Michelle Arevalo-Carpenter – CEO and co-founder of IMPAQTO, the first certified B Corporation in Ecuador – believes that one day all companies will measure their success not just through profit but through their social impact.
“Big business is often viewed as the bad guy,” says the Ecuadorian social entrepreneur. “By giving entrepreneurs the tools to run socially-conscious enterprises, IMPAQTO is gradually changing this mindset,” she says. “We hope that in 10 or 15 years all corporations will have no choice but to follow this impact entrepreneurship model.”
Michelle, who today appears on the list of the top 100 business people in Ecuador, left her home country at 17 to study philosophy in Canada. Her middle-class family was not exactly thrilled about her choice of curriculum but agreed on the condition that one day she would be making the same money had she been an engineer in the family business. With IMPAQTO thriving, it is safe to assume that Michelle has fulfilled her promise.
After completing her Master’s in the US, Michelle traveled to Geneva where she worked to create social change advocating for refugee rights before instances of the UN. “At 30 I was at the pinnacle of my career. I couldn’t have asked for anything bigger; couldn’t have ever imagined this girl from Ecuador would make it to Geneva as a human rights lawyer,” she says.
“Just then my dog died from cancer and it changed my entire outlook on life. I was missing my home, my grandparents, and the people who were dear to me. I was missing working close to communities and looking for roots, so I moved back to Ecuador.”
In 2013 Michelle set out to leave the non-profit world to set up a social enterprise. It was also at this time that she met the future co-founding partner of IMPAQTO, Daniela Peralvo. “I met Daniela through Twitter when everyone locally was telling me that social entrepreneurship was an aberration. She told me I wasn’t alone in thinking that socially dynamic companies could revolutionize the economy of the region. I finally found someone who shared my vision,” she says, adding that Carolina Brito joined the duo as a business partner two years later.
“Today, our company has mentored more than 220 social enterprises that have raised around $10 million in investments and that have improved the lives of 2.3 million people,” Michelle says.
Reaching for the stars
IMPAQTO started out by offering a series of five co-working spaces where like-minded individuals could discuss integrating human rights into profit-driven corporate culture, as well as IMPAQTO Lab, a social business accelerator program run in partnership with Google. In addition, the enterprise works to forge connections between business leaders and local entrepreneurs through its consulting service. “Some of our entrepreneurs have partnered with multinational corporations as well as UN agencies to create profitable ventures,” Michelle says.
“We also meet with business leaders to convince them that investment is not just about predicting where the world is going to go but also about building the world you want to see,” she says, adding that in 2021 IMPAQTO launched an impact investment fund as a channel for like-minded investors to support companies that improve society and the planet.
“We wanted to help socially-minded ventures in Latin America turn their ideas into impact. We decided to do this by providing the right ecosystem to strengthen the social entrepreneurship community in the region,” Michelle says. “We also started social business accelerator programs to help businesses bring their vision to life.”
The consulting services arm of IMPAQTO connects socially-minded entrepreneurs with multinational corporations, as well as UN agencies and large NGOs. “Our entrepreneurs need connections with the corporate world because if you are, for example, working on a gluten-free pancake mix with quinoa farmers, you also need to sell it,” Michelle says.
“And what if we could connect you with Nestlé? We could connect you with their executives and say, ‘these entrepreneurs can show you the way to the future. People in the future want to eat organic, they want to eat local’. Then, on the other hand, I could say to the entrepreneurs, ‘you need to meet with Nestlé to learn about distribution channels and how to market the product’,” Michelle explains.
The trio also regularly meets with leading business investors to source funding for newbie business ventures with a conscience. “Businesses are starting to realize that people of the future want to do good for the world; they want to do good for the community,” Michelle says. “We charge corporations for our consulting services and for navigating the world of social innovation. So far we have also managed to fundraise $640,000 towards our target of $2 million for our impact investment fund.”
Making a difference
Just like other businesses, IMPAQTO was affected by the outbreak of the coronavirus in early 2020. The co-working spaces had to close and face-to-face interaction became limited. This was an issue since IMPAQTO was relying on the co-working spaces for revenue. This is when Michelle and her partners decided to scale up their virtual and online services to compensate and continue supporting the start-up community.
“We took our community online with digital events and summits. If anything, this has increased our reach across the Andean region,” Michelle says. “Post-pandemic, there will be a lot of opportunities for companies to re-build. We are hoping that they will follow our impact investment business model.”
When asked about inspiring examples of a socially conscious enterprise, Michelle is quick to point to Patagonia, a company that sells outdoor clothing. Founded in 1973, the company uses its profits and sustainability initiatives to bring awareness to environmental issues. “Patagonia is a B Corporation that exists for a higher purpose. Just like us, they combine making a profit with making an impact through the mission they have set for themselves.”
Closer to home, one of IMPAQTO’s success stories is Waykana, a company that produces an energy drink made from guayusa tea leaves, found only in the Amazon rainforest. “Waykana has gone through our entire process from start to finish. The business partners who started the enterprise actually met at one of IMPAQTO’s gatherings and were members of our coworking spaces,” Michelle says.
“They got in touch with a group of farmers who were cultivating these tea leaves that have four times the caffeine level of normal coffee. They used these leaves to create a natural energy drink without toxins that is now being exported to 28 countries. Before the leaves were only used for indigenous rituals and now they are in high demand, which means that the farmers are making more money. And since they only grow in the Amazonian jungle, it has given the growers an incentive to protect the forest,” she continues.
There is little doubt that socially conscious ventures are emerging as a new species of enterprise. And IMPAQTO is paving the way for Ecuador to lead as a model that showcases the benefits of an inclusive business environment. “We have done the work, we have created an example for other businesses to emulate, we know that the work we are doing is making Ecuador a better place and our frameworks can be used successfully across the region and the world.”