, applicable requirements may be enhanced to include applicable IFC Performance Standards.

As part of the Project, Canary will be required to enhance its ESMS. E&S assessment will be commensurate to applicable risks associated with its pipeline and portfolio. For early-stage investees, requirements will be limited to the Exclusion List, relevant E&S national laws and labor screening in line with PS2 to all potential investee companies. As portfolio companies grow and E&S risks evolve, IFC’s Performance Standards will apply on a risk-based approach. As the Fund may do follow-on investments in portfolio companies, in those cases requirements should be reviewed to include enhanced approach, as applicable. IFC and Canary have agreed on triggers for enhanced ESDD’s based on proxies referring to number of employees, amount of assets and sales.

S.no	Title	Anticipated Completion Date
1	Enhance ESMS, scope of ESDDs and monitoring	08/30/2024
2	Provide Training	02/28/2025
3	Enhance Grievance Mechanism	10/31/2024

Contacts

For Inquiries About the Project, Contact

CNRY Management Ltda
Liliana Carlos
COO
-
liliana@canary.com.br
Rua Cunha Gago 208, Pinheiros São Paulo
www.canary.com.br

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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.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

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.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
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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.

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