The Brief | June 7, 2018

Hybrid impact investors, Techstars debuts impact cohort, Brazil’s Vox exits TEM, financial health solutions

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Greetings, ImpactAlpha readers!

Featured: The ImpactAlpha

‘Hybrid’ investors seek the alpha in impact. The Global Impact Investing Network has performed a valuable service by downgrading legacy investors from “mainstream,” which sounds like dominant, to “conventional,” which connotes outdated. And so, “conventional” investors are adding impact investing products to spiff up their offerings. Wealth managers like BlackRock, JP Morgan, UBS and Credit Suisse are the new hybrids. Along with private-equity giants like TPG, Bain and KKR, they’re the Priuses of capital, writes David Bank in this week’s column.

Five out of every six of the hybrid investors in the GIIN’s recent survey said their organizations are making more impact investments than they were three years ago. Inside the hybrids, new impact products and funds will live alongside conventional investments, (which the GIIN defines as those without explicit impact intent). Over time, that will make clear not only comparative client demand, but financial performance—and impact. In today’s hybrid world, impact is becoming the new mainstream, and impact alpha the key differentiator.

Read David Bank’s latest column, “‘Hybrid’ investors seek the alpha in impact,”on ImpactAlpha. And catch up on earlier columns in the series.

For more big thinking, be sure to see Jed Emerson’s reflections on theory, practice and community. Read, “Toward a new economic paradigm,” on ImpactAlpha.

Dealflow: Follow the Money

Deal of the Day: Brazil’s Vox Capital scores 26% return in TEM exit. The São Paulo-based impact investment firm has sold its stake in affordable healthcare network TEM, marking the country’s first impact investment exit. Read all about it.

Eight startups selected as Financial Solutions Lab cohort winners. The theme of the competition was “improving financial health of underrepresented communities.” See who won.

Ergonomic senior walker maker Motivo raises Series A round. The startup makes an ergonomic walker that cuts back and neck pressure by up to 60% compared with traditional walkers. Learn more.

Click here for more ImpactAlpha dealflow. Send deal tips and news to [email protected].

Featured Event: Confluence Philanthropy’s Advisors Forum, June 19-20, New York City

Taking mission-aligned investing to scale. We like the themes of Confluence Philanthropy’s Advisors Forum later this month in New York. Investment advisors, asset managers and endowment fiduciaries will explore strategies for investing in inclusion, achieving alpha through sustainability and removing barriers to dealflow. Register here.

Signals: Ahead of the Curve

Techstars Impact hunts for impact alpha with first cohort. Pipeline Equity is a Denver, Colorado-based startup helping companies unlock value by eliminating gender bias. MDaaS Global, based in Cambridge, Massachusetts, is building a network of low-cost diagnostic and primary care centers for Africa’s next billion. Kutumbita, in Singapore, helps companies manage and train workers throughout their supply chains. All three startups are part of the first cohort of Techstars Impact, which convened this week in Austin, Texas.

  • Why an impact accelerator? Techstars found that 10% of its cohorts were in impact-aligned sectors like financial services, healthcare, education, agriculture and clean energy. The number of impact companies coming onto the platform had been increasing 50% per year. Impact venture alumni were achieving multiples on invested capital—or valuations relative to Techstars’ original investment—on par with, and in some cases better than, the general portfolio.
  • Game on. Techstars tapped Zoe Schlag, formerly of UnLtd USA, and raised a dedicated fund with limited partners including Kesha Cash’s Impact America and Morgan Stanley’s Alternative Investment Partners, as well as RetailMeNot CEO Cotter Cunningham. Each startup receives $120,000.
  • The inaugural cohort: Better Living Technologies (Austin), Bridgecare Finance (Seattle), MDaaS Global (Cambridge, and Lagos, Nigeria), Graviky Labs (Bangalore), TommyRun (Atlanta), Kutumbita (Singapore), Base Operations (Cambridge, Mexico), Haven Connect (San Francisco), Pipeline Equity (Denver), Troposphere (Baltimore).

“We’re looking for great founders building great businesses solving real needs,” Schlag told ImpactAlpha. For these companies, “impact is intrinsically tied to business model. As the business scales, so does the impact.”

Notable Techstars impact venture alumni include Fig Loans, a lender for low-income borrowers, Connxus, which helps companies build more diverse supply chains, and Aunt Bertha, a searchable platform that efficiently connects people in need with services provided by local nonprofits.

Agents of Impact: Follow the Talent

David Sengeh, a 31-year-old MIT PhD, has been appointed as Sierra Leone’s first chief innovation officer… Law firm Womble Bond Dickinson was named the winner of the inaugural Grunin Prize for social entrepreneurship at NYU Law School for its “Performance Aligned Stock” investment product… Upstart Co-Lab’s Laura Callanan interviewed Maurice Jones of LISC, Tony Marx of the New York Public Library and actor and entrepreneur Mary Stuart Masterson at Smart Cities New York ‘18 on the creative economy and the future of work.

June 7, 2018.