#Featured: ImpactAlpha Original
The impact disruption hits the Milken Institute Global Conference. The $12,500 ticket (at the low-end) kept away most customers, workers, citizens and millennials. But such stakeholders were on the minds, or at least the lips, of the heavily male global financiers and power brokers “at Milken” in Beverly Hills this week.
The customer / worker / citizen / millennial / female ferment for free speech, healthy products, better jobs, ethical companies — and impact investments — is driving the conversation at the Global Conference. It’s almost as if business executives and investors now think it’s their ‘purpose’ to be part of the solutions to climate change, inequality and social exclusion. Are they for real?
Dennis Price reports from Beverly Hills:
The impact disruption at Michael Milken’s annual conference
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#Dealflow: Follow the Money
Nutriati raises $8 million to produce plant-based protein. Startups developing new plant-based proteins raised $78.2 million in 2016, according to AgFunder News. The latest: vegetarian “foodtech” startup Nutriati, based in Virginia, which closed an $8 million Series A funding round. The backing came from the food venture fund of London sugar company Tate & Lyle, as well as PowerPlant Ventures, Blueberry Ventures, and NRV. The funding will boost production of Nutriati’s vegetarian proteins, made from chickpeas, which are set to launch in the next year. Vegetarian proteins represent a growing segment of the food market amid growing global food needs and health awareness.
500 Startups backs Stockbit’s social investment platform for Millennials. Stockbit, an Indonesian stock analytics venture, raised (undisclosed) funding from 500 Startups to launch a social investing platform for millennials. Stockbit’s platform allows users to discuss trading and investment ideas with each other and copy other users’ investment portfolios. Stockbit launched in 2012 with financial data and stock screening on the Indonesia Stock Exchange for retail investors. “The Indonesian stock market, as with most emerging markets, is inefficient. This is partly due to the lack of available data and easy-to-access technology,” explained CEO Wellson Lo in 2015.
Catalyst Fund adds five fintech startups to its seed stage portfolio. The ventures include: Comunidad4Uno, a financial services provider for Mexico’s low-income domestic workers; Grafica, a software developer for off-grid solar distributors in Africa; Harvesting, an agriculture analytics software firm; PayLatr, a mobile-based micro lender for low-income Indians; and Smile Identity, an identity verification service based on facial recognition software. The $2 million seed stage venture fund was launched in 2015 as a partnership between the Gates Foundation and JP Morgan to support pre-investment emerging markets entrepreneurs. Catalyst Fund’s portfolio now includes 15 startups, each of which are provided $100,000 grants and mentorship.
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
Score one for gender wage transparency: Starbucks says it pays women equally. Starbucks’ disclosure follows a proxy ballot measure on gender wage transparency filed by Arjuna Capital, a Starbucks shareholder. In its report, Starbucks says it pays comparably-skilled male and female employees within 99.7 percent of each other. That’s at the far end of the retail bell-curve. On average, women in retail earn 70 cents to every dollar a man earns; the disparity is worse for black and Latina women. “We need more companies like Starbucks to break down the structural bias that keeps women in the back seat and business from reaching its full potential,” Arjuna’s Natasha Lamb said in a statement. Arjuna withdrew its shareholder resolution for Starbucks but is pursuing similar measures for eight other companies in financial services and consumer goods. The disclosure comes as the Trump administration and some legislators are seeking to rein in shareholder activism, particularly around social and environmental issues (see, “Shareholder resolutions are one of the only ways for investors to have impact on public companies”).
A second look at the Ford Foundation’s big shift toward impact investing (podcast). That it would make news that a foundation, especially the Ford Foundation, is committing its capital toward its mission of social justice and economic inclusion, tells you something about U.S. philanthropy. In ImpactAlpha’s latest Returns on Investment podcast, Imogen Rose-Smith, senior writer at Institutional Investor, argues there might be less to the Ford announcement than first met the eye. The structure of the new fund means considerations like “mission” and “impact” haven’t really taken hold among the traditional investment managers who control the rest of Ford’s $14 billion endowment. ImpactAlpha’s David Bank says Ford has a chance to show — not that impact investments can generate market-rate returns — but that private capital markets can be turned toward impact. Ford will be looking for market-based models that can scale up to real progress on affordable housing, inclusive prosperity and other Ford priorities. Full podcast here:
Six myths about food security that are due for debunking. About 40 percent of the global workforce works in agriculture, food and farming, and 100 percent of the population has to eat. If we hammer on food and farming here at ImpactAlpha, it’s because agriculture is the lever for new solutions in poverty alleviation, women’s rights, climate change and, of course, hunger.
“Meeting the goals of eradicating hunger and poverty by 2030, while addressing the threat of climate change,” the UN’s Food and Agriculture Organization warned last year, “will require a profound transformation of food and agriculture systems worldwide.”
More and Better Network, a food and agriculture nonprofit, has identified a half-dozen myths that may be holding back that transformation.
1) The world is fed from small farms, not industrial producers. Farms less than five hectares in size produce 40 percent of traded food and 70 percent of food in total.
2) “Productivity” is subjective. Industrial farms yield more food and fodder per hectare per person per year. But small-scale diversified farms could be more productive per hectare — when farmers have access to land, water, finances and farming inputs like seed and equipment. (As an added bonus, small farms require fewer inputs and do less environmental damage.)
3) Small-scale farming jobs are growing, not shrinking. Agriculture as a share of total employment has decreased in the past decade, but the total number of workers has gone up. Despite trends towards urbanization, workers in emerging economies “are not moving out of agriculture and into higher value added activities as fast as they did in the past,” notes a 2013 study from the International Labor Organization.
4) Yields on organic farms can be almost as high as conventional farms. Organic farming requires smart farming. Input-intensive farms that use large amounts of chemical fertilizers and pesticides before converting to organic practices saw a drop in productivity. Overall, overall organic farm yields were about 65 percent of conventional farm yields, according to a study in Nature. But with “best practices,” organic yields rose to 87 percent, and 95 percent for crops like legumes.
5) Most food isn’t traded. More and Better’s research showed that only 10 to 15 percent of all food produced crosses borders, ranging from three to six percent of produce to 35 percent of fish and 38 percent of oil crops. Food insecure places import more. The FAO estimates that developing countries’ cereal imports will double by 2050.
6) We’re closer than we think to being able to feed the world in 2050. The FAO estimates that food production needs to increase by 60 to 70 percent. Reducing the amount of food we waste and reducing meat consumption would bridge the gap from current production levels. No surprise, then, that ag and foodtech investors are eyeing waste-reduction and plant-protein startups (see above).
Onward! Please send any news and comments to [email protected].