Beats | April 23, 2018

McGlashan on TPG Rise, testing social-impact incentives, African fintech startups

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Rise Fund’s impact multiple of money: A conversation with Bill McGlashan. The $2 billion Rise Fund, launched last year by the private-equity giant TPG with a Who’s Who of tech and other billionaires, is the largest impact fund raised to date. In an on-stage conversation recently, Bill McGlashan, who heads both the Rise Fund and its parent, TPG Growth, tells ImpactAlpha’s David Bank the bigger feat is the expansion of impact investing by pension funds and other institutional investors that manage trillions. “The whole exercise of convincing them that we can deliver impact and return, and that there was no conflict, is a breakthrough idea,” McGlashan says. “If the output of a business is that which creates impact, by definition the more successful you are, the more impact you deliver.”

In the interview, McGlashan ranges over his global childhood, refugees, dairy farmers and the “co-linearity” of impact and financial returns. Each Rise Fund investment is underwritten for a specific impact target, or “impact multiple of money,” he says, that can be delivered in increased income for smallholder farmers, reduced greenhouse gas emissions, lower costs through diabetes prevention or other quantifiable social good. In the end, he says, such rigorous underwriting for “positive externalities” may itself be the Rise Fund’s greatest impact. “We think we can take this beast called capitalism and help to direct it in a way that is productive,” McGlashan says. “It has to be all of us coming together, and it has to be done in a way that’s scalable and sustainable.”

Read the full Q&A, “The Rise Fund’s Impact Multiple of Money: A conversation with TPG Growth’s Bill McGlashan,” by David Bank on ImpactAlpha.

Agents of Impact: Follow the Talent

International volunteering platform Moving Worlds hosts a webinar on April 26on choosing the best accelerator with FledgeVillage CapitalAgora Partnerships and the Entrepreneurship Database Program (and aided by the Accelerator Selection Tool on… Joan Larrea, the CEO of blended finance platform Convergence, joins the advisory board of FinDev Canada, Canada’s new development finance institution. SOCAP 365’s New York panel May 9th, “Investing for Racial Equity in Cities,” features Living Cities’ Brinda GangulyEleni di Janis of the New York City Economic Development, Corporation, James Johnson-Piett of Urbane Development and Prudential’s Miljana Vujosevic and Jim Carr of the Roosevelt Institute.

Signals: Ahead of the Curve

Early data signals success of Social Impact Incentives. Clínicas del Azúcar, a string of low-cost diabetes clinics in Mexico, increased the penetration of its services to low-income populations over a six-month period. Blood sugar levels improved. For hitting those six-month impact targets, Clínicas earned a $64,000 payment on top of its top-line revenues from the Swiss development agency. Bjoern Struewer of Roots of Impact, which is monitoring the clinics’ impact, touted the payment as an early proofpoint for Social Impact Incentives, or SIINC, the pay-for-success model Roots of Impact designed. By boosting the revenues of verifiably high-impact companies, SIINC aims to nudge ventures towards greater impact and help them attract the financing they need to scale.

  • Test cases… The SIINC model is also being piloted with Village Infrastructure Angels, a solar-agtech company in Honduras. A third firm, Peruvian enterprise Inka Moss, which helps local moss harvesters access international markets, is joining the pilot.
  • SIINC’ing portfolios… Roots of Impact and Root Capital, the agriculture lender, have also secured funding from the Swiss Agency for Development and Cooperation, to apply impact-based financial incentives for lending to early-stage agricultural enterprises in Latin America.

Impact investors are testing a variety of impact-incentive models. As part of a new “Social Success Note” (see below) UBS Optimus Foundation will lower interest payments on a loan to Impact Water if impact targets are met. Separately, Beneficial Returns has agreed to waive the final payments on loans to Sistema Biobolsa and Iluméxico in Mexico if the firms achieve their stated impact goals.

Dealflow: Follow the Money

Rockefeller and UBS Optimus test pay-for-success model for water purification. Under the “Social Success Note,” the interest paid by Impact Water will be cut if it hits installation targets for water purification systems in Ugandan schools. Read more.

OhmConnect raises $8.5 million to expand the “energy sharing” economy. It has created an energy sharing system to cut the use of dirty back-up power sources during peak-energy periods. Learn more.

Pula secures seed funds to offer small farmer insurance. The Switzerland and Kenya-based insurer helps pair agricultural insurance with the sale of seeds and fertilizer. Dig deeper.

Digital Financial Services Lab backs four African mobile fintech startups. The fintech accelerator invests from a $4.8 million, grant from the Gates Foundation to foster financial inclusion. The lab is investing $200,000 each in the four companies. Get the details.