The Brief | November 12, 2018

Gender-smart investing, Mayvenn’s stylist network, ranking Big Oil’s climate resilience, least-developed country financing

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Greetings, ImpactAlpha readers!

Agents of Impact Call No.5: Gender-smart investing

The smart money is gender-smart. Investors across asset classes are waking up to the power of women: as entrepreneurs and executives, employees and customers. Get smart about new funds, investment products and initiatives that are driving impact alpha with gender-lens investing on ImpactAlpha’s Agents of Impact Call No. 5. Join ImpactAlpha’s David Bank and Catalyst at Large Suzanne Biegel, co-producer of this month’s Gender-Smart Investing Summit in London, along with special guests, on Tuesday, Nov. 20th at 9:00 am PT / 12:00 pm ET / 5:00 pm GMT. RSVP for The Call.

Dealflow: Follow the Money

Essence Ventures’ first investment is in Mayvenn’s hair-products platform. The investment firm founded by Richelieu Dennis is leading a $23 million round of financing for Mayvenn, a hair-products platform that taps the distribution power of local stylists. Dennis is the co-founder of Sundial Brands, the personal-care products company acquired by Unilever last year for an estimated $1.6 billion. Also participating in the round were earlier investors Andreessen Horowitz, Impact America Fund, and Cross Culture Ventures. Mayvenn was founded by Diishan Imira to help individual stylists get a cut of the $6 billion U.S. market for hair products and extensions for people of color. Since 2013 Mayvenn has generated $80 million in revenue and paid out $20 million in commissions to hairstylists on its platform. “Diverse cultural leaders are at the edge of new markets, trends and customer demographics,” says Upstart Co-Lab’s Laura Callanan. Read the signals.

Rael raises $17.5 million for organic menstrual products. The California and South Korea-based company was launched in 2016 by three female founders who sought to bring the kind of high-quality, organic menstrual products common in South Korea to a wider market. The company’s Series A, backed by South Korean investors Mirae Asset and GS Retail, as well as prior investors Softbank Ventures and BAM Ventures, is a big round. It fits among a crop of startups in both high- and low-income markets attracting consumer and investor attention for tapping into women’s growing concerns about the chemical additives and environmental sustainability of their menstrual products. Read on.

Signals: Ahead of the Curve

European oil and gas majors hedge climate risks with low-carbon investments. Oil companies can choose to lead the low-carbon transition, or to slow it. Put another way, some oil companies look to be more resilient than others to the risks of the coming climate disruption. “Beyond the Cycle,” a new report from Carbon Disclosure Project, shows that Europe’s oil companies are better prepared than their North American counterparts across transition and physical risks, transition opportunities and climate governance. Investors are increasingly pressing oil companies to account for their climate risk under the recommendations from the Task Force on Climate-related Financial Disclosures. Actual investments to hedge such risks remains minimal, with the sector as a whole investing only 1.3% of its 2018 capital expenditure in low-carbon approaches. The CDP’s report ranks two dozen oil companies, representing about one-third of global production, on their readiness for the low-carbon transition.

  • European companies are further ahead. Norway’s Equinor is the best-positioned, the report found, followed by France’s Total, Shell and Eni of Italy. Equinor, for example, is seeking to rebrand itself as a broad energy company and expects to invest more than 15% of its capital expenditure in new energy solutions by 2030, up from about 7% now.
  • Major European oil companies account for 70% of the industry’s current renewable energy capacity, and nearly all the projects under development.
  • The laggards in CDP’s ranking: China’s CNOOC, Russia’s Rosneft and Houston-based Marathon Oil.

“Low-carbon technologies and regulatory change is disrupting the established order of the energy industry,”  said CDP’s Luke Fletcher. “Companies are now facing increasing scrutiny from investors to look beyond the current cycle and deliver value in the long-term.” Share this post.

How to attract private capital to the poorest countries. Development finance unlocked some $81 billion in private capital for global development between 2012 and 2015. Only $5.5 billion, or less than 7% of the total, ended up in one of the world’s 47 least developed countries. The United Nations Capital Development Fund lays out how to attract more private capital to the poorest countries. Obstacles to be overcome: real and perceived risks, shortage of investment opportunities and weak policy frameworks.

  • What works. Credit and risk guarantees – led by the World Bank – helped attract more than 70% of the $5.5 billion. Angola (more than $1 billion), Senegal and Zambia (each more than $500 million) attracted the largest share. Most went to mining and construction, energy, and banking and financial services.
  • Risk aversion. XSML’s Central Africa SME Fund in 2010 attracted $12.5 million from the International Finance Corp. and $1.3 million in grant capital for technical assistance. Yet it failed to attract commercial investors. The fund backed 32 businesses in the Democratic Republic of Congo and Central African Republic, creating more than 500 jobs. The fund has realized four exits and returned half of investors’ capital. XSML’s second fund raised $50 million from European development finance institutions and foundations – but still no commercial investors.
  • Currency hedges. A blended facility in Myanmar had better luck attracting international investors. The Currency Exchange Fund, which provides currency-risk protection in frontier markets, and The Livelihoods and Food Security Fund, a $400 million fund in Myanmar, joined forces to allow international investors to lend in Myanmar’s kyat while realizing their returns in US dollars. The $10 million hedged $86 million in loans from a dozen international lenders, allowing local microfinance institutions to serve more than 337,000 clients, most of them women in rural areas.

The development community, says the UNDP’s Achim Steiner, “needs to move out of our comfort zone, take more risks and adopt more flexible approaches to get finance going to where it’s most needed.” Share this post.

Agents of Impact: Follow the Talent

Nicole Taylor is the new president and CEO of the Silicon Valley Community Foundation. Ex-CEO Emmett Carson was ousted in June after an investigative report found “unacceptable workplace behavior” at the foundation… Humanity United is hiring a manager for strategy, learning and impact… Small-scale commercial solar financier Sunwealth is looking for an asset management associate… Development consultancy DAI seeks a senior finance and investment specialist.

November 12, 2018.