Welcome to #Shifts, ImpactAlpha’s monthly roundup of the ideas and trends driving impact investing. In this edition: investors see opportunity in scaling impact companies, fintech is on fire in Mexico, and human rights is investable. #Shifts happen.
THESES: Provocative investment propositions
Growth capital to scale proven impact business models. Last week, with the announcement of TPG’s Rise Fund, impact investing welcomed the possibility of its first billion dollar fund. The fund's represents a relatively new thesis in the market: the high-growth potential of high-impact enterprises in emerging markets. The new fund, writes Snigdha Sengupta, could “become an important source for the much-needed follow-on growth capital that impact businesses generally find hard to access from conventional private equity investors.” (LiveMint)
Talent + challenge = opportunities in Latin America. A potent mix of high social inequality, an entrepreneurial culture and young folks that want progress is creating impact investing opportunities in Latin America. Local and international investors have deployed $1.3 billion in the region through 520 deals — largely in “impact” enterprises to create formal jobs and deliver services such as education and healthcare, in just the last two years. (ANDE report)
Tech-driven services for migrants. Migrants and refugees need to establish digital identities and receive government services, access finance, education and housing, and communicate and seek employment opportunities. The private sector has a role to play and George Soros is allocating $500 million to invest in companies that deliver these solutions. (WSJ)
MARKETS: Attractive sectors
Mexican fintech boom. Tech, talent, and plenty of unmet demand are fueling investor interest in Mexican fintech startups. The opportunities include: a $10 billion small business credit gap, a banking gap of half of the population in one of the world’s largest consumer markets, and fraud that’s costing the economy about 3 percent of GDP. Recent Series A stage fundraising rounds: Kueski ($10 million), Konfio ($8 million) and PayClip ($8 million). (TechCrunch)
Farmers in India. Smallholder farming is a job creator, a key link to food security and nutrition and… a growing investment opportunity in India. Indian agri-processing venture Lawrencedale recently raised an undisclosed amount of funding. Bangalore-based agriculture tech startup CropIn Technology Solutions raised $2 million, in a transaction that valued the company at $12 million. (VCCircle, TechCircle)
Off-Grid Everywhere. With pay-as-you-go financing fueling growth, off-grid solar from the U.S. to West Africa to South Asia feels like the impact investment de jour. d.light, which has shipped 12 million solar products in 62 countries, just raised a $15 million dollar Series D equity round as part of $22 million in new financing (including $7 million in debt to finance PAYG; see Growth Capital, above). BBOXX, which has rolled out home-based solar to 350,000 in 35 countries since 2010, just closed a $20 million Series C round to expand in West Africa. (ImpactAlpha)
SIGNALS: Emerging trends and ideas
Investing in human rights. Health care for sex workers, clean energy access for billions, community land purchases for low-income mobile home owners — expansion of rights is now investable. Impact investors are building a track record backing human rights non-profits seeking new funding streams and for-profits delivering essential human services to vulnerable populations. (Arabella Advisors)
Mobile money in emerging markets. Delivering financial services by mobile phone to the two billion individuals — more than half of them women — and 200 million small companies that today lack access to savings and credit could be a $3.7 trillion boon over the next decade to emerging market economies and grow provider revenues by $4.2 trillion. That boost could also nearly 100 million jobs across sectors. (McKinsey)
Digital development. Digital solutions to improve lives, foster equitable growth and protect the environment could grow annual information and communications technologies sector revenues by 60 percent, to $2.1 trillion, by 2030. Information and communications technology solutions that help meet the Sustainable Development Goals scale quickly and deliver goods and services in a people-centric and affordable ways. (Accenture)
Photo by NASA.
#Shifts happen. More from our series.