The Brief | August 9, 2018

Living Cities’ pay-for-success lessons, Shaq attacks gig-worker challenges, pipelines in renewable mini-grids and inclusive fintech

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Featured: ImpactAlpha Series

Adapt to changing needs, and other lessons from Living Cities’ Pay for Success investments. Five years ago, Living Cities got interested in Pay for Success projects in order to influence government to invest in what works. Since then, the collaboration of foundations and financial institutions has seen Pay for Success projects drive systems-change in places like Denver. Based on early promising results, Denver investors have doubled down on a “social impact bond” to increase housing stability and decrease recidivism for chronically homeless individuals.

But repayments to investors and systems-change are not happening consistently, write Living Cities’ Ellen Ward and Sindhu Lakshmanan on ImpactAlpha. “We’ve learned that Pay for Success is not the end in and of itself. It’s a means to the end of getting better outcomes for people.” In the second part of a series exploring how foundations and financial institutions can better create jobs, income and wealth in America’s cities, Living Cities culls five lessons from five years of pay-for-success investing. Among the lessons: Structure projects with the flexibility to respond to changing conditions, such as the opioid crisis. “Service providers are doing what they should be doing — changing their models to best serve clients,” write Ward and Lakshmanan, “but it significantly increases risk to investors.”

Read, “Adapt to changing needs, and other lessons from Living Cities’ Pay for Success investments,” by Living Cities’ Ellen Ward and Sindhu Lakshmanan, on ImpactAlpha.

Dealflow: Follow the Money

“Shaq attack” on the gig economy: Steady raises $9 million. Atlanta-based Steady has raised $9 million to connect workers to gigs and benefits like prescription discounts and medical insurance. Investors include Propel Venture Partners, Omidyar Network and ex-NBA star Shaquille O’Neal. The company, launched a week ago, has 100,000 registered users. Dig in.

JPMorgan India and Bharat Inclusion Initiative launch financial inclusion lab in India. JPMorgan India and Bharat, an incubator for startups serving India’s low-income population, are committing $9.5 million to seed fintech ideas. The lab is modeled on the four-year-old Financial Solutions Lab in New York, run by JPMorgan Chase and the Center for Financial Services Innovation. The details.

Catalyst Fund stocks the inclusive fintech pipeline with five new startups. The early-stage accelerator, supported by the Gates Foundation and JPMorgan Chase Foundation, has backed 20 emerging-market firms using technology to extend financial services for billions of underserved customers in Africa, India, and Southeast Asia. The new cohort includes Payagri, which lets small Indian farmers access credit and funding; and Banco Maré, which uses blockchain to facilitate banking transactions in one of Rio de Janeiro’s largest favelas. More.

Signals: Ahead of the Curve

Half-billion dollar pipeline for mini-grid financing comes into focus. It’s going to take years for utilities’ grids to reach remote villages in Africa, if they ever do. Standalone solar home systems are filling some of the gap. But in many cases local “mini-grids” that can power businesses, schools and other loads are the least-cost option with the broadest social and economic benefits. Investors put $750 million into pay-as-you-go home-solar companies between 2012 and 2017; the top five mini-grid developers in Africa raised barely $100 million in the same period.

Investors can no longer say they can’t find deals to invest in. At least 550 renewable energy mini-grids are under development in Africa, Asia and Latin America by private power utilities that have listed their projects with Odyssey Energy Solutions, a software platform that aims to streamline mini-grid financing. The projects, which need financing of between $40,000 and $3 million each, could together bring electricity to more than 275,000 customers. “We’re able to aggregate projects into bankable portfolios that meet investors’ ticket sizes and diligence requirements, paving the way for more capital to come into the sector,” said Odyssey’s Emily McAteer.

  • Village models… Power for All’s analysis of 45 mini-grids in India found community based mini-grids, structured as “village energy committees” or rural electricity cooperatives allow communities to become active stakeholders.
  • Four-year payback… Power for All found most mini-grids paid back their original investment in four years, and mini-grid companies in South Asia reached positive net-income in less than eight years.

Agents of Impact: Follow the Talent

Tanvir Ghani and the Osiris Group committed $2.5 million to establish the Osiris Fund at Columbia University’s School of International and Public Affairs to advance innovative approaches to emerging-market impact investing and sustainable economic development… Patricia Torres-Burd joined Media Development Investment Fund as managing director of media services… RSF Social Finance is hiring a manager of investments.

— August 8, 2018.