Contrarian take on Opportunity Zones, entrepreneurs of color, global goals in Latin America, underwriting and optimizing impact



Greetings, Agents of Impact!

Featured: Impact Voices

Bobby Turner: Successful Opportunity Zone investments will pull people up, not push them out. The former hedge fund partner turned impact investor is an outspoken contrarian on the Opportunity Zones legislation included in the 2017 U.S. tax bill. It’s not that low-income, inner-city neighborhoods don’t need the infusion of capital. “Of all the factors stifling America’s underserved communities, a dearth of economic investment is among the most pernicious,” Turner writes in a guest post on ImpactAlpha. It’s that the legislation doesn’t overcome the perceived risks that are the main reason institutional capital has stayed away from disadvantaged communities. Turner fears Opportunity Zones will leave many investors wondering, “What good is a capital gains tax break on an investment that is likely to lose money?”

Reducing those risks requires humility, empathy and other skills not always taught in business school, Turner writes. “A top-down, ‘we know best’ attitude in working with communities is the surest path to failure.” Workforce housing developments operated by Turner Impact Capital include after-school tutoring programs, neighborhood watches and health and wellness services on site, he says. Professionals who provide services to fellow residents get discounted rent. The results: “Improved quality of life, higher tenant satisfaction rates, and longer lease terms – a winning model for everyone,” according to Turner. Such outcomes are unlikely for Opportunity Zone investors that seek to change the character of a neighborhood by building luxury apartments or destination retail, he writes. “Fulfilling the spirit of the Opportunity Zone ideal means pulling people up, not pushing people out.”

Read, “Successful Opportunity Zone investments will pull people up, not push them out,” by Bobby Turner on ImpactAlpha.

Dealflow: Follow the Money

Entrepreneurs of Color Fund expands to Washington, D.C. JPMorgan Chase’s initiative has $6.7 million to invest in minority entrepreneurs in Washington, D.C. The bank’s foundation launched the program in Detroit in 2015 and has added funds in Chicago, San Francisco and New York. The D.C. fund, which includes Capital Impact Partners and D.C.-based Clark Foundation, is part of JPMorgan’s Advancing Black Pathways program to improve access to education, build career opportunities and support wealth creation. Advisors to the program include former Secretaries of State Colin Powell and Condoleezza Rice, Essence Ventures’ Richelieu Dennis and comedian Kevin Hart. Read on.

Acumen’s Latin America fund backs Peruvian skills startup Crehana. Acumen Latam Capital Partners led the $4.5 million financing for Lima-based Crehana, a startup that offers low-cost online training in the creative, design and digital industries. Two-thirds of Latin America’s young people don’t advance into higher education. Crehana is trying to combat high youth unemployment rates by making professional and technical skills affordable and accessible. Prices for its 500 online courses and certificates start at $14. Crehana is the second investment since Acumen launched the Latin America fund in 2016. It invested in Phoenix Foods, an agri-processing company also based in Peru, in January. Learn more.

Agora Partnerships graduates 30 Latam and Caribbean startups targeting the Global Goals. Agora’s accelerator program has been working to build social entrepreneurship in Latin America and the Caribbean since 2011. Thirty startups working to advance the U.N. Sustainable Development Goals in 10 countries have completed the organization’s latest program. They include ethical fashion company AHA Bolivia, Chilean water tech company Capta Hydro, and Colombian organic beverage company D’CADA. The 215 companies that have graduated from the program have a 94% survival rate and have collectively raised $86 million. More than half are women-run. Dig in.

Signals: Ahead of the Curve

Underwriting – and optimizing – for impact on Agents of Impact Call No. 7 (audio). Limited partners are demanding more rigorous impact underwriting by fund managers. Successful projects also require ongoing impact management. On ImpactAlpha’s Agents of Impact Call No. 7, Y Analytics’ Maryanne Hancock said impact measurement tools developed by TPG Growth’s Rise Fund will help the firm drive impact throughout the life of the fund’s investments. The Rise Fund’s “impact multiple of money” methodology “allows you to see up front the pathways that you have to manage to ensure you’ll have impact down the road,” Hancock told nearly 200 ImpactAlpha subscribers on the conference call last week.

  • Signs of progress. Limited partners are demanding more rigorous management of impact from fund managers because “they now have a better idea of what that means,” said Tideline’s Ben Thornley.
  • Ongoing process. “You measure the positive and negative impacts that matter to people and the planet. You compare those impacts when possible and appropriate. You know whether what’s happening is bad, good, or as good as it could be. And then you improve,” says Impact Management Project’s Clara Barby.
  • Evidence base. The GIIN’s Kelly McCarthy said consistent data is important, but “to actually vet those metrics against something that holds water, requires some sort of evidence base that has been collated and curated and can help prove or disprove that strategies that the investment community are looking at.”
  • Bonus: Participants in the call turned up some excellent resources for underwriting and optimizing impact. We rounded them up.

Read on – and listen in – to “Underwriting – and optimizing – for impact on Agents of Impact Call No. 7,” by Dennis Price on ImpactAlpha.

Agents of Impact: Follow the Talent

Kelly Ward was named director of development and placemaking at Albuquerque’s InnovateABQ… IGNIA is looking for a full-time associate in México City and Monterrey, Mexico… Kapor Capital is hiring a talent director based in Oakland, Calif.… Urban-X is seeking a senior marketing and communications manager… Kroger’s new Zero Hunger Zero Waste Innovation Fund is accepting applications until March 4.

February 12, 2019. 

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