The Brief | August 13, 2020

The Brief: Buying Black, endowments for racial justice, racial equity resources, $100 million oceans fund, how women invest, small business bonds

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Greetings, Agents of Impact! 

Hop on The Call. Today’s Agents of Impact Call No. 22 takes on systemic investing. Join Living Cities’ Demetric Duckett, Cambridge Associates’ Sarah Hoyt, Sinclair Capital’s Jon Lukomnik and The Investment Integration Project’s Bill Burckart, in conversation with David Bank and Monique Aiken, today at 10am PT / 1pm ET / 6pm London. Zoom right in.

  • Keep the conversation going. Share your thoughts on ImpactAlpha’s #Systems-change Slack channel. 

Featured: Impact Voices 

‘Buying Black’ shouldn’t be so hard. How investors can help. CapEQ’s Tynesia Boyea-Robinson, founder of Path to 15|55, is mounting a campaign to support Black-owned businesses (see, “The $55 billion plan: Accelerating Black-owned businesses to create wealth, jobs and growth). The challenges: inconvenient locations, slow order fulfillment, a lack of options. Scarce working capital, for example, makes it hard to have inventory on hand. “To truly support Black businesses, it’s important for all of us to step back, understand the systemic challenges that Black business owners face and work together to address them,” writes Boyea-Robinson, an Agent of Impact who served as chief impact officer at Living Cities. In a guest post, she suggests three ways to make it easier to buy Black. Here’s one: Boost character-based lending to Black entrepreneurs. Read Tynesia Boyea-Robinson’s post on ImpactAlpha

How Babcock Foundation is investing its endowment with a focus on racial justice. The $171 million Winston-Salem, N.C.-based foundation was an early example of foundations moving 100% of assets to impact. Now, the foundation says it feels compelled “to embark on a deeper examination of how we can better use all our tools, particularly our grantmaking and our endowment, to advance racial equity,” writes the foundation’s Susanna Hegner. The foundation diversified its investment committee and began investing in Black and Latinx leadership and companies with a record of hiring and promoting people of color. A recent investment in Impact America Fund is part of a $5 million commitment, managed by Candide Group, to impact fund managers of color. Other investments in managers of color include Illumen Capital and Profit IM ESG. Read Susanna Hegner’s post on ImpactAlpha

Challenging assumptions and building portfolios. The national reckoning with racial justice has generated a raft of reports and resources for investors. Recent contributions:

  • Inconvenient truths. Social-justice investing firm Robasciotti & Philipson examines the industry’s history of systemic racism and challenges long-held industry beliefs stifling change in its Race in Finance series. The first two installments are “Reckoning with our history” and “Do our investment defaults fund systemic racism?
  • Racial justice investing. In “Investing to Advance Racial Equity,” Cornerstone Capital looks across themes (income and wealth inequality, home ownership and affordable housing, access to capital and access to education) and asset classes (public equity, alternatives, fixed income and cash) to identify investable solutions to structural racism.
  • Practices and portfolios. Cambridge Associates details three actions investors can take to address racial inequities in “Racial Equity Investing”: 1) Make racial equity an investment priority and codify it in investment policies; 2) Allocate capital to racial equity investments; and 3) Put racial equity at the center of the investment selection process.
  • Roundup. Trinity Church Wall Street’s Bhakti Mirchandani pulls together insights and initiatives in Forbes
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Dealflow: Follow the Money

Racial equity dealflow. Echoing Green has created the Racial Equity Philanthropic Fund with a target of $50 million to launch and scale 500 social enterprises focused on racial equity in the U.S. and globally. Backers of the fund include the Miranda Family Fund, the Jerome L. Greene Foundation and Goldman Sachs.

S2G Ventures closes $100 million for sustainable oceans fund. The venture capital firm, which invests in sustainable agrifood technology, is expanding into ocean health and sustainable seafood. Oceans provide a critical food source for billions of people and are crucial link in tackling climate change. S2G’s Oceans and Seafood fund will back early- and growth-stage startups developing science and technology around alternative proteins, aquaculture and supply chain innovation, traceability and transparency, algae and seaweed, ecosystem services, and ocean health. It has recruited Kate Danaher, previously with RSF Social Finance, and Larsen Mettler, from Silver Bay Seafoods, as managing directors. 

  • Food system gap. S2G’s portfolio includes companies like Beyond Meat, sweetgreen, Apeel Sciences and Greenlight Biosciences. With only one seafood investment—FishPeople—S2G recognized that it was missing opportunities. “The ocean is part of the food system for many people on this planet, and it is also, like land based agriculture, in dire straits for a lot of reasons,” Danaher told ImpactAlpha. “The sector has been so basic and under-invested in, entrepreneurs really need help to build their businesses, not only with capital but also wraparound services and support.” 
  • Small ecosystem. The handful of oceans and seafood-focused investors includes Netherlands-based Aqua-Spark, a dedicated aquaculture fund, the accelerator Hatch, SOSV, Alimentos Ventures, Kleiner Perkins and Fund. Dive into ImpactAlpha’s full coverage of Financing Fish.
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How Women Invest closes first $5 million for new gender lens fund. The San Rafael, Calif.-based venture capital firm is aiming to raise $10 million for its first fund from up to 249 accredited investors. The mission, fund co-founder Erika Cramer told ImpactAlpha, is to bring more diverse women into venture capital and fund more diverse female founders. Of the fund’s 100 or so investors so far, 90% are women; more than half are women of color. The fund’s two-dozen or so advisors all are women.

  • Network effects. The fund is looking to back a dozen seed or series A rounds with investments of $300,000 on average, while reserving capital for follow-on investments. Portfolio companies can also tap into the network for mentorship and connections. 
  • Women rising. Cramer and cofounder Julie Castro Abrams want to grow the ranks of women investors. “More and more women are taking control of their own wealth,” says Cramer. To aid newbies, they offer investment training though a sister nonprofit, How Women Lead. The goal: train 1,000 women, whether investors in the fund or not. “We’re all about elevating the community,” says Cramer.
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Online investment platform SMBX raises $2.5 million to scale small business bonds. The San Francisco-based platform helps Main Street businesses offer bonds to individual investors in denominations as low as $10. The round was led by Better Ventures and included Impact America Fund and Unpopular Ventures. “Sound, scalable, and community-oriented financial products like SMBX are extremely important — especially for businesses run by people of color” whose success is critical for national economic recovery, Impact America’s Kesha Cash and Kaiton Williams said in a statement.

Agents of Impact: Follow the Talent

Renewable energy veteran Mark Gainsborough joins the board of directors at Husk Power Systems… Shift Capital is hiring a vice president of real estate operations in Philadelphia… How Women Invest is looking for an investment associate in California (see Dealflow)… Asian Development Bank seeks a senior investment specialist in Manila.

Thank you for reading.

–August 13, 2020