Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Israel’s OurCrowd is targeting the Sustainable Development Goals – and measuring its own impact. Five out of six Israeli entrepreneurs believe that their businesses are doing good. More than one-third of startups have the specific intent of having positive impact. Yet only 13% are tracking or measuring their impact. The Israel-based investing platform OurCrowd is trying to shrink that gap with a new $30 million fund targeting the Sustainable Development Goals that will require portfolio companies to track and report their social and environmental performance – and tie the fund’s own compensation to such impact. OurCrowd, the brainchild of Israeli serial entrepreneur and venture capitalist Jon Medved, has helped 170 companies raise $1 billion from a network of global investors since 2013.
The company’s new fund, launched with support from Social Finance Israel, is trying to stand out in Israel’s increasingly crowded impact investing field. Impact investing in Israel has doubled, to $260 million, in the past two years. But it’s hard to know how broad and deep the impact is, OurCrowd’s Richard Norman told ImpactAlpha. The new fund is looking to invest in 15 to 20 companies with business models aligned with the global goals. Companies that receive investment will be required to track progress on impact performance metrics. OurCrowd’s standard 20% “carry,” or share of the fund’s profits, will be cut to 15% if the fund fails to meet its impact targets. “Once we can standardize the idea of translating impact to a dollar figure, you may see more investors asking for it,” Norman said.
Read, “Israel’s OurCrowd is targeting the Sustainable Development Goals – and measuring its own impact,” by Jessica Pothering on ImpactAlpha.
Dealflow: Follow the Money
Backstage accelerator backs 25 underestimated founders in Detroit, Philadelphia, L.A. and London. As part of its four-city accelerator program, the venture capital firm is investing $100,000 in companies founded by women, people of color, and/or LGBTQ entrepreneurs, in exchange for 5% stakes. Among the cohort: WhoseYourLandlord, founded by Ofo Ezeugwu in Philadelphia to empower and inform renters; Detroit’s Alerje, which has developed a medtech product that provides alerts to those impacted by food allergies; Los Angeles’ Lacquerbar, a feminist-focused nail salon, and gal-dem, a London media company for and by women and non-binary people of color.
- Closing a capital gap. There’s an untapped opportunity to “invest in folks in communities who understand the needs,” WhoseYourLandlord’s Ezeugwu told ImpactAlpha. The Backstage accelerator, “helps fill the friends and family funding gap for folks overlooked by other investors.”
Returns on inclusion. The 100 companies backed by Backstage Capital prior to the accelerator have gone on to raise $50 million in follow-on capital. Last month, Haute Hijab, the New York maker of ethically-sourced headscarves, raised $2.3 million led by Boston-based social investment firm Cue Ball.
Northwest Health Foundation invests $1 million in fund for Oregon communities. The commitment is part of a collaboration with RBC Global Asset Management and more than two dozen foundations in the Philanthropy Northwest network. The fixed-income fund supports lending for homeownership, affordable housing, healthcare clinics, job creation and small business creation in the five-state region. The collaboration, which pools funds and targets investments to the foundations’ thematic and geographic interests, allows the fund manager “to make bigger and broader commitments,” RBC’s Ron Homer told ImpactAlpha. Community and geographically-targeted foundations in cities like Chicago and Philadelphia also are finding new ways to invest for impact locally. Here’s more.
Signals: Ahead of the Curve
Investing for racial equity: highlights from Confluence Philanthropy’s practitioners’ gathering. Communities of color—particularly African and Native Americans—are notoriously underserved and undercapitalized. Exacerbating the problem is the lack of diversity in the firms and senior management deciding where investment money goes: just over 1% of $70 trillion-worth of assets under management in the U.S. is controlled by women and people of color. Foundations, family offices, individual donors and investment advisors representing $3.5 trillion in managed capital and $70 billion in philanthropic assets gathered at the annual meeting of Confluence Philanthropy in Brooklyn last week. ImpactAlpha dropped in to hear how the network is trying to use impact investing to drive racial equity. Some highlights:
Embedded bias. Akasha Absher of investment advisory firm Syntrinsic Investment Counsel said that for the majority of her career in fixed-income trading she did not have any black acquaintances or colleagues in finance. “I purposely went out of my way not to congregate with black people,” she said. “If too many black people are together, other people get scared,” she said. She said the blending of networks is critical for change. “Without that network support, no one is going to grow.”
Uncomfortable questions. When General Service Foundation’s Dimple Abichandani hears that her foundation is investing in distressed debt, she asks, “Who’s in distress?” If the borrowers being pressured are in communities of color, she says, she challenges the foundation to advance racial and gender justice through its investing.
Reparations. Some investors are starting to grapple with how private capital can help atone for historical racial inequality. “African Americans and indigenous communities don’t benefit from the wealth that their ancestors created and died for,” said Veris Partners’ Patricia Farrar-Rivas. Read more in our Agents of Impact special report.
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Agents of Impact: Follow the Talent
Omidyar Network is spinning off its early stage fintech investing group into a new venture fund, called Flourish. The impact investment firm previously spun off its health, wellness and work group… Impact investing advisory firm Quantified Ventures is hiring a marketing director and a vice president for its Environment team (See, “Atlanta raises $14 million environmental impact bond from public”)… Sustainable investing startup Ethic is hiring a legal and compliance director, an investment operations lead, a client solutions associate and a software engineer… Unreasonable is seeking a global partnerships associate… Omidyar Network is looking for an analyst in the Bay Area for its new innovation unit, Omidyar Labs… Education-focused ECMC Foundation has an opening for an impact investing intern in L.A… The Emerson Collective-backed Elemental Excelerator accelerator program is accepting applications until April 12 for startups in energy, food and agriculture, water, mobility and the circular economy.
— March 11, 2019.