The Week in impact investing: Path forward

TGIF, Agents of Impact! 

• Roundup: Common cause to reach the tipping point
• Podcasts: Live-ish from Amsterdam and the debut of the Market Makers
• Spotlight: India’s edtech unicorns

🗣 Mystics and mechanics. Has impact become inevitable? Impact assets under management grow year after year, through market ups and downs. So too does the evidence base that investing to include everyone, share the wealth and otherwise improve the quality of life also provides a lift to risk-adjusted returns. AlphaMundi’s Tim Radjy cited evidence that impact investments in emerging markets can match or exceed asset owners’ expectations of risk-adjusted returns. The recent release of decades of data on emerging market loans from the GEMs database demonstrates “a track record of loan repayment and recovery comparable to other debt assets, with risk diversification benefits,” according to ODI’s Neil Gregory. Our takeaway from the many reports of active deal-making at the Global Impact Investing Network’s forum this week is that fund managers and the asset owners are warming up to bigger funds and bigger swings (David Bank reports from Amsterdam on This Week in Impact, below). In maturation and momentum, “impact investing is inevitable,” the GIIN’s Amit Bouri told ImpactAlpha. 

But when? The GIIN’s $1.5 trillion-ish estimate of total impact assets under management is not yet enough to tip the rest of the financial system toward sustainable development and urgent climate action. That transformation needs both mechanics and mystics, as Lynn Zebeda of Catalytic, an impact consultancy, suggested at our memorable dinner and tour of her sustainable floating neighborhood in Amsterdam. Among the mechanics are the market-builders who are bringing together developers of green projects in underserved communities and the impressive array of lenders charged with leveraging $27 billion in greenhouse gas reduction funds into a swell of private capital, as Lynnley Browning reports. The mechanics of fintech and asset-backed finance are building a brisk market for off-grid solar, fueled by “productive use appliances” such as solar irrigation pumps, that improve livelihoods in the Global South, as Lucy Ngige reports. And the deployment of impact-first capital has a growing set of backers, including family offices Blue Haven Initiative, Builders Vision and Ceniarth, to advance the mechanics of catalytic capital. 

Progress may be incremental, but “the opportunity to shape a more sustainable and equitable future is still within reach,” Bill Burckart of The Investment Integration Project shared in a dispatch from PRI in Person in Toronto. Systems-lens investing, he says, offers investors a pathway to “generate positive returns while being good stewards of our climate and society.” Mystic visionaries and system-changers will mix with mechanics at next week’s SOCAP gathering in San Francisco. The “ImpactAlpha track” at SOCAP includes the opening panels on inclusion and ownership, climate, and “AI = Accelerating Impact,” a phrase we coined. We’re particularly excited about the premiere of ImpactAlpha’s first film, a 20-minute documentary profiling Napoleon Wallace, the visionary entrepreneur in North Carolina who is developing a playbook for the Reconstruction of Black wealth. “There is immense power and potential in building a coalition that includes both the historically privileged and the most marginalized, working together toward a common goal of inclusion and shared prosperity,” Wallace says, through his text-to-voice eye pad. There is common cause to be had as well among the mystics and mechanics that together can make impact investing inevitable, faster. – David Bank and Dennis Price

The Week’s Podcasts

🎧 This Week in Impact: $1.5 trillion of impact capital, from commercial to catalytic. Host Brian Walsh takes up ImpactAlpha’s top stories with editor David Bank, checking in from Amsterdam. Up this week: The GIIN’s new report pegs the impact investing market at $1.5 trillion…ish. The new backers of the Catalytic Capital Consortium’s efforts to expand the use of impact-first capital. And, a preview of “Equity and Ownership,” ImpactAlpha’s first film production, which is premiering at SOCAP next week.

• Listen to the new episode of This Week in Impact. Get the podcast in your feed by subscribing on Apple or Spotify.

📈 The Market Makers: Building inclusive capitalism with Troy Duffie and Lenore Champagne Beirne (video podcasts). The latest addition to the ImpactAlpha Podcast Network, is hosted by the Milken Institute’s Troy Duffie and Bright Ventures’ Lenore Champagne Beirne. On the inaugural episode, Duffie and Champagne Beirne introduce themselves and their choice to pursue more inclusive capitalism through their careers – and with The Market Makers podcast.

• Innovating financial security with Wemimo Abbey. Episode two features Wemimo Abbey, the founder of Esusu, which uses rent payments to help people improve their credit scores. Abbey tells Duffie and Champagne Bearne how he was inspired to start Esusu by his mother’s experience emigrating from Nigeria. “No matter where you come from, the color of your skin and your financial identity shouldn’t determine where you end up in the wealthiest nation the world has ever seen,” he says. Listen to or watch episode two of The Market Makers.

🏛️ Capitol Gains: Joel Rogers on taking the high road to sustainable and equitable development. “High road development is about prospering better together in places forever,” explains Joel Rogers of the University of Wisconsin, Madison, in the latest Capitol Gains podcast. “It’s about reducing waste, adding value, capturing the benefits, and doing it again.” Rogers speaks with hosts Matt Posner and James McIntyre about how local governments can implement strategies that foster economic equity, sustainability and resilience while navigating the complex challenges of modern governance.  

• Listen to the latest Capitol Gains podcast with Joel Rogers. 

The Week’s Deal Spotlight

India’s edtech ventures stage a comeback amid demand for education and upskilling. Artificial intelligence and other technological advances could transform nearly a third of the world’s jobs in the next five years. That’s driving global demand for new skills and education. India’s vibrant ecosystem of education tech providers is staging a comeback after getting hit by the global funding downturn. Mumbai-based Eruditus, which offers online professional development courses, raised $150 million this month in a round led by TPG Rise Fund that gave it a $3 billion valuation. Also in Mumbai, upGrad secured $60 million from Singapore’s Temasek. In the northern state of Uttar Pradesh, PhysicsWallah which provides an online curriculum for students in grades six through 12, landed $210 million from Mumbai-based Hornbill Capital Advisers and others in September.

• Market opportunity. An estimated 4,450 remote learning startups in India serve 300 million students. The government has several initiatives to promote e-learning. A lack of accessible, quality educational content in traditional schools and a shortage of teachers has created an edtech market that is expected to reach $10 billion by next year. Startups however have to grapple with poor connectivity in rural areas and resistance to remote learning.

• Return on education. India’s edtech startups raised $4.7 billion in 2021, an all-time peak, according to data from market research firm Tracxn. That year, Temasek led a $440 million investment in Bangalore-based Unacademy, giving the startup a $3.4 billion valuation (the company has since closed some business lines and laid off workers). The sector funding plunged more than 90%, to $321 million, in 2023. Before the recent deals, the sector attracted only $215 million through August.
   
• Keep reading, and catch up on all of this week’s dealflow reporting on ImpactAlpha.

The Week’s Talent and Jobs

💼 See and share more than a dozen new impact jobs posted this week on ImpactAlpha’s Career Hub and view hundreds of more jobs in impact investing and sustainable finance. Have a job listing to post? Submit it here.

Hillá Watkins, formerly of Scale Venture Partners, joined Congruent Ventures… Eric Stephenson, previously of Align Impact, joined Pathstone as managing director of integration and optimization… KOIS added Florian Kemmerich, previously a managing partner with Palladium, as managing partner… Norsad Capital tapped Vusi Raseroka, previously with Public Investment Corp., as CEO… Dustin Shay, previously with Acumen, joined Mission Driven Finance as senior director of capital initiatives.

Brian Wyborn stepped down as managing partner of First Australians Capital to join Aboriginal Investment NT, an Australian firm that invests in Indigenous communities in Australia’s northeast region… The Local Initiatives Support Corp., part of Greenhouse Gas Reduction Fund recipient Power Forward Communities, named John Moon, formerly of Wells Fargo, as president of LISC Green, LLC, LISC’s implementing entity in the fund… The Center for Sustainable Finance and Private Wealth North America, or CSP North America, appointed WakeUp Capital’s Faye Walsh Drouillard to board chair.

Wilmington Trust appointed Sarah Friedman Hersh, previously with Vanguard, to head of sustainable investing… Zoe Bulger, previously with Summa Equity, joined The California Endowment as impact manager… The Washington Center for Employee Ownership tapped Patricia Kwan, previously with Grailed, as director… Village Capital promoted Sofía Cándano to global communications and branding director. 

That’s a wrap. Have a wonderful weekend. 

– Oct. 25, 2024