The Brief | November 22, 2022

The Brief: Bankrupt billionaires, home healthcare, Kenya’s electric buses, geothermal heat pumps, boosting renter wealth, public solution for worker rights

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Greetings, Agents of Impact!

Featured: Institutional Impact

Beware of paper billionaires bearing gifts, and other lessons of the FTX implosion. Before he lost it all, making crypto ESG-friendly was somewhere in the plans of Samuel Bankman-Fried, the founder of the now-bankrupt crypto exchange FTX. Supermodel Gisele Bündchen, an “ESG ambassador” for FTX, was central to the plan (her ex-husband Tom Brady, the NFL quarterback, is listed in FTX bankruptcy filings as being out $5 million in equity in the crypto exchange). In her latest Institutional Impact column, ImpactAlpha contributing editor Imogen Rose-Smith asks, “Will ESG be among those forced to take the fall?” That would be rich, as FTX “seems to have had all the governance of a monkey fighting its way out of a paper bag,” as Rose-Smith says. But Bankman-Fried seems to still want to be a wrecking ball, telling Vox’s Kelsey Piper that “ESG has been perverted beyond recognition,” and that his talk of ethics was “mostly a front.” You’ve got to love the steaming hypocrisy of SBF, Rose-Smith writes, “as if that kind of cynical brand marketing isn’t exactly the kind of behavior undermining ESG.”

Conflating FTX and ESG is especially galling for impact investors, she writes, “in that institutional investors are willing to go all in with a company like FTX at the same time so many of them express so much hesitancy about making investments in things that actually are trying to do well while doing good by people and the planet.” Top-tier VC firms like Sequoia, NEA and IVP, or institutional investors like Temasek or Ontario Teachers Pension Plan, who piled into FTX, may have limited credibility in rejecting impact investments as risky or unproven. “People dived into crypto, despite some obvious red flags, because they thought it would make them rich,” Rose-Smith says. The temptation was not limited to investors. Bankman-Fried, a champion of “effective altruism,” showered capital on charities (and media organizations). There are huge incentives to allow billionaire philanthropists “to call the shots and gain prominence as long as the money is flowing,” says Urban Institute’s Benjamin Soskis. Rose-Smith is rooting for Bündchen and Brady to play themselves in the movie version of the still-unfolding FTX drama. “But it’s going to take more than actors, models and sports stars to credibly serve as ambassadors for ESG,” she says, and to call for more environmental stewardship, social impact, and a whole lot of accountable governance. “It’s going to take all of us.”

Dealflow: Investing in Health

DispatchHealth rakes in $330 million to reduce unnecessary emergency room visits. DispatchHealth launched in 2013 to reinvent doctors’ house calls in order to cut back on unnecessary emergency room visits and costs, particularly for low-income people and older patients. Roughly one-third of hospitalized patients over the age of 70, and more than half over the age of 85, leave the hospital more debilitated than when they arrived, according to the Denver-based company. DispatchHealth delivers rapid urgent care for non-life threatening illnesses and injuries. DispatchHealth says its services are available to more than three out of every four Medicare Advantage patients in all 50 U.S. states.

  • Home-care economy. The company is aiming to build a last-mile healthcare platform that includes “everything from the logistics, to the clinical support, to the coordination with others in the ecosystem,” said founder Mark Prather. Existing investors including Humana and Oak HC/FT joined new investors Adams Street Partners, Blue Shield California and Pegasus Tech Ventures in the equity portion of DispatchHealth’s round. Silicon Valley Bank and K2 HealthVentures led the debt portion.
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Kenyan electric bus maker BasiGo scores $6.6 million to electrify mass transit. Kenya has emerged as Africa’s early leader in e-mobility, primarily for two- and three-wheel vehicles. Nairobi-based BasiGo is making the push for electric buses. BasiGo works with Kenya’s public transit bus owners and operators, which own more than 100,000 buses and minibusses, to electrify their fleets. The company partners with banks to finance the purchase of an electric bus for a similar upfront cost to a diesel bus. Owners and operators pay a subscription fee to lease batteries, charge at BasiGo’s charging stations, and receive maintenance and other services. BasiGo aims to reduce the high upfront costs of transitioning to electric busses, which the company says hinders EV adoption in emerging markets.

  • Commercialization. “Over 90% of Kenya’s electricity already comes from renewables [and] yet Kenya’s transport sector relies entirely on imported petroleum fuels,” said BasiGo’s Jit Bhattacharya. “By electrifying Kenya’s public transport, we can make an immediate dent in climate emissions, clean up the air in our cities, and give bus owners relief from the rising cost of diesel.” Backers in BasiGo’s equity round include Mobility54, Novastar Ventures and My Climate Journey.
  • Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • South Korean venture fund Sopoong raised 10.3 billion won ($8 million) to back tech founders in South Korea and Southeast Asia solving environmental challenges.
  • Colombia-based fintech venture Zulu snagged $5 million in seed funding to offer a consumer digital wallet and no-cost cross-border payments.
  • Dandelion Energy raised $70 million to install geothermal heat pumps in New York homes.
  • Carbon Engineering secured nearly $6.8 million in debt and equity capital from Air Canada for its direct air capture technology.

Impact Voices: S in ESG

How housing investments can create wealth for investors – and tenants. Wall Street investors have committed billions of investment dollars to the housing market, often in a way that extracts wealth from renters. A new housing fund from Enterprise Community Partners aims to create wealth-building opportunities for residents of affordable housing properties and put a dent in lingering racial wealth gaps. “Investors have an opportunity to use housing as both an investment vehicle and a way to help solve one of the most pressing issues facing families across the country,” write Enterprise’s Lori Chatman and Chris Herrmann in a guest post. “As investment managers, it is our job to make that opportunity clear.”  

  • How it works. The Renter Wealth Creation Fund, which has raised $47 million of its $250 million target, will give longtime residents of properties in the fund the opportunity to receive a payout – 80% of the profit – when the property is refinanced or sold. Investors receive a targeted financial return of 4%. To incentivize timely payments, residents will also get a monthly cash reward when they pay their rent on time. A separate equitable housing fund, the Dearfield Fund for Black Wealth, last week secured $7.5 million for a shared-equity fund to help Black first-time homeowners make down payments.
  • Keep reading, “How housing investments can create wealth for investors – and tenants,” by Enterprise’s Lori Chatman and Chris Herrmann. 

Walmart workers are ‘still broke’: The limits of socially conscious capitalism (Q&A). In the early 2000s, Rick Wartzman’s team at the Los Angeles Times produced a Pulitzer Prize-winning series that solidified a widespread perception of Walmart as an exploitative force in the global economy. In 2015, Walmart – the largest U.S. private employer – introduced new labor policies and raised worker pay. In his new book, Still Broke: Walmart’s Remarkable Transformation and the Limits of Socially Conscious Capitalism, Wartzman concludes that good intentions, even accompanied by substantial actions, are not enough to ensure that hourly workers earn a living wage.

  • Public solution. “In the eyes of many, Walmart has really embraced stakeholder capitalism,” says Wartzman in a Q&A with Capital & Main, shared with ImpactAlpha. Still, the average Walmart worker is making less than $29,000 a year. “Corporate America will never go far enough or fast enough on its own,” he says. “This needs to be a public solution. We need a government-mandated living wage of $20 an hour.”
  • Worker consensus. Support for workers unites Americans across political affiliation, race, gender, age and income group. The public wants companies to prioritize workers as the most important business stakeholder and consider “paying a fair, living wage” as the most important business issue today, according to Just Capital’s 2022 issues report. A report earlier this year from GQR for Omidyar Network found a two-to-one majority of registered voters want companies to measure and publish their impacts on workers, as well as on communities and the environment.
  • Keep reading, “Walmart workers are ‘still broke’: The limits of socially conscious capitalism (Q&A),” on ImpactAlpha.

Agents of Impact: Follow the Talent

The International Finance Corp. is hiring a director of development impact measurement in Washington, D.C… Also in D.C., the Tony Blair Institute for Global Change seeks a director of global philanthropy partners… LISC is looking for a senior director for diversity, equity, inclusion and justice in New York… Also in New York, Bloomberg Philanthropies is looking for an environment program associate… TechBridge is accepting applications from African startups “solving pressing problems” for its latest accelerator program.

Thank you for your impact!

– Nov. 22, 2022