The Brief | September 10, 2018

Impact-washing blues, Spyce’s robot kitchens, Unshackled’s immigrant entrepreneurs

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Dear ImpactAlpha readers!

Featured: Returns on Investment podcast

Beware cures for ‘impact-washing’ that may be worse than the disease (podcast). The impact investing community seems to be in one of its cyclical discussions about who and what should count as impact. The latest Returns on Investment podcast takes up the growing concern about “impact-washing,” the use of impact jargon or marketing to raise money or burnish reputations without delivering real impact or, in some cases, causing negative impacts. But creating barriers to entry to impact investing and setting up select people or organizations as gatekeepers could be more harmful than any damage from a few bad actors. “Invite them in. Don’t bar the door,” ImpactAlpha’s David Bank argues in the podcast roundtable discussion.

Imogen Rose-Smith, an investment fellow with the University of California, said impact marketing hype could undermine credibility, citing “B- or C-list managers, who think they can use ESG or impact as a way to raise money from institutional investors they otherwise couldn’t raise money from.” Podcast host Brian Walsh suggested that the rush of fund managers and others to wrap themselves in the ‘impact’ mantle might be a sign of impact investing’s appeal: a good problem to have. Until recently, the term impact in an investment pitch scared investors rather than attracted them. Bank argued that strict definitions overlooked the dynamic nature of social change. Each new level of impact creates proof points, possibilities and constituencies for further efforts. “There’s always a new hill to take,” he said, “but we want to make sure that impact becomes the dominant paradigm.”

Read on and listen in to the latest Returns on Investment podcast, “Beware cures for ‘impact-washing’ that may be worse than the disease.” Catch up on all of ImpactAlpha’s Returns on Investment podcasts.

Dealflow: Follow the Money

Chicago and Boston food-tech startups raise millions to lower cost of healthy food. Innovation Endeavors, Eric Schmidt’s venture fund, led a $30 million Series C round to help Farmer’s Fridge expand its healthy vending machines across the Midwest. Separately, Boston-based Spyce raised $21 million, led by the Collaborative Fund, for healthy kitchens – run by robots. Dig in.

Salary Finance raises $20 million to expand savings plans in the U.S. The London-based startup launched in 2015 to help the U.K. workforce save more and manage debt through an employer benefits scheme. Its $20 million Series B round, led by Legal & General and Blenheim Chalcot, will support the company’s launch in the U.S., in partnership with United Way. Here’s more.

Kellogg Foundation, DiCaprio Foundation support L.A. community wellness center. The Paul Robeson Community Wellness Center was developed by Community Services Unlimited to offer nutritious affordable food and other services to South Central L.A. communities. Part of the funding came as a $1 million, 10-year program-related investment from the Kellogg Foundation. Learn more.

Signals: Ahead of the Curve

De-risking entrepreneurship for immigrant founders. Founders born abroad have built more than half of America’s “unicorn” startups (see, “Immigrants and the American Economy). The proposed International Entrepreneurship Rule, which would allow foreign-born entrepreneurs to remain in the U.S., is under attack from the Trump administration. From the other direction, Unshackled Ventures is raising a new fund specifically to invest in immigrant entrepreneurs. Part of its mission: create 100,000 American jobs.

The San Francisco area-based venture firm helps de-risk investments in immigrant-founded companies by helping founders secure the visas and business support they need to grow. The most recent investments include on-demand knitwear manufacturer Tailored Industry, located in an opportunity zone in Brooklyn, camera monetization solution Hype, and Mylk Guys, a plant-based food grocer. Unshackled’s “immigration platform solution” helps the firm “partner with VCs and investors to support immigrant entrepreneurs build their startups,” founding partner Nitin Pachisia told ImpactAlpha.

  • Backers. Unshackled counts among its dozens of investors Brad Feld, First Round Capital, Jerry Yang and Laurene Powell Jobs. Last year the VC kicked off fundraising for a second, $25 million, fund. Unshackled portfolio companies have secured capital from more than 130 co-­investors.
  • Early-stage. Unshackled has made 32 investments in 25 companies since 2014, generally in pre-seed stage investments of less than $500,000. The investment firm bets on entrepreneurs at the earliest, idea stage of their businesses. “By bringing together immigration and venture capital at day 0, we believe more immigrant founders will succeed faster,” the firm says on its website. “And history is on our side.”
  • Bonus: “11 venture capitalists investing in immigration tech.”

Agents of Impact: Follow the Talent

Freada Kapor Klein, in the Financial Times, says Kapor Capital will disclose returns for the first time next year. “We will easily be in the top quartile of VC funds,” she says… Julie Cheng, ex- of BlueOrchard Finance, is the new director of financial inclusion at fintech firm Harvesting… Skoll Foundation is recruiting a fellow for its portfolio investments team.

September 10, 2018.