2030 Finance | February 15, 2018

Economist conference preview, Rise of the Rest startups, the end of the middle class?

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#Featured: ImpactAlpha original

A handy cheatsheet (and modest provocation) for The Economist’s annual impact investing conference. Impact investors have cheered the magazine’s interest as a British-accented signal that the new investment approach is ready for prime time. Among the weighty questions on the agenda: Can investors revive the American Dream? It will be a welcome relief if the gathering in New York on Thursday goes beyond high-minded conversation to actually mobilize the super-empowered guest list for concerted action.

To help guide the day’s discussion, ImpactAlpha (a media sponsor of The Economist event) offers not only a preview of some of the speakers, but some takeaways from our series of profiles of “New Revivalists” around the country. Among the action items to revive the American Dream: the need for startup debt — not just equity — capital; temporary retail and manufacturing space to help founders launch quickly; an emphasis on operating revenues, rather than the next round of fundraising; and more investors who look like, and can spot, underrepresented and underestimated founders. “We actually know quite a bit about how to support more diverse startup founders,” says Ross Baird, founder of Village Capital, which is working with ImpactAlpha on the series. “It’s really hard, with no shortcuts.”

Read “‘Can investors revive the American Dream?’ and other weighty questions of the day,” by David Bank and Dennis Price on ImpactAlpha.

‘Can investors revive the American Dream?’ and other weighty questions of the day

#Dealflow: Follow the Money

Rise of the Rest adds first nine portfolio companies — and more big name investors. Steve Case’s Rise of the Rest fund now counts Michael Bloomberg, LinkedIn founder Reid Hoffman and former White House chief technology officer Megan Smith among its roster of investors. The $150 million fund’s first nine investments include startups in Indianapolis, Columbus and Pikeville, Kentucky, among other places. The fund isn’t a lead investor in any of the deals; its goal is to provide a catalyst to draw in other investors. Case has resisted calling Rise of the Rest an “impact” fund, but a number of the nine startups employ impact strategies beyond local job creation and innovation including AppHarvest, which is building a $60 million high-tech greenhouse; Catalyte, which closed a $27 million round to foster diversity in tech; and ethical outdoor gear brand Cotopaxi.

Awaaz De gets backing from Tribe Impact Capital. Awaaz De offers mobile communications and data collection tools for social enterprises and development organizations. The Ahmedabad, India-based company firstpiloted its technology with the Development Support Centre, an NGO, to spread agricultural information to small farmers in the state of Gujarat. More than 300 organizations, including IFMR and Dimagi, now use Awaaz De’s tools. The company raised an undisclosed amount of funding from Aavishkaar-Intellecap Group’s subsidiary Tribe Impact Capital, along with multiple angel investors. Several other companies that offer services to charities and social enterprises have attracted impact capital recently, including Lightful andJustGiving, which was acquired last year by Blackbaud, a fundraising software provider for charities.

True Wealth Ventures closes women-focused fund. The Austin-based investment firm raised $19.1 million, which it will use to back women-led health tech ventures and sustainable consumer brands. The founders cite high performance of women-run startups, lack of VC funding for women entrepreneurs and women’s overwhelming influence in consumer purchasing and healthcare decision making as reasons for launching the fund. (We know of at least 58 funds and 13 investment tools focusing on women.) The founders chose Austin as a base because there are “no other early-stage funds targeting this market in the central/southern part of the US.” True Wealth intends to invest in 12 early stage startups.

See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to [email protected].

#Series: The New Revivalists:

Lisa Skeete Tatum: Unlocking women’s talent in the workplace. You might have heard that women’s economic equality represents $28 trillion in potential productivity gains by 2025. Lisa Skeete Tatum is helping firms — and women themselves — tap that opportunity. Tatum has raised $2 million to build Landit, a tech-enabled platform that helps women create a personal brand, establish a “board of advisors” and access world-class coaches. A healthcare technology venture capitalist, Skeete Tatum had volunteered on nonprofit boards to create access for underserved individuals. But she felt stuck. “I wanted to combine my full-time and volunteer work, but I had no idea what that looked like,” Skeete Tatum told ImpactAlpha. So she did what entrepreneurs do and turned her challenge into a startup. At Landit, “Women get a trusted, personalized career playbook,” she says. The companies they work for get “higher productivity, higher retention and higher satisfaction.” Read, “Lisa Skeete Tatum: Unlocking women’s talent in the workplace, by Megan McFadden on ImpactAlpha.

Lisa Skeete Tatum: Unlocking the value of women’s talent in the workplace

New Revivalists is a series from ImpactAlpha and Village Capital profiling the people, places and policies reviving entrepreneurship — and the American Dream.

#2030 Finance: Long Termism

Will demographics, automation and inequality mean the end of the middle class? By 2030, the familiar categories of low-, middle- and upper-income in the US may be obsolete. Instead, according to a new report from Bain & Company, an affluent 20% may separate itself from the remaining 80%, who will earn less than what would be considered a middle-class income. The report calls the coming decades-long period of upheaval, driven by aging populations, increased automation and growing income inequality, “the Great Transformation.”

The shift will present new risks for businesses, as well as not-so-obvious opportunities. As automation drives corporate profits and wealth among the affluent, companies will swarm to get their share of the disposable income of the upper end of the market. Competition will be fierce, as will efforts to tax the rich. Companies that focus too heavily on the affluent in the 2020s and 30s may find themselves vulnerable to popular backlash and social unrest, Bain warns. Conversely, “Companies that adapt their business models to the lower-income tier of the population may find new opportunities,” Bain predicts. Low-cost products and services developed in place like China and India may find new markets among the broad swath of American consumers.

The real opportunity, of course, may be in strategies that reverse inequality itself. ImpactAlpha has detailed the business case for inclusion and inclusive growth. Businesses right now can expand customer bases by targeting racial equality. Boosting women’s participation in the economy could add tens of trillions to global productivity. Countries with lower levels of inequality are more politically stable and friendly for business. Baking all that into the US economy would truly be a Great Transformation.

Thank you for reading. Onward! Please send news and comments to [email protected]