Accelerating co-op businesses, Breakthrough Energy Ventures Europe, access to dental care, the new fiduciary duty



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Series: New Revivalists

Start.coop: Accelerating co-op businesses to expand ownership for workers and customers. Greg Brodsky grew up watching his father build a local carpet store into a 2,000-store chain that buys and sells floor coverings on par with Home Depot and Lowes. A key difference: the stores were cooperatively owned by local independent carpet dealers. Later, Brodsky used the same model to create a purchasing co-op for bicycle stores. Now, Brodsky is helping other entrepreneurs scale their own shared-ownership business models through Start.coop, a co-op accelerator in Boston that he co-founded with a half-dozen other co-op evangelists. “We want to help the entrepreneurs, but we also want to help update the narrative and take some of the mystery out of the word ‘co-op,’” Brodsky told ImpactAlpha for the latest profile in our “New Revivalists” series. Start.coop’s first cohort of five companies completed the 12-week training program and started raising money in May. The businesses range from Driver’s Seat, a data-sharing platform for rideshare drivers, to Arizmendi Roots and Returns, a bakery co-op in Oakland, Calif. that is branching out into affordable housing.

A cooperative represents an ownership model, “that changes the incentives in some very powerful ways,” says Brodsky. Yes, there’s profit-sharing, among customers, workers or other business owners. There’s also usually shared governance or accountability rights. “And then there’s also kind of this psychosocial thing: What does it mean to be an owner of a company versus just a customer? The ownership actually changes our relationship with businesses.” The 30,000 co-ops in the U.S. have a combined 120 million members. In a typical business, “incentives get out of whack if the people who support the business are over here, but all the decision making is over here,” says Brodsky. “We’re bringing the incentives together.”

Read, “Accelerating co-op businesses to expand ownership for workers and customers,” by Liz Enochs on ImpactAlpha.

Dealflow: Follow the Money

Breakthrough Energy Ventures Europe goes live with €100 million. The billionaire-backed clean energy investor consortium launched a €100 million ($111 million) fund to invest in European ventures. The European Union has committed to cut carbon emissions by 40% by 2030. Breakthrough Energy Ventures Europe (BEV-E) is capitalized with €50 million from the European Investment Bank and €50 million from Breakthrough’s investors, including Bill Gates, Jeff Bezos, Jack Ma, Mukesh Ambani and Richard Branson. It’s a small sum compared to what is needed: Achieving carbon neutrality by 2050 would require an estimated €500 billion in investment per year. The original Breakthrough Energy Ventures intends to catalyze $1 billion in “patient, risk-tolerant capital so that more clean energy innovations get to market faster.” It has made 16 investments to date, including in Baseload Capital, CarbonCure and several battery ventures. More.

Bain Capital acquires Rodeo Dental to expand access to dental care. Bain Capital’s Double Impact fund took a majority stake in Texas-based dental services provider Rodeo Dental. Less than half of children insured under Medicaid or the Children’s Health Insurance Program receive regular dental care, Bain Capital’s Peter Spring tells ImpactAlpha. “Oral health wouldn’t be as much of a financial burden for [low-income] families, but most dentists aren’t compelled to accept Medicaid.” Rodeo provides affordable dental services through 21 locations across Texas, providing 250,000 appointments a year, regardless of patients’ insurance status or income level. Reaching more patients is a key part of Bain Capital’s impact strategy for the investment. The firm will also work with Rodeo to track first-time dental patients and patient satisfaction. Read on.

Dealflow overflow.

  • Tides Canada launched a 100%-impact donor advised fund to ensure that both investment and philanthropic commitments have a positive impact mission.
  • Leadout Capital Partners raised $27 million for its first fund, which will invest in pre-seed and seed-stage software companies with diverse founders.
  • Nairobi-based Kuria Capital invested in Fundis to help Kenya’s informal technicians and craftsmen secure more reliable work.

Impact Voices: Pass the Mic

The new fiduciary duty demands a single framework for measuring impact. Which is the better use of money – treating disease in Africa, educating youths in Latin America or replacing carbon emissions in Asia? “This is not a hypothetical question,” writes Shami Nissan of Actis, an emerging-market investor with $7.6 billion in assets under management. “It’s the kind that managers of family offices, pension funds and other institutions will need to answer as part of their fiduciary duty.” Fiduciaries’ duty to assess impact, says Nissan, is “a legal responsibility, equal in weight to assessing the likely risks and returns of investment opportunities.” In a guest post on ImpactAlpha, Nissan calls for the adoption of a single coherent, verifiable standard for measurement that makes it as easy for investors to compare impact as investment returns.

  • Common principles. The IFC’s principles that define impact investment were adopted last month by more than 60 asset managers and institutional investors (See, “Global investment firms adopt IFC principles seeking a market standard for impact investing). Principle No. 4: “Assess the expected impact of each investment, based on a systematic approach.”
  • Impact comparables. With its methodology, which Actis is making public, the fund manager is able to answer the questions that Nissan posed. The portfolio company treating disease in Africa was the most impactful at the time of our investment. “We’ve been able to add greater impact over time to our education investment in Latin America,” writes Nissan. The company replacing carbon emissions in Asia was “the least impactful at the time of our investment, but is now the most.”

Keep reading, “The new fiduciary duty demands a single framework for measuring impact,” by Actis’ Shami Nissan on ImpactAlpha.

Agents of Impact: Follow the Talent

Seize the opportunity. Carbon Lighthouse seeks a director of finance in San Francisco… PG Impact Investments is looking for an impact investing investment manager in Singapore (see, “PG Impact closes its first fund targeting the Global Goals at €210 million)… German development bank Kfw’s DEG is hiring a senior analyst or investment manager for its equity and funds business in Brazil and other Latin American countries.

Where to be. New Ventures Mexico is hosting a happy hour June 5 in New York to showcase this year’s I3 LATAM impact entrepreneurs… Village Capital is convening a fintech community event June 5 in Los Angeles… i(x) investments and Good Money present the Entrepreneurs Impact Summit June 13-14 in Santa Monica (Register with code IMPACTALPHA19 for 25% off)… The Refugee Investment Network formally launches in New York City June 20 (see, “A growing community of investors steers capital to solutions that benefit refugees).

May 30, 2019.

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