Beats | February 13, 2018

Pay-for-success budget, Calvert’s syndicated debt, uMunthu fund for Africa, Launch Tennessee

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#Featured: ImpactAlpha original

The US government is again in the pay-for-success business. Slipped into the continuing resolution passed by Congress and signed by President Trump last week is $100 million for states and localities to use in programs that deliver higher rates of youth employment and high school graduation, and lower rates of asthma, diabetes, homelessness and recidivism among juvenile offenders. Last May, Congress defunded the Social Innovation Fund, an Obama-era effort launched in 2009 to support pay-for-success programs.

Also known as social-impact bonds, pay-for-success contracts (or pay-for-results, as they’re called in the new legislation) turn traditional government social services procurement practices on their head. Rather than pay upfront for services, local or state governments promise to use savings from avoided costs to repay private investors only if certain milestones are reached and outcomes delivered. A total of 20 social impact bonds have been launched in the US, attracting more than $200 million. In South Carolina, for example, a 2015 social impact bond raised $30 million from private investors to help 3,200 first-time, low-income mothers have healthy pregnancies. “We are seeing an exciting level of innovation in state and county governments to experiment with arrangements that enable social service providers to get paid for solving social problems rather than filling out paperwork,” the Nonprofit Finance Fund’s Antony Bugg-Levine told ImpactAlpha.

Read “US states and cities to compete for $100 million in new funding to ‘Pay for Success’,” by David Bank and Dennis Price on ImpactAlpha.

US states and cities to compete for $100 million in new funding to ‘Pay for Success’

#Dealflow: Follow the Money

Calvert Impact Capital secures $10 million for Community Housing Capital. Community Housing Capital is a Georgia-based lender for community development financial institutions working in affordable housing. CHC is partnering with Calvert Impact Capital to raise a $15 million credit facility to support affordable housing. Calvert has so far raised $10 million for the facility through its debt syndication business, which Calvert launched last year to rally impact capital for loan funds. “The capital is unsecured and allows [CHC] to do more flexible lending for all the things that need to happen predevelopment,” like contracting architects and site planners, Calvert’s Beth Bafford tells ImpactAlpha.

Goodwell raises €20 million feeder fund for African impact investing. The Dutch firm invests in young companies focusing on financial inclusion in Africa and India. The €20 million ($24.5 million) raised from private investors is the anchor investment for its €100 million uMunthu fund, launched last year to invest in high-impact companies in Africa. “We’ve found that the private investors can be catalytic in getting institutional capital in,” Goodwell’s Wim van der Beek told ImpactAlpha. Goodwell has already made eight investments including in public transit tracker WhereIsMyTransport and mobile payments company Nomanini. It invests through partnerships with local fund managers in five countries, including Alitheia in Nigeria and Aavishkaar in India.

Athena Capital opens SF office to boost impact practice. The Bay Area continues to attract impact investment activity. The latest data point is the opening of Athena Capital’s San Francisco office. The $5.5 billion asset manager said the move is intended to advance its impact investing practice. The office will be headed by Athena’s William McCalpin, who was CEO of Imprint Capital before Imprint’s acquisition by Goldman Sachs. “Among asset owners on the West Coast, there is growing interest in addressing some of the most pressing global social and environmental challenges with investment capital,” McCalpin said.

See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to [email protected].

#Featured event: SEED

What’s ahead for seed-stage investing. Join leaders in seed-stage startup funding and acceleration at SEED: Gathering the Impact Ecosystem, on April 19–20 at ImpactHub in San Francisco. Explore what’s working, how to increase opportunities and how to break down boundaries within the seed funding and acceleration ecosystem. ImpactAlpha readers register here for a 30% discount.

#Series: The New Revivalists

Charlie Brock: Building a statewide startup network for Tennessee entrepreneurs. Charlie Brock is building in Tennessee what entrepreneurs in California and New York sometimes take for granted: a robust startup ecosystem with mentors and support. When Brock set out in 2012, Tennessee was short on places entrepreneurs could go to build and test companies. Launch Tennessee now supports six entrepreneur centers across the state, touching about 2,500 entrepreneurs a year. The network has supported the creation of more than 2,000 jobs. On deck for 2018: connecting entrepreneurs to larger firms in the states. “If we can help them get to revenue faster, everything else will fall in line,” Brock told ImpactAlpha. Read, “Charlie Brock: Building a statewide startup network for Tennessee entrepreneurs,” by Sherrell Dorsey, on ImpactAlpha.

New Revivalists is a series from ImpactAlpha and Village Capital profiling the people, places and policies reviving entrepreneurship — and the American Dream.

Charlie Brock: Building a startup ecosystem for Tennessee’s entrepreneurs

Thank you for reading. Onward! Please send news and comments to [email protected]