The Brief | January 30, 2019

Risky business, Brazil’s new neo-bank, raising Filipino graduation rates, blockchain for impact

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Greetings, Agents of Impact!

Featured: Returns on Investment podcast

Risky Business: Corporations need market signals to reduce climate risks (podcast). Will it be risk – rather than returns – that drives impact investment? Bank of America worries about mortgage defaults from storm-flooded homeowners. Disney frets its theme parks may become too hot for vacationers. AT&T is concerned about hurricanes and wildfires that could knock out its cell towers. Coca-Cola wonders whether there will be enough water to make Coke. Major companies are starting to face the very practical implications of climate change, as indicated by responses to CDP, the U.K. organization formerly known as the Carbon Disclosure Project. The latest episode of ImpactAlpha’s Returns on Investment podcast explores the connection between such risks and the mobilization of investment to address them.

“The markets are not accurately pricing the risk associated with catastrophic climate change,” said roundtable regular Imogen Rose-Smith, an investment fellow with the University of California. And so, many corporations aren’t receiving the signals they need to make the needed investments. The implicit message from the wave of corporate share buybacks, particularly since the 2017 U.S. tax cut, is that there aren’t more productive uses for their hoards of capital. “What we’re saying on this podcast is ‘Hey, there are plenty of places to put your money as you prepare for the challenges of the future and the opportunities of the future,’” said ImpactAlpha’s David Bank. How corporations deploy their cash is an ‘ESG’ factor (for environmental, social and governance), Bank suggested. “It’s a sign of how seriously they are taking this.”

Read on and listen in to “Risky Business: Corporations need market signals to reduce climate risks,” the latest episode of ImpactAlpha’s Returns on Investment podcast. Catch up on all the episodes on iTunes, SoundCloud, Stitcher or wherever you listen.

Dealflow: Follow the Money

Accion Venture Lab backs a “neo-bank” in Brazil. Jeitto is the latest Latin American fintech company to launch as a “neo-bank,” a financial services company that essentially does what traditional banks do, but with digital and mobile technology. Jeitto, which caters to low- and emerging-middle income Brazilians, aims to expand mobile money use in a country with a large number of smartphone users, but few mobile-money accounts. The Brazilian startup closed a seed round backed by Accion Venture Lab. Learn more.

Edukasyon raises fresh capital to help Filipino youth plan for school. The Manila-based startup is trying to improve educational attainment and post-graduation employment in a country where only 15% of students advance beyond secondary school. The Philippines’ high rate of youth un- and under-employment is due in part to what the company calls a “fundamentally inefficient” education system. Since 2015, Edukasyon has helped more than 10 million students find high schools and colleges, connect with international schools, plan their education and careers, and apply for scholarships. Its third round of investment capital comes from Core Capital and Gobi Partners’ $10 million Philippine Fund. Read on.

Signals: Ahead of the Curve

Blockchain in action for social and civic impact. Say what you will about blockchain hype (see “Deals lag the hype in ‘blockchain for good’ investments). But keep paying attention. “The Blueprint for Blockchain and Social Innovation” from New America’s Blockchain Trust Accelerator takes stock of blockchain pilots and programs attempting to boost social impact and governance in business, global development, public services, social investment and media. Bottom line: “Blockchain isn’t a replacement for or a shortcut to building trust,” write the New America authors. “It is a trust accelerator, giving individuals and organizations a head start in cultivating solid relationships, built on a foundation of security, accountability, and transparency.”

  • Financial inclusion. Smallholder farmers in cooperatives use AgUnity’s blockchain-enabled app to share crop transactions and sales information with other farmers. Price transparency across the cooperative allows farmers to bargain for better prices. Farmers equipped with AgUnity devices tripled their incomes in pilots in Kenya and Papua New Guinea.
  • Social investment. Berkeley, Calif., officials partnered with municipal bond investment platform Neighborly and the UC Berkeley Blockchain Lab to let investors buy tokenized municipal bonds for as little as $10. Bypassing middlemen and decreasing transaction costs could enable new initiatives such as food vouchers for the homeless.
  • Mobile voting. Nearly 150 overseas military members and their families voted in the 2018 general election in West Virginia via a blockchain-enabled mobile voting application (from tech firm Voatz). Blockchain has the potential to reduce failure and fraud in elections, and restore trust in the institution of voting.
  • Combating “fake news.” During the 2018 Macedonian referendum, Democracy Notary “notarized” public statements on the conduct of the referendum process to provide a verified official copy.
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Agents of Impact: Follow the Talent

Suzanne Biegel and Wharton Social Impact released the Project Sage 2.0 scan of gender lens private equity, venture and debt funds (see our fall preview: “More than two dozen new private gender-lens funds launched in 2018). “Since we completed the research last summer, so many more great funds are on our radar,” Biegel says… Lara Metcalf, previously a fellow at MIT’s Engine fund, joins The Social Entrepreneurs’ Fund as managing director…  Ana Marie Argilagos of Hispanics in Philanthropy and Google AI’s Anand Babu join the board of Rockefeller Philanthropy Advisors… Blueprint Local is recruiting a director of investments in Washington DC, Baltimore, or Texas’ Austin-San Antonio corridor… (see, “Ross Baird’s ‘blueprint’ for local impact investing”)… Village Capital is looking for an impact metrics analyst in Washington DC… Total Impact seeks a senior associate in New York… The Reproductive Health Investors Alliance is hosting a venture fair featuring 10 reproductive health entrepreneurs in San Francisco Feb. 20.

January 30, 2018.