Emerging and Growth Markets | June 15, 2017

Growth capital for growth markets, social impact incentives, gender-lens opportunity

The team at


Greetings, ImpactAlpha readers!

#Featured: Open Mic

A new model for equity growth capital for the world’s poorest countries. Helping the world’s poorest countries move out of poverty requires more equity growth capital from private investors. Today, there are only five local private-equity funds in the world’s 23 poorest countries (one in the Central African Republic, one in the Democratic Republic of Congo, one in Ethiopia and two in Afghanistan). Peter O’Driscoll, head of the emerging markets group at the law firm Orrick, Herrington & Sutcliffe, has a modest proposal: a $600 million to $1 billion fund to invest in those 23 countries. Dubbed the “23 Fund,” he argues the new model for impact-driven equity growth capital investment in frontier markets is crucial to the achievement of the Sustainable Development Goals and for the poorest countries to benefit from impact investment.

Read “The 23 Fund: A new model for growth capital in the world’s poorest countries,” by Orrick’s Peter O’Driscoll:

The ‘23 Fund’: A new model for growth capital in the world’s poorest countries


Deadline extended: We’re looking for leaders driving impact investing around the world. The Global Steering Group for Impact Investment will honor investors, managers, entrepreneurs and market-builders. New Deadline: June 18. Submit an entry.

#Dealflow: Follow the Money

“Social impact incentives” introduced in Mexico and Honduras. Social impact incentives are a form of pay-for-success financing that offer incentive payments to businesses for proven impact. They effectively act as “bonus” payments on top of a company’s normal revenue stream. As part of a $1.6 million pilot, Clínicas del Azúcar, a group of low-cost diabetes treatment facilities in Mexico will be be eligible for up to $275,000 for extending diabetes treatment and prevention — and success rates — for low-income patients. Village Infrastructure Angels, a solar agtech company that supports women entrepreneurs and farmers, can earn up to $195,000 for helping to build women-run community businesses. Unlike social impact bonds, social impact incentives focus on scaling the “supply” of impact, rather than specific outcomes. The goal is for the additional revenues to make the ventures more attractive to other investors. The pilot, designed by German impact consultants Roots of Impact, was approved in 2015 by the Swiss development agency and is being implemented in Latin America by the Inter-American Development Bank.

Community Capital Management customizes mortgage pools for low-income women. The South Florida firm is adding a layer to its gender-lens investment approach with customized mortgage pools that provide capital exclusively to low-income female borrowers. That offers investors the opportunity to directly provide capital so women can affordably own homes. Community Capital Management manages $2.4 billion and has been making women-positive fixed income investments for nearly two decades. “Access to capital, specifically the financial markets, is a vital catalyst toward promoting positive change,” says president Alyssa Greenspan. “The bonds are positively benefiting women such as empowerment programs for girls and providing capital to low- and moderate-income women.”

Three startups empowering women get coLABS backing. The accelerator-investor run by Gray Matters Capital is making small investments in three startups focused on women. African Renewable Energy helps women and disabled people set up solar-powered mobile charging and wifi kiosks. Pakistan-based doctHERs connects female home doctors with hard to reach patients. U.S.-based IssueVoter sends alerts on upcoming Congressional issues and votes to encourage civic engagement, particularly among underrepresented women. The investment amounts were not disclosed, but coLABS, with a $1 million mandate, generally invests between $10,000 and $100,000 to help startups with proof of concept and piloting.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

Audrey Choi spreads sustainable finance at Morgan Stanley. After taking a look at the big bank’s new index for inclusive investment opportunities, we wondered to what extent Morgan Stanley itself uses such tools. More than you might expect, Audrey Choi, who heads both Morgan Stanley’s global sustainable finance group and its Institute for Sustainable Investing, told ImpactAlpha. “When you say the word inequality and investment in the same sentence, people have hard time reconciling them,” says Choi. But she sees “tremendous growth opportunities” in tech-driven solutions in healthcare or financial services that promote gender equity and access to credit for low-income people. “Then you get into a virtuous cycle, where the benefit to the community is a benefit to the business.” Keep reading “Spreading the sustainability story on Wall Street, by David Bank on ImpactAlpha:

Spreading the sustainability story on Wall Street

#2030: Long-Termism

Breaking the link between child labor and poverty. This week’s World Child Labor Day quietly came and went. Child labor fell by one-third between 2000 and 2012. But about 1 in 10 children worldwide, or 168 million children, still work instead of learn. Nearly half of all kids out of school are trapped in child labor. Child labor continues to be a drag on prosperity, economic inclusion and Sustainable Development Goal №4: Quality education for all.

Poverty is not the cause of child labor. Rather, labor at an early age limits a child’s ability to go to school, learn to read and later earn a reliable income, according to a 2015 International Labour Organization report.

To break the destructive relationship between child labor, poverty and education, investors and entrepreneurs can help reduce the cost of education, build more schools and train teachers in disconnected regions, says the Global Partnership for Education. Other ideas: provide accommodation for girls, especially those at the age of menstruation, and manage the school-to-work transition by creating opportunities for work.

“Child labor perpetuates poverty. Child labor creates poverty,” said 2014 Nobel Prize winner, Kailash Satyarthi. “If the children are deprived from education, then they are bound to remain poor for the whole of their life.”

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