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Three lessons in impact investment to absorb from Peruvian moss

Published 3 December 2021 in Sustainability • 5 min read

Driving sustainable economic development through impact investing requires careful due diligence, strong partnerships and patient capital. The elea Foundation’s experience with Peruvian startup Inka Moss offers valuable lessons when it comes to navigating the impact landscape.


Under the thick fog that coats the remote slopes of the Peruvian Andes, an orchid grower’s dream grows in abundance – sphagnum moss. Spongy and durable, supplies of this hard-to-harvest moss cannot meet global demand from exotic plant nurseries who favor it for its ability to keep orchids well hydrated.

Alongside a promising industrial application in water and sewage treatment, this high level of future demand makes sphagnum moss an attractive investment prospect.

For the elea Foundation for Ethics in Globalization, a philanthropic impact investor based in Switzerland, moss production for global markets also presents an opportunity to transform communities blighted by absolute poverty.

elea has invested in Peruvian startup Inka Moss, which works with subsistence farmers and communities in the Andean highlands to sustainably harvest the moss before drying their crop at a central production plant for export to global markets.

Established in 2010 by Marco Piñatelli, Inka Moss is a prime example of the kind of social enterprise that, with the right funding and strategic support from impact investors, can thrive to the level of scalability and sustainability required to attract more mainstream investment.

One of the purposes of elea’s investment portfolio is to fill the financing void between social enterprises and institutional investors, also providing strategic and technical capacity-building support so startups can meet the standards and scalability sought by more mainstream capital. Once the target enterprises have reached that stage of maturity, elea then looks to withdraw its funding support and recycle its resources elsewhere.

During the IMD EMBA Discovery Expedition to Peru, participants met and heard from local social entrepreneurs, including Piñatelli, as well as impact investors such as elea’s CFO Adrian Ackeret to learn about what is required to deliver impact for both investor, startup and local communities. The ultimate goal of the expedition is for our EMBAs to conduct detailed due diligence before pitching investment recommendations on Peruvian social enterprises to impact investors.

“We exist to fight absolute poverty with entrepreneurial means,” Ackeret told EMBA participants. “We believe globalization is an opportunity for people at the base of the pyramid, but we also believe we need to be this intentional type of investor that brings a positive agenda for change.”

“Even if there is strong innovation potential and even if there is strong value add to eventually pay for the innovation, and opens up opportunities for people who live in absolute poverty, it needs a lot of time,” he added. “It needs a system that can really scale and make the average economic cost work, and it needs the integration of many stakeholders that allow for this step-by-step process to happen over time. That is why it needs patient capital.”

In the case of Inka Moss, elea’s investment to support production and management capacity has facilitated additional investment in working capital and helped the Peruvian startup grow rapidly and deliver real impact on the ground. The company has increased incomes by 25% for Andean farmers, with 60% participation among women, and it has injected more than two million dollars into more than 130 remote communities. At the same time, 15,000 hectares of moss habitat – which would have been under threat from burning by potato farmers – has been protected. Inka Moss is now targeting a much larger share of the global market as well as further institutional investment.

While Inka Moss is a positive example of what can be achieved through impact investing, it is also a reminder that a gap in the market and investment capital is never enough to ensure that social enterprises succeed and investment goals are met.

In fact, elea’s careful approach to its Peruvian investment teaches us three important lessons when it comes to due diligence and how to choose the right partners for impact investing.

Impact investing often needs more than capital to succeed. Capacity building can prove just as important as a tool to help social enterprises reach their potential.

Is the business model scalable and sustainable?

While some impact investors can lean towards a more philanthropic attitude, experience has shown that the greatest positive impact from investment comes from adopting a professional set of criteria, mirroring the approach of mainstream investors. For example, if you want to help a startup attract greater funding and to grow in a way that drives impact, it is important to carry out in-depth due diligence on the business model. Is it scalable? Is it sustainable? What is the plan for the next five years? How will this deliver on your goals as an impact investor? In the case of Inka Moss, elea could see significant global demand for its high quality moss which was not being met by supply. With the right infrastructure investment, there was also a scalable business model based on engaging more communities and rotating harvest areas.

People count

When you are working with startups, it is important to trust and believe in the people running those social enterprises. They will, after all, be your close partners for several years and personal relationships count. Are they in it for the long haul? Do they have what it takes to survive the ups and downs of entrepreneurship? Do you connect with them on a personal and professional level? For elea, Marco and his Inka Moss team represented a professional, highly-motivated group of entrepreneurs who were committed to the business.

Think beyond money

Impact investing often needs more than capital to succeed. Capacity building can prove just as important as a tool to help social enterprises reach their potential. The elea Foundation deliberately focuses on building capacity with the social enterprises it supports, and has been instrumental in helping Inka Moss develop its human resources. Is your potential target startup open to the idea of capacity building? What other skills and capacities can you offer to help them grow?


Vanina Farber - IMD Professor

Vanina Farber

elea Professor of Social Innovation, IMD

Vanina Farber is an economist and political scientist specializing in social innovation, sustainability, impact investment and sustainable finance with also almost 20 years of teaching, researching and consultancy experience, working with academic institutions, multinational corporations, and international organizations. She is the holder of the elea Chair for Social Innovation and the Program Director of IMD’s Executive MBA program and IMD’s Driving Innovative Finance for Impact program.


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