The Brief | May 6, 2019

Beyond Trade-offs series, Ecosystem Integrity’s $100M fund, financing India’s micro-merchants, Africa’s entrepreneur pipeline, handworker economy

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Greetings, Agents of Impact!

Podcast Series: Beyond Trade-offs

How leading commercial and catalytic investors are managing for impact, risks and returns. In The Land Beyond Trade-offs… investors know their own objectives for social and environmental impact, and craft investment strategies and portfolios that fit their unique appetites for risks and returns. As ‘impact’ becomes an integrated part of investment decision-making, an outdated notion of necessary and permanent trade-off between social benefits and private returns is giving way. Leading investors, both commercial and catalytic, are deploying integrated strategies across assets and across portfolios. In a new series of podcasts produced in collaboration with Omidyar Network, ImpactAlpha asked a range of leading investors what lies… Beyond Tradeoffs.

Over the next few weeks, we’ll explore an integrated “risk-return-impact framework,” with John Goldstein of Goldman Sachs. Ommeed Sathe explains Prudential Financial’s 80/20 rule for balancing market-rate and catalytic investments. Beyond trade-offs lays “more shades of gray,” Lok Capital’s Vishal Mehta told us. The sweet spot for Roy Swan and Christine Looney, who are managing the Ford Foundation’s $1 billion mission-related mandate: sectors such as affordable housing and quality jobs, in which they feel the market has mispriced risks. For Elevar Capital’s Sandeep Farias, it’s an entrepreneurial focus on low-income communities around the world with growing demand for affordable, high-quality products and services. Liesel Pritzker Simmons of the Blue Haven Initiative argues that high-net worth families have particular flexibility to allocate the right capital for the job. The series kicks off with a conversation with Omidyar Network’s Robynn Steffen and Matt Bannick. Says Steffen, “Our message would be, ‘See the full continuum of capital and be intentional about where you play.'”

Keeping reading, “How leading commercial and catalytic investors are managing for impact, risks and returns (podcast),” by David Bank on ImpactAlpha.

Dealflow: Follow the Money

Ecosystem Integrity Fund closes $100 million fund for sustainability tech. The San Francisco-based impact investor invests in early and growth-stage tech companies focusing on environmental sustainability. Its third fund already has made six of eight planned investments, including two in electric vehicle charging (EV Connect and eMotorWerks), solar (Pegasus Solar), water management (Opti), and others. Ecosystem Integrity Fund III more than doubles the capital Ecosystem Integrity Fund raised in two prior funds. EIF’s first fund of $19.6 million, raised in 2011, is fully deployed and has made two exits. EIF’s $57 million second fund is also fully deployed. Read on.

India’s Dvara KGFS raises $14 million for rural financial inclusion… The Chennai-based initiative of financial services company Dvara Trust focuses on financial inclusion in rural India. Dvara KGFS raised a 970 million rupee ($14 million) Series E equity round led by private equity firm Stakeboat Capital, with backing from prior investors LeapFrog Investments, Dvara Trust and Accion. Since launching in 2008, the company has grown its assets under management to 7.6 billion rupees ($110 million) and supported nearly 850,000 customers through 250 branches in four states. Dvara KGFS acquired microfinance institution Varam Capital last month. The Series E round will bolster Varam’s capabilities and help Dvara KGFS open 76 new branches by 2020. Dig in.

…While ftcash raises $7.2 million to lend to India’s micro-merchants. Mumbai-based ftcash offers services for India’s 60 million small merchants, most of whom lack access to formal financial services. Ftcash’s digital payments platform, incubated by PayPal, helps merchants transact business without cash. The company analyzes payment data to provide small loans and lines of credit and has served 30,000 merchants since 2015. Ftcash’s 500 million rupee ($7.2 million) Series A equity round was backed by Accion, Dutch development bank FMO and Indian venture capital firm IvyCap Ventures. Here’s more.

Signals: Ahead of the Curve

Stocking Africa’s entrepreneur pipeline. Last month Devex highlighted the need to get impact capital to more local entrepreneurs in Africa. Now comes venture firm Village Capital’s playbook for accelerators, incubators and other organizations that provide support for such entrepreneurs. The know-how, based on more than 300 interviews and surveys: Sector-specific programs attract better mentors and more funding. Not all micro-, small- and medium-sized businesses are the same (see, “The four ‘missing middles’ among small and growing businesses). Accelerators that emphasize peer collaboration between startups tend to outperform. More from Village Capital.

Hearing from handworkers. The global handicraft market employs hundreds of millions of people and is expected to nearly double to $985 million by 2023. Nonprofit Nest collected data on 500 artisanal small- and midsize enterprises in 90 countries. Among the takeaways: Between 20% and 60% of garment production leaves the factory to be done in homes. Most artisan businesses are selling abroad, but the export opportunity remains largely untapped. Handicraft businesses employ social media but don’t take full advantage of inexpensive technologies like Shopify. More from Nest.

Agents of Impact: Follow the Talent

The Low Income Investment Fund promotes COO Kimberly Latimer-Nelligan to president. Daniel Nissenbaum becomes CEO… San Francisco-based RSF Social Finance is searching for a chief financial officer… Abt Associates seeks an impact investing program coordinator in the Philippines to support Australia’s Investing in Women initiative… Louisville-based Access Ventures is hiring a program associate… Tiedemann Advisors is recruiting an impact investing intern in San Francisco… Sustainable seafood network Fish 2.0 is accepting applications through May 19.

May 6, 2019.