Greetings, ImpactAlpha readers!
#Featured: Returns on Investment Podcast
Nature reduces risk. The Nature Conservancy’s Kathy Baughman McLeod led participants in chanting, “Nature reduces risk, nature reduces risk,” at last week’s conservation finance conference at Credit Suisse in New York. Our roundtable regulars, Imogen Rose-Smith, Brian Walsh and David Bank took up the chant in our latest Returns on Investment podcast.
The podcast explores how risk reduction, even more than upside opportunity, has emerged as the key lever in conservation finance. Among the wonky mechanisms presented at the conference was a “Sustainable Commodity Conservation Mechanism” that leverages penalties owed by palm oil suppliers to create a fund for large-scale forest restoration. Another effort uses hotel insurance premiums to finance reef restoration along Mexico’s Mayan Riviera around Cancun. If the details seem complicated, just keep repeating, “Nature reduces risk.”
#Dealflow: Follow the Money
ImpactUs marketplace suspends operations. The online impact broker-dealer, which launched last year with backing from the Ford, Kellogg and MacArthur foundations and others, went offline just before the new year. “Unfortunately, we have had to make the difficult decision to cease operations,” said a notice on the ImpactUs website. The platform had offered investment in about a dozen ventures and community development finance institutions, including Iroquois Valley Farms, Low Income Investment Fund, CommonBond Communities, Coastal Enterprises Inc. and Meow Wolf, the Santa Fe art attraction. Members of the team said they weren’t able to comment. Online impact investment marketplaces have a troubled history; earlier efforts that have closed include Enable Impact and Mission Markets.
CBA Capital invests in three Indianedtech ventures. The Bangalore-based investment firm is backing Simulanis, Kopykitab and Buddy4Study with $2.4 million. Its Education Catalyst Fund invests in edtech startups serving low-income Indian households, Inc24 reports. Simulanis provides corporate training programs via virtual reality. Kopykitab creates digital textbooks. Buddy4Study helps students apply online for scholarships. Dell Foundation, Gray Matters Capital and private Indian investors are backers of the CBA fund, which had its first close of one billion rupees ($15.6 million).
First Step Staffing to offer workforce training in Philly. First Step is acquiring part of for-profit On Time Staffing. The Atlanta-based nonprofit provides support to people having trouble finding jobs. Financing for the deal comes from the Investors’ Circle consortium and includes loans from Nonprofit Finance Fund, Reinvestment Fund, Local Initiatives Support Corporation and Philadelphia Industrial Development Corporation. First Step also received grants from the Barra Foundation and City of Philadelphia.
Bezos donates $33 million to DACA scholarship fund. The Amazon CEO and his wife MacKenzie committed the funds to TheDream.US, a scholarship program for undocumented immigrants in the Deferred Action for Childhood Arrival (DACA) program. Undocumented immigrants are ineligible for federal student aid. Bezos’ contribution will pay for college for 1,000 “Dreamers.”
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#Signals: Ahead of the Curve
Exits, with impact. A new report from the Global Impact Investing Network offers guidance for those who want to make sure their investments keep having an impact after they cash out. Based on a survey of 33 investors, advisors, and social enterprises covering the lifetime of their investments, GIIN provides some answers for impact investors:
- Pre-investment: Look for investments that embed impact in the business model or the path to financial success. Invest where founders are committed to the impact mission.
- At the time of investment: Structure capital — whether private equity, debt or an alternative — to set up an exit that’s well understood. Be sure you and the business are aligned on impact. Make sure impact is included in the documentation.
- During investment: Create governance, employment and supply policies that allow positive impact.
- At the time of exit: Choose a time to exit that allows a company continued access to resources and success. Select follow-on investors who understand and will support the impact model and a path to growth.
Economic growth to the (climate) rescue?First the bad news. Environmental dangers — storms, earthquakes, fires and failed efforts to address climate change — will still threaten in 2018, according to a Global Risks Report from the World Economic Forum. Water shortages, refugee crises and cyberattacks are all part of the problem, as this map shows.
The good news? Strong economic growth could be part of the solution, the WEF said in a statement. Among other bright spots: The surge in public and private players that stepped up commitments to the Paris Agreement after Trump said the U.S. would pull out. Delve into the details in the Global Risks Report 2018 here.
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