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#Featured: Impact Voices
Nine out of 10 of the largest U.S. asset managers are now active in impact investing. The biggest asset managers, including №1 BlackRock ($5.7 trillion in assets in 2015) appear to be the first movers, according to a new analysis from impact investing strategy firm Tideline. As Tideline’s Ben Thornley and Kim Wright-Violich write on ImpactAlpha, larger firms, “have a bigger brand and corporate reputation to protect; they have deeper pockets for R&D; and, with client-and asset-retention front of mind, making relationships stickier through innovation is critical, even if just serving a niche.” Of the top 10, only Vanguard ($3.15 trillion), the second-largest US asset manager, has not tapped the trend toward impact.
The findings provide “further evidence of growing demand from clients, but also of a market still in the early phases of institutional adoption,” says Thornley and Wright-Violich. State Street, Goldman Sachs, Fidelity, J.P. Morgan Chase, Bank of New York Mellon, Capital Group, Prudential Financial and Wellington Management have either dedicated strategies or are actively exploring their own impact approach. Among the top 20 U.S. asset managers, Tideline found half are now active in impact investing or are actively testing impact investing strategies, up from fewer than one-third five years ago. Adoption may not be fast enough for impact investing advocates. But “for asset management executives at the largest firms, accustomed to methodical thinking, the shift in the last five years would be understood as nothing short of momentous.”
Read, “Major asset managers moving slowly but surely toward impact investing,” by Tideline’s Ben Thornley and Kim Wright-Violich on ImpactAlpha:
#Dealflow: Follow the Money
Salesforce stands up $50 million impact fund. The San Francisco cloud-computing company intends to use the fund to back social startups that use its products. Already, the Salesforce Impact Fund has made its first round of investments: Hustle, a peer-to-peer messaging services for nonprofits (Salesforce took part in a recent $8 million funding round); Angaza, a software provider for clean-energy startups (Salesforce invested as part of its $10.5 million Series B round — see below); Ellevest, a digital financial advisor geared towards women started last year by Sallie Krawcheck (Salesforce was part of a recent $34 million funding round); and Viridis, a career service that uses machine learning and predictive analytics. Salesforce CEO Marc Benioff has been a champion of business as a force for good. The impact fund will be managed by Salesforce Ventures, the company’s venture arm, which since 2009 has invested more than 250 tech startups in 14 countries. Omidyar Network issued a statement saying it “[looks] forward to continuing to provide support to and co-invest with [Salesforce’s] team.”
Solar venture Angaza raises $10.5 million. The company makes software that lets small-scale solar lighting manufacturers and distributors use mobile payments, making affordable solar energy available to off-grid households that otherwise rely on low-quality dirty fuels for lighting. Solar companies can embed Angaza’s software in each solar device, tracking usage and payments so that users can “pay-as-you-go.” It has two million solar users in 30 countries, TechCrunch reports. The Series B round led by Laurene Powell Jobs’s Emerson Collective with participation from Rethink Impact, Salesforce Ventures’ new impact fund, Social Capital and the Stanford StartX Fund. Angaza has raised $16 million since it was founded.
responsAbility backs Egyptian electronic-payments company Fawry.Fawry works with banks and small-shop owners to make it easier for consumers to pay bills or buy mobile airtime in a country where getting around and bureaucratic hassles are daily challenges. It has also expanded into mobile payments in light of Egypt’s high mobile penetration rate. Swiss investment firm responsAbility has made an undisclosed minority equity investment. Two years ago, in one of the largest private-equity deals in Egypt, Fawry sold a majority stake to a consortium of investors, including the Egyptian-American Enterprise Fund, Helios Investment Partners, and the MENA Long-Term Value Fund, for $100 million. responsAbility manages more than $3.3 billion in assets and has invested in more than 550 impact ventures in 97 countries since it was launched in 2003.
#Signals: Ahead of the Curve
Filling the education funding gap in India. 260 million students in 1.5 million schools. Welcome to India, home to one of the most complex education systems in the world. India has attained near universal primary education –only 3% of students don’t attend grades one through eight. Yet one in four lack access to early education and only 64% successfully transition to secondary school. Dropout and transition rates are higher than average among girls and minority students. Performance is relatively low across the board. India needs to invest about $173 billion a year from now through 2030 to achieve U.N. SDG №4 (Affordable and quality education for all). That’s more than $100 billion more each year than the current government budget. A new report, Funding Education with Impact, from the Asian Venture Philanthropy Network, says impact investors are missing key opportunities. Of the roughly $4 billion impact investors such as Khosla Impact, Unitus Seed Fund and the Michael and Susan Dell Foundation invested in India between 2010 and 2015, only 2% went into education. Primary and secondary education received the bulk of impact investments, with tech-based platforms for tutoring and e-learning taking in significant investment. Early childhood education attracted one-third of investments, mostly directed to “private, urban, early childhood daycare centers catering to middle-income groups,” according to AVPN. Missing out completely: vocational training and “ecosystem interventions,” including curricula, standards and data-collection.
How privacy can keep up with the explosion of data. Smart cities of the 21st century are going to collect enormous amounts of information about their residents. Crossing city records like tax payments, property records and utility bills with data from traffic sensors, smart meters, surveillance cameras and other connected devices can improve services and inform policy. Our urban lives will be ever more tracked, quantified and analyzed as 200 billion devicescome online by 2020. The “open data” movement will make more and more of that information widely available online.
The city of Seattle — home of data behemoths like Amazon and Microsoft — wants to be a model for how to be smart and still protect citizens’ privacy. Seattle is trying to avoid the situation New York’s taxi agency got into a couple of years ago when it released hundreds of millions of taxi trip records, only to find out that it had not adequately anonymized the data. A reporter from Gawker linked the database to identify celebrity cab rides. Last year, Seattle adopted a resolution to make all civic data “open by preference,” rather than “open by default,” CityLab reports. The policy applies to databases from any city agency — the police department, housing and transit authorities, the city’s disability services and others.
“This means we can be open [with data] once we mitigate for privacy risks, release of personally identifying information, and other kinds of harm,” said David Doyle of Seattle Information Technology. Figuring out how to mitigate such risks isn’t straightforward. By itself, one bit of data might not pose a risk to someone’s privacy but could when combined with data from other sources. A “de-identification” expert suggests no more than six to eight indirect identifies should be included in any database, and even those should ensure that multiple people fit any given profile. Seattle plans to check in on itself with an annual data risk assessment — which will be made public.
Onward! Please send any news and comments to [email protected].