Case Analysis Vox - Elin Forsberg PDF

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Case study on Vox Capital, pioneering impact in Brazil. Provides history and analysis of Vox Capital, presents the key issues in the case and uses a SWOT analysis to do so....

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Case analysis: Vox Capital: Pioneering Impact Investing in Brazil

Elin Forsberg - Z23630188 MAN 6937_001_16306 Fall 2021

1. Introduction

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2. Situation Analysis

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2.1 Timeline and the Brazilian Market

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2.2 SWOT Analysis

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3. Key Issues Strategic Issues

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4. Recommendations

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References

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1. Introduction

Vox Capital is an impact investment fund located in Brazil, it provides early-stage capital for companies that offer innovative and scalable services to improve the low-income Brazilians’ lives and additionally intending to generate market-rate financial returns for its investors. What makes them unique is their desire and capabilities to renew processes to stay true to their mission. Vox Capital was founded in 2009 in São Paulo and when it was first founded there were only a few investment firms like it but only in a few years, this sector started to show significant growth. The company both has a financial and a social bottom line, and it is also continuously working with all the other occurring shifts in the market. This essay will start off with a brief summary of the background and history of the company and Brazil. It will then present the key issues found in the case, examine the case through the use of a SWOT analysis. Lastly, when reading the Vox Capital case, one understands that there are certain challenges and important decisions facing the company and this case analysis will finish off by coming up with some future recommendations to these obstacles.

2. Situation Analysis

Vox Capital was founded in 2009 by Daniel Izzo (CEO), Antonio Ermirio de Moraes Neto, and Kelly Michel. Vox Capital essentially came to life because Antonio, who comes from the family controlling the Votorantim Group, realized at an early age that he wanted to pursue societal transformation through the use of social entrepreneurship he realized during his studies that a lot of nonprofit models had flaws, in particular in terms of the projects’ scalability and

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sustainability. Because usually these matters are solved with profitability and being able to hire the best people for the job. Before starting Vox, Antonio realized that finding entrepreneurs that could achieve both a financial and a social bottom line was possible yet difficult. Eventually, when in his search for partners to create an impact investment fund, Antonio met Kelly and Daniel. They all aligned around their desire to provide capital to social enterprises and creating an impact investment ecosystem in Brazil. Their mission was:

“To empower people and companies to create a more just and joyous world for everyone.” (p. 235) Eventually, they became what they are today an impact investment fund providing early-stage capital for companies that offer innovative and scalable services to improve the low-income Brazilians’ lives and additionally intending to generate market-rate financial returns for its investors (Appendix I). Essentially, through years of building and rebuilding their organization and continuously checking that they walk the talk, they successfully continue growing. They wanted to find the right type of entrepreneurs, “We don’t want to invest in someone who has the business skills, but is not committed to having an impact. We need to find those who will continue seeking impact once we are not there” (p. 6). Vox Capital continuously renewed both the inside and outside processes of their company to match their mission, through thinking about issues such as who to accept funds from, who gets our funding, and how to make their employees happy. In 2015, Fund 1 had already completed its investment portfolio only three years after it was launched.

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2.1 Timeline and the Brazilian Market

In 2000 Brazil was battling with inequality, and in 2010 the economy was booming which rose 40 million people out from poverty. Yet despite these efforts, Brazil was still one of the world’s most unequal countries. In 2009, Vox Capital was founded and by this time there were only a few investment firms available in this market. During 2015 and 2016 Brazil had the worst recession in 20 years which meant unemployment, devaluation of the currency, major downturns in government social programs. Despite this, in 2016, Vox had managed to get 29 investors and in 2017 the investment sector was attracting much more attention than when Vox was founded and the same year Vox Capital collected money for their second fund. Brazil is still in the lower half of the global economic ranking, however, there have been slight improvements in this forecast period (2021-25) compared to the previous one (Economist Intelligence, 2021). Yet, as the case mentions despite the great efforts against inequality in 2000 and 2010, around 80% of the population was still earning less than US$9 per day. The presidential elections in Brazil are coming up in October 2022, and the right-wing president, Jair Bolsonaro likely to run up against the former president Lula. Bolsonaro has made threats not to accept or respect the outcome of the elections unless he is the winning president (Economist Intelligence, 2021), which are clearly anti-democratic statements, and if this were to happen 2022 can become a tumultuous year for the inhabitants of Brazil but also for Vox Capital.

2.2 SWOT Analysis

This section will bring forth the key strengths, weaknesses, opportunities, and threats associated with Vox Capital. 4

Strengths Vox Capital has a well-established brand name (Appendix 2), the company has a history of growth and has received both national and international recognition. Which makes them attractive both to investors and investees. Additionally, Vox Capital develops its strategies after making a thorough investigation by determining its success. Thus, the company has been developing its business strategies after continuous revision of its internal and external processes, making them agile towards changes in the market.

Weaknesses One of the perceived weaknesses that Vox Capital is experiencing is that they are walking off the beaten track and trying to generate profit in both the financial and the social bottom line, which means that there will always be a trade-off. Another perceived weakness is their struggle of not reaching the social impact they desire, according to GIIRS Vox Capital is responsible socially and environmentally, but not a true impact company. Which is something they are constantly working towards. They have also been criticized for being too close with the investees, which brings a risk of becoming too subjective.

Opportunities Vox Capital has plenty of opportunities, one of them being a great potential for growth in international markets. Vox Capital is hesitant to do marketing or become too commercialized, but they do have great opportunities to increase their marketing in a suitable manner for their mission. It can help to spread awareness to people. There is also an increase in demand for social

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impact investment, as mentioned in the case, in only eight Brazil went from three impact investment companies to 29.

Threats One threat to the mission that Vox Capital is working towards is the other firms’ in desire for profit in this sector. As the case mentions, other firms are using this sector for profit, and even if they are helping people out to some extent, it is still creating a reputation about social impact investment firms that Vox Capital does not want to be included in. The other firm’s preference for for-profit and marketing can become a threat to Vox in the future.

3. Key Issues Strategic Issues

The key strategic issue presented in this case is how Vox Capital should make decisions in order to be aligned with its mission. Their mission is “To empower people and companies to create a more just and joyous world for everyone.” (p. 235). In this case, we learn that the biggest struggle the founders are experiencing is if the company is generating the social impact that they want to be generating. Vox Capital is continuously aiming to renew its internal and external processes in order to stay up to date and improve its already existing processes. They are going back to revise how they can make their workplace better and make the world a better place. But also, as mentioned in the case, the founders are also questioning whether they are making the social impact they want to make and contemplating that if they are not doing that, they should leave the company and figure out how to better make a social impact. Some other issues mentioned which are connected to this one is then who should they accept money from, where to draw the line. Since there are issues with corruption and other 6

deviant market players. As well as who gets to take part in the money? Should someone with an important cause but who is not interested in the cause get funding? The issue lies in being consistent with their values and aligned with their mission.

4. Recommendations Since Brazil is still struggling with inequality and poverty, the need for social impact investment firms is still highly relevant. Moreover, keeping the potentially turbulent upcoming elections in mind, for future recommendations for Vox Capital. In turbulent times companies have to adjust to the rapid changes in the market accordingly. However, being a substantial company like Vox Capital demands great knowledge and capabilities in innovations. Which will be the key priority for the company to work towards. The recommendation for Vox Capital is to continue its continuous innovation, it is of the highest importance for companies to work with innovation to stay afloat, especially in a growing market (Teece, Raspin, and Cox, 2020). “... embracing uncertainty is the best way to confront external forces outside your control” (Webb, 2020, p. 70) Companies have to be sensitive towards the external changes in the market and renew their processes according to the ongoing shifts in their environment. These shifts can be competitors, politics, sudden health-related outbreaks such as the ongoing pandemic of Covid-19, etc. If there are disruptive changes in the market, companies have to be more radical in their innovation strategy. If you are a big company that suddenly needs to make a radical shift in strategies, you have to be agile. Agility means “... the capacity of an organization to efficiently and effectively redeploy/ redirect its resources to value-creating and value protecting (and capturing) higher-yield activities as internal and external circumstances warrant” (Teece, Peteraf, Leih, 2016, p. 17). Teece et al. (2016), further 7

proposes that companies should create and sustain their agility through the practice of sensing, seizing, and transforming. Which are the three primary pillars that Vox should work with in order to achieve agility. Vox Capital needs to work with this needs to continue their internal and external evaluation of their processes and transform their business accordingly. Furthermore, suggestively, the company should also implement marketing strategies to make its voice heard amongst the other “social washing” companies. Despite the fact that all social companies are working toward a good cause, it is still important that the ones making a greater impact will receive greater outcomes. Advertising would generate new customers and could enhance the business.

5. Conclusion To conclude, Vox Capital is in a market that is experiencing growth and potential external turbulence. In order to deal with turbulence, it is suggested to embrace the uncertainties and improve innovation processes in order to follow the market shifts and stand strong. Vox Capital should work with the suggested framework of sensing, seizing, and transforming by Teece et al (2016) in order to achieve the agility needed in a shifting market. In addition to this, Vox Capital should also aim towards improving marketing strategies through the use of innovation in order to stay relevant amongst the commercialized competition.

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References Country.eiu.com.eu1.proxy.openathens.net. 2021. OpenAthens / Sign in. [online] Available at: [Accessed 16 September 2021]. Impacto.voxcapital.com.br. 2021. [online] Available at:

[Accessed 16 September 2021]. Teece, D.J., Raspin, P.G., and Cox, D.R. (2020). Plotting strategy in a dynamic world, Sloan Management Review, Fall 2020, pp. 28-33 Teece, D., Peteraf, M. and Leih, S., 2016. Dynamic Capabilities and Organizational Agility: Risk, Uncertainty and Entrepreneurial Management in the Innovation Economy. California Management Review, 58(4), pp. 13 – 35 Webb, A. (2020). The 11 sources of disruption every company must monitor, Sloan Management Review, Spring 2020, pp.65-70.

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Appendix I

Impacto, (2021)

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Appendix II

(Impacto, 2021)

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