The Brief | June 14, 2018

Lessons of Abraaj, Meow Wolf’s creative expansion, inclusive Opportunity Zones, Best for the World companies

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Featured: The Impact Alpha

How to keep Abraaj Group’s meltdown from dragging down ‘SDG investing’ as well. Failure may be good, but only if we know what to take from it. The latest object lesson is the ongoing meltdown of the Abraaj Group, which not long ago was a high-flying $14 billion private equity fund investing in “growth markets” in the Middle East, South Asia and sub-Saharan Africa. Its CEO, Arif Naqvi, was one of the most visible proponents of the investments in the 2030 Sustainable Development Goals, calling them not a tradeoff, but “a tradeon.” Then, the Bill & Melinda Gates Foundation, along with several other foundations, helped trigger investigations into the finances of the $1 billion Abraaj Growth Markets Health Fund. Since then, a cascade of inquiries into other areas has nearly sunk the firm.

In his latest column, David Bank calls on the Gates Foundation to explain what the outcome of its $100 million program-related investment in the Abraaj health fund says about the underlying health strategy or, indeed, the future of “SDG investing” more broadly. The investment needed to fulfill SDG No. 3 (“ensure healthy lives and promote wellbeing for all at all ages”) is not just $1 billion, but $140 billion, every year through 2030. The Abraaj debacle would seem to make for an inauspicious start.

Read David Bank’s latest column, “How to keep Abraaj Group’s meltdown from dragging down ‘SDG investing’ as well,” on ImpactAlpha. Catch up on all of David’s The Impact Alpha columns here.

Dealflow: Follow the Money

Santa Fe funhouse Meow Wolf raises $17.5 million to expand its creative economy. One of the most successful examples of the “creative economy” has blossomed in an old bowling alley a few miles from the Plaza in downtown Santa Fe, New Mexico. Surrounded by strip malls, the interactive, creative, funhouse Meow Wolf has become a smash success with local families and a hip destination for out-of-towners.

  • Growth capital. Meow Wolf has raised $17.5 million in convertible debt from investors including San Francisco venture capital firm Alsop Louie Partners, Santa Fe-based Sun Mountain Capital, French digital production firm MK2 and follow-on from existing investors. The new raise follows last year’s $17 million in equity and will help fund the firm’s expansion to Denver and Las Vegas.
  • Creative economy. The production and distribution of art and cultural goods and services generates jobs, improves quality of life and contributes around $700 billion to the U.S. economy.

Continue reading, “Santa Fe funhouse Meow Wolf raises $17.5 million to expand its creative economy,” by Dennis Price on ImpactAlpha.

Women-run logistics startup Hey Deedee closes pre-seed funding. The startup hires women drivers to deliver packages from warehouses to delivery hubs and homes. Learn more.

Switchee secures £1.3 million for social housing energy monitoring system. The company’s smart thermostats allow landlords to track energy consumption and other factors in homes. Get the details.

Signals: Ahead of the Curve

Impact investors mobilize around inclusive Opportunity Zones. The passage of the Investing in Opportunity Act created equal parts enthusiasm and anxiety. Now worry has, at least in part, begun to shift toward a mobilization of resources, networks and identified best practices for effective community investment. The provision of last year’s U.S. tax bill lets investors defer and even reduce capital gains taxes by redeploying those gains into investment funds targeting underinvested U.S. communities. The Rockefeller Foundation’s Raj Shah said at last month’s Mission Investors Exchange conference that an influx of outside capital could lead to “not lifting up those that this was intended to lift up.”

  • Guarantee’ing impact. Kresge Foundation and Rockefeller Foundation are dangling up to $25 million in grants and unfunded guarantees for fund managers establishing new Opportunity Funds “designed to benefit low-income people and communities.” The letter of inquiry period begins on July 16.
  • Lessons from the field. The difference between communities able to recover from disinvestment and those that struggle to may be the presence of strong social networks, says a new report from MDRC, which may hold lessons for Opportunity Zone investors.
  • Fund creation. Access Ventures and VilCap’s Ross Baird, also a Kauffman Fellow, are exploring the creation of an Opportunity Zone fund and are keen to answer the question: How can you build an investment strategy that helps entrepreneurs across the country from all backgrounds, not just the 1% of companies that raise venture capital?

Keep reading, “Impact investors mobilize around inclusive Opportunity Zones,” by Dennis Price on ImpactAlpha.

Agents of Impact

B-Lab has published its annual list of nearly 1,000 companies that are “Best for the World” as rated by the nonprofit’s sustainability assessment. Investment firms on the list include Bridges Fund Management, City Light Capital, Equilibrium Capital, Foundry Group, Iroquois Valley Farmland REIT, SJF Ventures, Vox Capital and many more… Investor network TONIICis hiring a manager in San Francisco for its Impact Terms Project… Themes for this fall’s SOCAP18 conference will include gender + markets, racial equity, Africa, circular economy, transformative development and blended finance.

June 14, 2018.