Willy Foote (second from right) is the Founder and CEO of Root Capital. Credit: Root Capital
In the late ‘90s, while traveling through Mexico on a journalism fellowship, Willy Foote spent time getting to know a vanilla cooperative in the Chimalapas rainforest. Ultimately, Willy witnessed the co-op fail, because, despite the tenacity of its leadership, the business lacked access to the credit and capacity building it needed to access global markets.
Root Capital was born out of this experience, with the aim of financing the “missing middle”—agricultural businesses that are too big for microfinance, but deemed too small or risky for a commercial bank—and improving livelihoods for smallholder farming families around the world.
The Challenge
The early days of Root Capital were difficult, working alongside small and growing agricultural businesses (agri-SGBs) to create a new financing model that would serve their needs while matching investor expectations. The true size of the financing gap became increasingly clear—there was no shortage of businesses interested in Root Capital’s loans.
“It wasn’t enough to just scale our own operations,” Willy recalled. “If we wanted to achieve our mission, we needed to bring others along with us. We needed to change the system. We needed to build a movement.”
Our Collaboration
“We committed to what I like to call ‘pathological collaboration.’ As we iterated our core loan product, we did so in close collaboration with our clients, their buyers, and our peers,” Willy continued.
Root Capital has co-founded three coalitions to amplify our impact.
The Aspen Network of Development Entrepreneurs (ANDE), founded in 2009, is a global network of organizations that propel entrepreneurship in developing economies. ANDE members—including both for and nonprofit investment funds, capacity development providers, research and academic institutions, development finance institutions, foundations, and corporations—share the view that targeted support for small and growing businesses represents the most effective way to create the kinds of jobs that improve the lives of individuals and communities.
The Council on Smallholder Agricultural Finance (CSAF), founded in 2012, is an industry group of peer social lenders doing similar work. CSAF meets regularly to establish industry standards, share best practices, and track sector trends. Root Capital is proud of CSAF’s collective impact, growing from seven members at its inception to 19 lenders today. In 2023, CSAF members loaned a total of $697 million, reaching 675 agribusinesses and 2.7 million farmers.
The Climate Action for Smallholders (CASH) Coalition, founded in 2022, aims to accelerate regenerative transition for smallholder farmers and drive scalable climate action. CASH members share knowledge on best practices, technologies, and financing strategies, and collectively advocate for carbon market reforms that value smallholder solutions.
In addition to our engagement in coalitions, Root Capital shares learnings across our impact areas with key audiences. For example, 12 years ago, we launched the Women in Agriculture Initiative (WAI) to identify and address the systemic inequities faced by rural women. In 2023, our groundbreaking report, Inclusion Pays, was released. This rigorous evaluation showcased our decade-long gender-lens investing journey with data from more than 1,500 loans and lessons that spanned the whole process. Root Capital’s partner, Value for Women, worked to train peer lenders on how to mainstream gender-lens investing into their own work.
Willy Foote sorting coffee cherries with Root Capital clients in Rwanda. Credit: Root Capital
The Impact
Beyond the powerful impact of the WAI on rural women and women-led businesses, this investment signaled a shift to Root Capital’s more comprehensive focus on rural resilience beyond access to finance. Though the gap for agricultural agri-SME finance remains a challenge—as high as $106 billion— we continue to innovate alongside our clients to optimize products and services and thus further “crowd in” the sector.
There are also yawning (and growing) gaps in so many other elements critical to agricultural enterprises and rural community resilience beyond gender equity, including jobs for the next generation and, perhaps most critically, climate action. Since 2021, Root Capital has worked at the intersection of these pathways, along with a continued commitment to financial access.
Root Capital will never achieve the scale needed to address these complex, intersecting challenges. Our work with ANDE, CSAF, CASH Coalition, and actors throughout the ecosystem are pivotal to realizing our vision of thousands of rural businesses supporting a thriving agricultural sector, as they replicate and adapt our work well beyond our “factory gates.”
“Systems change is sometimes a nebulous term, but when you feel its impact, it’s incredibly concrete,” Willy noted. “When I reflect on our impact over the past 25 years, I think back on that vanilla cooperative in Mexico and the thousands of others like it that Root Capital has touched over the years. Where the impact is most valuable is in the countless other businesses, communities, and individuals whose lives have been helped thanks to the power of pathological collaboration.”