Greetings, ImpactAlpha readers!
#Featured: ROI Podcast
Are you down with the SDGs? Yeah, you know me. Our host, Brian Walsh of Liquidnet, serves up a softball pop-culture reference in our latest Returns on Investment podcast. Which David Bank, our editor, completely muffs. ImpactAlpha regulars know we are indeed down with the SDGs, or the Sustainable Development Goals or, as we prefer, the 2030 global goals.
It’s not just that the 17 goals are becoming a universal framework for impact investors. It’s not even that fulfilling the goals would reshape financial markets themselves, as global capital gets aligned with global opportunities for sustainable prosperity. It’s that the shared goals and common purpose are themselves an antidote to retrenchment and division. By mobilizing the will for a better world by 2030, the global goals sustain the possibility that we might actually get there.
Even Imogen Rose-Smith, senior writer for Institutional Investor magazine, is down with the…. just don’t call them SDGs.
1 — Listen in on Brian, Imogen and David in our latest podcast:
Then, 2 — Subscribe to the Returns on Investment podcast:
#Dealflow: Follow the Money
Lok Capital backs Ummeed Housing Finance to extend low-income mortgages in India. Delhi-based Ummeed Housing Finance has raised $5.6 million from Lok Capital and Duane Park, seven months after the two investors backed a $3.5 million Series A round. Ummeed offers mortgages for low-income households and informal economy earners. Activity in India’s affordable housing market is taking off, thanks to a national plan to ensure all Indians have access to an affordable place to live by 2022. The market is estimated at $135 billion; it has recently attracted investment from U.S. private equity firm KKR and ICICI Prudential. Ummeed will use the new funding to expand throughout North and Central India.
SUSI to launch $1.1 billion dollar wind fund for wealthy countries. Swiss investment firm SUSI has upped the ante on renewables energy investing. The firm is planning a €1 billion ($1.1 billion) investment in commercial renewable energy infrastructure and offshore wind projects. The Global Energy Transition Fund will target 15 to 20 investments in OECD countries, reports Environmental Finance. The size of the fund is a big jump for SUSI, which has about $1 billion in assets under management. It recently closed $70 million for an energy storage technology fund and $425 million for a renewable energy fund. The offshore wind fund is SUSI’s first in the sector McKinsey recently called “the next big thing.” The cost of offshore wind energy production is expected to drop 70 percent from 2010 levels in the next three years. Improvements in technology will play a big part, but so will the cost of capital, which is falling as investment flows increase.
PayPal and Vilcap to support 40 fintech startups around the world. The online payments platform and the impact accelerator and fund manager are taking their fintech startup partnership to Africa for this first time. They’ll also run new rounds of their peer-reviewed accelerator program in Latin America, India and the U.S. to enroll 40 startups through four cohorts over the next two years (see the U.S. cohort). Since 2014, PayPal and Village Capital have supported 70 startups, which have gone on to raise $28 million in investment. Ant Financial, the financial services arm of Chinese internet giant Alibaba, and other strategic investors are all over the $17 billion fintech space amid intensifying competition in emerging markets. Vilcap bonus: CEO Ross Baird and Access Ventures’ Bryce Butler discuss the effects of student and home debt on entrepreneurship in the US.
Urban Us and BMW-Mini team up to accelerate urbantech. Urban Us, the smart-city venture fund, is partnering with BMW-Mini to find entrepreneurs focused on the future of cities with solutions for urban pollution, energy savings in buildings, and workforce connectivity. It’s the third round of the URBAN-X accelerator program in Brooklyn, launched by Mini last year. “As cities continue to grow, they magnify opportunities for their citizens and in turn, the challenges that need to be overcome by smart investment and innovation,” says Urban Us’ Shaun Abrahamson. URBAN-X’s roadshow this summer will stop in Seattle, Austin, Barcelona, Berlin, Montreal, Munich and other innovation hubs to meet with urbantech founders, investors, universities, and corporation. Applications are open now for the new cohort, which features more money (up to $100,000) and more lab time (five months).
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
Why Etsy investors should double down on the company’s purpose. The barbarians are at Etsy’s responsibly-sourced gates. After ousting CEO Chad Dickerson for slow growth at the online craft marketplace, investors are pressuring the firm to act more like a conventional, shareholder-value-only company. Not so fast, warns Ted Rheingold, who advises not just for-profit but for-large-profit-from-purpose companies. For companies like Etsy, Rheingold writes in FastCompany, purpose drives profit and their ability to beat competitors in the marketplace. “Competitors can’t simply knock them off by matching product, price, and convenience,” he says. “They have to also match brand message, good governance, customer experience and satisfaction, supply-chain excellence, and company values.” Impact investors get this; more traditional investors are beginning to. Bain Capital bought half of TOMS Shoes. Campbell Soup Co. acquired Plum Organics. “A customer would never know there was any leadership change,” says Rheingold. He adds, “purpose businesses aren’t here to stay, they’re here to win.”
Locus launches to help foundations invest locally. Place-based foundations — philanthropies that target specific geographies — are among the longest-standing impact investors around. Local foundations from Maryland to Minnesota to Oregon are also now some of impact investing’s most enthusiastic adopters, complementing grant-making strategies with equity and debt investments to build prosperous communities. Virginia Community Capital, a community development financial institution, and the Center for Rural Entrepreneurship have launched Locus Impact Investing to help smaller foundations that lack the expertise required for such investments. Locus will help local foundations source and assess deals, monitor impact and build internal capacity to manage impact investments. VCC vice president Teri Lovelace, who will head Locus, says a “new era” in philanthropy and community investing “requires different, more comprehensive solutions.”
Stimulating global growth by investing in sustainable development. We told you we were down for the 2030 global goals (see above). Now comes a new report that suggests increased public and private investment in sectors aligned with the Sustainable Development Goals, specifically in infrastructure and in the poorest countries, is a key to economic growth. “Such investment will stimulate global growth, leading to a virtuous cycle,” says the report. Conversely, a sluggish global economy is already putting at risk a key pillar of the goals, the eradication of poverty. “Continued slow global economic growth is likely to leave about 6.5 per cent of the world population extremely poor in 2030,” the UN said in a statement.
The new report tracks progress against the Addis Ababa Action Agenda, the plan laid out in Ethiopia in 2015 to finance ambitious 2030 plans to end poverty, ensure universal access to education, energy and health care, and propel the transition to a low-carbon economy. The Addis Ababa Action Agenda, which received mixed reviews at the time, became part of the business plan for the UN’s Sustainable Development Goals. The agenda called for social protections, increased foreign aid and efforts to collect more taxes and fight tax evasion. But public funding and international aid can’t fill the financing gap (see, “Financing the sustainable development goals with blended finance”). The report points to effective uses of blended instruments and public-private partnerships, to de-risk SDG-aligned investments and incentivize private capital to flow to SDG-aligned sectors. The Addis agenda set out an unprecedented role for private investment in sustainable development, as the only way to move from billions to the trillions needed annually to achieve the goals.
Onward! Please send any news and comments to [email protected]