The Brief | January 28, 2019

Seed equity for affordable housing, Owl Ventures’ third fund, mini-grids in Africa, the U.K.’s social investment diversity challenge

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Greetings, Agents of Impact!

Featured: ImpactAlpha Original

Key to the new $500 million affordable housing fund: Facebook founder’s $40 million grant. Making the numbers work for affordable housing has been tough in the San Francisco Bay Area, one of the highest-cost housing markets in the U.S. A new partnership raising a $500 million fund has found a way to square the circle: a $40 million grant from the Chan Zuckerberg Initiative of Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, that serves as first-loss capital. The big slug of concessionary financing will let the new fund provide affordable housing developers with lower-cost loans – and attract additional investors. “It’s a game changer,” Maurice Jones, CEO of LISC, which is managing the new fund, told ImpactAlpha.

Tech giants and their founders are ponying up for affordable housing as both a business necessity – it’s increasingly hard to hire in markets where tech employment has sent the cost of housing skyrocketing – and a political strategy. Amid a public backlash over tech-fueled dislocation, the industry generally sees voluntary investments as more palatable than new taxes. Microsoft this month announced its own pledge to invest $500 million over three years, including $225 million in below-market rate loans to preserve and build middle-income housing near its Redmond headquarters. New Calif. Gov. Gavin Newsom is pressuring tech companies to put up $500 million in low-interest loans and other financing for affordable housing. The new Bay Area fund could become a model for how to stack such capital for maximum effect. The fund aims to protect the homes of up to 175,000 households over five years and produce more than 8,000 homes.

Keep reading, “The key to new $500 million affordable housing fund? A $40 million grant from Facebook’s founder,” by David Bank on ImpactAlpha.

Dealflow: Follow the Money

Owl Ventures raises $315 million for third education fund. San Francisco-based Owl’s early stage investments in impact-focused education ventures in the past five years have paved the way for larger follow-on rounds of funding. One portfolio company, DreamBox, clinched $130 million last year from TPG Growth’s Rise Fund. Owl closed its third fund at $315 million and aims to invest in companies bridging widening skills gaps with digital tools. Learn more.

Rockefeller Foundation and Ceniarth back CrossBoundary’s Africa mini-grid fund. Roughly 600 million people in Africa lack access to reliable energy services. CrossBoundary Energy Access is targeting mini-grids with a $16 million fund backed by the Rockefeller Foundation and Ceniarth. CrossBoundary estimates $11 billion is needed to install mini-grids connecting 100 million people. The new vehicle aims to enable services for 170,000 people in Tanzania, Nigeria, and Zambia. CrossBoundary’s first fund, launched in 2015, focuses on commercial and industrial solar installations. Here’s more.

Signals: Ahead of the Curve

Digging for diversity in U.K.’s social investment landscape. Boards and leadership teams at social investment firms in the U.K. are overly white, male and “Oxbridge”-educated. And the imbalance may be getting worse, according to Diversity Forum, a Connect Fund-backed group formed to drive diversity among social investors in the UK. How can the sector drive gender and minority inclusion without leadership that is itself gender and racially diverse? “From the pure competition of the free market, selecting other than on grounds of the best person to do the job, is not efficient,” says Danyal Sattar of Big Issue Invest. “From an equal rights perspective, how can we deliver social change if we look like part of the problem?” It’s a matter of equity in more ways than one. Firms with more inclusive leadership may be more likely to deliver competitive returns as well.

  • Falling back. Representation from female board directors at U.K.-based social investment firms fell five percentage points from 2017 to 33%. Less than one in five Black, Asian and minority ethnic, or BAME, employees say they are in senior leadership or executives roles. Social investment sector executives are ten times more likely than the population to have attended Oxford or Cambridge.
  • Valuing lived experience. “If you overlook lived experience and focus only on professional and academic achievements, you might tend to select candidates from similar backgrounds and with similar skills,” says the Diversity Forum’s roundup of inclusive workplace practices.

“Wider societal discrimination can be to our advantage,” Sattar says. “If the rest of commerce do not want the brightest and the best, we’ll have them.” Share this post.

Agents of Impact: Follow the Talent

Impact Community Capital is hiring a controller in the San Francisco Bay Area… The Los Angeles Cleantech Incubator seeks a senior vice president of unlocking innovation… Unreasonable Group is looking for a global programs coordinator in Boulder, London, or anywhere… The Farm Animal Investment Risk and Return initiative, or FAIRR, is recruiting an ESG analyst and other roles in London… Kauffman Foundation’s Inclusion Open is seeking programs that remove barriers to starting and growing a business… Intelligent Impact, and the Blockchain Academy are hosting ‘AI and blockchain impact’ trainings Feb. 26 and 27 in Johannesburg and March 5 in Cape Town.

— January 28, 2019.