ImpactAlpha, May 23 – An emerging ecosystem is beginning to move capital for people on the move.
Where others see refugees and other migrants as liabilities, a growing group of investors and entrepreneurs see assets: customers, talent and next-gen leaders.
Stocking the pipeline of ventures targeting “the migration market” with solution-oriented approaches is the Social Entrepreneurship at the Margins accelerator at the Miller Center at Santa Clara University. Among the 21 enterprises in the new cohort is a Nashville company using blockchain to help refugees secure their assets and firms that help refugees make a living through business services they can provide with only an internet connection.
As they grow, ventures that benefit people in forced-labor supply chains can look to a dedicated venture capital-style fund. Humanity United, the Omidyar Group organization, has done at least two deals from its $23 million Working Capital fund for solutions to forced labor and modern slavery. Provenance uses, yes, blockchain, for product traceability; Ulula’s software engages workers across supply chains.
And capital has begun to flow from billionaire George Soros’s $500 million commitment to drive business solutions to refugee challenges. Last year, Soros gave $50 million to Humanity Ventures, a partnership with Mastercard to develop financial tools and services to serve refugees.
To help pull that financing ecosystem together, a group of funders and investors are forming the Refugee Investor Network to connect investors with investable opportunities that benefit refugees. The network, developed by Alight Fund’s John Kluge and Andrew Stern at the Global Development Incubator, aims to help bridge the gap between private investors and non-governmental organizations and advocates. The goal: economies of scale, risk-mitigating partnerships between donors, governments and businesses, and local expertise on refugees and forced migrants.
Growing pools of capital reflect, for better or worse, a growing refugee and migration market. The world’s 22.5 million refugees and as many as 46 million people still forcibly enslaved are only the starkest examples of populations in need of fresh solutions. Another 65.6 million people have been “forcibly displaced,” meaning involuntary driven from their homes. And fully 224 million people, an all-time high, can be called “migrants,” or people living or working outside their homeland.
That’s not only a humanitarian crisis. It’s a staggering supply of untapped talent and leadership, and a demand for housing, healthcare, education and financial services from a population bigger than that of the United States.
By 2030, the new Refugee Investor Network aims to unlock at least $1 billion in new refugee-focused investment deals that, in turn, create at least a million new jobs and livelihood opportunities for refugees and host communities.
“It’s important not just to invest in firms but also in the sector itself,” Kluge told ImpactAlpha in an email exchange. He says there still is a disconnect between investors and deal opportunities. “We want to fix that and make it easier for private investors to put their capital to work supporting both displaced people and the communities hosting them.”
In short-term refugee solutions alone, estimates the U.N. High Commissioner for Refugees, there is an estimated financing gap of $3.1 billion. Many more billions are needed to ensure refugees and other migrants not only survive, but thrive and lift up the communities and economies around them.
That financing gap presupposes a more traditional foreign-aid approach. The migrant solutions represented by the cohort of early-stage enterprises selected for the “Social Entrepreneurship at the Margins” accelerator at the Miller Center for Social Entrepreneurship at Santa Clara University, showcase a more investment-driven approach
Leaf Global Fintech out of Nashville, Tennessee is using blockchain to help refugees “bank beyond borders.” Destiny Reflection in India provides court services for rescued women and then trains them for artisan jobs. WorkAround, in Boston, distributes piecemeal work digitally to migrants and refugees with an internet connection. Re:coded, an Iraqi nonprofit, is training young Syrian refugees to code so they can secure work wherever they end up.
The six-month business accelerator will work with 21 organizations focused on training and jobs, business services, food and education, energy access, health insurance and financial services to migrants, refugees and survivors of human-trafficking
Kiva’s World Refugee Fund, launched last year, is tapping crowd-sourced investments and funding from corporations and foundations to make $9 million available to refugees to borrow in Lebanon, Jordan, Turkey and other countries. Kaah International Microfinance Services in Somalia has provided over $8 million in financing to 8,000 Somali entrepreneurs and small business, including many refugee returnees.
Continuing up the capital continuum, the Ascend Venture Fund in Greece, a project of the Radcliffe Foundation, has raised $5 million (of a planned $20 million) to make commercial and sub-commercial investments into ventures in labor-intensive sectors such as agriculture, food, hospitality and tourism. Kuala Lumpur-based Cradle Fund and Hong Kong-based JC Management backed MyCash, which provides financial services to the more than three million migrant worker in Malaysia. Kois Invest is moving ahead with a livelihood bond for Syrian refugees.
Through it’s Working Capital fund, Humanity United is cutting larger checks to ventures in the emerging ‘labor-lens investing” category. Labor-lens investors seek to disrupt the $51 billion in profits reaped from goods made with forced labor. The fund, which raised $23 million in January from Walt Disney Company, Walmart Foundation, C&A Foundation and several impact investors, has backed Provenance, a blockchain-based startup for product traceability and Ulula, a software firm that allows for worker engagement in their supply chains.
Looking for large-scale impact, the hedge fund billionaire George Soros made a $500 million pledge to reshape the global response to refugees. In January, Soros invested $50 million in Humanity Ventures, an education and healthcare-focused partnership with Mastercard. Mastercard will develop products and services that can reach refugees on the move. The Soros Economic Development Fund is an investor in Humanity United’s Working Capital fund.
Corporations like IKEA and Starbucks are intentionally hiring refugees. Airbnb is attracting new hosts eager to house them. A Massachusetts workforce development pay-for-success program is trying to improve employability and skills for adult refugees and other immigrants.
Private capital, public good
The follow-on benefits from helping refugees and migrants build successful lives are huge. With nine out of 10 migrants on the move voluntarily and for economic reasons, each migrant family is its own engine of growth. The IMF says increasing the share of migrants in a population drives per capita GDP growth. Another report found a dollar spent welcoming refugees returns $2 within five years.
Helping refugees resettle in host countries pays off in economic progress and education, according to the U.N. High Commissioner for Refugees. UNHCR notes that refugees resettled in the U.S., for example, settle quickly and that their income progression outpaces economic migrants.
Eradicating modern day slavery will bring millions into the formal economy and help avert any “race to the bottom” in global labor standards. Migrants rising lifts all boats.