2030 Finance | September 26, 2017

Gender-diversity outperformance, Mitsui and minigrids, food-tech investing, India’s water challenge

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Greetings, ImpactAlpha readers!

#Featured: Impact Voices

The Google diversity story needs a reframe. Others have debunked the poor science and just plain ignorance in Google engineer James Damore’s argument that males are better suited than females for work in the tech and engineering fields. So let’s talk instead about building great businesses and investing to make companies stronger, more innovative and ultimately more profitable. Investors actively considering gender and seeking out investments in women founders, gender-diverse teams and companies delivering solutions for women — gender lens investors — are finding a competitive advantage.

“Given historical imbalances in capital flows, investors using a gender lens are identifying outsized opportunities,” Patricia Farrar-Rivas and Anders Ferguson of Veris Wealth Partners, a U.S. wealth manager with nearly $1 billion in assets, write on ImpactAlpha. “The data bears out that companies perform better and communities are stronger when women fully participate.”

Read, “Gender diversity is about radical innovation…and outperformance,” from Veris Wealth Partners’ Patricia Farrar-Rivas and Anders Ferguson on ImpactAlpha:

Gender diversity is about radical innovation…and outperformance

#Dealflow: Follow the Money

Mitsui backs OMC Power’s minigrid expansion to Africa. OMC Power develops solar minigrids for telecom towers and rural villages in India. With a ¥1 billion ($9.3 million) equity investment from Japanese conglomerate Mitsui, the company will expand to Africa and other parts of Asia. Minigrid ventures have been gaining support from big corporate players, including Engie,Caterpillar and Total. “Mitsui’s investment is an endorsement of the sector,” which is making the transition to large-scale commercialization, said OMC’s Anil Raj. The company is targeting five or six East African countries, where 600,000 people lack access to the grid. Because the region is less densely populated than India, OMC will focus on powering telecom towers, extending electricity to nearby businesses and homes. Last year, OMC raised $4.5 million from the Rockefeller Foundation to finance 100 minigrids in rural India.

A new Fledge fund invests in Uganda sanitation venture JOELEX. Fledge runs an accelerator program and raises funds to back graduates. JOELEXbuilds and runs public toilets and showers in Kampala, Uganda, where as many as two million people in slums have access to only 1,000 public toilets. Fledge has invested $20,000 in JOELEX, a recent accelerator graduate, and introduced a new sanitation fund to direct other investors’ capital to the startup. Fledge’s other funds include Africa Eats, a food and agriculture fund that made three investments in March.

Credit Suisse launches impact investing division. The Swiss bank, an early mover in supporting other impact investment firms, is opening its own impact investing division, called Impact Advisory and Finance. It will be headed by Marisa Drew, who has served as co-head of Europe, Middle East and Africa investment banking and capital markets for the bank. Leading the new division, Drew will report directly to CEO Tidjane Thiam. In 2003, Credit Suisse was a founding partner in responsAbility, a company that has since invested in 550 emerging-market impact ventures.

People on the Move. Purpose Capital has recruited Upkar Arora as its new CEO. Toronto-based Purpose Capital works with U.S. and Canadian investors to develop impact investing strategies. Arora founded advisory firm Illumina Partners in 2002 and has been active in social-finance investing in renewable energy and community and social-impact bonds. “The time was right to expand our capabilities and take our firm to the next level,” says co-founder Norm Tasevski.

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

#Signals: Ahead of the Curve

Climate, consumers, constraints drive growth in food-tech investing. A host of startups are bringing innovation to all parts of the food system, from labs to farms to consumers’ plates. Financing is following. Investment in the sector is up 6% in the first half of 2017 even as the total number of deals fell 27% to 369, according to a new report from market-research firm AgFunder. Large deals drove $4.4 billion in investments. Globally, agriculture and food, or “agrifood,” is a $7.8 trillion industry and employs 40% of the world’s population. The sector is being transformed by climate change, population growth, resource constraints, consumer demands and health concerns. Innovative foods, for example, still a sliver of the agrifood market, are attracting increased attention from investors. Startups are on the hunt for substitutes to fossil-fuel-intensive proteins. Alternative-meat companies Impossible Foods and Memphis Meats, which claim to use less land and less water than livestock, have attracted investment from Bill Gates. Funding for the segment has increased 60% to $206 million. The U.S. dominates investment in food-tech, with nearly half of the deals and funding. Australia, France, Germany, Ireland, and Malaysia. India, Canada, and the UK all saw growth in deal activity. Investments in agribusiness startups landed Lebanon, Iraq, Myanmar and Latvia on AgFunder’s list for the first time.

#2030: Long-termism

Sustainable water solutions for India — or else. India’s water woes are welldocumented. The news keeps getting worse: Kornik, a town near the border with Tibet, went dry last summer because of reductions in snowfall and unpredictable rains due to climate change. “We are staring at an apocalypse,” write Vineeth Menon and Lakshmi Poti in a recent article in the Hindu Business Line. The country suffers from decades of overuse of groundwater, wasteful and inefficient irrigation practices, pollution of lakes and rivers and erratic weather patterns that have left at least 75.8 million people without clean water.

Menon and Poti, consultants with the business advisor Intellecap, lay out two scenarios for India’s water future through 2050. In the first, the country proceeds along business as usual. By mid-century, total demand for water increases by 32 percent while supplies falls to 22 percent of current daily per capita levels. India has to import water.

In the more hopeful scenario, Indians adopt water-efficiency practices in all parts of their lives. Water-guzzlers, like PepsiCo and General Mills, convert to more sustainable water use. Technology also plays a role. Consumers use smart meters to remotely shut off leaky taps. Game apps encourage households to compete to see who can cut water consumption the most. Atmospheric generators create water from thin air, as do bikes that extract water as you pedal. Flushless urinals, solar-powered flushing systems, dirt-sensing taps and self-cleaning surfaces are standard fixtures in homes, offices, and public institutions. Data helps farmers use water more efficiently. (Sensor-based systems are already helping farmers analyze the moisture in soll and control water released to crops.)

The second scenario includes markets for trading water through financial instruments, like energy and carbon credits. Australia has already laid the foundations for such a water market. Such market tools, including water licenses, access entitlements, and allocations, could be key to a water-safe future for India. The coming water crisis, Menon and Poti write, “can only be averted if efficient practices are integrated into industries and services.”

Onward! Please send any news and comments to [email protected].