Greetings from Mérida, Agents of Impact!
Featured: ImpactAlpha Original
Second wave – and second funds – for Latin America impact fund managers. You have an investment thesis, a deal pipeline and a committed set of limited partners. You’ve overcome biases against impact investing, emerging markets and – especially – first-time fund managers. You’ve closed your first Latin American impact investing fund and now can focus on investing in promising entrepreneurs. For about a minute. Then it’s time to start raising your next fund. And – surprise! – it’s likely to be just as hard as Fund I.
The experiences of a handful of pioneering private-equity managers of early impact investing funds in Mexico, Brazil and Colombia offer a glimpse of the future for “second wave” impact funds emerging in many of Latin America’s smaller countries, including Guatemala, Ecuador and Bolivia. Continuing obstacles and lingering skepticism, primarily about ventures that serve lower-income customers, has made the development of a robust impact investing ecosystem in Latin America slower than expected. ImpactAlpha’s David Bank will interview managers from Adobe Capital, Vox Capital, Inverso and Acumen Latin Capital Partners onstage at the Foro Latinoamericano de Inversión de Impacto, opening today in Mérida, Mexico. Says Tony Carr, president of Halloran Philanthropies, which seeded many first-generation Latin American impact funds: “The movement has grown, but not fast enough.”
Read, “Second wave – and second funds – for Latin America impact fund managers,” by David Bank on ImpactAlpha.
Dealflow: Follow the Money
PG Impact closes first fund targeting the Global Goals at €210 million. PG Impact Investments was launched out of Swiss investment firm Partners Group in 2015 to institutionalize its impact investing practice. The nonprofit spinoff closed fundraising for a €210 million ($237 million) fund to invest in emerging markets businesses aligned with the U.N. Sustainable Development Goals. It has made about 20 investments, including a $5 million loan to Ugandan motorcycle taxi lease-to-own startup Tugende. Partners Group is managing its own larger impact investing initiative: a planned $1 billion fund called PG Life. Read on.
Emerging markets Agri-Business Capital Fund secures €50 million. Access to capital is a “perennial challenge for viable businesses seeking financing in developing countries,” say Bamboo Capital Partners and Injaro Investments, which are raising the fund. The International Fund for Agricultural Development launched the targeted €200 million ($226 million) fund in December. The European Union invested the majority of the initial €50 million to serve as first-loss capital and attract other investors. Here’s more.
Signals: Ahead of the Curve
A launch pad for businesses that can make Opportunity Zones thrive. Projects that integrate community needs and local businesses – and the facilities they need – are hard to come by inside newly designated Opportunity Zones. Such models are key to long-term investments in low-income communities. New Orleans-based Launch Pad, a business incubator, is expanding its network of co-working spaces to Opportunity Zones to stock the project pipeline. The firm, which also has facilities inside or adjacent to Opportunity Zones in Newark, Nashville and Memphis, has raised $1.33 million to jumpstart its expansion to Opportunity Zones around the country. “Opportunity Zone law recognizes the importance of investing in communities across the country,” said Launch Pad co-founder Chris Schultz. The “legislation has provided a compass for our expansion across the country.”
- Economic impact. The businesses Launch Pad has supported in New Orleans have collectively created 5,000 jobs, raised $160 million in capital and occupy 600,000 square feet of office space. Market-research company Lucid began with one coworking desk in Launch Pad’s New Orleans hub. The 350-person company raised $60 million in its most recent financing and occupies the top floor of Canal Place in downtown New Orleans. Another Launch Pad firm, Propeller, has supported more than 200 New Orleans businesses and nonprofits tackling food, water, health and education challenges; together, the firms have generated revenues of more than $100 million and created more than 460 jobs.
- Entrepreneurial ecosystems. Other models are looking to leverage Opportunity Zones to build entrepreneurial hubs in cities long overlooked by venture investors. Ross Baird’s Blueprint Local launched in January with Blueprint Texas to invest in clusters of real estate projects and operating businesses to promote inclusive economic growth in the Austin-San Antonio corridor. AOL founder Steve Case is building a team at Revolution, his venture capital firm, to develop Opportunity Zone real estate for tech startups in areas far from the coastal tech hubs.
Read, “A launch pad for businesses that can make Opportunity Zones thrive,” by Dennis Price on ImpactAlpha.
Agents of Impact: Follow the Talent
Follow the talent. Congratulations to Align Impact’s Eric Stephenson and Cordes Foundation’s Stephanie Cordes, who got married Feb. 16 in New York… Ben Jealous, ex- of NAACP and Kapor Capital, and a former Democratic candidate for Maryland governor, is starting a Baltimore-based impact investing and advising firm named 20X… Cindy Holler is joining Community Housing Capital as president and CEO while Arif Rizvi joins as chief financial officer… Liz Roberts, previously head of Valley Venture Mentors, is the new managing director of inclusive startup advocacy group Zebras Unite… Tech entrepreneur Srikant Vasan, ex- of Gates Foundation, joined startup network Techstars in January as a partner for SDG impact investments.
Seize the opportunity. Vasan and Techstars seek a short-term consultant to develop a framework and dashboard for impact measurement and management… Media company NationSwell is looking for a managing director for its membership community, NationSwell Council.
Where to be. There’s still time to join more than 1,000 investors, entrepreneurs and global development practitioners at the 2019 Sankalp Africa Summit on Feb 21 and 22 in Nairobi (use code IMPACTALPHA15 for a 15% discount)… The Francophone Africa Investor Summit is happening in Bamako, Mali on Mar. 28-29.
— February 19, 2019.