Robo-investing in refugees, climate-resilient housing finance, alternative capital in Africa…



Greetings, ImpactAlpha readers!

#Dealflow: Follow the Money

On World Refugee Day, OpenInvest points its robo-advisors toward refugee inclusion. OpenInvest allows investors to back publicly-listed companies that have forward-thinking policies towards refugees, including Starbucks, which has committed to hiring 10,000 refugees in the next five years, and H&M and Google, which are pledging funds for refugee aid. More than 34,000 people around the world are forcibly displace every day. OpenInvest launched in 2015 to enable “everyday investors” to align their values and investment dollars. It recently raised a $3.25 million seed round, led by Andreessen Horowitz. The investment screening theme is the tenth one to be added to the impact investing robo-advisor’s platform.

MoneyTap raised $12.3 million for a consumer credit app for India’s emerging middle class… MoneyTap launched last year with what is effectively an app-based line of credit for India’s young professionals and now has more than 30,000 users, who earn $500 per month on average. Consumer lending is an underserved segment of India’s financial markets; 70% of the population doesn’t have access to commercial lenders. Sequoia Capital India led the Bangalore-based startup’s $12.3 million round, with support from two existing investors, NEA and Prime Venture Partners. MoneyTap The startup expects to surpass $46 million in issued credit by early 2018 and expand to 50 Indian cities by end of 2017.

and crowdfunders stake MyCash to $300,000 fintech for migrants in Malaysia. MyCash launched last year to provide financial services to the three million migrant workers in Malaysia, 90% of whom do not have bank accounts. It functions as an online marketplace for phone credit, bill payment, and transit tickets. It facilitated 280,000 financial transactions for 65,000 customers in its first year. The Malaysian fintech startup raised the round via pitchIN, an equity crowdfunding platform. Kuala Lumpur-based Cradle Fund and Hong Kong-based JC Management backed MyCash’s round, which closed within 24 hours. MyCash is the first fintech firm to raise equity capital through such a service, which is growing as a fundraising tool for Malaysian startups.

Affordable housing hit by Hurricane Sandy gets $560 million climate upgrade. The Ocean Bay Apartments public housing complex in the Far Rockaways was hard hit by Hurricane Sandy five years ago. Renovation has been slow; the 24-building complex still relies on temporary boilers. Now it is the first New York City project to to tap private funding through the federal Rental Assistance Demonstration program. The New York City Housing Authority is upgrading living quality and climate resiliency of the 1,400-unit complex. The complex will be bolstered against future weather events with a flood wall, independent electricity and boiler services, and water retention swales. It will also include the New York’s third-largest affordable housing solar panel installation. Catholic Charities’ local chapter is providing community social services. Project financing includes a blend of tax-exempt bonds from the state; Low-Income Housing Tax Credit Equity, syndicated by Richman Housing Resources; and $1.1 million of Investment Tax Credits for solar generation. Goldman Sachs’ Urban Investment Group and Citi are the project’s lead lenders.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

A map of alternative finance for small- and medium-sized businesses in Africa. In unproven, nascent and risky markets across the world, commercial banks and capital markets tend to work only for the largest companies. Small and medium-sized businesses are turning to alternative finance solutions, including angel investors, crowdfunding, impact investing, public finance and venture capital. A regular ImpactAlpha reader pointed us to Developing World Alternative Finance, a new report from AlliedCrowds, a London-based data and analytics firm that has mapped the alternative finance market in Africa. Where are the most alternative capital providers? Answer: South Africa (360), followed by Kenya and Nigeria. Which industries in Africa attract the most providers? Construction (691), finance (~550) and education (~450). And which alternative funding type has the most sources? Venture capital (38%), impact investing (30%) and public finance (24%). To map the market, AlliedCrowds used Capital Finder, its proprietary database of alternative capital providers in emerging markets.

#2030: Long-Termism

Is meat the next fossil fuel? China’s nearly 1.4 billion people consume one-quarter of the world’s meat supply. By 2030, consumer spending in China’s lowest-tier cities alone is expected to reach $10 trillion (the value of China’s entire economy in 2015.) WHO research shows a positive correlation between income level and protein consumption. The meat industry already contributes as much as 18% of all greenhouse gas emissions and is responsible for unsustainable land and water use. Beyond China, demand for meat is rising among a growing and increasingly affluent global population. Something’s got to give. “Protein production (in the form of meat and fish) is killing the planet,” warns Factor Daily.

That makes the future of sustainable food a growing investment theme, not only among impact investors like aquaculture fund Aqua-Spark, but also tech venture capitalists, who are throwing money at vertical farming, plant-based proteins, and insects for animal feed. Big meat-industry players like Cargill and Tyson’s are doing the same. Five categories of more sustainable “alternative” proteins are on the rise:

  • The market for plant-based protein is poised to reach $10 billion by 2020. Startups in the space raised close to $80 million in 2016. Impossible Foods, which produces a “bloody” vegetarian burger, raised more than that in one round alone in 2015.
  • Lab-grown meat is attracting scientists’ attention since a group in the Netherlands grew the first batch in 2013. A pound costs about $6,000, but “The real question would be to see how easily can cultured-meat companies convince consumers to switch to meat that didn’t originate naturally,” Factor Daily writes.
  • Algae requires little water to grow and can also produce biofuel. The algae food market hit $608 million in 2015 and is forecast on pace to nearly double that amount by 2024. Spirulina is expected to claim almost a 25% share of that. The broader algae market may reach $44 billion, according to a new algae products report from Fish 2.0.
  • Bugs are protein-dense, grow quickly, and consume few resources. Some, like the black soldier fly, even eat waste. Startups like Protix and Enterra have raised investment capital for their insect-based animal feed (30% of humans also eat bugs). The bugs-for-human-consumption market is expected to reach $1.5 billion by 2021, as companies experiment with “palatable” variations like flour, vitamins, or protein bars for unaccustomed consumers.
  • Farmed fish are on pace to surpass wild-caught fish in the next two years. Aqua farms must become more sustainable, in particular in fish feed. Fish farms currently consume more ocean-caught fish as feed than they produce. Fish 2.0’s new “Innovation in Fish Feed” brief outlines the options. The growth of the “blue economy” as an investment theme is channeling more capital, partnerships, and celebrities into sustainable aquaculture.

In China, by the way, the government is pre-empting an increase in demand with plans to halve meat consumption by 2030. The new guidelines could reduce carbon dioxide emissions from China’s livestock industry by one billion tons, from the 1.8 billion tons now forecast for that year.

Onward! Please send any news and comments to TheBrief@impactalpha.com.

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