The Brief | April 22, 2019

Community accountability tools, Serena Williams’ off-court impact, bridging indigenous finance in Canada, Frogtek’s tiendas

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Greetings, Agents of Impact!

Featured: Impact Voices

Developing community feedback tools to help investors manage positive – and negative – impact. Even with careful planning, impact investments can cause unanticipated harm to people and places and undermine impact goals. Recent examples include large-scale renewables projects and for-profit schools. Even a small number of impact investments that are seen to harm rather than help communities jeopardize the field, Accountability Counsel’s Kindra Mohr writes in a guest post on ImpactAlpha. The International Finance Corp.’s new Operating Principles for Impact Management provide guidelines for managing positive and negative impact throughout the lifecycle of an investment. As it happens, the IFC itself houses a tool that could help investors implement those guidelines, in the form of a state-of-the-art “accountability office” that receives direct community feedback about IFC investments.

Community-driven accountability tools, like the IFC’s “Compliance Advisor Ombudsman,” can provide affordable, relatively fast, and fair platforms for communities to raise grievances to investors, resolve disputes and remedy harm. In Mongolia, Accountability Counsel helped nomadic camel herders engage one of the world’s biggest mining companies. In Haiti, displaced farmers negotiated a settlement with a major development bank. Philanthropic and private sector impact investors have yet to establish the kind of community-driven accountability tools that have proven critical in development finance. “Foundations, individuals, and institutional investors can share the costs and benefits of creation of community feedback tools without having to share the same impact goals, due diligence standards, or operational methods,” Mohr writes. “Investors just need to be willing to learn from and respond to the people they seek to benefit, and who have the most to lose when they are not heard.”

Keep reading, “Developing community feedback tools to help investors manage positive – and negative – impact,” by Accountability Counsel’s Kindra Mohr, on ImpactAlpha.

Dealflow: Follow the Money

Serena Williams’ portfolio of diverse and impactful startups. Tennis mega-star Serena Williams has (not-so-quietly) invested millions over the last five years into dozens of diverse-led and impactful startups. Last week, Williams formally unveiled the more than 30 companies in the portfolio of Serena Ventures, which aims to invest in “companies that embrace diverse leadership, individual empowerment, creativity and opportunity.” There’s Mayvenn, the online marketplace for hair extensions that puts extra income into the pockets of hairdressers. And Lola, a maker of organic tampons and sexual health products. Brooklyn startup Propel digitizes food stamps and other financial services for low-income Americans, while Andela trains and hires African coders to fill global companies’ technical skills gaps. Also in the portfolio: Impossible Foods’ plant-based burger and Brandless’ “better-for-you” products made more affordable by connecting suppliers directly with customers. Sixty percent of the firms in the portfolio are led by a diverse founder. Check it out.

Dutch bio-product company Ceradis secures €9 million from impact investors. Ceradis makes earth-friendly agriculture products to reduce and replace mainstream chemical fertilizers and pesticides. The company has more than a dozen products on the market, which it distributes through partners like agrochemical giant Syngenta and Dole. Ceradis raised €9 million ($10 million) from Dutch impact investors Waterman Ventures and Pymwymic and existing backer Van Herk Investments to commercialize CeraMax, a new biofungicide to prevent crop disease. Unlike Ceradis’ other products, which allow farmers to reduce chemical applications, CeraMax could replace existing chemical treatments. “With the overall movement to biologicals, producers usually have to accept a trade-off,” Ceradis’ Willem-Jan Meulemeesters said. Get the full story.

Bridging Finance launches fund to finance Indigenous development projects in Canada. First Nations and Inuit people in Canada do not own their land. Per the Indian Act, it’s held by the Canadian government. Without collateral, private banks are hesitant to fund early-stage development. “It’s very difficult to do on-reserve lending in a traditional format,” Bridging Finance’s David Sharpe, a member of the Mohawks of the Bay of Quinte, told The Globe and Mail. Bridging Finance, with $1.3 billion in assets under management, is raising a private-debt Indigenous Impact Fund to provide early-stage funding to on-reserve grocery stores, pharmacies, housing and renewable energy projects. The firm has notched CAD $25 million ($18.7 million) in commitments toward a target of at least CAD $500 million, Bridging Finance confirmed to ImpactAlpha, and has a deal pipeline of CAD $200 million. After projects are generating cash, Bridging will sell the loans to banks. Bridging projects its higher-risk loans will generate higher-risk returns of 8%. Says Sharpe, “We’ve never had a loss, nor a default, on First Nations lending.” More.

Series: Impact en Las Americas

Frogtek is bringing Mexico’s one million mom-and-pop shops into the digital age (video). One million family-owned tiendas account for 40% of all retail sales in Mexico, but revenues have been declining in the face of competition from chain stores and online retailers. Frogtek’s software, Tiendatek, helps several thousand tienda owners collect sales data to help them make better decisions about products they should be selling. “We’re trying to democratize the data information on the retail sector,” Frogtek’s Montse Mora told ImpactAlpha’s David Bank at the Foro Latinoamericano de Inversión de Impacto, or FLII, in February. The average shop boosts revenues by 12% in the year after adopting Tiendatek, rather than losing 5%, the average for the industry as a whole. Frogtek also sells data to consumer goods companies like Unilever and Bimbo, from which tienda owners buy their goods.

  • Early mover. Frogtek may have been ahead of the market when it launched in 2008. Slow adoption nearly sunk the company before Mora was brought in two years ago to steer a turnaround. She said the company has reached breakeven and is looking to expand as a pan-Latin American company with predictive—rather than reactive—software.
  • Inclusive market intelligence. Data analytics could help Frogtek take on major market research companies like Nielsen, she says. “With technology, the traditional channel is going to shrink,” Mora says. “But we will be able to maintain better shops. The ones that stay will be families that have better businesses.”

Keep reading, “Frogtek is bringing Mexico’s one million mom-and-pop shops into the digital age,” by Jessica Pothering on ImpactAlpha.

Agents of Impact: Follow the Talent

Mauer Kunst Consulting’s Henry A.J. Ramos is the new board chair at Nonprofit Finance Fund… IFC and EMPEA host the Global Private Equity Conference May 13-16 in Washington D.C…. Pioneers Post and Hatch Enterprise host the Good Deals + Beyond Good Business conference in London May 21… Applications are open for Village Capital’s ‘future of work and learning’ accelerator… GatherLab’s Transform: Climate, Communities, and Capital, from the founders of SOCAP, is May 22-24 in San Francisco (ImpactAlpha subscribers get a 10% discount with code “NW_ImpactAlpha”).

April 22, 2019.