The Brief | October 15, 2018

Measure Better kicks off, online nature products in Brazil, online domestic jobs in India, impact operating principles

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Greetings, ImpactAlpha readers!

ImpactAlpha Series: Measure Better

Talking to customers to take the measure of impact investments. At ImpactAlpha, as you might imagine, we see a lot of impact reports. One that stood out was Acumen’s energy impact report on its $20 million in investments in 20 energy companies in South Asia and Africa. Together, those companies had reached 81 million people. Acumen’s survey of more than 5,500 customers showed 58 million of these people had access to electricity for the first time; together, they had stopped using 18 million kerosene lamps. The data also suggested room for improvement. Customers saved an average of $43 in their first year with solar lanterns and other products, but some customers spent more than they had on traditional fuels. Understanding customers is core to any business’s success, and all the more so when a company makes it its business to improve its customers’ lives. For impact entrepreneurs and investors, it’s not enough to understand what’s supposed to happen for customers; the real impact lies in how such strategies actually play out.

Acumen has now surveyed 65,000 customers in 27 countries, gathering detailed data across issue areas on poverty levels, social impact and their customer experience. Its “Lean Data” methodology lets the firm hear “directly from customers, even those in the most remote locations, in ways that creates value for them, for the companies that serve them, and for investors,” write Acumen’s Sasha Dichter and Tom Adams to open a new ImpactAlpha series, “Measure Better.” Over the next two weeks, in partnership with Acumen, we’ll present a range of perspectives on impact measurement from Alnoor Ebrahim of the Fletcher School at Tufts University, impact measurement pioneer Jed Emerson, Jessica Kiessel of Omidyar Network, the Gates Foundation’s Chiara Kovarik and Laura Birx, CDC Group’s Martina Castro and Sara Taylor, and Clara Barby, who leads the Impact Management Project. We look forward to hearing from all of you as well.

Read, “Measuring the impact of impact investments – by talking to customers themselves,” by Sasha Dichter and Tom Adams on ImpactAlpha.

Dealflow: Follow the Money

Brazil’s Mundo Verde acquires natural products e-commerce platform Natue. Mundo Verde, a Brazilian natural products retailer, has acquired its e-commerce equivalent Natue. Mundo Verde bought out German venture capital firm Project A’s stake for an undisclosed sum. Mundo Verde launched in Brazil more than 30 years ago to sell health foods, organic and all natural products. The company sells more than 30,000 products from more than 1,000 mostly small-scale suppliers via 400 stores across Brazil. Natue could help Mundo Verde expand its reach into Brazil’s fast-growing e-commerce market. Read on.

Japanese investor ARUN backs Indian domestic service platform BookMyBai. ARUN invests in seed-stage social enterprises tackling issues like poverty alleviation and gender equality. The Japanese impact investor has made an undisclosed investment in Indian startup BookMyBai, which connects households to domestic workers like cleaners and gardeners. ARUN sees the potential to boost job stability and income of domestic workers, particularly women. BookMyBai aims to professionalize the domestic work sector by vetting and hiring service providers for homeowners. Learn more.

Please send deal news and tips to [email protected].

Signals: Ahead of the Curve

Leapfrog Investments backs IFC’s ‘operating principles for impact management.’ The world’s largest pension funds, insurers, family offices and sovereign wealth funds are waking up to financial opportunity in impact investing, says Andy Kuper, CEO of the $1 billion LeapFrog Investments. “But they also want to know that they’re not going to wake up with their name in the paper for something that apparently is impact but actually turns out to be extractive and exploitative.” Kuper was in Bali last week with representatives from UBS, Partners Group and others at the annual meetings of the World Bank and International Monetary Fund for the launch of the International Finance Corp.’s “operating principles for impact management.” A basic set of impact standards, alongside demonstrable outsized returns, could produce the paradigm shift that helps attract trillions in capital to impact investing, he says. “In the financial markets, demonstration is more powerful than remonstration.”

The IFC, part of the World Bank Group, is betting on the nine principles to help combat “impact washing” while providing an impact-investing onramp for institutional investors sitting on trillions. The IFC’s impact principles include “establish the investor’s contribution to the achievement of impact” and “conduct exits, considering the effect on sustained impact.” The nine principles track to the lifecycle of managing an investment fund, including strategic intent, structuring, portfolio management, exit and verification. The final principles and first signatories are expected in April.

  • Mobilization. The IFC is the latest industry group to attempt to put basic standards around impact investing practice (see this and this and this). In Bali, Jim Kim said the World Bank aims to use the multilateral development system “to give real teeth and perhaps broader acceptance” to impact investing best-practices. “If we just mobilized all the private sector money under the control of people who already talk about impact investing,” he said, “we could transform the world.”
  • Proof points. Kuper founded LeapFrog a decade ago to reach millions of lower-income emerging consumers with healthcare and financial tools. The frontier market private equity firm has realized exits through acquisitions by Swiss Re, Prudential and other major institutions. LeapFrog’s portfolio companies now serve more than 117 million people living on less than $10 a day and have grown revenues on average 40% annually over the decade. Kuper provided input to the IFC’s principles. “With the principles in place, and some of the returns being demonstrated,” he said, the field has the opportunity “to scale this to the trillions.” Share this post.

Agents of Impact: Follow the Talent

HCAP Partners’ Bhairvee Shavdia was selected for Aspen Institute’s Quality Jobs Fellowship… Capria has openings in the U.S., Turkey, Latin America, sub-Saharan Africa and South Asia… Linear Impact Partners is recruiting a portfolio manager for a client in Toronto.

October 15, 2018.