The Brief: Catalyzing new markets, home healthcare economy, low-cost solar installs, creators of color

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Featured: Frontiers in Social Innovation

Catalyzing new markets with early-stage impact investments. Economists have long understood that individual firms come and go, but the markets they help spawn continue to grow and evolve. Impact investors from the Gates and MacArthur foundations to Omidyar Network have a long history of investing to “build markets” in sectors and geographies that commercial capital has been hesitant to enter. Today’s market-building catalytic investors include Breakthrough Energy Ventures and Generation Capital’s Just Climate fund. “By providing early-stage capital, the impact investor enables a promising firm to demonstrate the financial potential that attracts follow-on capital from commercial investors,” explains Matt Bannick, the former managing partner of Omidyar Network. “As the firm scales, it attracts additional innovative competitors, accelerating a flywheel of innovation and market creation.” Bannick’s guest post is the latest in ImpactAlpha’s series, “Frontiers in Social Innovation,” with the Center for Social Innovation at Stanford’s Graduate School of Business.

• Proof points. Perhaps the best example of an early-stage catalytic investment is MPesa, which received initial funding in the form of a grant from U.K. development agency DfID. The mobile money platform went on to spawn an entirely new global sector of mobile payments. Omidyar Network’s portfolio alone contains at least three examples, says Bannick, including d.light, which sparked new markets for home solar systems; Doubtnut, which helped democratize education in India; and Dr. Consulta, which demonstrated the market for affordable healthcare in Brazil.
  
• Challenges remain. Chief among obstacles to overcome: an excessive focus on commercial rates of return, insufficient impact measurement, and a lack of clarity about whether specific investments drive impact above and beyond what would have occurred without them (a concept referred to as “additionality”). “These market shortcomings not only lead to systemic under-investment in market creating ventures,” says Bannick, “they also undermine the credibility and health of the impact investing movement.”
  
• Keep reading, “Catalyzing new markets with early-stage impact investments,” by Matt Bannick on ImpactAlpha. Take a spin through early posts in ImpactAlpha’s series, “Frontiers in Social Innovation.”

Dealflow: Investing in Health

Cera Care rakes in $320 million to deliver home health services to the elderly. The home-health industry could reach $383 billion by 2030, driven by aging populations. London-based health tech startup Cera Care provides prescriptions, at-home and telehealth consultations, and other health services. Cera currently serves 15,000 elderly and other vulnerable patients in the U.K. and Germany; its platform provides more than one million at-home appointments per week for 2,000 businesses. Cera claims its alternative is 10x cheaper than hospital services and can cut hospitalization rates by more than half.

• Investing in health. Kairos led the investment round’s equity portion, alongside the Vanderbilt University Endowment, Schroders Capital, Oltre Impact and others. Cera declined to disclose its debt investor. “Aging populations, post-pandemic recovery and major staff shortages have created a series of issues facing healthcare providers and governments,” said Schroders’ Tim Creed. Cera’s home healthcare can help build a bigger carer workforce, he says, and “help our elderly communities to receive quality, genuine care.”
  
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Project Solar raises $23 million to provide low-cost solar installations to homeowners. Nearly half of American homeowners want to install solar panels in their homes, but high upfront costs are prohibitive. Utah-based online solar startup Project Solar supplies solar panels through a network of installers in 20 U.S. Its app helps homeowners manage their systems. The company says the model cuts the price of solar installation by half. “Nationally, our customers see an average return on investment of 18% in the first year,” said Project Solar’s Trevor Hiltbrand.

• Clean energy. Project Solar will use the investment to expand its business in the South and Midwest. “With rising energy costs and more awareness of our climate impact, it has never been better for the consumer to consider solar as a complete energy solution for their home,” said Derek Urben of Left Lane Capital, which led the Series A round.
  
• Check it out. 

Dealflow overflow. Other investment news crossing our desks:

• London-based venture fund Cornerstone VC secured €20 million ($24.1 million) to invest in up to 40 underrepresented founders in the U.K.
  
• Bacon, an on-demand app for gig workers, clinched $8 million in Series A funding.
  
• Beacon Power Services snagged $2.7 million to provide data and grid management services to electric utilities in Africa.
  
• Black women-led Clutch scored $1.2 million in a round led by Precursor Ventures to build a digital marketplace that focuses on content creators of color.

Agents of Impact: Follow the Talent

David Mathewson, ex- of Small Enterprise Assistance Funds, joins Quona Capital as partner and COO… Mekaelia Davis, ex- of Surdna Foundation, will join Ballmer Group as director of Black Family Economic Mobility… Benjamin Downing, consultant and former Massachusetts governor candidate, joins The Engine as vice president of public affairs… Third Sphere’s Stonly Baptiste joins Impact Capital Managers’ board of directors… Kerry Constable, ex-of Google, joins Standard Chartered to lead its net-zero and sustainability strategy. 

Summa Equity’s Tommi Unkuri, Gustavo Salem and Nick Roelofs will lead U.S. operations in a new office in Palo Alto, along with investment director Anna Ryrberg (for context, see, “Summa Equity closes third SDG impact fund at $2.6 billion”)… The Environmental Defense Fund seeks a senior director of sustainable finance for its natural climate solutions team… The Yale Center for Environmental Justice is looking for an executive director… US SIF is offering a virtual training on the fundamentals of sustainable and impact investment on Wednesday, Sept. 14.

Thank you for your impact!

– Aug. 8, 2022