Greetings, ImpactAlpha readers! We’re taking a brief hiatus. A Brief, hiatus. Time to catch our collective breaths. We’ll see you again on August 28. Please continue to send through deals, news and other announcements. Onward!
#Featured: The Brief Quiz №27
The “we-wish-ignorance-weren’t-bliss” edition. What’s Lean Data? How might bitcoin impact the remittance market? And, what’s been the ‘Trump Effect’ on ESG funds?
Don’t ask us. Take this week’s Brief Quiz, from Jérôme Tagger, on ImpactAlpha:
#ICYMI: Worth a Read
Smallholder farmers are investable. A review of investments in smallholder agriculture shows a maturing market with clear investment opportunities at different stages of the agricultural value chain and varying stages of financing. Read more.
Measuring impact at lower cost for higher value. Acumen’s Tom Adam’s busts the “Metrics Myth” — that the use of proper impact metrics among investors is widespread — and explains how the goal of Acumen’s Lean Data approach is to “drive down costs to measurement and significantly increase the value to enterprises of gathering data.” Read more.
How to mobilize local funding for entrepreneurs without a rich uncle. An entrepreneurship ecosystem that creates wealth in marginalized communities doesn’t happen by accident. Neighborhood Economics is building markets, stacking capital, connecting people and institutions, convening stakeholders and reproducing the model. Read more.
#Dealflow: Follow the Money
Nigerian agribusiness portal Releaf heads to Silicon Valley. Releaf, which connects buyers and sellers of ag-related products and services, was selected for Y Combinator’s exclusive Summer 2017 program. As part of the program, the company will get a $120,000 investment from one of the Valley’s most popular accelerators in exchange for a 7% stake; the funds will be used to help Releaf hit its goal of 20,000 registered businesses within a year. Agriculture constitutes a quarter of Nigeria’s formal economic activity (and a larger share of the informal economy), but sellers have a hard time connecting to buyers. “Most business originates through word of mouth,” limiting opportunities for other business-to-business platforms, says co-founder Ikenna Nzewi. Releaf’s referral-based service functions like a LinkedIn or Facebook where members can tap common connections, post open bids and pitch for contracts. The portal launched last week and so far has enrolled 1,000 companies, Nzewi told ImpactAlpha. The founders eventually want to expand to other kinds of trade across Africa.
Australian insurer turns $91 million in premiums into impact investments. QBE has pooled $91 million from its Premiums4Good initiative, which allows customers to invest 25% of their insurance premiums in social infrastructure, impact bonds and environmental initiatives. It’s a small share of the insurer’s £20 billion in investments, but the company expects it to become a growing part of its portfolio. QBE launched the initiative at a time when company profits were falling, due to low performing investments. “It was not a case of, can we afford to do this? It was: can we afford not to do it, because this is exactly where business as a whole is going and we want to be a part of it,” says QBE’s Grant Clemence. QBE isn’t the first to dabble in the impact realm after lower-than-expected performance of its traditional investments. Last month, Luxembourg’s Fonds de Compensation pension fund launched two sustainability bonds, while parts of its global equity and bond portfolios were underperforming.
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
A picture is emerging about impact investor preferences for the 17 U.N. global goals. Impact investors are increasingly adopting the U.N. Sustainable Development Goals as a guide to action. Yet little is known about which of the goals are getting the most attention. A new report from InvestorFlow, the fast-growing impact investor network, sheds some light on the question. The report, “Who, What, Where, and How: The First 205 Investors,” provides a snapshot of InvestorFlow members (which now number 212) and includes an analysis of their preferences among the U.N. goals. The most popular SDGs: №1 (No poverty), №3 (Good health), №6 (Clean water) and №7 (Affordable and clean energy). The least targeted SDGs? №14 (Life in water), №15 (Life on Land), №16 (Peace, justice and strong institutions) and №17 (Partnerships for the goals). The investor network, co-founded by Matt Eldridge and Luni Libes in January, counts among its members fund managers including Global Partnerships and Adobe Capital; networks like Toniic and Gratitude Railroad; individuals and family offices such as Annie Chen’s RS Group; and foundations, including the world’s largest, the Bill & Melinda Gates Foundation. The InvestorFlow report notes that its SDG preference findings are similar to those in the GIIN’s recent survey of 55 investors (though the questions asked were slightly different). A separate report from Dutch pension funds, APG and PGGM, left “peace” off the list of investable SDGs. Looking for opportunities in those hard-to-reach SDGs? Check out ImpactAlpha’s ongoing coverage of activity in oceans, forests and peace.
Investing in urbanization. Big migration flows to cities means big new projects for housing, education and other services. The population of the world’s cities is expected to double by 2050, when urban centers are expected to house, educate, feed and employ 6.5 billion people. Already some cities are investing billions in new projects and redevelopment to expand access to housing and public parks, social services and transportation lines. Business Insider rounded up a few of them.
Just outside of downtown Cairo, Egypt, the city is building a 270-square-mile hub that includes 21 new residential districts. The $45 billion New Cairo Capital will have enough housing for 5 million and include 2,000 schools and colleges, 1,250 mosques and churches, a 5,000-seat conference center and one of the world’s biggest parks. In Istanbul, Turkey, on a 3.6 million-square-foot former military zone, the city is building 50,000 residential units in seven new towers. The project, called New City Istanbul, will feature one of the world’s largest airports, a 6,200 spot underground parking lot and new entertainment and shopping centers. São Paulo, Brazil plans to build 717,000 new residential units by 2030, and 240,000 will be designated affordable as part of its “people-oriented” master development plan. One four-story community center was completed in 2015 and features access to public transportation, an urban farm and a performance hall.
Investors are jumping in. Chinese developers are financing the New Cairo Capital project. In May private equity giant KKR invested $31 million in Indian developer Signature Global, which plans to build 7,400 affordable homes around Gurgaon, India. The Indian government is providing an interest-rate subsidy for low-income homebuyers as part of a push to ensure all Indians secure affordable housing by 2022.
That’s a wrap! See you soon. Please send any news and comments to [email protected].