Catalytic Capital | March 24, 2022

How Open Road helps providers of essential services carry on in conflict zones

Amy Cortese
ImpactAlpha Editor

Amy Cortese

ImpactAlpha, March 24 – In Syria, where hundreds of thousands of people have been killed in a decade-long civil war, an advance warning system has sometimes meant the difference between life and death. 

Hala Systems, a U.S.-based social enterprise, combines a network of civilian spotters with AI-based software and a mobile app to alert residents to potential airstrikes, giving civilians a crucial seven to 10 minutes to take cover. The system has reduced casualties in Syria by 25%, according to one analysis, and has helped to document war crimes. 

Hala is now deploying its civilian intelligence system in Ukraine. 

“We are working literally 24/7 across our team and with folks on the ground in Ukraine” Hala Systems’ Dave Levin tells ImpactAlpha. “We are doing nothing else.”

Hala might not be in a position to provide its urgently needed services had it not been for support from Open Road Alliance, which specializes in short-term bridge loans to help social enterprises get through tough patches. Open Road has made two bridge loans to Hala, the first in 2019 to help keep the company afloat while it awaited capital from investors, and a recent loan providing immediate funds while a large government grant winds it way through the process.  “The second loan has enabled us to hire staff and expand to Ukraine,” says Levin.

Ensuring essential services

Open Road’s impact-first financing is tailored for disruption. In its 10 years of existence, it has lent $50 million to 110 social enterprises to help tide them over when “unexpected OMG moments” arise. The firm, which raised its first outside capital in 2020, has stepped in during upheavals from Brexit to the Covid pandemic to help essential service providers continue their work. 

A grant to Access Afya helped the Kenyan healthcare clinic operator get through an initial drop in revenue when the Covid pandemic hit, and to implement a phone-based clinic service. The funding also sent a signal to investors and partners that Access Afya would survive the crisis. Access Afya went on to raise $1 million from investors in 2020. 

War, however, is too risky for even Open Road. 

“A bridge still has to be a bridge to somewhere,” says Open Road’s Maya Winkelstein. “One of the challenges in active conflict, especially a new conflict, is it’s really hard, if not impossible, for anyone to predict where the bridge ends, and when and how and if.”

The company has extended loans to solar provider Nuru in the Democratic Republic of Congo, home to one of the longest armed conflicts in the world. The loan bridged a gap while Nuru awaited funding from a development finance institution. 

“At the end of the day, it’s the long-term government investors that can take on the political risk, and the private investors that can help them get to those big injections of capital,” says Open Road’s Caroline Bressan. 

“We are keeping an eye out for: Where is that humanitarian aid getting stuck? And is there any way that our capital can accelerate it and get it into the hands of the people that need it?” adds Bressan.  

Humanitarian tech

If conflict zones require humanitarian aid, there are still ways that impact investors can support such regions, say Bressan and Winkelstein. That includes supporting refugees as they create new lives and ventures away from their homeland. In the case of Ukraine, investing in renewable energy can foster resilience and lessen dependence on Russian oil and gas. 

Supporting adjacent areas can also help. Open Road has extended loans to Prograin Organic, a Moldovan company that works with small farmers to grow organic grain and export it to Europe, when grain shipments ran into bureaucratic delays. The loan enabled Prograin Organic to pay its farmers and be in a position to today help supplement the loss of grain from Ukraine. 

The most direct way to have on-the-ground impact, they say, may be supporting  “humanitarian tech” ventures, such as Hala Systems.  

Conflicts drive 80% of all humanitarian needs. By 2030, up to two-thirds of the world’s extreme poor could live in “fragility, conflict, and violence” settings, according to the World Bank. 

Sustainable Development Goal No. 16, which promotes peace and security, is one of the least funded of the 17 SDGs. 

“You have a huge gap between needs and impact investment capital,” says Hala’s Levin, who is eyeing an equity raise later this year. Meanwhile, he is raising donor funds to protect Hala’s network on the ground.