2030 Finance | August 8, 2017

Busting the metrics myth, Obama staffers back “political tech,” Nobel for impact, forests are a…

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Greetings, ImpactAlpha readers!

#Featured: Open Mic

Operation Impact pt. 2: Measuring impact at lower cost for higher value. Here’s an impact-investing myth that needs busting: The proliferation of social-impact metrics and frameworks is giving front-line employees, managers and investors the kind of data they need to improve their operations — and deliver genuine impact.

Sadly not, says Tom Adams, a director at Acumen, the New York nonprofit that invests in companies serving the world’s poor. Most investors are requesting operational measures, like unit sales, or other “weak proxies” that don’t show actual impact, he says. Instead of asking the enterprises it invests in for predetermined metrics, Acumen wants to know: “What data can we help you collect?” By gathering information about social performance and customer feedback and behavior, “our investees are much more excited about measurement,” he says.

In the second feature in the Operation Impact series, Adams takes on the “Metrics Myth,” what Jed Emerson calls the misconception that the collection of proper impact metrics has become widespread. Lean Data, Acumen’s signature approach to impact measurement and management, focuses on the “how” of assessing investment impacts to “drive down costs to measurement and significantly increase the value to enterprises of gathering data,” Adams says.

Read, “Lean Data: The “how” of measuring impact at lower cost for higher value,” by Acumen’s Tom Adams on ImpactAlpha:

Lean Data: The “how” of measuring impact at lower cost for higher value

#Dealflow: Follow the Money

New Markets gets $10.5 million to close U.S. education and skill gaps. ACT, an Iowa-based nonprofit best known for its standardized college-readiness exam, made the investment in New Markets Venture Partners as part of ACT’s mission to improve education and career readiness. “There is an urgent need for investments into new educational models with proven efficacy that address the nation’s achievement and skills gaps,” says Mark Grovic, New Markets’ co-founder and general partner. New Markets previously raised $30 million towards its $75 million goal. The fund aims to invest $1 million to $5 million in K-12 education startups and workforce development; it has made more than a half dozen investments so far. The most recent, SignalVine, is a text messaging platform used in higher education institutions. ACT will work with New Markets to identify education startups to invest in.

Obama staffers invest in 10 “political tech” startups through new fund. Higher Ground Labs was launched in May to support emerging digital tools for future national and state campaigns — Democratic campaigns, that is, since the fund was started by former Obama tech aides. It’s a response to campaign investments from wealthy conservative backers like the Koch brothers. “We haven’t built a culture around investors who invest in political tech in a real way,” Higher Ground co-founder Betsy Hoover told Wired. “I think there’s a real moment to think about this differently.” The fund has raised at least $2.5 million since it launched — 60% of which has been invested in a cohort of 10 companies that are part of Higher Ground’s accelerator. They include: Hope, a mobile-communications platform that aims to help people understand and engage in political issues; surveying tool Qriously; and Field Day, a local data aggregator for campaign marketing.

coLABS backs Colombia’s LikeU to support women’s employment. LikeUis a staffing service that connects corporate clients to part-time telecommuters. It’s goal is to create better-paid, flexible work and to strengthen families by “acknowledging the need for balancing domestic responsibilities,” says Juan Esteban Rincón, LikeU’s founder. The investment from coLABS, a seed-stage fund from Gray Matters Capital that backs startups with a gender lens, will enable LikeU to improve and automate its online platform and build more corporate partnerships. The amount of the investment wasn’t disclosed. Launched this year, coLABS is part of Gray Matters Capital’s effort to “create an empowered and purposeful life for 100 million women globally by 2036.” The fund previously invested in three startups, spanning Africa, Asia and the U.S.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

Risk, return and impact. At the GSG Summit of social activists and investors in Chicago last month, Sir Ronald Cohen, a British venture capitalist turned impact investor, suggested that a Nobel prize awaits the economist that goes beyond the standard investing concepts of risk and reward and “best frames the interaction between risk, reward and impact.” More capital would be directed towards achieving social and environmental benefits if impact investments can show they can reduce stakeholder risk, cut the cost of capital, help recruit talent and boost financial returns by uncovering new kinds of profitable investing opportunities, Cohen said. Then came the results of a small but high-profile experiment in social impact investing out of St. Petersborough, England. A third-party evaluation showed that world’s first social impact bond helped reduce recidivism of ex-offenders in the St. Petersborough prison system. The private investors who helped finance the program were repaid with interest from the local government. “It is very gratifying to see the world’s first social impact bond do good and do well,” said Cohen, who helped launch the bond in 2010. The investment succeeded in “helping released prisoners lead better lives and, as a result, paying back investors’ capital with a reasonable return and saving the government money,” he added. For St. Peterborough bondholders, risk, reward and impact aligned.

#2030: Long-termism

Restoring forests: Malawi’s 2030 climate plan. In late 2016, southern Malawi saw temperatures hit 46 degrees celsius (115 degrees F.), and the rains never came. Research from the University of Malawi, backed by 50 years of rainfall and temperature data, established that drought, flooding, strong winds and high temperatures were all becoming more common in the region. Those who depend on rain-fed agriculture, notably maize, know this firsthand — a food crisis looms for many Malawians as well as for 50 million people living in southern Africa. Drought, decreasing land productivity and poor water management can also lead to conflict; in usually peaceful Malawi, a land-defense movement has started fighting against foreign-owned tea plantations.

Forests are a climate solution. So the Malawian government, as part of the Bonn Challenge, has unveiled an ambitious program to recover some of the estimated 7.8 million hectares of forest land that has been lost since the 1980s. “The most efficient technology for taking CO2 out of the atmosphere is a tree,” Al Gore, the former U.S. vice president and climate advocate, said recently. “When you take it to scale, it’s a forest.”

Malawi has earmarked $385 million to plant 20 million trees and restore millions of hectares of degraded lands by 2030. Forestry officials said the initiative will cover 4.5 million hectares, or almost half of the country’s total land area. Malawi recently completed an assessment of its forest landscape and discovered that nearly 7.7 million hectares, or 80% of Malawi’s total land area, has opportunities for restoration.

Technology from the private sector can help. Jurriaan Ruys, a former McKinsey partner and founder of Land Life, has developed a biodegradable “cocoon,” made of waxed paper, that supplies saplings with enough water to thrive until their root systems reach groundwater. Malawi — along with Mexico, Cameroon, the US and a half dozen other countries — has adopted the innovation, which Ruys says has about a 95% success rate. Says Ruys, “I see [reversing desertification] as a very doable technological challenge.”

Onward! Please send any news and comments to [email protected].