The Brief | June 19, 2019

Interrupting implicit bias, Aunt Bertha’s connections, pay-by-the-hour insurance, Entrepreneurs Impact Summit

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Greetings, Agents of Impact!

Featured:  ImpactAlpha Original

How Kellogg Foundation is interrupting racial bias in capital markets. Hidden prejudices show up in health and education outcomes that divide along racial lines. Implicit bias shapes capital markets as well. Attitudes about race influence with whom institutions place their assets, and which entrepreneurs and ideas get funded. Even egalitarian-minded individuals, research shows, can let race-based assumptions and stereotypes penetrate decision-making. Some investors are learning to interrupt implicit bias by becoming more aware that it exists and building more diverse teams. The W.K. Kellogg Foundation is taking racial equity further by making the business case for racial inclusion. The Battle Creek, Mich.-based foundation, one of the first to allocate a portion of its endowment for mission-driven investments, is intentionally backing fund managers and entrepreneurs of color and seeking investments that reduce bias in the financial system. “If you are not looking at this, you are actually taking risk,” says Cynthia Muller, the foundation’s director of mission investment.

Last week, the foundation gathered its mission-investments investees for a summit in Detroit, and invited ImpactAlpha to sit in. No longer satisfied with making only the moral case for racial equity, the foundation’s new message: Reducing bias is aligned with the interests of investors. With exits, the foundation has committed about $166 million in mission-related investments and another $52 million in program-related investments across 71 investments. Kellogg Foundation has backed San Francisco-based Sixup, a lending platform that helps low-income students with college financing. The Entrepreneurs of Color Fund in Detroit has lent $6 million to 62 businesses, with a default rate of less than 2%. The foundation joined a consortium that invested $150 million in Macro, a production company that tells stories of communities of color. “The same way we structure portfolios and want them to be diversified to manage that risk, we have to think about that risk with racial equity,” Muller says. “That’s the place for us to address the wealth gap, and get more folks, more perspectives, more voices to the table.”

Keep reading, “How Kellogg Foundation is interrupting racial bias in capital markets,” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

Aunt Bertha raises $16 million to help people connect to community services. Austin-based Aunt Bertha launched in 2010 to help individuals identify social, health and community services. Aunt Bertha offers a searchable database of social programs, free to search anonymously, with at least 700 programs in each county. The B Corp also helps 175 healthcare, education, housing providers and community organizations coordinate social services and referrals. Rising awareness of the “social determinants of health” is key to lowering costs with “value-based care models,” the company says. Aunt Bertha’s $16 million Series C funding was led by healthcare investment firm Noro-Moseley Partners, with participation from Digitalis Ventures, Techstars Ventures, Techstars Impact and Capital Factory. Read on.

Dealflow overflow.

  • D.C. real estate company Menkiti Group is rolling out an Opportunity Zone fund in partnership with LISC. The partners are eyeing projects in D.C.’s Anacostia neighborhood and cities like Worcester, Mass.
  • Insure-tech company Zego, based in London, clinched $42 million for its pay-by-the-hour commercial insurance policies, designed for gig-economy workers like ride-app drivers and food delivery couriers.
  • Talkspace, a New York-based company that connects people to mental health providers, raised $50 million led by Revolution Growth.
  • Norwegian aquaculture startup Aquabyte reeled in $10 million for fish farming software to improve sustainability, resource efficiency, and fish health.
  • Japanese corporation Marubeni led a $26 million equity round for Azuri Technologies, a pay-as-you-go solar provider in East and West Africa.
  • Mumbai-based Cosmeto Food Organic raised $144,000 in early funding for skincare products the company’s female founders boast are so organic, customers can taste them (if so inclined).
  • Virginia’s Senseware is the latest building energy-efficiency startup to raise funding, securing backing from GreenGen Ventures.

Signals: Ahead of the Curve

Commitments and convictions at the Entrepreneurs Impact Summit. Startup banking platform Good Money committed to move at least $5 billion “to a values-based system financial system where every customer is an owner.” An employment service, 70 Million Jobs, pledged to facilitate the employment of one million formerly incarcerated men and women over 10 years. And the investment firm FullCycle promised to invest $100 million in the next year “to accelerate and scale the deployment of climate-restoring technologies.” Taking a page from the playbook of the defunct Clinton Global Initiative, the first Entrepreneurs Impact Summit last week encouraged participants to publicly commit to measurable impact goals. ImpactAlpha was a media sponsor of the event organized by i(x) investments, an impact holding company focused on renewable energy, green real estate, gender equality and other themes.

  • Flow Capital’s Ravé Mehta introduced WaterLedger, a blockchain-based water bank that aims to conserve water by encouraging efficiencies, particularly in agricultural use. Tabreez Verjee, founder of the investment firm Uprising, touted Devoted Health, a Medicare Advantage provider that has raised more than $370 million for what Verjee calls “an alternative-universe health care system.”
  • Halogen Ventures’ Jesse Draper, a fourth-generation venture capitalist, has invested in more than 50 early-stage consumer tech companies, nearly all of them headed by women. Joanna McFarland founded the ride-hailing service HopSkipDrive to help parents, mostly moms, manage the conflicting demands of work and family logistics, but found unexpected impact, and revenues, through contracts with schools and public agencies to provide transportation for homeless and foster youth.
  • i(x)’s Trevor Neilson committed to raise and invest more than $100 million in companies addressing the global climate emergency, and to stage a second Entrepreneurs Impact Summit in 2020 as “the start of a new movement to align profit with purpose.”
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Agents of Impact: Follow the Talent

Richard Allen joins Stonehenge Capital Company as director of strategic initiatives… Consulting and investment firm Karisimbi Business Partners is hiring a senior manager in Kigali, Rwanda… Align Impact seeks a philanthropy associate in Santa Monica, San Mateo, or New York… Futurebound, Uncharted and Gary Community Investments launch the Futurebound Acceleration Lab to accelerate “breakthrough solutions to child development’s most complex challenges”… Third Sector, Social Value U.S., SVT Group, and Global Impact Investing Network host impact management skills training, July 17 in New York.

June 19, 2019.