Greetings, ImpactAlpha readers!
#Featured: ImpactAlpha Original
Blockchain, meet the 2030 global goals. ConsenSys, an ambitious Brooklyn software company founded by blockchain guru Joseph Lubin, has launched a $50 million in-house venture capital fund to back startups turning the distributed-ledger technology on global challenges like refugee assistance, distributed energy and supply-chain tracing.
The firm already has more than 150 former bankers, management consultants, mathematics, engineers and techies working on blockchain startups. The new venture fund signals the firm’s intention to demonstrate the potential of the emerging digital transaction architecture to transform the lives of world’s poor. “I believe resolutely in the 100-year mission of blockchain: to completely change the way society functions through decentralized technologies,” says Kavita Gupta, who was tapped to head the fund. A former World Banker and previously an impact investor at the Schmidt Family Foundation of Alphabet’s executive chairman Eric Schmidt, Gupta told ImpactAlpha, “We haven’t even begun to tap the depth of its social impact potential.”
Read “ConsenSys puts up $50 million to hunt for blockchain solutions to global challenges,” by Dennis Price on ImpactAlpha:
Gupta will discuss social impact applications of blockchain at the Triple Bottom Line Investing conference in Stockholm, September 28–29. Register here.
#Dealflow: Follow the Money
Agroforester Florestra Viva secures funding from Moringa. The Brazilian company produces organic heart of palm with environmentally friendly practices. Production of the plant is a $500 million business worldwide, and Brazil is both the largest producer and consumer. However, “heart of palm has been a plague for forest biodiversity in the past,” says Roberto Pini, Florestra Viva’s founder, “extracted from natural forests of Brazil with such intensity that some of its species almost reached extinction.” His company owns a multi-crop farm that grows a less-vulnerable variety, pupunha, without the use of chemicals, and also sources from local smallholder farmers. Moringa, a sustainable-agroforestry investor in Africa and Latin America, didn’t disclose the amount of the investment, which will expand the farm’s operations, open a bottling facility and expand its farmer network. Brazilian film celebrity Fernando Meirelles also invested.
Palatine invests in U.K. workforce development with Trade Skills 4U. The U.K. is facing a skills shortage that could cost the nation £90 billion — or more with post-Brexit changes in immigration. “Without radical reform, swathes of people face a future where they have skills mismatched for jobs, risking them being in low paid, insecure work, and reliant on benefits, at a huge cost to people’s lives and the local and national economy,” says Richard Leese, of the U.K.’s Local Government Authority. Launched in 2005, Trade Skills 4U specializes in electrical training and offers courses at four centers in and around London. With the investment from Palatine, the amount of which was undisclosed, the company plans to open new centers around the U.K. Palatine, a Manchester-based private-equity firm, made the investment from its first Impact Fund. Palatine reached a £75 million ($92.5 million) first closefor the £100 million fund earlier this year.
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
Uncommon Cacao vs. global commodity markets. A higher-than-expected yield last year drove down futures prices for cacao beans on the London and New York markets. In turn, the Ivory Coast’s government slashed the guaranteed price to farmers by 36% — a decision that affects cacao farmers worldwide because the price is set every year in West Africa where 60% of the world’s cocoa is produced. Uncommon Cacao, a Berkeley, Calif., company that provides logistics and financial services to smallholder cacao farmers and connects them with premium chocolate makers, bucked the market. Its latest transparency report details the prices farmers received in the Uncommon Cacao network, where producers earned $1.30 a kilogram above the 2016 West Africa FarmGate price and 30 cents a kilogram above the average commodity price. (Listen to ImpactAlpha’s podcast, “How Emily Stone is Doubling Farmer Incomes by Going Beyond Fair Trade Chocolate.”) Uncommon Cacao started in Belize in 2010 to make cacao trading more equitable for local farmers by providing pricing transparency across the entire cocoa market. “Hedge fund speculation in the volatile commodity cocoa market removes farmers from meaningful pricing and dignified livelihoods even more,” the transparency report says. “Most cacao farmers make less in a day than the sticker price of a cheap chocolate bar.” Read the full post from Jessica Pothering on ImpactAlpha:
After the rains stop, part 2. On the heels of Harvey, Hurricane Irma is one of the most powerful storms ever recorded in the Atlantic and is poised to cause catastrophic damage in parts of the Caribbean and in the US. Only once before has the US been hit by more than one hurricane Category 4 or stronger in the same season: in 1915, when two Category 4s hit in Texas and Louisiana six weeks apart. Last year, natural disasters caused $175 billion in damageworldwide and $46 billion in the U.S., and this year will undoubtedly be much worse. With the looming threat of Jose and Katia and recent flooding in South Asia that has killed over 1,000 people and displaced millions, climate experts say that 2017’s hurricane season could be just a taste of what’s to come.
As ImpactAlpha readers know, financial institutions are experimenting with different ways to mitigate costs and rebuild more quickly. Fast Companyexplored more intriguing ideas, including a marketplace for trading stormwater retention credits (SRC), also known as “catch and trade,” much the way that credits for carbon emissions can be bought and sold. Such a marketplace launched in D.C. four years ago, with Prudential Financial investing $1.7 milliontowards a pilot project to reduce the runoff of millions of gallons of polluted stormwater into the Potomac and Anacostia rivers. The program is off to a slow start; one big challenge is that installing green infrastructure to absorb water is complicated to design and build. The Anacostia Waterfront Trust is working to goose the SRC market by providing the expertise to maintain rain gardens to trap runoff and to trade the resulting credits.
There are other “passive” approaches to flood management, such as infiltration ponds, bioswales, green roofs, and even just plain old open space such as grasslands (i.e. what Houston used to be), to help mitigate increased flooding caused in part by climate change. We must build “a culture of living with water,” says Henk Ovink, the Netherlands’ special envoy for international water affairs. Ovink worked on Hurricane Sandy relief efforts, and helped launch Rebuild by Design, a federally funded competition to spur investment in green infrastructure and water management strategies in New York, New Jersey and Connecticut. He’s also helping the area with its next regional plan. “If we only respond to the past, we will only get answers that fit the past,” he says. “Those answers won’t fix the future.”
Onward! Please send any news and comments to TheBrief@impactalpha.com.