SDG Week, JP Morgan in Chicago, development impact bonds, farm tech and talent



Greetings, ImpactAlpha readers!

#Featured: ImpactAlpha Original

Welcome to SDG Week. At the United Nations in New York, it’s the 72nd annual gathering of the General Assembly. Outside, it’s SDG week, a moveable feast of events, receptions, panels and parties to mobilize support for the 17 Sustainable Development Goals or, more simply, the global goals. Secretary-General Antonio Guterres on Monday announced an SDG finance summit next year to mobilize commitments of private capital to finance the 2030 goals, which have an annual price tag of an estimated $7 trillion.

Around town, private investors and corporate CEOs are saluting the SDGs and signing on to their favorite goals. Frans van Houten, CEO of Dutch tech giant Royal Philips, says the firm will positively impact three billion people by 2025. Former President Barack Obama is the keynoter at the Gates Foundation’s Goalkeepers conference. France’s Emmanuel Macron and Canada’s Justin Trudeau are heading to Michael Bloomberg’s business forum.

Private investors, long on the fringes of UN-style development initiatives, are suddenly the center of attention. Bank of America Merrill Lynch and the Abraaj Group, a $10 billion growth-markets private equity firm, set up shop across from Trump Tower with the Global Impact Investing Network. A new narrative seemed to be displacing impact investing’s long-running debate about the “trade-off” between financial returns and social impact. Abraaj founder Arif Naqvi declared the global goals to be a “trade-on” — an opportunity to scale financial returns by driving social value.

For the impact investing crowd, the global goals are an opportunity to take “impact” to a broader audience. “Business needs a purpose,” said Royal Philips’ van Houten. By bringing the tools of finance to the biggest global challenges, said GIIN CEO Amit Bouri, “We’re not just keeping pace with capital markets, but reinventing them entirely.”

––The ImpactAlpha team

#Dealflow: Follow the Money

J.P. Morgan replicates Detroit community revitalization commitment in Chicago. J.P. Morgan was one of the first major financial institutions to bet on Detroit’s recovery after the city’s bankruptcy in 2014. After an initial $100 million commitment, the bank pledged another $50 million to Motor City. Its work in Detroit helped the bank earn the top spot on Fortune’s third annual Change the World 50 list. Now J.P. Morgan is putting $40 million, over three years, into a similar initiative in Chicago’s struggling neighborhoods, its second-largest city investment. Chicago had a violent 2016 and this year seems likely to be worse. J.P. Morgan is distributing the capital as grants to nonprofits and small businesses focused on providing job training and mentorships in particular. Its first grant is going to the Arthur M. Brazier Foundation to back its robotics training program.

Agtech venture Bee Corp closes Series A to support bee health. Bees and other pollinators contribute $24 billion to the U.S. economy, but bee colonies have been suffering collapse for decades, due to factors like commercial pesticide use and parasites. (There has been a slight improvement this year.) “Given the heavy dependence of certain crops on commercial pollination, reduced honey bee populations pose a real threat to domestic agriculture,” according to a 2014 White House statement. The Bee Corp makes software and sensors to help commercial bee farmers monitor the internal conditions of their hives. Their current product monitors queen bee health, which is a major factor of hive survival. Farmers receive alerts by text message. The undisclosed amount of funds Bee Corp has raised in its Series A round will go to building a more robust platform and integrating data monitoring and decision support for farmers. The round was backed by several angel investors and some of the company’s larger commercial customers.

ImpactAssets adds four investment options to $350 million Giving Fund. The Giving Fund is the non-profit financial services firm’s donor-advised fund. The fund raises capital for other impact investment funds while preserving the tax-benefits of giving versus investing for philanthropists. It has added three new investment options, including: Iroquois Valley Farms Blended Private Debt Note, a debt fund that supports sustainable, organic farmland in the U.S.; EcoEnterprises Fund III Venture Fund for Nature, a mixed-investment fund for Latin American ventures focused on local biodiversity causes; and Sarona Frontier Markets Fund III, a fund that invests in other equity impact funds focused on community and environmental causes. ImpactAssets launched the fund in 2013 and has backed 12 investment funds. MicroVest’s Short Duration Fund, which provides short and medium-term loans to micro- and emerging market financial institutions, is also part of the portfolio. Donors can commit as little as $25,000 to any of the Giving Fund’s options.

People on the move. The Abraaj Group has named Kito de Boer as a managing partner and head of impact investing. de Boer is a 30-year veteran of McKinsey who helped found the consulting firm’s India and Middle East practices and a former aide to former Secretary of State John Kerry in the Middle East peace process. At Abraaj, de Boer will lead the emerging market private equity firm’s efforts to deploy capital to address the U.N. Sustainable Development Goals.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

Development impact bonds take aim at health challenges. Nearly 100 social impact bonds have been launched since the first SIB in 2010. Development impact bonds, or DIBs, on the other hand, haven’t made as much traction. Only three have taken off in low-income and emerging markets; 25 are in development. A new report, Impact Bonds in Developing Countries, highlights the predominance of philanthropic funders in DIBs, compared to SIBs, which are often backed by commercial capital. They also tend to tackle different issues. Health is a big one for DIBs, finds the report, by blended finance network Convergence and Brookings’ Center for Universal Education. Eleven planned DIBs target the health sector, including cataracts, nutritional education for prediabetic women, and maternity care. Health-related DIBs are tackling problems that also simultaneously address water, sanitation, and malnutrition. Last year, Convergence backed a feasibility study for a $25 million to $35 million bond DIB focused on skills training for refugees. The full report is available here.

#2030: Long-termism

Can tech bring new talent to agriculture? One in three of all workers worldwide are employed in the agriculture sector, but the share of the global workforce in agriculture is dropping as people flock to cities and emerging economy incomes rise. That’s a problem at a time when global food production has to increase by 35% by 2030 and 50% by 2050 to feed the world’s growing population.

So how does the agriculture sector retain and attract the new talent it needs for the future? “New technology and innovations are creating new opportunities for income gains, entrepreneurship, and higher skilled jobs in the food system,” according to the World Bank’s Future of Food report. “Rural youth are well-placed to benefit from jobs created by these innovations since they are more likely than adults to own mobile phones as well as adopt financial, training, and extension services which use these digital platforms.” That could include better on-the-farm jobs, enabled by digital networks likeWefarm, or employment with tech-based startups supporting productivity and extension of the agriculture sector, like Hello Tractor, an equipment-sharing platform that has been dubbed “the Uber for tractors.”

Urban youth could benefit too, as urban and indoor farming grows. “Between 1,000 and 15,000 farming jobs, have for example been created in urban centers like Bamako, Accra, and Kumasi, and even megacities such as Shanghai maintain their urban farming as an important part of the economic system,” according to a post on a World Bank blog.

One initiative pushing to draw youth into agriculture is the Africa Agriculture Innovation Network, or AAIN. The three-year-old network, backed by roughly 200 public, private and academic institutions, has led youth-focused agriculture initiatives across the continent, engaging young people on problem-solving pressing issues like sustainable fertilizers and soil health, building Ghana’s seed sector, and developing climate resilient agtech in Rwanda. AAIN aims to launch 180 agriculture incubators in 54 countries over the next five years. Its goal is to create 600,000 jobs and 100,000 startups on the continent with an “earn as you learn” model.

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

Correction: Kito de Boer is joining Abraaj as a managing partner. A previous version of this post indicated he was joining as a managing director.

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