The Brief | August 1, 2018

Opportunity zone protections, Rise Fund backs Dreambox, Southeast Asia pay-as-you-go solar, gender lens on ethical fashion

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Real estate funds move into opportunity zones, raising concerns about displacement. Fundrise has made its mark by democratizing commercial real estate investing. By pooling commitments of as little as $10,000, the firm has made the asset class accessible to 50,000 investors who may not have millions in assets. Now, Fundrise is planning a $500 million fund to invest in some of the 8,700 mostly low-income census tracts designated as “opportunity zones” that qualify for capital-gains tax breaks under last year’s U.S. tax-cut bill. Fundrise’s opportunity fund could democratize access to the tax advantages, which are aimed at unlocking some of the trillions of dollars in unrealized stock market gains, and make it available for investment in the “real economy,” where it is sorely needed for urban and rural development.

The prospect of a flood of value-added real estate investing, however, has raised concerns about rising housing costs, displacement of local residents and other byproducts of gentrification. Fundrise’s new opportunity fund may offer a chance to establish industry practices to guard against such downsides. The company doesn’t consider itself an impact investor, but Fundrise’s Ben Miller has called for a joint initiative among all “opportunity funds” to share data about the impact of investments. Tools like Enterprise Community Partner’s Opportunity360 portal offer a zone-by-zone breakdown of what each community needs. “I really want to understand how funds are thinking about responsible exits, and impact measurement and reporting around that,” says Enterprise’s Rachel Reilly.

Read, “Real estate funds move into opportunity zones, raising concerns about displacement,” by Jessica Pothering, on ImpactAlpha.

Dive deep into opportunity zones on ImpactAlpha’s Agents of Impact Call No. 3 on Thursday, Aug. 9 at 1pm ET / 10 am PT / 5 pm GMT. Hear from LISC’s Maurice Jones, Beeck Center’s Lisa Green Hall, Economic Innovation Group’s Steve Glickman and other early movers who will identify opportunity zone strategies for success and signs of danger. RSVP today.

Dealflow: Follow the Money

Rise Fund puts $130 million into personalized learning company DreamBox. The Bellevue, Wash-based company delivers tailored math content to more than 3 million students in all 50 U.S. states, Canada and Mexico. DreamBox, now one of the most well-funded edtech firms, will use the funds to expand to additional international markets. The deal marks the fifth education investment from the Rise Fund, TPG Growth’s $2 billion impact investing fund. Read more.

Insitor backs SolarHome to expand pay-as-you-go solar in Southeast Asia. The Myanmar-based pay-as-you-go solar provider closed on a $1 million convertible note from the Insitor Impact Asia Fund, a Phnom Penh-based impact investor. The more than 150 million people not connected to electricity grids in Southeast Asia spend $3 billion each year on lighting and heating substitutes, like kerosene. With the new funding, SolarHome will expand in Myanmar, and into Cambodia and Indonesia, this year. Dig in.

EV Connect raises $8 million in round led by Ecosystem Integrity Fund. The El Segundo, Calif.-based firm provides cloud-based electric vehicle charging solutions for businesses and organizations in the U.S. With customers like Hilton, Western Digital and New York Power Authority, the company aims to integrate with utility grid systems and open new relationships outside of the U.S. San Francisco-based venture capital firm Ecosystem Integrity Fund led the funding round. Read on.

Impact Voices: Pass the Mic

Gender bias creates gender-lens investment opportunities in ethical fashion in Indonesia. The best investors see opportunities where others don’t. One set of investors, writes Criterion Institute’s Kristen Yee in a guest post on ImpactAlpha, is turning a better understanding of implicit gender bias into opportunities in a booming industry: fashion. Last month, Patamar Capital, which manages a $45 million venture fund in South and Southeast Asia, and Kinara Indonesia, an early-stage venture capital firm in Jakarta, completed their third impact accelerator, awarding $25,000 to each of four women-led ethical fashion companies in Indonesia through a peer-selected investment process.

Many venture capital firms are blind to such ethical issues, or avoid the fashion industry altogether. “Patamar Capital and Kinara Indonesia are finding value in companies that fight fast fashion, protect worker rights and pay workers well, are focused on environmental sustainability, use local talent and ensure the sustainability of culture, promote recycling, energy efficiency and waste elimination, and use innovative technology that help stakeholders be more efficient,” Yee writes.

Read, “Gender bias creates gender-lens investment opportunities in ethical fashion in Indonesia,” by Criterion Institute’s Kristen Yee, on ImpactAlpha.

Agents of Impact: Follow the Talent

Lyndsey Vandament joined Global Partnerships/Eleos Social Venture Fund as an investment director in Nairobi… Jason Mitchell is the new co-head of responsible investment at London asset management firm Man Group… Impact Engine in Chicago is recruiting a principal to join its new private equity investment team… SOCAP announced “Moving from ‘Good Impact Deals’ to ‘Systems Change’” and 77 other community-sourced panels for its October conference in San Francisco.

— August 1, 2018.