The Solution Finance Accelerator, whose first cohort ran from 2020-2021, contributes to a vision of a vibrant social finance marketplace with efficient and effective investment capital flowing to social and environmental development at scale. The SFA aims to expand the Canadian social finance marketplace by supporting a group of impact investing intermediaries to develop and launch their funds. These organizations are disrupting the traditional means of structuring their business models, be it by leveraging technologies or applying new financial mechanisms to advance the United Nations Sustainable Development Goals. This series profiles the nine participants supported through the Accelerator.
Rhiza Capital
Rhiza Capital is a financial intermediary advancing the UN Sustainable Development Goals (SDGs). Rhiza builds positive impact financial products, programs and partnerships that localize the SDGs and connects communities to investment opportunities. The word Rhiza means “a continuously growing horizontal underground stem that puts out lateral shoots and adventitious roots at intervals.” The organization is deeply rooted with local enterprises in B.C. while growing horizontally across the country with national partnerships.
“Rhiza Capital was born from a gap in the local finance ecosystem in B.C.’s Sunshine Coast. We saw that not only were impact entrepreneurs having trouble getting finance, but investors did not have access to the kinds of vehicles that would allow them to invest in impact. What they needed was an intermediary – and that is where Rhiza came in. We started on the Sunshine Coast, but we quickly grew beyond that region and now serve impact companies throughout BC and we have investors from around the country.”
– John Sutherland, Chair Rhiza Capital
Activities
Over the past two years, Rhiza Capital has been developing three products aimed at increasing funds available to impact organizations and providing impact investing opportunities for all sizes of investors.
Coast Ventures Root 3 (CVR3)
The Coast Venture Root 3 (CVR3) fund uses equity investments to support organizations working to advance the United Nations Sustainability Goals. Many early-stage or innovative impact organizations cannot access traditional debt-based financing because they lack a proven track record and access to collateral. The CVR3 fund uses equity investing to provide early-stage, high-risk investees with patient capital so that they may have the resources and breathing room to grow and scale, while also providing investors with steady returns. The CVR3’s objective is to cater to 40-50 organizations’ lending needs. This fund is growing in partnership with TELUS’ Pollinator Fund for Good.
Mainstreaming impact investing
Rhiza has partnered with eight credit unions across the country to dedicate 10% of their low-risk Guaranteed Investment Certificate (GIC) funds to SDG linked impact investing loans. From the individual investor’s perspective, the fund looks and acts like a traditional GIC savings vehicle — it is guaranteed by the BC government, it has a predictable term maturity, has annual liquidity and market-based rates of return — and in addition, a portion of the fund is also committed to supporting impact. After a successful pilot in 2019, Rhiza hopes to expand the project to credit unions and banking institutions across the country, attracting both individual and large institutional investors like universities and pension funds, creating a systems-level tool that is capable of injecting large amounts of capital into social and environmental change.
Community Investment Warehouse
Rhiza is in the process of developing a community investment warehouse concept in partnership with Yukonstruct, Scale Collaborative and others to collaborate across regional impact funds that facilitate a just transition to a low carbon economy. The collaborative curates strategic blended finance models to grow local social ventures alongside high-potential tech companies, with particular emphasis on supporting Indigenous entrepreneurs. By focusing on regions that are overlooked by traditional venture capital the group aims to create a unique combination of economic development and inclusive impact.
Learn more about Rhiza Capital.