Before Michelle Arevalo co-founded IMPAQTO, the first certified B Corporation in Ecuador, the concept of impact entrepreneurship was foreign to the Latin American country.
Eight years later, what was once a start-up for people looking to set up businesses with a conscience has evolved into a hub for socially dynamic companies from across the Andean region.
Named one of the top 100 B Corporations in the world, IMPAQTO has successfully established a vibrant ecosystem of inspiring start-ups and impact investors. From budding entrepreneurs and philanthropies to regional development banks and multilateral agencies, Michelle says there are plenty of change agents looking for financially sustainable models to improve the environment, health, education, and gender equality in the region.
“Making a positive change in the world is no longer the exclusive territory of non-profits. IMPAQTO has proven that profits and purpose can be successfully integrated into corporate culture. We think that young entrepreneurs can use the power of the market to tackle our region’s most pressing problems,” Michelle says.
“To date, we have led over 220 business ventures with combined earnings of more than $65 million, having raised over $6 million in investment on start-ups that have improved the lives of 2.3 million people.”
Working for social change
Today listed among the top 100 business leaders in Ecuador, Michelle left her native country for Canada at the age of 17 to pursue a liberal arts education. She studied philosophy and human rights law before embarking on a career supporting Colombian refugees in NGO Asylum Access back home in Ecuador. This role eventually took her to Berkeley, California, where she studied public policy and business administration focused on social enterprises.
“When you are in the human rights world, the simplistic collective narrative is that business is the bad guy. In fact, this is far from a given. Business ventures can be used as a force for good, from regenerating the jungle to protecting ancestral cultures to supporting rural communities to export their products on the international arena.”
After completing her Master’s in the US, Michelle traveled to Geneva where she worked to create social change as an advisor to 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 and the UN,” 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 Michelle 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. We had coffee together and the rest is history,” Michelle says, adding that Carolina Brito joined the duo as a business partner two years later.
The right ecosystem
Daniela and Michelle founded IMPAQTO in 2013. “We started by setting up the first co-working space in Ecuador to bring like-minded individuals together. However, we quickly realized that there was a lack of understanding about starting social enterprises. Offering just coworking spaces wasn’t enough.” Michelle says.
This sparked an idea for the IMPAQTO Lab, a social business accelerator program run in partnership with Google. “People who came from the business world and wanted to do good didn’t know how to speak to community leaders and didn’t understand social issues such as gender-based violence or climate change. On the other hand, we had people from the social world needing to learn how to do financial projections, marketing, and PR,” Michelle says. “IMPAQTO Lab addresses this issue. It produces super-star start-ups and is a great model for emerging cities in Latin America.”
In addition, IMPAQTO 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 investors 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.
.Seizing opportunities
IMPAQTO’s business model changed after the outbreak of Covid-19. “If the pandemic hadn’t happened, I would have started a fundraising project to open at least 10 more co-working spaces in the Andean region,” Michelle says, explaining that the company currently runs five such spaces. “But due to social distancing, the demand for the co-working areas cooled down and we had to start exploring different revenue models.”
Luckily, IMPAQTO already had the community support and momentum to scale its efforts online. The sense of community has remained while a series of webinars has carried the IMPAQTO message further across the region and gone viral. In the first 6 weeks of the pandemic, IMPAQTO mobilized its entire community to support struggling businesses in digital transformation, pivoting and adapting to the new normal.
“We have managed to retain all our staff to help us hold digital events and summits because we are keenly aware of the opportunity that post-pandemic reconstruction offers Latin American countries to rebuild their economies through impact entrepreneurship,” she says.
There is no doubt that IMPAQTO has proven that social and environmental impact can be successfully incorporated into corporate culture. “We are redefining what it means to be a successful business,” says Michelle. “We have created a model that purpose-driven entrepreneurs can follow. It’s great to know that the effort we have put in is making a positive difference in Ecuador. We look forward to our business model being employed in the Andean region and beyond.”