Analyze and evaluate the dual objectives of social impact and financial sustainability in impact investing contexts, particularly in rural and poverty settings.
Understand how impact investment can be used to create inclusive markets in the context of poverty and/or informality.
Critically assess ethical dilemmas in impact investing when balancing financial returns with social impact in vulnerable communities.
Evaluate strategies to manage stakeholders for projects involving both philanthropic and financial investors.
This case focuses on Pablo Vagliente, General Manager of Ikatú Ventures at Avina Foundation, and Sebastián Salinas, President of Balloon Latam, as they lead the rural development fund (RDF) in Chile. RDF was initially designed to bridge the gap between rural entrepreneurs and formal financing in regions facing poverty, informality and geographic isolation. At the outset, funded through philanthropic contributions in the context of the COVID-19 crisis, the fund delivered social impact without financial return expectations. With mounting pressure from existing investors to develop a long-term viability of the fund and the urgent need to secure funding for a second iteration, Pablo and Sebastián must decide whether to maintain the philanthropic model or adopt a hybrid approach including conventional financial investors. The time constraint adds urgency to their decision, as they face critical stakeholder pressure that will determine the fund’s future direction. The case highlights the operational challenges faced by rural entrepreneurs and explores how impact funds balance philanthropy and financial returns to create inclusive markets. That is, markets that emerge as participatory arenas for social interaction and economic exchange for the poor and other excluded categories of people (Mair, Marti, & Ventresca, 2012; Mendoza & Thelen, 2008; Symmes, 2021) and especially for necessity entrepreneurs born in rural poor contexts (de Soto, 1989, 2003; Dencker et al., 2021). This case is designed to teach social entrepreneurship, impact investing, rural development strategies and ethical decision-making.
This case is suitable for upper-level undergraduate and MBA students.
Teaching notes are available for educators only.
CSS3: Entrepreneurship.
