The Brief | May 8, 2019

Blackstone’s impact strategy, unshackling immigrant founders, fintech for low-income South Africans, donor-advised fund windfall with Beyond Meat IPO

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What we know about Blackstone’s impact infrastructure, real estate and private-equity initiative. As one of the largest alternative asset managers in the world, Blackstone is looking to put its unique stamp on impact investing. The $512 billion behemoth said this week it is building an impact strategy to advance health and well-being, financial access, sustainable communities and green technologies. Blackstone hired Tanya Barnes, a former Goldman Sachs’ merchant banker, to lead the initiative. The firm has not disclosed its impact investing targets but Blackstone’s president, Jon Gray, cited investors’ “growing demand for impact investments.”

Blackstone’s strategy looks to be different in key respects from the approaches of TPG Growth, KKR, Bain Capital, Partners Group and other big private equity players that have launched impact funds in recent years. For starters, private equity will be only part of Blackstone’s impact portfolio, which will include real estate and infrastructure investments as well. In addition, the firm will co-invest alongside outside fund managers and make some primary commitments to impact funds, in what could be termed a fund-of-funds strategy. Pension funds and other institutional investors have been keen to diversify with alternative assets, but many newer and smaller impact fund managers simply can’t absorb the big checks institutional investors must write. Blackstone can. The firm’s Strategic Partners group, where the initiative will be housed, has raised $42 billion and closed nearly 1,300 deals over 20 years – an average of one deal every five to six days.

Read, “What we know about Blackstone’s impact infrastructure, real estate and private-equity initiative,” by Jessica Pothering on ImpactAlpha.

Dealflow: Follow the Money

Unshackled raises $20 million venture fund for immigrant-founded startups. The Palo Alto-based venture capital firm “de-risks” investments in foreign-born entrepreneurs by helping immigrant founders secure visas and get business support. The $20 million early-stage fund is the firm’s second, after a debut fund of $15.5 million. “The difference between success and failures is oftentimes who you know and when,” Unshackled’s Manan Mehta, the son of immigrants, told TechCrunch. The firm has backed 31 companies since 2015, including vegan grocer Mylk Guys, plant-based nutrition firm Plantible, driverless truck startup Starsky Robotics, African logistics firm Site Logistics and Togg, which makes sensors to monitor seniors in nursing homes. The startups have gone on to raise $54 million. Unshackled’s limited partners include Bloomberg Beta, Yahoo co-founder Jerry Yang’s AME Cloud Ventures, Laurene Powell Jobs’ Emerson Collective and Techstars’ Brad Feld. More.

Nobuntu to expand financial services for low-income South Africans with Crossfin’s backing. Low-income South Africans still have access to a limited range of financial services. Nobuntu, launched in 2017, is building a range of fintech products for low-income consumers, including funeral insurance and a peer-to-peer retirement savings plan. “The traditional cost structure makes existing products expensive, complicated and only available to wealthier people,” Nobuntu’s Tyron Fouche told Africa Digest. The undisclosed investment from fintech holding company Crossfin will give Nobunto access to 9,000 retailers and 13,500 mobile merchants in seven African countries. Read on.

Signals: Ahead of the Curve

Philanthropic investors multiply their impact assets with Beyond Meat’s IPO. Impact investments from donor-advised funds helped seed the growth of Beyond Meat, the plant-based meat company that staged a successful public offering earlier this month. Commercial real-estate investor Mark Van Ness, and Honest Tea’s Seth Goldman, now executive chair at Beyond Meat, invested in the company from their donor-advised funds, tax-advantaged accounts originally designed for grant-making. The $1.1 million combined pre-IPO investment from the accounts of Van Ness and Goldman are valued at more than $30 million as of yesterday’s close, according to ImpactAssets. The windfall pushed “DAF” assets managed by Bethesda-based ImpactAssets above $700 million. The outcome suggests donor-advised funds could represent the kind of risk-tolerant catalytic capital needed by early-stage impact companies. “I do make investments out of my own portfolio,” Goldman said in 2017. “But I will take more of a risk with the donor-advised fund, because whether it succeeds or not, I’m not getting any money back personally.”

  • Growing market. DAFs are public-charity giving vehicles that allow donors to take immediate tax deductions, then make grants over time. A growing number of DAF donors are making impact investments as well; returns may be reinvested or regranted. Assets in donor-advised funds jumped 27% to $110 billion in 2017.
  • Untapped opportunity. Still, DAF investing is largely an untapped opportunity for the impact investing space, says ImpactAsset’s Tim Freundlich. “Particularly in the early stage segment, it can aggregate many small commitments from individual donors into one meaningful check, and create a new source of capital for entrepreneurs.”
  • Investment vehicles. ImpactAssets has helped donors make nearly 600 impact investments since 2011. Commercial sponsors like Fidelity Charitable, Schwab Charitable, Vanguard Charitable and National Philanthropic Trust are dipping their toes into DAF-originated impact investments. Community foundations, including Chicago Community Trust and Philadelphia Foundation, are pointing DAF capital toward local, place-based investments.
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Agents of Impact: Follow the Talent

Follow the talent. KKR and Harlem Capital partner to recruit women and minority investment professionals… Fintech firm Fig Loans (backed by VilCap Investments and Techstars) receives B Corp and federal Community Development Financial Institution certifications… Salesforce is looking for an impact investing manager in San Francisco.

Where to be. The Invest for Good Brazil conference at London Business School May 16 will connect international investors and Brazilian venture capitalists and regulators. ImpactAlpha subscribers get 25% off with code IMPACTALPHA25BRAZIL. Register now ImpactAssets (see Signals above) is a program partner at SEED, the San Francisco gathering of impact ecosystem support for early stage ventures. Sign-up now with code SEEDPromoPartner to receive a 30% discount… Alliance Healthcare Foundation is hosting a healthcare-enterprise pitch event for funders at San Diego State University May 9.

May 8, 2019.