Advice for advisors, making blended finance work, big bet on Branch, cashflow loans in Brazil, angel investing in the Pacific Alliance



Greetings, Agents of Impact!

Advice for advisors. For their new guide, “Fundamentals of Sustainable Investing,” William Burckart and Jessica Ziegler interviewed dozens of financial advisors. “How many of you plan to be financial advisors in 10 years?” one suggested they ask. “How many of you are making preparations for your practice to actually reflect who your clients are going to be in 10 years?”

Burckart, co-founder of The Investment Integration Project, will join ImpactAlpha’s Agents of Impact Call No. 8 to talk about the sustainable investing imperative for financial advisors (and share tips for investors who want to get their own advisors up to speed). Special guests include Noel Pacarro Brown of the Conscious Wealth Management group at Morgan Stanley, Mark Sloss of Regenerative Investment Strategies and Brie Williams of State Street Global Advisors. Join The Call, next Thursday, April 18 at 1 pm ET / 10 am PT / 5 pm London. RSVP today

Featured: Impact Voices

Key ingredient in the blended-finance blend: revenues. As “blended finance” becomes part of the global development vernacular, the term is popping up in conversations where it doesn’t belong, says Joan Larrea of Convergence. Sprinkling the phrase on a noble endeavor doesn’t make it an investable financial transaction. “To put it bluntly, if you want investors, you have to present a revenue line,” Larrea writes in a guest post on ImpactAlpha. With development types converging on Washington, D.C. for the spring meetings of the World Bank, Larrea offers a reminder that blended finance is not magic. Still, catalytic capital can help enterprises test the frontier and attract commercially-priced money into new sectors.

For example, the off-grid solar market, launched with deeply concessional financing, is rapidly reaching investability. GAVI, the global vaccine alliance, is not generally recognized for its blend of finance, but Larrea says it may be “biggest blended finance macro-program ever seen.” Recognizing the immense cost savings from immunizations, institutions committed to minimum purchase obligations that mitigated risks for vaccine manufacturers. Those with catalytic resources, Larrea says, “need to make sure they are using the best possible tools” to meet the Sustainable Development Goals. “Let’s keep it real,” she writes. “And let’s accept that attracting new capital into some sectors is hard, it will be incremental, and none of us has any magic wands.”

Read, “Key ingredient in the blended-finance blend: revenues,” by Convergence’s Joan Larrea on ImpactAlpha.

Dealflow: Follow the Money

Branch raises $170 million to drive access to credit in emerging markets… Kiva co-founder Matt Flannery’s new venture, Branch International, secured a major round of financing from Visa, Foundation Capital, B Capital, Andreessen Horowitz, Formation 8 and Trinity Ventures. Branch uses smartphone data to underwrite small loans in sub-Saharan African, Latin America and South Asia. It has disbursed more than $350 million in 13 million loans to three million people in Kenya, Nigeria, Mexico and India. Read on.

…while Brazil’s Weel raises $30 million from Franklin Templeton to support small-business lending. The Brazil- and Israel-based fintech startup Weel can provide short-term loans to small businesses against their incoming payments within 15 minutes, and at a lower interest rate than most other financial services firms. It also claims a 0% default rate. Cashflow management is a critical challenge for small businesses worldwide and Weel’s cashflow loans can help Brazil’s small businesses bridge the gaps between incoming and outgoing payments. Weel has raised $30 million from U.S. investment firm Franklin Templeton to add services for Brazil’s small businesses and expand to Chile and Mexico this year. Here’s more.

Signals: Ahead of the Curve

Angel Ventures searches for unicorns – and impact – in Latin America’s Pacific Alliance. Hernán Fernández founded Angel Ventures as one of Mexico’s first angel networks a decade ago while completing his MBA at MIT. Now comprising 400 angel investors, the firm has investing in 21 companies from its first, $20 million venture fund and is raising and deploying a second fund, with a target of $120 million. “The region is changing dramatically,” Fernández told ImpactAlpha’s David Bank in February at the Foro Latinoamericano de Inversión de Impacto, or FLII. Nimble financial technology startups in the Pacific Alliance – Mexico, Chile, Colombia and Perú – are lowering the cost of banking products and services. Angel Ventures has backed Clip, which has grown to become one of Mexico’s largest digital-payments providers. “Bringing goods and services to the unbanked population is a massive opportunity,” Fernández says.

  • Early-stage capital. Mexico alone has more than 230 fintech startups. The same impact-driven disruption is underway in healthcare, education, agriculture, media and retail. Such ventures need early, risk-taking capital to build, test and scale their products, Fernández says.
  • Pacific Alliance. Mexico, Chile, Colombia and Perú have a combined population of 230 million people and a $2.2 million economy – a market larger than that of Brazil. The four countries are relatively stable democracies with independent central banks, steady exchange rates and a common language. Another commonality: Growing venture ecosystems ripe with startups delivering basic goods and services for the region’s emerging middle classes.
  • Different angels. In the U.S. and Europe, four out of five angel investors have been successful entrepreneurs. “In emerging markets, that trend is broken,” Fernández says. “We see high-net-worth individuals or successful executives who are investing their year-end bonuses in startups.” Angel Ventures doesn’t call itself an impact fund, but Fernández says about half of its 400 investors are open to impact investments.

Read, “Angel Ventures searches for unicorns – and impact – in Latin America’s Pacific Alliance,” by Dennis Price on ImpactAlpha.

  • Join the conversation: ImpactAlpha’s David Bank caught up with Angel Ventures’ Hernán Fernández at the FLII in February. Many thanks to Disruptivo.tv for its help producing the video series.

Agents of Impact: Follow the Talent

Matthew Reilein is the new president and CEO at National Equity FundNew Markets Venture Partners promotes Elizabeth Chou to general partner… Pay-as-you-earn coding program Lambda School is hiring a general manager in India… BlueOrchard is looking for a senior investment risk specialist in Geneva.

April 10, 2019.

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