Greetings, ImpactAlpha readers!
#Featured: #EconImpact in London
In the future all investing will be impact. The Economist magazine put on its second impact investment gathering in a London still reeling from this week’s Grenfell Tower fire and recent terrorist attacks. Takeaways from the event: “Increasingly ‘impact’ is a measure of externalities embedded. So in the future all investing will be impact,” said Rodney Schwartz, CEO of ClearlySo, a London-based impact investment bank. He added, “I won’t rest until the $150 trillion in the world is invested with an impact investing lens.” The IFC’s Gavin Wilson said development finance has already undergone a fundamental shift, saying, “Private capital is now at the heart of development.” Big Issue magazine’s Nigel Kershaw said bending impact investing to fit mainstream finance will stifle innovation, “It must come to us.” The ImPact’s Abigail Noble urged moderation in ongoing efforts to make impact measurement on par with financial reporting (see #Signals, below). “Measurement and transparency are critical to the impact sector’s maturation, not standardization, control and regulation,” she told ImpactAlpha. “Don’t let perfect be enemy of good enough with impact metrics.”
Deadline extended: We’re looking for leaders driving impact investing around the world. The Global Steering Group for Impact Investment will honor investors, managers, entrepreneurs and market-builders. New Deadline: June 18. Submit an entry.
#Dealflow: Follow the Money
Climate Trust Capital makes first grasslands carbon investment. The Climate Trust’s carbon fund was established late last year with a program-related investment from the Packard Foundation and a grant from the U.S. Department of Agriculture. The $5.5 million fund underwrites investments based on the projected 10-year value of the carbon credits from forestry, grasslands and livestock waste digesters. The fund’s first grasslands deal is a $260,000 investment into a 12,000-acre Oregon ranch to support an “agricultural easement” that allows for managed grazing, but ensures that the land won’t be converted for commercial agriculture or energy use. According to the Climate Trust, the plan will prevent an estimated 55,000 tons of CO2 from entering the atmosphere.
Ugandan fintech venture Awamo closes $1.7 million. Many of the more than 2,000 microfinance and savings and credit institutions in Uganda, are unregulated by the government. Roughly 40% of their customers are women. Awamo will use the new funding to help unregulated microfinance lenders bring their businesses online and share credit information between one another. Its software is mobile-based and handles loan management, accounting and reporting and has biometric security. Awamo, started in Frankfurt, Germany in 2013, raised $550,000 in 2015 to launch in Uganda. Investors in its latest round include the German Investment and Development Corporation and two angel investors.
Bowery Farming raises $20 million for vertical farm expansion. Indoor farming is still small but investors think it’s poised for growth with rising global food need and the environmental strain of traditional agriculture. Bowery Farming, based in Kearny, N.J., calls itself a tech venture focused on the future of food and claims its approach grows 100 times more produce than a similarly-sized outdoor farm. It has raised $27.5 million to date for its approach to growing greens indoors. The process uses LED lighting, robotics and specially-developed software. The latest funding round was backed by Google’s venture fund, GV; General Catalyst; and GGV Capital — a venture capital firm focused on the U.S. and China. Vertical farming “is no longer just a pie-in-the-sky theory,” says GGV’s Hans Tung. “It has the chance to scale in the next five years.” Earlier this month, AeroFarms, another New Jersey indoor farming operation, raised $34 million from Emirati investors interested in bringing the technology to the desert-covered Gulf region.
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
Family offices move beyond philanthropy. “Once the markets offer investors the opportunity to understand and choose their impact, nothing will ever be the same again,” says Matthew Weatherley-White, managing director of the Caprock Group, in a Q&A that takes up three of the 30 pages in Bloomberg’s new family office “investing for impact” brief (which focuses largely on philanthropy). Weatherley-White on mispriced risk: “Most diversified, public-debt, investment-grade portfolios are going to be yielding somewhere south of 3 percent now. Micro-finance? You can get 4.25 percent with a similar or somewhat lower default rate.” On the familiarity of impact investing portfolios: Impact aside, Caprock’s portfolios “look like a totally conventional portfolio — public fixed income, a layer of public equities, some private debt, early-stage venture capital, private equity, hedge funds, some real assets.” On what mainstreaming impact investing means: “Overcoming this embedded, institutional resistance to this notion that capitalism and the capital markets can be harnessed to create non-financial value.” On the challenges of scaling impact investing: “It’s one thing to have the first off-grid solar-power leasing company; what happens when there are 10 of them all competing for market share in Uganda?”
A one-stop shop for best practices in impact measurement. The authors of a new report reviewed 257 publications (!) and interviewed 17 firms to put together a guide of current practices in impact due diligence, monitoring and reporting. Researchers from the impact management firm, SVT Group, and the Center for Social Impact Learning at Middlebury Institute of International Studies in Monterey, Calif., took “The Pulse of Impact Management.” The “one-stop synopsis” offers a take on longstanding debates like, What proof is required to demonstrate impact? The report points to emerging tech solutions to manage impact data, such as iPar. It even attempts to size the market for impact measurement and reporting (preview: it’s complicated). Says SVT’s Sara Olsen, a co-author: “We’ve reached a milestone in the impact management profession: so many reports are coming out that look at impact measurement and reporting practices that most folks just don’t have time to keep up.”
In 2030, a robot could write this newsletter. A survey of artificial-intelligence researchers converged on a timeline for the triumph of the machines over humans in various activities, and it may be sooner than you think. According to the experts, AI will outperform humans in translating languages by 2024, writing high-school essays by 2026, driving a truck by 2027, working in retail by 2031, writing a bestselling book by 2049 and working as a surgeon by 2053. In a little over a century, artificial intelligence will be able to do all of today’s human jobs. There’s a 50% chance that will happen in the next 45 years.
Just because they can, doesn’t mean they will, of course. And the machines won’t be able to do all of today’s human jobs at once, or even a few at a time, like many of us already do. “There is accumulating evidence that machines can overpower human intelligence in complex, though specific tasks,” the University of Sheffield’s Eleni Vasilaki tells New Scientist. AI with human-like versatility is unlikely any time soon.
How quickly one thinks the crossovers will occur may depend on where you stand. AI experts in Asia estimate its only 30 years until we reach 50% probability for AI superiority across all jobs, while North American experts predict 74 years. In case anyone is wondering, Elon Musk — who is backing a brain-computer interface to absorb, rather than compete, with AI advances — sides with experts in Asia. “Probably closer to 2030 to 2040,” Musk tweeted. “2060 would be a linear extrapolation, but progress is exponential.”
The researchers were split on the benefits and risks of high-level machine intelligence. The survey suggested a 25% chance for a “good” outcome and 20% for “extremely good.” Don’t worry: The experts say there’s only a 5% probability for an “extremely bad” outcome, e.g. human extinction.
Onward! Please send any news and comments to TheBrief@impactalpha.com.