Root Capital

Root Capital operates as a nonprofit social investment fund focused on fostering prosperity in rural communities across Africa, Latin America, and Southeast Asia. Founded in 1999 by Willy Foote, the organization addresses a critical financing gap for small and growing agricultural businesses that are too large for microfinance yet considered too small or risky for traditional commercial banks. Foote, a former financial analyst and business journalist, was inspired to create Root Capital after witnessing firsthand in Mexico how a promising farmer cooperative failed due to a lack of access to capital and business skills.

The organization's business model is centered on a 'credit plus capacity' approach, providing both capital and advisory services. Financially, Root Capital offers loans typically ranging from $200,000 to $2 million, which are tailored to the specific harvest and sales cycles of its clients. Its funding structure is a blended finance model, combining philanthropic donor capital with investor capital, which may accept below-market returns. A key aspect of its lending practice involves using purchase orders from international buyers as a form of collateral, pre-financing businesses against these contracts, a method that circumvents the need for the hard assets often required by commercial banks. Since its inception, Root Capital has disbursed over $2 billion in loans to more than 843 enterprises.

Beyond financing, Root Capital delivers crucial, customized training to strengthen its clients' capabilities in financial management, governance, climate resilience, and gender equity. This dual approach helps businesses become loan-ready and sustainable in the long term. For instance, the Women in Agriculture Initiative, launched in 2012, specifically targets the challenges faced by women in rural areas through tailored training and gender-lens investing. The organization serves agricultural enterprises in sectors like coffee, cocoa, grains, and tree nuts, working to connect smallholder farmers to global markets. On average, this support helps borrowers increase their revenue by 20% annually, with many gaining access to conventional financing within a few years.

Keywords: impact investing, agricultural finance, social enterprise, rural development, smallholder farmers, blended finance, sustainable agriculture, nonprofit lender, capacity building, gender-lens investing, climate resilience, supply chain finance, Latin America, Africa, Southeast Asia, farmer cooperatives, coffee financing, cocoa financing, access to capital, financial inclusion