Greetings, Agents of Impact!
Have you moved beyond trade-offs? Leading investors are sharing their strategies for integrating impact, risks and returns in our Beyond Trade-offs podcast series. What’s yours? Drop a note to [email protected] or join the conversation on our Slack channel. Explore each investor’s portfolio in an interactive infographic. Catch every episode by subscribing to ImpactAlpha’s podcasts on iTunes, Spotify, SoundCloud or Stitcher.
Featured: Impact Voices
Hacking community lending to interrupt the racial bias in ‘appraised value.’ No nonprofit or small business should have to raise more money to serve kids in communities of color than they would have to raise to serve kids in white communities. That still happens, a legacy of funding inequities that have starved communities of color of capital for decades. That historic racism is now entrenched by standard lending practices that are based on the appraised value of real estate, argues IFF’s Joe Neri. The Chicago-based community development financial institution, or CDFI, has “hacked” its underwriting processes to expand access and lower the cost of capital in communities of color.
“We offer non-appraisal-based lending,” Neri explains in a guest post on ImpactAlpha. Instead of asking the value of the property, IFF underwrites loans based on enterprises’ ability to repay IFF’s flexible debt. Old bank regulations, such as redlining, drove down the property values, while current bank regulations prevent investment in areas where appraised values are low. “That difference in the cost of capital can mean the difference between a viable enterprise and no enterprise at all,” Neri writes. “If we remove the barriers that ‘appraised-value’ lending creates in our communities, we could move the needle toward greater justice.”
Read, “Hacking community lending to interrupt racial bias in ‘appraised value,’” by IFF’s Joe Neri on ImpactAlpha.
- Join the conversation. What other hacks do you have to remove lending barriers based in racist disinvestment? Share your thoughts at [email protected] or hop on the ImpactAlpha Slack channel.
Dealflow: Follow the Money
WorldCover raises $6 million to insure Africa farmers against climate risks. The New York-based insurance company covers climate-vulnerable small farmers in Africa from changing weather patterns. WorldCover analyzes farm and climate-risk data from satellites, ground sensors, and mobile phone data and offers low-cost policies through mobile payment platforms like M-Pesa. The company has supported 30,000 farmers in Kenya, Uganda and Ghana since 2015, TechCrunch reports. WorldCover’s early backers included the Gates Foundation and JPMorgan Chase-backed Catalyst Fund for low-cost financial-services providers in underserved markets. The $6 million Series A funding round was backed by MS&AD Ventures, Y Combinator, Western Technology Investment and EchoVC. Read on.
SparkMeter raises $11 million to meter minigrids. Washington, D.C.-based SparkMeter makes a simple energy metering system that can be used by any utility or minigrid system. The meters, installed in households and businesses, transfer energy usage data over low-bandwidth internet, helping microgrid operators demonstrate commercial viability. SparkMeter launched in 2013 and is operating in 22 countries in Asia, Africa, and Latin America. The company has raised $11 million towards a targeted $14 million funding round, according to an SEC filing. SparkMeter has been backed previously by the Shell Foundation, energy venture fund Factor[e] Ventures, the Inter-American Development Bank, the Global Innovation Fund, Power Africa and others. Here’s more.
CirrusMD clinches $15 million for tele-medicine for veterans. Waiting times for Veterans Affairs’ health care vary widely by geography. Some facilities have average wait times of nearly 40 days. Denver-based CirrusMD’s system allows patients to request virtual health advice and diagnosis from medical professionals via online chat, as a lower-cost alternative to emergency rooms or urgent care centers. The company, co-founded in 2012 by emergency physician Blake McKinney, has partnered with four of the eight largest health insurers. CirrusMD raised Series B equity funding from Colorado Impact Fund, Drive Capital and existing investors. The funding will be used in part to roll out its platform for 200,000 patients at three V.A. facilities. Check it out.
Signals: Ahead of the Curve
‘Impact alpha’ fund managers seek co-investors to scale impact investing. What lies beyond tradeoffs? “Smart growth,” says Marieke Spence, the new executive director of Impact Capital Managers, the network of fund managers seeking market-rate (or better) returns from impact investments. Such ‘impact alpha’ investors can co-invest with catalytic investors that can accept higher risks, lower returns, more flexible terms or longer repayment periods, Spence says. “ICM doesn’t operate in a vacuum,” the ex-Synergos director told ImpactAlpha. “We are one part of an increasingly vibrant impact investing ecosystem and sit within the spectrum of returns sought by investors.” Impact Capital Managers has grown to 40 members, with $11 billion in assets under management since launching last April.
- Growing network. New to ICM are KKR, Partners Group, Morgan Stanley and Cranemere. Turner Impact Capital, Illumen Capital, The Impact Engine, Aiim Partners and Jana Partners have joined as well. Founders of ICM include SJF Ventures and Bridges Fund Management.
- Impact-driven performance. The group’s mantra was codified in last year’s report (wink) “The Alpha in Impact” from Tideline.
- On the front lines. Spence says the network is focused on general partners and fund managers rather than limited partners and asset owners. “You can’t scale impact investing unless managers are scaling successfully,” says Spence, and hitting financial and impact targets.
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Agents of Impact: Follow the Talent
International Finance Corp. is recruiting a chief technology officer… Mission Investors Exchange is hiring a director of membership in New York… The city of Philadelphia is looking for a smart-city director… The Washington Area Community Investment Fund is accepting applications to its board of directors… Uncharted is looking for ag-tech ventures based in Colorado… The “six capitals of sustainability” is the theme of this year’s Sustainability Investment Leadership Council conference in New York on May 9. ImpactAlpha subscribers receive 60% off with code IMPACT60. Register now.
— May 7, 2019.