2030 Finance | June 22, 2017

Social progress index, vision finance, investing in HENRYs, the heat is on

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Greetings, ImpactAlpha readers!

#Featured: ImpactAlpha Original

Positive deviants of the world, unite! Economic growth is an outcome of social progress and not the other way around. That simple and powerful premise is at the core of the Social Progress Index, a five-year-old effort to monitor how countries around the world measure up in meeting basic human needs, ensuring the foundations of well-being and promoting personal freedom, tolerance and inclusion. Thus, the countries to watch may be the “positive deviants” that are outperforming on social progress, especially in relation to their GDP per capita.

This year’s index shows the biggest such outperformer continues to be Costa Rica, the top-scoring country outside Europe or North America. Others include Nepal, Senegal, Chile, New Zealand and Portugal. Also making progress are Nigeria and Myanmar, along with Côte d’Ivoire, Kyrgyzstan, Togo, Bangladesh, Sierra Leone and Ghana. The U.S., by the way, is an underperformer, with a significant drop in tolerance and inclusion, in particular. “The world in general is progressing,” Michael Green, CEO of the Social Progress Imperative, told ImpactAlpha, “but not as fast as we want, or need.”

Keep reading, “The surprising list of countries that are proving the pessimists wrong,” by David Bank on ImpactAlpha:

The surprising list of countries that are proving the pessimists wrong

#Dealflow: Follow the Money

RSF Social Finance backs Theo with working capital for sustainable chocolate. It’s a sweet deal. Theo is a “bean to bar” company that works directly with the farming associations in Peru and Democratic Republic of Congo that supply cacao for its chocolate products. It supports regenerative agriculture practices by its suppliers and provides income stability through its pricing. The Seattle company has taken a $3.8 million loan from RSF Social Finance for working capital and to replace prior financing. RSF’s lending targets companies that have a positive impact across their supply chains.

Agruppa connects farmers and retailers in Colombia. The Bogota-based company raised $330,000 in a seed round, with funding from Mercy Corps’ Social Venture Fund and Yunus Social Business. Agruppa launched last year to connect small farms to local retail shops in low-income parts of Bogota, where nearly half of mom-and-pop shop owners live below the poverty line. Its mobile platform coordinates between produce suppliers and buyers to reduce costs of produce by up to 45% and save small retailers up to $1,500 per year. Starting with a 20-store pilot, Agruppa has expanded to more than 400 shops.The startup is looking to raise $200,000 more in July and hopes to scale its business to 5,500 shops and several thousand farmers in the next four years.

Global Vision designs a holding company for affordable eyecare in Asia. Nine out of 10 blind people around the world live in poor areas with little or no access to eyecare. The low-cost eyecare specialist Global Vision has a plan to raise $300 million over the next five years to create a holding company for a network of 60 affordable, for-profit eyecare hospitals, starting in Vietnam. Convergence, a non-profit platform promoting blended (or full-stack) capital in impact investing, is providing a “Design Funding” grant to GlobalVision to help bring in philanthropic and private investors. The grant (amount undisclosed) is the seventh award from Convergence’s $10 million Design Funding initiative, which has also supported clean energy and smallholder livelihood projects in Indonesia and employment integration for Syrian refugees, among other programs.

New Media Ventures stakes $1 million on 14 startups aiming to ‘resist and rebuild.’ Social- and political-action startups have proliferated since last year’s U.S. election. New Media Ventures staged its sixth competition, themed “Resist and Rebuild,” to find media and tech startups committed to social engagement and advocacy. Winners include: Townhall Project, which facilitates direct conversations between constituents and elected representatives; Notifica, which connects immigrants at risk of deportation to support services; Online SOS, which serves victims of online harassment; Vigilant, a public record search database; and several ventures specifically committed to causes in “blue America.” Each team gets seed funding of $50,000 and a spot in New Media Ventures’ acceleration program.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

Investing in HENRYs to boost the supply of tomorrow’s leaders. High Earners Not Rich Yet, or HENRYs, are the key to Prodigy Finance’s plans to increase access to higher education for promising, but cash-strapped, students around the world. The number of international students in the U.S. has increased five-fold in recent years. Prodigy, headquartered in London, has disbursed $318 million to finance the education of 6,800 students from over 125 nationalities over the last decade. Nearly eight in 10 of the borrowers are from emerging markets and most tell Prodigy they had no other way to finance their studies. Capital for the loans comes from the the sale of bonds, which can be customized to target students in India or Latin America, for example, or by student characteristic, such as gender. The secret: assess students’ earning potential, not their savings. The firm launched its first bond available to accredited U.S. investors last night at its New York offices. Prodigy will provide loans to international students seeking a U.S. education at top business and engineering schools but who have difficulty getting a loan. Delinquency rates on the fixed-income, low-risk bond are only 1.5%. “Students are an asset,” said Prodigy’s Joel Frisch. “Investing in education is a game changer.”

#2030: Long-Termism

The heat is on, and taking a toll. In Arizona this week, it was literally too hot fly. Temperatures in Phoenix reached 119 degrees Fahrenheit, grounding the regional flights of American Eagle, which flies smaller Bombardier CRJ planes. (We’ll know it’s really hot when larger Airbus and Boeing flights are disrupted. Their temperature limit are 127 and 126 degrees, respectively.)

Such heatwaves could become more common. A new study in Nature, “Global Risk of Deadly Heat,” projects that if carbon emissions continue to rise, by 2100, up to 74% of all humans could experience deadly heat waves. Already roughly 30 percent of us live in places with potentially deadly heatwaves at least 20 days a year. Researchers identified 783 deaths linked to heat between 1980 and 2014 in 164 cities in 36 countries.

Even with drastic reductions in emissions, the researchers predict, up to half the population will still likely be exposed to regular deadly heat. And even if the heat doesn’t kill us, it’s likely to take its toll on the economy and elsewhere. Popular Science reports worker absenteeism during a 2013/2014 heatwave in Australia cost the country’s economy $6.2 billion. Another study, published in 2009, found that excessive heat in India and Vietnam caused construction and factory workers to take extended breaks, pushing 8- to 10-hour days to up to 16 hours. “An increasing threat to human life from excess heat now seems almost inevitable,” conclude the authors of the study in Nature, “but will be greatly aggravated if greenhouse gases are not considerably reduced.”

Onward! Please send any news and comments to [email protected].