Greetings, Agents of Impact!
Featured: Financing Community Development
Black Vision Fund creates a pipeline of loan capital for Black-owned small businesses. Misperceptions of risk among many lenders make Black-owned small businesses twice as likely to get rejected for bank loans as white-owned small businesses. The $29 million Black Vision Fund raised by the Expanding Black Business Credit Network aims to shift the narrative. The six community development financial institutions, or CDFIs, participating in the fund “each have shown that you can lend money to Black people and you will get paid back,” Prosperity Now’s Gary Cunningham tells ImpactAlpha.
- Black entrepreneurship. Getting additional capital to Black-led businesses is critical to turning the pandemic-related surge in Black business starts into a long-term trend. “We’re seeing an uptick in demand across the spectrum, from small mom-and-pop businesses, to small service businesses, to larger companies that are looking to acquire real estate,” says Hope Credit Union’s Bill Bynum, who chairs the network (see “Agent of Impact, Bill Bynum”). “We want to make sure they’re adequately capitalized.”
- CDFI capacity. The loans will be underwritten by community lenders including Jackson, Miss.-based Hope, the National Community Investment Fund in Chicago, Minneapolis-based Metropolitan Economic Development Association, City First Broadway Bank in Washington, D.C. and Los Angeles, Community First Fund in Philadelphia, and Florida-based Black Business Investment Fund. LISC’s New Markets Support Company will manage the fund.
- Catalytic capital. The Black Vision Fund was catalyzed by a $10 million grant from Wells Fargo, which serves as first-loss capital and helped attract long-term and low-interest senior debt from Amalgamated Bank, the Packard Foundation, family office Ceniarth, the Jewish Community Federation, LISC and Opportunity Finance Network. “The Expanding Black Business Credit Network wanted to demonstrate that they, as a Black-led consortium, could pull together a fund to support themselves,” Ceniarth’s Greg Neichin tells ImpactAlpha.
- Keep reading, “Black Vision Fund creates a pipeline of loan capital for Black-owned small businesses,” by Roodgally Senatus on ImpactAlpha.com.
How ‘community recovery vehicles’ scaled community lending to ease pandemic pain. Many CDFIs are as underfunded as their borrowers. “Community recovery vehicles,” piloted in New York, California, the state of Washington and 15 states across the South, suggest a way to scale up small business lending (for context, see, “Innovative CDFIs scale up to help underserved communities move from relief to recovery”). Designed by Calvert Impact Capital, the Community Reinvestment Fund and local partners, the model blends capital from private, public and philanthropic investors to buy loans from CDFIs, freeing up their balance sheets for further lending. “The new financing structures and cross-sector alliances born from necessity have now set the bar for what this industry can accomplish,” says Calvert’s Beth Bafford.
- Scaling impact. The four vehicles supported a total of $210 million in loans to 3,500 businesses, according to a new analysis. More than 90% of the borrowers had less than $1 million in revenue and fewer than 10 employees – disqualifiers for typical bank loans. The average loan size was $60,000. Two-thirds of the businesses were owned by women and people of color. In New York, 68% of loan recipients did not have other access to credit. Borrowers reported improved finances and job retention – and reduced stress.
- Keep reading, “How ‘Community Recovery Vehicles’ scaled community lending to ease pandemic pain,” by Amy Cortese on ImpactAlpha.
- Dig in. Calvert Impact Capital, Community Reinvestment Fund and 60 Decibels will share results from New York’s Forward Loan Fund, Thursday, Mar. 31. Register here.
Dealflow: Business Digitalization
Sokowatch nabs $125 million for economic inclusion for Africa’s informal retailers. ImpactAlpha has been watching closely the move into micro and small business financing by enterprise tech providers in emerging markets. Among the earliest: Nairobi-based Sokowatch, which now supports 50,000 informal retailers with online inventory, logistics and sales management, as well as credit. The company’s Series B round, led by Tiger Global and Avenir Growth, is among the largest-ever investments focused on Africa’s informal sector. “Informal retailers capture the vast majority of consumer spend in Africa, and they are dramatically underserved by existing distribution and financial infrastructure,” said Avenir’s Andrew Sugrue. Existing investors Quona Capital, 4DX Ventures and JAM Fund re-upped in the round.
- Buying power. Sokowatch offers customers small lines of credit from its own balance sheet. Aggregating their buying power helps shopkeepers meet “unmet demand from the community to buy goods,” founder Daniel Yu told ImpactAlpha last year (see, “New channel of capital for small businesses worldwide: enterprise tech startups”).
- Informal opportunity. Sokowatch is rebranding itself as Wasoko, or “People of the Market” in Swahili, and expanding in Kenya, Rwanda, Tanzania, Uganda, Côte d’Ivoire and Senegal. In December, Nigeria-based enterprise tech provider TradeDepot raised $110 million in debt and equity. Kenya-based MarketForce raised $40 million last month.
- Check it out.
Nautilus Labs secures $34 million to decarbonize shipping. The shipping industry emits about a gigaton of greenhouse gasses annually. New York-based Nautilus uses sensor and weather data, as well as shipping routes and schedules, to reduce fuel use and emissions. “Economic efficiency and environmental efficiency are best solved in unison,” said Nautilus’ Matt Heider. Microsoft’s venture fund M12 and its Climate Innovation Fund led the company’s Series B round. Existing investors Systemiq Capital and Root Ventures also participated.
- Blue economy. Europe’s emissions trading scheme will expand to ocean commerce next year. Investors are mobilizing. Amsterdam-based Prow Capital’s €420 million ($463 million) Green Shipping Fund helps shipowners finance new, greener vessels and retrofit old ones. Paris-based Eurazeo launched its Sustainable Maritime Infrastructure fund last year to invest in “the ecological transition of the international maritime sector.” Shipping giant Maersk this month said it will buy 30,000 tons per year of bio-methanol from L.A.-based WasteFuel to power a dozen “green methanol” ships by 2024.
- Dive in.
Dealflow overflow. Other investment news crossing our desks:
- Powerhouse Ventures raises $70 million from Energy Impact Partners, Microsoft Climate Innovation Fund, Constellation Technology Ventures and others for decarbonization tech for energy, utilities, mobility and finance.
- Wagely secures $8.3 million to give low and middle-income workers in Indonesia and Bangladesh access to earned wages before their normal payday.
- Austin-based Loveseat snags $7 million to auction online furniture returns, most of which end up in landfills.
- Founders Fund and General Catalyst back Alinea Health to help Brazil’s workforce navigate health benefits programs.
Agents of Impact: Follow the Talent
More than 140 impact fund managers are featured in this year’s ImpactAssets 50 database, which now includes both emerging and emeritus managers… North Sky Capital promotes Andrew Harris to managing director… Lisa Schule, ex- of Global Environment Fund, joins Generate Capital as a managing director. Darryl Carbonaro is promoted to general counsel… Invest-NL seeks an impact investing intern in Amsterdam… SNV is recruiting a global technical advisor of gender equality and social inclusion in The Hague.
LOCUS Impact Investing is hiring a remote marketing and communications manager… New Island Capital Management has openings for a real estate associate and a vice president for real estate asset management… C40 Cities is hiring a city advisor on climate change mitigation in Pretoria, South Africa… BFA Global seeks a climate change economist in Nairobi… Also in Nairobi, Root Capital is hiring an impact evaluation manager.
Thank you for your impact.
– Mar. 17, 2022