The Brief | June 18, 2019

Resistance meets revival, tech-for-good fund, the retail imperative, exits at Twiga Foods, 50 inclusive fintechs

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Greetings, Agents of Impact!

Featured: Returns on Investment podcast

Resistance meets revival to renew the political discourse (podcast). The roundtable regulars made a pledge before recording the latest Returns on Investment podcast: no cable-style political punditry. But we couldn’t entirely escape the historical moment. “Everybody is freaked out about rising populism, xenophobia, exclusionary, fear-based politics,” ImpactAlpha’s David Bank said to kick off the discussion. “And my biggest worry is that we think we don’t have answers to that when, in fact, we do.” Bank extolled the “new revivalists” – entrepreneurs and engineers, innovators and activists, in small towns across America and startup hubs in Lagos or Nairobi or social enterprises in the slums of Mumbai. “We have to radically enable that part of the economy that is already there,” he said. “That’s the ticket to this future that we should be laying out: shared prosperity, sustainable, green, regenerative. Why is that not the best political platform on the planet?”

Because, as Imogen Rose-Smith pointed out, that message may not be so compelling after all. The recent European elections demonstrated the appeal of climate-change denialists, even in Germany, arguably one of the countries that has most successfully turned the corner toward renewable energy. France’s gilet jaunes — or yellow vest — protests, sparked by a fuel-tax increase, were at least in part a backlash against climate action. “I do worry that impact investing is framed as the urban elite, the cosmopolitan elite, saying, ‘We know what’s best, we know the right solutions,’” said Liquidnet’s Brian Walsh. “That is sometimes perceived as being tone deaf to the real anxieties that citizens face.” Rose-Smith said change at the scale and speed required won’t happen without a popular mobilization and a credible alternative. Bank agreed, but flipped it on its head. Change will happen because the mobilization is underway and the alternative is emerging. “Once you flip the momentum, then it shifts very rapidly,” he said. “It’s a Hail Mary pass, I agree. But it’s the only pass we have left.”

Read on, and listen in, to “Resistance meets revival to renew the political discourse,” on ImpactAlpha’s Returns on Investment podcast.

Dealflow: Follow the Money

Valo Ventures rolls out $175 million fund for “tech for good.” The founder of CapitalG, Google’s venture arm, has raised $175 million to invest in growth-stage impact enterprises. Scott Tierney said Valo Ventures will invest in companies using digital technologies to address climate change, the circular economy, urban quality of life, mobility and transportation, and to build better consumer products and services. “We started Valo because we believe that today’s entrepreneurs and emerging digital technologies are shaping what the future looks like for generations to come,” Tierney said in a statement. The firm says it values “people over algorithms” and “diversity as a source of resilience and insight.” Valo has backed four companies including women-led and women-focused career planning site Landit, climate monitoring company PlanetIQ, and AI-based manufacturing software company Atollogy. More.

Twiga raises $5 million and gives early investors a partial exit. Twiga Foods is working to improve food pricing and supply chain transparency in Kenya by connecting Kenya’s farmers directly to the informal produce vendors. The logistics company has built a network of 17,000 farmers and 2,500 vendors, who sell most of the country’s fresh fruits and vegetables. The company has secured $5 million from French family office Creadev. The round brings Twiga’s total funding to more than $35 million since 2014. Creadev’s investment provided partial exits for a number of Twiga’s early investors, including Blue Haven Ventures and Omidyar Network. Check it out.

Signals: Ahead of the Curve

Retail investors are worried about impact, not financial returns. Retail investors increasingly believe impact investments can generate sufficient financial returns. It’s the “impact” they’re not so sure about. The concerns are hampering broader adoption of sustainable exchange-traded funds, fixed-income community notes, listed investment trusts, impact mutual funds, and other mainstream products, according to “The Individual Imperative,” a retail impact investing report from the Rockefeller Foundation. The 200 retail investors and 300 advisory firms surveyed were split between North America and Europe. “Early innovations in impact investing catered to accredited and institutional investors,” writes Rockefeller’s Saadia Madsbjerg. “The next frontier for impact investing lies with retail investors.”

  • Impact alpha. More than half of investors see a clear link between financial investment and social returns. “In fact, some make an argument that, by considering impact in the investment process, you can actually do better financially; what’s termed ‘impact alpha,’” says Barclays’ Damian Payiatakis.
  • Impact light. Eight of 10 investors find it difficult or extremely difficult to measure impact and are confused about what is a ‘genuine’ impact investment, say the report’s authors. Many new products are ‘impact’ in labelling only, says Erika Karp of Cornerstone Capital Group. “I think there needs to be more ‘real’ products out there.” The lack of clarity makes it hard for clients to see the difference between products that may look similar. “Customers can see the cost, they can see the financial return,” says Triodos Investment Management’s Hans Stegeman. But “on the social impact aspect, there is no common language.” A common definition for impact and how to measure it can help, says the report (see, “Underwriting – and optimizing – for impact).
  • Nevertheless, they persist. Three-quarters of investors who are aware of impact investing say they currently make impact investments. More than half expect to increase their impact allocations to between 6% and 20% of their portfolios in the next two years.
  • Follow the market. Navigate the impact investing marketplace with ImpactAlpha’s personal finance coverage.
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Agents of Impact: Follow the Talent

Visa and Metlife foundation, along with Accion, International Finance Corp. and MIX release the “Inclusive Fintech 50” of top early-stage fintech companies serving the world’s three billion financially underserved people… Echoing Green is hiring a director of alumni programs in New York… Also in New York, Common Impact is looking for an associate consultant… Swedish impact hub Norrsken is opening a location in Kigali, Rwanda, for tech entrepreneurs… Techstars launches a second impact accelerator, in Atlanta, with Cox Enterprises (see, “Techstars looks for startups to help mitigate mounting social and environmental risks).

June 18, 2019.