Greetings, ImpactAlpha readers!
#Featured: Open Mic
Fellow Travelers, Part 1: Bringing emerging markets and impact investing back together. Impact investing and emerging markets were once fellow travelers. Impact investing would redefine the efficient frontier, while making emerging markets more efficient. Impact investment would bring capital to the “missing middle” — small and growing enterprises in emerging markets that had been left out of the capital markets.
The perceived massive potential for the private sector to boost investments in emerging-market small businesses, however, has largely failed to materialize. In the first of a three-part series for ImpactAlpha, Andrew Haimes of the financial advisory firm Office:FMA traces the divergent paths of emerging-market and impact investing, as major players enter the market and fund sizes grow. On deck: A deep dive into emerging-markets impact investing data and how to reinvent small-business investing to help the capital flow.
Read Part 1 of ImpactAlpha’s “Fellow Travelers” series, by Andrew Haimes:
We’re looking for leaders driving impact investing around the world. The Global Steering Group for Impact Investment will honor investors, managers, entrepreneurs and market-builders. Deadline: June 16. Submit an Entry
#Dealflow: Follow the Money
Fishpeople Seafood raises $12 million to meet growing demand for sustainable seafood. Fishpeople, a Portland, Ore., B-Corp, buys from local, small-scale fishermen and delivers Seafood Kits, fillets and soups to grocery stores and restaurants. New Orleans-based Advantage Capital Agribusiness Partners led the Series B round, joined by longtime Fishpeople partner 3×5 Partners and impact investors Encourage Capital, S2G Ventures, Blueberry Ventures and Collaborative Fund. Venture capital for seafood startups and aquaculture technology grew to $193 million last year (see, “Year of the Oceans”). “The seafood industry is one of the last to see meaningful improvements in product quality or sustainability, so we are excited to work with a group of people that is so dedicated to providing better options and full traceability for consumers,” said ACAP’S Tyler Mayoras.
Japan’s SoftBank to help finance India’s march towards all-electric vehicles by 2030. Electric vehicle sales in India are not growing fast enough to meet the country’s all-electric 2030 goal. SoftBank sees an opportunity to help lower the high cost of electric vehicle manufacturing, and retail costs in turn. The bank is reportedly negotiating with the Indian government over low-cost terms for financing 200,000 electric busses for public use. It is also working with Indian cab-hailing company Ola to nudge the company towards electric car manufacturing. SoftBank, which owns 40 percent of Ola, appears to be eyeing a deal with Toyota to develop a manufacturing partnership with the Uber competitor. Ola already has plans to launch one million electric vehicles in the next five years, starting with a 200-car fleet in the city of Nagpur.
Imperative Fund kickstarts $1.5 million community development project in Tabasco. The first phase of the project to alleviate poverty conditions for 500 families in the Mexican state will finance 36 houses and improve local roads and street lighting. The New York-based Imperative Fund invests in poverty alleviation initiatives in low-income communities by pooling funds and social enterprises to fill community gaps, including housing, internet, “poverty tax” alleviation, solar energy and clean water, health insurance, and waste management. “In order to have a structural change, we will have to have a holistic approach,” says founder Camilo Galvis. Imperative Fund launched its first project in the Yucatán Peninsula in 2016, targeting 2,000 people. For the Tabasco project, it is aiming for 8.75% returns after five years. Imperative Fund’s own source of funding was not disclosed.
Court Innovations raises $1.8 million to improve dispute resolution process. The Ann Arbor, Mich., company is expanding its online system for handling infractions, disputes and warrants with local courts to make it easier to resolve minor legal matters without a court appearance. “Millions of people in this country are expected to use courts or public agencies that they can’t afford or are too afraid to use,” says founder J.J. Prescott. The Series A round was backed by three Michigan-based investors: Belle Michigan Fund, Northern Michigan Angels, and Michigan Angel Fund. The University of Michigan’s Business School’s social venture fund also kicked in $50,000. Court Innovations spun out of the university’s law school.
#Signals: Ahead of the Curve
Is Geneva the Silicon Valley of sustainable finance? Last week’s Geneva Forum for Sustainable Investment highlighted Geneva’s Calvinist tradition, its rank as a global private banking powerhouse, and its United Nations presence. Swiss sustainable finance assets have grown 38% to $273.8 billion over the past year, according to new research from Swiss Sustainable Finance and German counterpart Forum Nachhaltige Geldanlagen. The spike reflects strong institutional asset growth and, yes, higher survey participation. Ivan Agabekov of INOKS Capital, told the forum, “Geneva has the potential to be the Silicon Valley of sustainable finance.” Read more from Jérôme Tagger on ImpactAlpha:
Britain’s low-carbon transition is driving jobs and growth. The pace of the U.K.’s transition to a low-carbon economy may be at stake in the general election this week. The low-carbon economy could contribute 13% of the U.K. GDP by 2050 — up from just 2% today. “Stable policies to grow the UK’s low-carbon market will be essential to turn this potential into reality and ensure our economy remains competitive on the global stage,” states a letter from Aldersgate Group, a green business association, that was also signed by Aviva, Siemens, and Kingfisher, the housewares retailer.
Prime Minister May’s government has so far remained firm in its its international climate change commitments. But in the first round of Brexit talks with Europe, the government pressed the European Commission to water down its 2030 energy-efficiency targets. At home, opposition parties have raised concerns about the U.K.’s Climate Change Act, which outlines domestic emissions targets.
Aldersgate Group is aiming to reframe the debate low-carbon initiatives as economic opportunities. The letter cites 432,000 existing low-carbon jobs and £77 billion ($100 billion) in revenues in 2015. And with the U.K. pondering its international trade prospects post-Brexit, Aldersgate Group cites a $23 trillion global opportunity partnering with emerging economies like China, India and Mexico on low-carbon technologies. “We therefore call on the new government to put in place ambitious and long-term policies to tackle climate change,” the letter says, “and improve the state of the environment at the heart of its industrial strategy and vision for the U.K.”
Onward! Please send any news and comments to TheBrief@impactalpha.com: