Nowadays, having a lot of money in your bank account is not synonymous with financial prosperity. It’s important to invest and grow the money you earn. Wouldn’t it be great if, in addition to profiting from your investments, it were possible to help others make an impact? Investing with your values is a wonderful way to achieve both financial and social returns, build the world you want to see and leave a positive legacy.
It is for this very reason that Creci, a company that focuses on social and environmental impact-driven finance, came to life. Before we introduce their work, let’s first understand the basics of the investment world.
The Importance of Investing
For companies that are growing, funding is important to the stability of any venture, especially in times of crisis. In addition, it can really stimulate economic growth. For individuals and businesses, investing is an important way to achieve stability and diversification over the long term. It can also enable them to achieve the following additional goals:
1. Achieve financial independence
How do you see yourself 5, 10, 20, or even 30 years from now? This is a question that we have to consider, given that currently, the viability of public pensions in many countries is a much-discussed topic. Consequently, deciding to take control of your finances and making strategic investments is necessary to ensure your future independence.
Some investments bring more return than others. Generally, and especially In the current economic environment, savings in bank accounts earn very little and are eroded by inflation. Many choose to consider investing in NFTs, cryptocurrencies, stock exchanges, and other equity-based investments.
However, some of these investments carry higher risk profiles and can be volatile. They can also be difficult to get into because it is not possible to start with smaller amounts and fees can be substantial. As a result, they are not accessible to many investors. Having a portion of your investments in fixed income instruments is paramount to the long-term earnings of your portfolio.
2. Achieve short- and long-term goals
Making investments is extremely important to realize the dreams that you have for your future. Past circumstances may have left you with unrealized dreams and saving and investing is an essential way to help you meet your short, medium and long-term goals.
3. Have financial security
Achieving financial security is the goal of virtually everyone. However, everyone finds it difficult to reach the finish line, as it is not easy to give up momentary desires in favor of future stability.
Therefore, to avoid getting lost along the way, it is essential to understand the importance of financial planning. That is to say that when you learn to control your expenses and grow the money that you set aside by investing it, it becomes easier to achieve stability. Ongoing savings and investments are very empowering.
4. Keep a financial reserve
In life, things happen. Unanticipated expenses can arise at any time and you have to be prepared. That means setting money aside and making it grow. Investments serve to make your life easier when these eventualities arise.
Accessibility to Investing
There are a number of reasons for a person to make the decision not to invest. Here are a couple of the most powerful.
The first hurdle is the lack of financial education. Although there is teaching in schools today about financial concepts and goals and how to make your money work, there is still a long way to go in making this knowledge widespread and mainstream. There are a number of investment possibilities. Some are low risk and some are higher risk. Others do not align with the investor’s objectives.
Summing it up, investing is not easy. That is why investors can often need advice or assistance to better understand the market, its opportunities and challenges.
For some, the second major obstacle to investing is the lack of financial accessibility. There are many investments out there that demand a minimum initial commitment, which is often high.
Further, many traditional investments carry a risk profile that is not in line with that of the investor. Therefore, not all people have the opportunity to invest or avoid taking this very important step in securing their financial futures. However, alternative investment instruments are being introduced into the mainstream. Therefore, enabling investors to not only start with little money but also invest with their values, therefore, avoiding traditional investments that can be in direct conflict with what the investor wants their money to finance. The social and environmental impact of investments have become important aspects of investment choice.
Meet Creci & Start Investing With Your Values
Creci is an investment platform with a mission. They give US investors the opportunity to support social and environmental impact businesses and the transition to a sustainable economy while earning an attractive 5% fixed return.
We had the opportunity to interview Andres Idarraga, CEO and Pravin Rodrigues, COO – co-founders at Creci. They shared with us about their initiative and their goals for its future. Keep reading!
How did Creci come to life?
Andres initially founded Creci with another co-founder Veronica Peña, both of whom desired to make an impact in sustainable development. Unfortunately, Veronica passed away during the early stages of the pandemic. Pravin was involved in looking at investments in Latin America, invested in Creci and signed on as an advisor to the company. When Veronica passed away, because of his experience in financial services and his education and work in sustainability, Pravin joined as COO of the company.
Investing with your values: How does impact investing with Creci work exactly?
Investors invest in an instrument called a Creci Note, with a $10 denomination that bears a 5% annual interest rate and carries a 3-year term. Investors come to Creci’s website, hit the “Invest Now!” button to register an account and then choose the number of notes they want to buy. Interest is compounded daily.
Impact investors – everyday folks – are essentially investing in an interest-bearing instrument and not a specific company directly. There are no fees and investors benefit from being empowered to invest directly for both a financial and social return. Once they have registered an account, purchasing additional lots of notes can be done quickly through their personal dashboard.
Investors can redeem up to 10% of the original investment plus interest or $500 (whichever is greater) every three months. At the end of the 3-year term, the investor can withdraw the remaining balance plus accrued interest. They may also choose to reinvest the money by buying new notes.
Which companies does Creci work with and how do they select these companies?
Creci lends money raised from impact investors to finance, through term loans, companies that are making a significant social or environmental impact. It works with channel partners in the impact space to identify clients prospects, who need financing to grow. These companies apply for credit through Creci’s credit platform and requests are evaluated using both stringent credit models and social impact scoring models. This dual-set of criteria ensures that the borrower has a reasonable risk and is a company that will make a significant social and/or environmental impact. Creci maintains a spread between the money raised and the money lent in order to sustain the company and maximize its impact over the long term.
These clients are quite diverse in terms of the Sustainable Development Goals (SDGs) they are tackling with their business models, and some individual companies are tackling multiple SDGs. Overall, Creci’s portfolio of clients is tackling 13 of 17 SDGs in Colombia and it wants to both broaden and deepen these impacts.
Borrowers pay back their term loans over the life of the loan, usually three years, but the company has also written loans with 2-year terms. Clients report their positive impacts to Creci on its proprietary impact measurement tool, and as a result, qualify for more favorable rates.
What is Creci’s ambition?
Andres and Pravin envision Creci as a social impact neobank operating in the Americas. Within the next few years, their goal is to raise and deploy $100s of millions to 1,000s of businesses, significantly impacting social and environmental issues. Creci is presently lending in Colombia but with plans to lend in both the US and Mexico.
By Fashinnovation in Partnership with Creci