The Brief | November 26, 2018

Seeding social finance in Canada, sustainable peanut butter, online tutoring in India, optimizing impact to manage risks

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Greetings, ImpactAlpha readers!

Dealflow: Follow the Money

Canada pledges C$800 million to seed social finance market. The Canadian government is creating a C$755 million ($570 million) Social Finance Fund to invest in social and environmental solutions, along with C$50 million in investment-readiness funding. The fund aims to encourage more private investment in Canada’s social sector by seeding “a self-sustaining social finance market over time that would not require ongoing government support.” The 10-year fund is seeking matching capital from private investors to invest in pre-commercial initiatives and organizations. “This is not just a major milestone for social finance in Canada,” said SVX’s Adam Spence. “It is a watershed moment for our country as a whole.” What we know.

Germany’s Katjesgreenfood backs sustainable food company Wild Friends. Wild Friends produces sustainable, palm oil-free nut butter. The female-run company, based in Portland, Ore., sources its ingredients from U.S. farmers and sells its products in retailers across the country. Berlin-based impact investor Katjesgreenfood, a subsidiary of German confectionery company Katjes, led Wild Friends’ $4 million equity round. Katjesgreenfood focuses on sustainable, vegetarian food companies and says U.S. companies represent the biggest opportunity for sustainable food investments. Half its portfolio is based in the U.S.; half are women-led. Dig in.

Omidyar Network invests in online tutoring company Vedantu. Bangalore-based Vedantu’s online platform connects students with affordable group and one-on-one tutoring sessions. The four-year-old company, which offers tutoring to 6th- through 12th-graders in 80 cities, has been growing fast in India’s second- and third-tier cities. Omidyar Network led Vedantu’s $11 million Series B round. Prior investor Accel Partners also participated. Read on.

Signal: Ahead of the Curve

Tools for optimizing impact help investors identify risks and opportunities. Targeting, measuring and managing social impact can illuminate other investment factors as well. Some new tools generated by the cottage industry of global agencies and associations can help investors use impact analysis to manage risk, generate dealflow and spot opportunities.

  • Monetizing impact. “Impacts can be used as a starting point for business models and generate revenues,” suggests a new report from Positive Impact Finance, a program of United Nations Environment’s Finance Initiative. “Rethinking Impact to finance the SDGs” outlines an approach the authors say “can reduce costs, address certain risk issues and catalyze private sector solutions.” Positive Impact Finance also released tools to turn the ideas into practice.
  • Natural risk. Investors don’t need to care about the environment to care about their risk exposure as the depletion of land, oceans and forests accelerates. The Natural Capital Finance Alliance, a finance sector-led initiative, has developed an online tool, dubbed ENCORE, that helps investors quantify companies’ dependence on ‘natural capital’ such as groundwater, coral reefs and forests. The alliance found agriculture, aquaculture and fisheries and forest products to be most dependent on natural capital; utilities, oil and gas and mining also are highly exposed.

Read, “Tools for optimizing impact help investors identify risks and opportunities,” by Dennis Price on ImpactAlpha.

Agents of Impact: Follow the Talent

Opportunity Finance Network is hiring in Washington D.C. after moving from Philadelphia… Smarter Good is looking for a finance director in the Philippines… Adjuvant Capital seeks an investment associate for its life sciences impact investment fund in New York.

November 26, 2018.