The Brief | July 25, 2018

Bono and Gates together again? smart energy storage, business financing for the other 81%

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Greetings, ImpactAlpha readers!

Featured: ImpactAlpha Original

TPG Growth’s Rise Fund touts ‘impact’ in bid for Abraaj health fund. Bono and Bill Gates have been longtime partners in philanthropic efforts to fight poverty, hunger and disease. They may become impact investment partners as well in a private-equity fund aimed at transforming health care delivery in the developing world. Bono, the rock-star-turned-activist, co-founded TPG Growth’s $2 billion Rise Fund. Gates was instrumental in the Abraaj Group’s audacious plan to build comprehensive healthcare networks in megacities of the 21st century like Lagos, Karachi and Mumbai.

Round-robin negotiations over the liquidation of the Abraaj Group have left the Rise Fund as one of the remaining bidders for the $1 billion Growth Markets Health Fund. Discussions have been complicated because of impact commitments Abraaj has made to limited partners, including the Bill & Melinda Gates Foundation, which made a $100 million program-related investment. “We are judged by financial returns and a deep set of impact metrics,” Khawar Mann, managing director of the health fund, told ImpactAlpha in an interview last year before the accounting irregularities came to light. Whether the fund’s impact strategy can survive the transfer to a new fund manager is critical to broader efforts to meet U.N. Sustainable Development Goal No. 3: “Ensure healthy lives and promote well-being for all at all ages.”

Read, “TPG Growth’s Rise Fund touts ‘impact’ in bid for Abraaj health fund,” by David Bank on ImpactAlpha.

Dealflow: Follow the Money

Ontario Teachers’ pension fund backs energy-storage company Stem. The big Canadian pension fund is committing C$200 million ($152 million) in project financing as well as an equity investment in commitment to Stem. The California company makes battery systems that use artificial intelligence to optimize energy consumption, particularly during peak demand. Stem will deploy systems throughout Ontario, which charges energy customers for building, maintaining and delivering power, and for conservation initiatives. The C$189.5 billion ($144 billion) pension has backed other cleantech and renewables firms – while maintaining a large fossil fuels portfolio as well. Read on.

Angel Ventures commits $2.5 million to Latin American smart-city and clean-tech startups. Mexico City-based Angel Ventures is backing Chile-based Citysense’s smart sensors and software for urban security, transportation and energy use. Angel Ventures’ second fund also invested in Mexico’s Energryn, which makes makes hybrid solar-electric boilers. Energryn was backed previously by Guatemala-based Pomona Impact. Here’s more.

Impact Voices: Pass the Mic

Ross Baird: Increase the flow of capital to rural entrepreneurs. As banks have consolidated and closed small-town branches, only 18% of new businesses get a bank loan. Less than 1% of businesses, mostly tech companies in big cities, ever raise venture capital. “That leaves 81% of businesses stuck with no formal access to capital,” Village Capital’s Ross Baird told the U.S. House of Representatives’ Committee on Small Business. Economic revival in rural America requires much more capital to flow to local entrepreneurs in small towns across the country who are creating new businesses and good jobs, said Baird, also an innovator-in-residence at the Kauffman Foundation. At the hearing, he laid out a range of ideas for increasing the flow of capital to small, rural business owners, including:

  • Defer student loans for entrepreneurs who start businesses in economically distressed areas.
  • Clarify rules around Opportunity Zones to ensure capital is directed toward local entrepreneurs, not just big real estate funds.
  • Support small-business investment structures, such as revenue-based finance, that let businesses pay back investors with a percentage of the company’s revenues.

Read Ross Baird’s testimony on ImpactAlpha, and view the full hearing.

Agents of Impact: Follow the Talent

Applications are open for Startup.Coop, a Boston-based accelerator for startups with scalable, distributed ownership models… New Forests is hiring economists, directors and analysts in Sydney, Singapore, and San Francisco.

— July 25, 2018.