Greetings, ImpactAlpha readers!
#Featured: ImpactAlpha Voices
Larry Fink flips social impact from a luxury to a necessity for every company. The chief executive of BlackRock, the world’s largest asset manager with $6 trillion under management, served notice on corporate CEOs their companies “must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.” Fink made his point as clearly as possible: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
Village Capital’s Ross Baird, writing on ImpactAlpha, argues that Fink’s edict could change the decision-making of CEOs, boards and leadership teams in ways that corporate social responsibility and impact investing have not. “If BlackRock does what it says it’s going to do — if they start to sell stocks in companies that can’t firmly demonstrate the impact they are having, it would mean that the stock price of a business will depend, at least in part, on whether or not that business is doing something positive for society,” Baird writes. “Lots of CEOs talk about the impact their company has, and market around that impact. It’s rare for a company executive to think, ‘If my company doesn’t make an impact, my stock price will go down; I’ll lose money; and the board will fire me.’”
Read, “BlackRock just did one thing that changed the game for anyone who invests,” by Ross Baird on ImpactAlpha.
#Dealflow: Follow the Money
Husk Power secures $20 million for micro-grid expansion. Bihar, India-based Husk delivers mini-power grids in rural India and East Africa. Its technology uses solar, biogas and batteries. Shell Technology Ventures, French utility ENGIE’s impact investment fund, and the Swedish development finance institution Swedfund International backed the $20 million equity round. Husk originally made biogas systems powered by rice husks, but in 2013 changed its model (paywall) to focus on solar hybrid mini-grids. Acumen, a nonprofit impact investment fund, was an early backer. Husk Power aims to install 300 mini-grids in India and Tanzania in the next four years, serving 100,000 people.
Voatz raises $2.2 million to improve election transparency. Can blockchain make voting more secure? Boston-based Voatz makes mobile-voting software that uses the distributed-ledger technology to safeguard results. Originally designed for university elections, the smartphone software aims to encourage greater participation in elections by making voting more convenient. It is used by labor unions, non-profits and town governments. Urban Innovation Fund; business coach Joe Caruso; and Medici Ventures, Overstock.com’s venture arm, provided the funding. Medici, which focuses on blockchain investments, also backed SettleMint, which uses the technology to record votes.
ResponsAbility invests in ag-finance venture Samunnati. Chennai-based Samunnati lends to India’s small farmers and agriculture businesses; loans are based on cash flow, which helps ease debt-repayment pressure that hashurtother ag-credit programs. It operates in 10 states and disbursed $80 million in credit since 2014. It also supports borrowers with financial intermediation, advising and market connections. The investment, amount undisclosed, is the first from responsAbility’s agriculture private equity fund, (More on the Swiss impact investors ag-sector work here.)
Calling all impact finance MBS students. In the Kellogg-Morgan Stanley Sustainable Investing Challenge, graduate-student teams worldwide compete to come up with new ideas for investing for impact. Winners receive mentoring, networking and $15,000 in cash. Past winners include EduIndia, which finances new private schools in India; Terra Limpa, an Angolan fund to improve agriculture productivity and land ownership; and Fresh Coast Capital, which just raised $1.25 million to upgrade U.S. water and wastewater infrastructure. This year’s competition will be held in London on April 13th. Requests for mentors are due by January 23rd (here), and prospectuses by February 20th (here).
#Signals: Ahead of the Curve
Keeping up with India’s fintech rush. #Dealflow can barely keep up with the flood of interest in financial technology startups in India. “India offers the highest expected return on investment on fintech projects,” with returns of 29% versus a global average of 20%, according to a report from PwC and Startupbootcamp. Driving the action are greater openness among regulators for non-banks, Prime Minister Modi’s “demonetization” strategy and demand from e-payment companies like PayPal, Amazon and Paytm for new markets (Amazon, it seems, is taking advantage of all three trends.) Personal finance, peer-to-peer lending and micro-financing are all enticing investors; nearly all promise proprietary technology. Here is just some of the action so far this year:
- Personal finance: Peer-to-peer lender AnyTimeLoan landed $2 million. EarlySalary raised $15.6 million for app-based payday loans. Savings app Balance Technology was selected for YES BANK’s fintech accelerator.
- Small business and microfinance: Lendingkart raised $3.8 million for small-business lending. Microfinance firm Spandana Sphoortysecured$63 million in debt funding. Ess Kay Fincorp closed $32 million for small-business and vehicle financing in rural and near-urban areas.
- Digital and mobile payments: Razorpay, which sells online-payment software, raised $20 million to help businesses manage digital payments. Mobile-payment company Dov-E was also selected for YES FINTECH.
- Financial efficiency: PhonePe is expanding into insurance and mutual products for financial-services firms. Moneytor received seed funding to automate debt collection. Investors poured $13.2 million in payroll and employee benefits management startup NiYO. FinBit, whose software helps underwriters analyze bank statements, and Fyle, which automates business-expense management, also joined YES FINTECH accelerator.
First the sun, now the wind. China is already the world’s largest producer of solar energy. By 2022, it will also become the world’s offshore wind leader, according to new research from Bloomberg New Energy Finance (paywall). Globally, offshore-wind capacity is expected to hit 115 gigawatts by 2030, up from almost 18 GW today, the report says.
Thank China’s commitments in the Paris Agreement on climate change and its drive for cleaner, more efficient economic development. The world’s most populous country and largest emitter of greenhouse gas has reduced energy consumption relative to GDP. Its commitment to invest $360 billion in renewable energy by 2020 is expected to add 13 million jobs. By 2030, wind and solar generation could replace the equivalent of 300 million tonnes of coal a year — about as much as France consumed in 2015, Greenpeace reports.
There’s a catch in the lightning-paced growth of China’s renewables sector. Half the world’s 2018 production is already destined for China, and its appetite for solar could lead to a slowdown in development elsewhere, the Bloomberg report warns. “Solar developers could find it harder to line up supplies to build plants in other countries,” Bloomberg says. “China’s appetite is both a blessing for solar and a curse.”
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