Managers walk the talk on impact fund strategy and structure (The Liist, Dec. 2023). Women investing in women. Africans investing in Africa. Impact-aligned fund compensation and fees. This month's Liist of actively raising impact funds highlights how fund managers are rethinking incentives and drawing from lived experience to achieve their impact goals. In Germany, Masawa has tied half of its carry, or profits, to its impact targets and pledged 10% of those profits to founders in its portfolio. Social Finance in Boston is charging below-market fees and taking no carry to deepen the impact of its Impact First Fund.
Dealflow: Climate Finance
British International Investment backs trio of climate tech funds in South Asia. The UK’s development finance institution made a $25 million allocation to GEF Capital’s third South Asia Growth Fund. The fund is looking to raise $300 million to provide growth capital to small and mid-sized projects and companies supporting the transition to a low-carbon economy in India and Southeast Asia. The fund “will support our goal of enabling sustainable practices, with a focus on renewable energy, efficient resource management and cutting-edge environmental solutions,” said BII’s Srini Nagarajan in a statement. BII committed to invest up to $1 billion in climate projects in India between 2022 and 2026. BII also backed GEF Capital’s second South Growth Fund.
Impact Voices: Inclusive Economy
Navigating racial equity investment strategies for a post-affirmative action economy (Q&A). Last summer’s US Supreme Court ruling that struck down the consideration of race in college admissions opened the floodgate for other legal challenges to programs with race-based selection criteria. The rush included a legal challenge to Fearless Fund and its grant program for Black female entrepreneurs (for background, see “Legal challenge to Fearless Fund misses the mark on racial bias in venture capital”), and left companies and investors confused about the future of diversity, equity and inclusion, or DEI, strategies. In a guest post for ImpactAlpha, CapEQ’s Tynesia Boyea-Robinson speaks with civil rights attorney Farhana Khera about how investors and other organizations can navigate legal landmines. “Diversity, equity and inclusion programs were legal both before and after the Supreme Court’s decision striking down affirmative action in higher education,” Kherasays. She urges investors to let asset managers, colleagues, the courts and elected officials know that racial equity investing “is necessary for the growth and strength of our nation’s economy; and that you don’t want roadblocks placed in the way.”
Agents of Impact: Follow the Talent
👋 Agents of Impact Call: Finding hidden impact and risk in municipal bonds. On the next Call in ImpactAlpha’s Muni Impact series, join Activest’s Homero Radway,Kestrel’s Monica Reid, R. Paul Herman of HIP Investor, Court Street Group’s Matt Posner and other Agents of Impact, Wednesday, Dec. 13, at 10am PT / 1pm ET / 6pm London. RSVP today.