Greetings, ImpactAlpha readers!
#Featured: Impact Voices
Eleven online platforms that let you — yes, you — make socially responsible investments right now. ImpactAlpha spills a lot of digital ink on private-market impact investing. Most of that is inaccessible to “unaccredited” investors who don’t already have considerable assets. Now, a growing number of public-market offerings are allowing smaller, retail investors to align their money with their values. But how can you find the impact signals in all the noise about indexes, stocks, mutual funds, exchange-traded funds and bonds?
Lena Backe, a social-impact analyst at San Francisco-based Pacific Community Ventures, has created a quick guide to navigate the minimums, fees, investments types — and impact — of leading online advisors for retail investors. The usual disclaimer applies: We’re not endorsing or recommending any of these products (nor is Backe). But her post collects some basic information to help in making a comparison. For example, among impact-only online investment platforms, OpenInvest and Swell shine by enabling investors to mix-and-match among impact themes, and are transparent about how companies are selected. Hedgeable and Wealthsimple, more traditional investment platforms with socially responsible options, let investors customize portfolios from a variety of impact-driven investment options.
Read, “Eleven online platforms that let you — yes, you — make socially responsible investments, by Lena Backe on ImpactAlpha.
#Dealflow: Follow the Money
UBS philanthropic arm leads first maternal-health DIB. The UBS Optimus Foundation is backing a $3.5 million development impact bond for Rajasthan, India, that aims to reduce the state’s maternal and infant mortality rate, among the highest in the country. The “Utkrisht” bond (Hindi for “excellence”) hopes to prevent 10,000 deaths over the next five years by expanding private neonatal health and delivery services to 600,000 women. Palladium developed the bond and program, and two non-profit organizations — Population Services International and the Hindustan Latex Family Planning Promotion Trust — will be implementing it. They are both investing capital alongside UBS Optimus. USAID and pharmaceutical company Merck’s maternal health program, MSD for Mothers, are contributing $8 million in funding, pending the success of the program. Development impact bonds cover pay-for-success initiatives and are backed by development institutions; they differ from social impact bonds, which are typically government-backed. Only a handful of DIBs have successfully launched, including an education DIB also in Rajasthan. Healthcare appears to be a major focus for others that are in the works.
Edtech venture Kinedu raises $1.1 million. The Mexican startup focuses on learning at the earliest stage: infancy. Kinedu has developed an app that gives parents non-screen-based development activities for their babies. The aim is to help parents understand what activities support the development of the “right skills at the right time,” covering physical, linguistic, social, emotional and cognitive development. DILA Capital, Promotora Social Mexico and Social+Capital led Kinedu’s financing round. The capital was committed as convertible notes — debt that can be converted to equity provided the company achieves certain (undisclosed) growth metrics. Stella Maris, The Stanford-StartX Fund and Advenio, all prior investors, also participated.
Morgan Stanley, Urban League replicate Cleveland small-business fund in Florida. Morgan Stanley and the Broward County, Fla., chapter of the Urban League, are launching an $8 million fund for minority-owned businesses in the county, which includes Ft. Lauderdale and surrounding areas. Business owners “get lost in the shuffle” between Miami and Palm Beach, says Germaine Smith-Baugh of the local Urban League. The $8 million Capital Access Fund replicates a similarly named initiative the partners launched in Cuyahoga County, Ohio. The three-year Ohio fund provides business owners with between $10,000 to $2 million in low-interest loans and aims to create 300 local jobs by supporting small-business growth. As of July, the Ohio fund had issued $2.3 million in loans to 15 businesses.
#Signals: Ahead of the Curve
West Africa’s growing startup ecosystem is built for small, growing and high-impact companies. Earlier this year, Accion Venture Lab, Newid Capital and a group of angel investors backed a $1.25 million seed round for Lidya, a Nigerian startup that helps small businesses in the West African nation build credit and access finance. The deal highlights a relative boom in the country, as domestic and international investors focus on local entrepreneurs solving unmet consumer needs in energy, financial services and agriculture. The fast-growing West African startup landscape now includes a web of investors, accelerators, networks and events targeting entrepreneurs solving local and regional problems. An updated guide from Ventureburn, an emerging-market tech publication, offers a guide to the West African startup landscape. Venture firms include such familiar names as Omidyar Network, Acumen Fund and Village Capital. Accion Venture Lab is actively backing microfinance, fintech and other banking services in the region. There’s VestedWorld, a Liberia- and Chicago-based “micro VC,” investing in sectors including energy and agriculture that are essential to economic growth, and Unique Venture Capital, set up by five Nigerian banks to support small and mid-sized companies. In private equity, Accra-based Jacana Partners backs small and medium-sized enterprises, and Synergy Capital in Lagos, invests in high-growth companies in underserved sectors in Nigeria, Ghana, Liberia and Sierra Leone. Lagos Angel Network and Ghana Angel Investor Network are among a handful of angel groups active in West Africa.
Australia looks set to exceed 2030 clean-energy goals. The sector accounts for nearly 19% of national electricity output — enough to power 70% of homes — up from 7% a decade ago and is on track to easily meet the government’s goal of 20% by 2020. Hydro remains the biggest source of renewable energy at 40% of the total, with 31% from wind and 18% from solar. A dozen new large-scale solar plants are coming online soon, enough to account for 10% of the capacity needed to meet 2020 target.
That may be too much of a good thing, unless the country raises its ambitions. A new white paper from Bloomberg New Energy Finance, Modelling of Australia’s National Energy Guarantee, suggests the Australian government’s current emissions-reductions commitment — cutting CO2 emissions 28% below 2005 levels by 2030 –“could decimate large-scale wind and solar construction.” The country is close enough to meeting this target that small-scale solar projects alone could contribute most of what is needed, and only 1.5 gigawatts of new large-scale renewables would be required from 2021–2030 to meet that target. In contrast, the paper says, a stronger commitment, such as the 45% reduction that is found in the opposition Labour Party’s platform, would enable the current renewables boom to continue. The Labour plan, modeled on a pathway to keeping global temperature increases below 2 degrees C., would require 17.3GW of large-scale renewables over the next decade and lift renewable generation to 52% of the total.
The Bloomberg paper also looks at the reliability component of the Australian government’s national energy guarantee, which requires electricity retailers to maintain enough generation to meet a share of their peak demand. An emphasis on reliability implicitly gives a continuing role to coal- and gas-fired power plants — and battery storage — to augment variable wind and solar. The reliability guarantee won’t bring back old coal plants, the Bloomberg paper says, but could prevent closures beyond the six gigawatts of coal-fired capacity already predicted to shut down.
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