The Brief | April 9, 2019

Demonstrating Central America impact investing, Bay Area workforce housing, pay-as-you-earn for undergrads, future of workers

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Greetings, Agents of Impact!

Featured: ImpactAlpha Original

With debt as well as equity, Pomona is demonstrating impact investing in Central America (video). Pomona Impact is making the case for impact investing in Central America one investment – and one fund – at a time. The fund manager, co-founded by Rich Ambrose in 2011, is busy raising a $35 million second fund to deploy into high-growth enterprises in Central America, in agriculture, as well as basic services including health, education, water and renewable energy. Ecofiltro, for example, makes and distributes home water filtration systems that serve a half-million families in Central America. With its $2 million pilot fund, Pomona has backed 20 companies and exited 12 of them, mainly through repayments on mezzanine debt loans. The revenue-based financing has enabled Pomona to notch strong returns while not having to depend on hard-to-come-by exits.

In the second video in ImpactAlpha’s series of interviews at the Foro Latinoamericano de Inversión de Impacto, or FLII, in February, ImpactAlpha’s David Bank checks in with Ambrose on Ponoma’s progress in the region. Pomona was one of the first impact funds in Central America, where many markets lack basic investment infrastructure. Pomona’s accelerator, with Village Capital, helped jumpstart its agriculture and agtech pipeline. The firm helped create FLII Central America, the region’s first impact investing conference. Pomona joined Capria’s network of emerging-market fund managers to build its investment capacity. Now, Pomona is demonstrating the impact investing opportunity in a region long overlooked by even legacy investment funds. Says Ambrose, “More capital will flow to the region if we do our job well.”

Keep reading, “Pomona is demonstrating impact investing in Central America,” by Dennis Price on ImpactAlpha.

  • Join the conversation: Pomona Impact’s Rich Ambrose spoke to ImpactAlpha’s David Bank at the FLII in February. Many thanks to who helped produce the video series.

Dealflow: Follow the Money

Venrock backs Make School’s pay-as-you-earn degree program for undergraduates. Make School was started in 2012 to offer undergraduate-age students an alternative to technical training programs and traditional four-year universities. The institution has developed a two-year, accredited computer science Bachelor’s degree program that students only have to pay for after graduating and securing a job. “What helps you get a job is technical. But what makes you succeed once you’re there is the critical thinking that comes with a liberal arts emphasis,” says Tom Willerer of Venrock, which led Make School’s $15 million Series B round. Make School has 66 alumni working in tech jobs that pay $95,000 per year on average—above its $60,000 tuition repayment threshold. Forty-five percent of its students and alumni are underserved minority students. Get the scoop.

M31 Capital’s Opportunity Fund targets workforce housing in the San Francisco Bay Area. What difference do Opportunity Zone tax breaks make for a commercial real estate fund? San Francisco-based M31 Capital has launched a $25 million Opportunity Fund to buy up vacant and underutilized apartment and mixed-use properties in the San Francisco Bay Area and restore them as entry-level workforce housing. M31 Capital’s first Opportunity Fund, Morpheus 1, will invest in the Bay Area’s roughly 80 Opportunity Zones, designated for real estate and investment tax breaks under the 2017 Tax Cuts and Jobs Act. M31 doesn’t represent Morpheus 1 as an impact fund, in that it has not targeted measurable impact outcomes, nor baked impact into the investment thesis. But the tax-cut bill that included the Opportunity Zone legislation requires investments to be held for 10 years to qualify for the full tax advantages.“One great thing about Opportunity Zones is that the money has to stay there,” M31 Capital’s Taylor Lembi told ImpactAlpha. “It’s different than when you fix something up and sell it [immediately]. The money stays in the communities that need it.” Here’s more.

Agents of Impact: Follow the Talent

Sondra Ford is the new director of the Strong, Prosperous, and Resilient Communities Challenge at Low Income Investment Fund. Angie Garling is the organization’s first director of early care and education… Transform Finance’s new “future of workers” cohort includes Centro de Trabajadores Unidos en Lucha, Jobs With Justice, National Domestic Workers Alliance, Service Employees International Union, Workers Defense Project, and Working Partnerships USA… Learn how public funds can attract private capital for high-impact investment with “Impact Investment & Blended Finance,” a three-day program from Social Finance Academy, Convergence and the University of Zurich Center for Sustainable Finance and Private Wealth.

— April 9, 2019.