#Featured: Editor’s Note
Dear Friends of ImpactAlpha. The new ImpactAlpha is wrapping up its first season and gearing up for a breakthrough fall and new year. As we head into a two-week August recess, we wanted to thank you, for being readers, contributors, supporters and all-around FOIAs (Friends of ImpactAlpha).
We say ‘new’ because since the beginning of the year, ImpactAlpha has reached a new level of visibility and engagement. We are proud to have become the go-to news source and media outlet for impact investing’s early adopters and first movers — including you.
We have always been clear that our growth is tied to the growth of the impact investing market. The step-change in impact investing is now evident around the world. As capital markets rotate toward social and environmental value, people are no longer just interested. They’re investing (see #signals below). As investors demand impact, a growing industry is demanding proof-points, stories — and a new narrative for the future.
This is our — all of our — time. As early adopters and first movers, you have made a bet on impact investing. We have too, for next season and beyond.
Get the full fall preview in an Editor’s Note from David Bank, on ImpactAlpha:
#Dealflow: Follow the Money
RSF Social Finance backs New York “dance incubator.” The arts are increasingly attracting investors. The latest case: Lumberyard Contemporary Performing Arts, a New York City-based residency program, received a $5 million loan from San Francisco-based impact investor RSF Social Finance to build a 5,500-square-foot arts and dance campus on the site of a former building supply company in Catskill, N.Y. Lumberyard, which started in Maryland in 2000, aims to cultivate a performing arts scene in Catskill, about 120 miles north of New York City. The center will host artistic residents and at least a dozen companies each year to stage performances, Albany-based Times Union reports. It is expected to boost tourism and create several dozen permanent jobs in the small town of 6,700 people. “We’re eager to see the many ways this project will ripple in its impact by attracting national audiences and artists, and boosting economic vibrancy,” says RSF’s Casey Johnson. Other action in the arts:
- Artscape raised $21.4 million earlier this year to build an art entrepreneurship hub in Toronto.
- Upstart Co-Lab projects the U.S. creative sector alone needs $1.5 billion in investment over the next five years.
- Upstart Co-Lab founder Laura Callanan joined David Bank on the Returns on Investment podcast last year to explain how the initiative promotes creative people and communities.
- Why it matters: Artist-innovators are an untapped source of business and social value.
Uncharted selects 10 startups to combat Denver food deserts. Uncharted, formerly the Unreasonable Institute, is wasting no time putting into practice its new problem-focused accelerator strategy. First stop: Food deserts in Denver. One in six households in the Colorado city struggle to access fresh food, according to the firm’s website. Uncharted, which formally split from the Unreasonable Group last month, has teamed up with the City of Denver to make affordable, healthy food options more available across the city and county. The solution: Uncharted Food Access, an accelerator program for entrepreneurs working to bring more healthy food choices to residents. “The community has been asking us, as a city, to be more involved,” says Blake Angelo from Denver’s Office of Economic Development. The program has selected 10 for-profit and nonprofit startups for the first cohort. They include Re-Vision, a community leadership development organization focused on local food systems; Copia, a platform for minimizing food waste; and GrowHaus, one of the program’s first recruits, which runs an indoor farm and educational center.
Tajik women entrepreneurs get a $2 million boost. The European Bank for Reconstruction and Development (ERDB) has issued a $2 million loan to women-focused microfinance lender IMON International. IMON, launched in 1999 as a partnership between nonprofit Mercy Corps and the National Association of Women of Tajikistan, was the first microfinance provider in the landlocked Central Asian country. It continues to be the country’s largest with more than 109,000 borrowers, almost 40% of their women. The loan is part of ERDB’s Women in Business initiative, which works with local partners to help women entrepreneurs access finance and business advice. The funding will also support small and medium-sized agribusinesses to enhance Tajikistan’s agriculture sector. Both initiatives align with IMON’s recent shift towards lending to small businesses instead of individuals.
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
Growing interest in sustainable investing is turning into action. The trend is especially pronounced among Millennial investors, according to a new survey from the Morgan Stanley Institute for Sustainable Investing. In the survey, “Sustainability Signals,” 86% of active Millennial investors expressed interest in the field, while six of 10 investors in that group say they’ve made at least one sustainable investment in the last year. In the survey, which takes stock of the attitudes, perceptions and behaviors of a 1,000 individual investors towards sustainable investing, three out of four active individual investors said they’re interested in sustainable investing, a slight increase from Morgan Stanley’s 2015 poll. “Consumers and investors alike are now more than ever factoring sustainability issues into their investment decisions,” said Morgan Stanley’s Audrey Choi. Here are few other “sustainability signals” ImpactAlpha has been tracking:
- Global sustainable-investment assets have hit $23 trillion, up 25% in two years. (This figure includes negatively and positively screened public equities, green bonds and impact and community investments.)
- A dozen new ESG funds have launched since January and Morningstar has seen a four-fold increase in the use of ESG data on its fund rating platform.
- New flows of investor capital into ESG funds in just the first half of 2017 have topped net flows for 2014 or 2015 and are on pace to top 2016 inflows, says Morningstar.
- Betterment and Wealthfront, two of the biggest digital investment advisors, recently added ESG stock portfolios.
- Venture capital firm Andreessen Horowitz led a $3.35 million roundinto OpenInvest, an impact investing robo-advisor. The firm recently launched a #WithRefugees theme to its investment platform to allow investors to invest in publicly listed companies that have forward-thinking policies towards refugees.
People on the move. The impact investment firm i(x) investments, known for its structure as a permanent holding company, has appointed Sarah Bloom Raskin to its Board of Directors. From 2014 to 2017, Raskin served as Deputy Secretary of the U.S. Department of the Treasury — the first women to serve in that role — where she worked to strengthen the nation’s financial infrastructure and establish consumer safeguards in the financial marketplace. “The great challenge of our time is harnessing the power of markets and economic growth to address the social and environmental problems of humanity,” said Raskin, who has also served as a Governor of the Federal Reserve System. She added that at i(x), co-founded by Howard Buffett (the grandson of Warren E. Buffett) and Trevor Neilson, “social, economic, and environmental progress will be the baseline return on our investments.”
Will mobile-based remittances feed a $10 trillion market for bitcoin? For many, bitcoin — a digital currency based on a decentralized ledger system called a blockchain (it’s complicated) — is the future of money. It has been the top-performing currency in six of the past seven years, and a single coin is, as of August 9th at 7:20pm PT, worth $3,366.05, or almost 1,346,420 times its initial market valuation of $.0025. Not a bad investment for those who bought their bitcoins early.
That’s just the tip of the iceberg, says Jeremy Liew of Lightspeed Venture Partners. Liew, the first investor in Snapchat, thinks the value of a bitcoin will increase to something like $500,000 by 2030, which would put the total market value of today’s bitcoins at around $10.5 trillion. Three forces will drive this appreciation, Liew says: bitcoin-based remittances, global uncertainty and instability, and increasing global smartphone penetration.
Consider the cross-border remittance market, which is huge. About 230 million people send $500 billion in remittances each year, primarily through such companies as Western Union, RIA, Moneygram and the like. But they charge high fees, and overseas transfers can take a few days. A bitcoin remittance service might charge only 1%, and the transfer could be near-instantaneous.
Bitcoin also benefits from smartphone “wallet” apps like Abra, which enable users to bypass traditional finance institutions (and their fees). Abra is a remittance service that uses bitcoin to let users transfer remittances from their mobile phones to any recipient, who gets the cash from an Abra teller. Abra has VC backing, and actress/Goop CEO Gwyneth Paltrow recently joined Abra as an advisor.
In the Philippines, where the central bank legalized bitcoin earlier this year, adoption is rising at an exponential rate; Coins.ph, a bitcoin-based service provider, boasts more than one million active users. A recent report indicated that 20% of remittances from the Philippines to South Korea are now processed in bitcoin. The Philippines is the third largest remittance market in the world, behind only China and India, receiving nearly $30 billion in remittance payments every year. Liew and Peter Smith, CEO of Blockchain, said in a recent presentation: “Expats sending money home have found in bitcoin an inexpensive alternative, and we assume that the percentage of bitcoin-based remittances will sharply increase with greater bitcoin awareness.”
Onward! Please send any news and comments to TheBrief@impactalpha.com.