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#Dealflow: Follow the Money
Buffalo, N.Y., impact fund raises $8 million. Buffalo Mayor Byron Brown’s push to spur private investment with public funds is paying off. The Western New York Impact Investment Fund has raised (paywall) $8 million from community and national foundations and private investors to back projects in the Buffalo area, from social startups to environmental-cleanup bonds. Investors are already active in the depressed region; more than $19 billion in economic-development projects are slated for Western New York. Backed by the Community Foundation for Greater Buffalo, the fund was based on a study with the Heron Foundation to survey demand for impact investing in the region. Investors include the the Health Foundation for Western & Central New York, the John R. Oishei Foundation, the Seymour H. Knox Foundation, private investors Thomas Hunt and Andrew Rudnick, and RP Oak Hill Building, a construction-management company.
Jopwell raises $7.5 million to connect ethnic minorities with job opportunities. The NYC-based company launched in 2015 to help companies build more diverse workforces and to aid candidates from minority backgrounds land jobs. Clients, including BlackRock, Facebook, LinkedIn, and the NBA, can access Jopwell’s resume database and attend company-sponsored recruiting events. Job seekers use the site for free. Jopwell, which has raised a total of $11.5 million, lists 70 corporate partners; the number of successful job placements wasn’t available. The latest round was led by Cue Ball Capital and backed by Kapor Capital, Y Combinator, Omidyar Network, Valar Ventures, SJF Ventures, Blue Ivy Ventures, and Teneo Ventures.
Australian impact bond targets youth homelessness. The government of New South Wales is leading a program called Foyer51 to provide housing and support services to young adults leaving Australia’s foster-care system. Exiting foster care “can be the ‘end of the road’” for continuing support when youths turn 18, putting them at a higher risk of homelessness, says Bob Mulcahy, director of resilient families at Uniting, a community non-profit that is part of the program. Foyer51 will provide education, healthcare, employment opportunities and up to 18 months of housing, and will include construction of a new housing complex with 26 affordable rental units for low-income workers. New South Wales has issued a social-benefit bond to attract private investment and has agreed to commit up to A$33 million ($26 million) over the life of the initiative. The city of Sydney has committed A$3 million. Social Ventures Australia and St. George Community Housing, a social-services organization, are also participating. The program represents a proactive approach to a problem that the government has been tackling reactively, as with the recent clearing of a homeless camp in Sydney’s inner city. Other Australian states have issued impact bonds addressing both homelessnessand foster care.
See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to [email protected].
#Signals: Ahead of the Curve
Pension funds can’t hide from the world’s problems. Achieving the U.N.’s Sustainable Development Goals is economically essential, said representatives of several big pension funds at the PRI in Person conference in Berlin this week. Alexandra West, a portfolio head at Cbus, a $27 billion Australian super fund, says the fund’s construction worker beneficiaries are facing a housing crisis and economic inequality, reports Responsible Investor (paywall). Cbus can’t continue in “splendid isolation” from such realities, said West. “We can’t afford to leave this to others.” Anne Simpson, sustainable investment director at CalPERS, California’s $300 billion public pension fund, called the SDGs a moral imperative and an economic necessity. CalPERS has “nowhere to hide,” said Simpson, and added that the pension fund has followed Dutch pension funds and begun to map its portfolio to the 17 global goals (see, “SDGs take hold as a universal impact investment framework”). Dutch and Swedish pension funds have begun to shift their portfolios to align with the goals (See “European pension funds tilt capital toward ‘SDG Investing’”). “Pension funds were not interested in values-aligned investing when it was driven by aspirational, wishful thinking or, even worse, do-gooder advocacy,” wrote ImpactAlpha’s David Bank earlier this year. “They went from laggards to leaders when they assessed their portfolios against their long-term obligations, most obviously to pay out pensions to retirees decades in the future.”
Mapping agriculture’s water-risk hotspots. The world’s agricultural regions face serious water-related challenges: polluted sources, excessive flooding, groundwater depletion and drought. A new report from the Organisation for Economic Co-operation and Development, Water Risk Hotspots for Agriculture, explores these challenges and identifies the food-producing regions most likely to experience water crises in the future.
The results are unsettling: Looking at water risks across 142 countries, the study finds that water-related problems could negatively impact food production, markets and prices, food security and socio-economic progress. Food-producing regions in three countries — Northwest India, Northeast China and the U.S. Southwest — face the greatest risks, mainly because they combine diversified agriculture, declining groundwater supplies and unstable surface-water levels. Although these aren’t the only places affected by changing weather patterns and human activity, food-production problems here can have an outsized impact on markets and food security internationally. (Looking to 2050, the report says that Brazil, China, India, and the U.S. will account for about half of global agriculture production.)
The report also looks at the crops that could be affected in the short and long term. For instance, Northwest India is the source of much of the country’s subsidized rice and wheat supplies. The report is less detailed in laying out solutions, placing responsibility for action on farmers, agribusiness and policymakers. Governments, it says, need to adopt a three-tiered approach that includes policies such as water cap-and-trade systems, improved trade relations and international collaboration in the form of financial assistance and information and technology sharing. As an example, the report cites a successful partnership among China, Western U.S. states and the Australian government to learn about the water markets in Australia’s Murray-Darling Basin.
Onward! Please send any news and comments to TheBrie[email protected].