Financing Mexico’s missing middle, pay-as-you-go solar in Rwanda, startup (racial) equity…



Greetings, ImpactAlpha readers!

#Featured: ImpactAlpha Original

For Adobe Capital, competitive returns run through social ventures in Mexico. Rather than trying to hit a homerun with the next tech unicorn, Mexican venture capital firm Adobe is looking for 10 base hits with cash-flow positive firms delivering healthcare, education, affordable housing and alternative energy to Mexico’s new middle class. The venture capital arm of the impact investing firm New Ventures has closed on $21 million of a planned $40 million second fund. Adobe’s “impact” signature was a positive, one investor, Marcelo de la Garza of Auria Capital, told ImpactAlpha. What Auria really wanted was access to a new crop of companies that were serious about serving Mexico’s emerging middle market. “In Mexico, that’s very profitable,” de la Garza said.

A fund targeting ventures delivering basic services to Mexico’s low- and emerging-middle classes can “provide equal or better returns than other funds,” Rodrigo Villar, founder and managing director of New Ventures, told ImpactAlpha. “We wanted to prove that this kind of mechanism in developing countries is a good strategy for investors.”

Read, “For Adobe Capital, competitive returns run through social ventures in Mexico,” by Dennis Price on ImpactAlpha.

For Adobe Capital, competitive returns in Mexico run through social ventures

#Dealflow: Follow the Money

BBOXX closes $5 million for pay-as-you-go solar in Rwanda. The debt funding will be used to help 150,000 Rwandans finance BBOXX’s home solar products and systems. The funds will be managed by Banque Populaire du Rwanda in an unusual trilateral structure for pay-as-you-go solar. Banque Populaire du Rwanda also helps support BBOXX’s 250,000 current Rwandan customers. BBOXX closed a $20 million equity round last year to expand in Kenya and Rwanda and launch in new markets in West Africa. The new debt capital was provided by Deutsche Asset Management’s Essential Capital Consortium, a $50 million debt fund launched in 2015. The African Guarantee Fund and USAID provided guarantees and MFX Solutions provided a foreign exchange swap to hedge against currency fluctuations.

Green Visor Capital backs Colombia fintech startup Tpaga. The founders of Tpaga launched Tappsi, a Colombian ride-hailing services, in 2012 to offer a safer taxi option for urban residents and visitors. Tpaga expands that service with a mobile wallet that gives Colombia’s unbanked taxi drivers and other adults a cashless payment option. Tappsi’s 50,000 taxi drivers are the first Tpaga users. Tpaga developed the wallet as part of Y Combinator’s Summer 2017 cohort and launched it at the start of October. Green Visor Capital in San Francisco, a fintech venture capital firm, invested $2.2 million.

Smart Farming competition kicks off in India. The state government of Andhra Pradesh in southwest India is looking for startups that support farmers with technology-driven services, connect farmers to markets and farming supplies, mine data for small-scale agriculture and provide digital financial services and products. The state government is partnering with the Gates Foundation, Dalberg and the Confederation of Indian Industry to support the startups, and will help selected companies roll out their solutions. Applications are open until October 31st. Finalists will pitch their ideas at the Progressive Farmer Smart Farming Summit in Visakhapatnam on November 15–17, 2017.

See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to thebrief@impactalpha.com.

#Signals: Ahead of the Curve

Can startups help equalize racial wealth disparities? “I think overall the greatest opportunity that we have to change generational wealth and generational inequality is through the startup scene,” Harold Hughes, the founder of online sports ticket sales site Bandwagon, said at an event for the Black Angel Tech Fund in Atlanta. A report from Black Tech Mecca in Chicagofound that median black salaries in the tech sector, at $64,000, were close to the overall median of $70,000. “Technology [is] not a silver bullet [but] when properly leveraged, it has proven to be an amazing catalyst for transformation,” the report states. More work is needed to get blacks into Chicago’s tech and tech startup scenes: the black employment rate is growing at a slower rate to other demographics, and blacks still represent the smallest share (9%) of the sector. In Atlanta, the Black Tech Angel fund doesn’t claim to be an impact fund beyond trying to support more black entrepreneurs. It has invested $1 million in six black-owned startups, including Bandwagon, based in Greenville, S.C.

#2030: Long-Termism

Investing in women in India: A tale of two McKinsey reports. Two years ago, McKinsey reported that achieving gender parity in India by 2025 would have a greater economic impact than in any other region in the world. The report, The Power of Parity: Advancing Women’s Equality in India, estimated that India could add a whopping $700 billion in added GDP in 2025 by, for example, raising women’s participation in India’s labor force by 10 percentage point by 2025. That would usher 68 million more women into the labor force. If India were to match the momentum toward gender parity of the fastest-improving countries in its region, the country’s annual GDP could grow by 1.4 percentage points.

With an opportunity of that scale, it’s surprising that McKinsey’s recent reporton the growth of impact investing in India, Impact Investing: Purpose-Driven Finance Finds Its Place in India, published last month, makes no mention of gender equity, gender-lens investment, women entrepreneurs or women investors. The report, which forecasts that the market for impact investments will grow 20 to 24% percent a year and reach $8 billion in 2025, does not even include the word “women.” To be fair, there is an illustration of a woman in a miniskirt watering what looks to be an impact investment tree.

The disconnect leaves out funds like the $15 million SAHA Fund, which “invests in companies that promote gender parity and increase women’s participation in the workforce as employees, leaders and entrepreneurs.” The Accelerator Group recently launched a $25 million fund and staged an “All India Roadshow on Women’s Economic Empowerment Through Entrepreneurship.” The state of Karnataka has launched a $1.5 million “proof of concept” fund specifically to help female innovators prove out their concepts, get certified and pilot their manufacturing processes.

“There was no deliberate exclusion of ‘gender-lens’ in our work,” Vivek Pandit, co-author of the recent report, told ImpactAlpha. “I suspect the reason it did not find special mention is because we did not find a sufficient number of investments explicitly focused on gender parity, women’s empowerment or female participation rates as the primary measure of their social impact.” The report suggests growing impact investing by tapping Indian-government-mandated corporate social responsibility funds, developing strong impact fund managers, collecting better data and building new platforms such as social stock exchanges. Regarding the $700 billion opportunity from the empowerment and inclusion of women, identified by McKinsey itself? Not a word. “You implicitly raise a critical point,” Pandit admits. “There is a woefully insufficient focus on the issue of gender.”

ImpactAlpha’s special report, Women Rising in India, explores how the lives of women are changing — and how women are changing life in India.

  • Episode One: Meeting women who are leading India from what’s wrong to what’s working. A journey through rural and urban India finds women are overcoming barriers to build a more resilient and equitable India.
  • Episode Two: How women artisans are reviving ancient crafts and rural livelihoods in modern India. Connected to the global market, pottery makers and weavers are raising — and the status of women.
  • Episode Three: India’s women farmers are leading from subsistence to regeneration. The feminization of agriculture is bringing higher incomes to rural families.

Onward! Please send news and comments to TheBrief@impactalpha.com.

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