The Brief: California’s public banks, Croatia’s impact startups, small-business loans in Colombia, energy access in Asia, ImpactAssets’ emerging managers



Greetings, Agents of Impact!

Featured: ImpactAlpha Original

City-owned banks in California could leverage public funds for local impact. States are the laboratories for democracy; cities are where finance goes to innovate. San Francisco and Los Angeles are moving forward with plans to create city-owned banks after California Gov. Gavin Newsom signed a bill to allow their creation. The publicly owned banks could hold the cities’ deposits and be their bankers, redeploying their idle capital for local projects. Like commercial banks, public banks could borrow at low rates from the Federal Reserve and make low-cost loans for renewable energy, affordable housing and other public needs. They could also save taxpayers money on Wall Street fees. By one estimate, financing costs related to interest and fees can double the cost of municipal infrastructure projects.

The legislation was inspired by the 100-year-old Bank of North Dakota, currently the only public bank in the nation, which has one of the highest returns on equity among U.S. banks and returns up to $50 million a year to the state’s coffers. State and local governments in the U.S. have more than $500 billion on deposit in commercial banks. A dozen other jurisdictions, including Washington, New Mexico, Michigan, New York City, Portland, Philadelphia, Chicago and others, are mulling public banking legislation. California’s Public Banking Act will let up to 10 cities create public banks over seven years. “I see the public bank becoming a new locus of community development activity,” said attorney Sushil Jacob, who helped draft the bill. “As a financial center, [a public bank] will use its lending power to promote change in local financial institutions. It’s a value multiplier.”

Keep reading, “City-owned banks in California could leverage public funds for local impact,” by Amy Cortese on ImpactAlpha.

Dealflow: Follow the Money

Feelsgood Fund brings capital to impact startups in Croatia. Startups in the former Yugoslavia don’t see a lot of impact investment; most of the impact capital in the region comes from organizations like SEAF or the European Bank for Reconstruction and Development that fund small businesses, basic services, and climate change initiatives. The Feelsgood Fund in Croatia (Slovenian startups will also be considered) will invest €30 million in startups addressing financial inclusion, agriculture and farming, the circular economy, education and healthcare. Feelsgood’s Renata Brkić said the fund, only the third venture capital firm to launch in Croatia and the first with an entirely Croatian team, would provide “long-awaited” capital for impact startups. The European Investment Fund contributed €15 million. Check it out.

Oikocredit reinvests in Colombian small business lender Sempli. Colombia’s small businesses have limited access to affordable financial products. Sempli, a Medellín-based online lender, approves and disburses working capital loans of $10,000 to $100,000 for six to 36 months within 72 hours. Dutch impact investor Oikocredit invested in Sempli’s $8 million Series A equity round, alongside Belgian impact investor Incofin. Oikocredit also invested in the certified B Corp.’s $5 million seed round last year. Oikocredit’s Sébastien Rigaud said his firm was reinvesting because of Sempli’s clear social impact objectives and commitment to “promoting responsible financial inclusion.” Sempli, which launched in 2017, has raised a total of $24 million in debt and equity. More.

Schneider Electric impact fund targets energy access in Asia. The energy multinational company says two earlier energy impact funds have reached 24 million people. The new fund will invest €20.9 million in energy startups in India, Bangladesh, Myanmar, Indonesia and the Philippines. It’s backed by the European development finance association EDFI, Norway’s Norfund and French asset manager Amundi.

Exelon Foundation to allocate $10 million for climate startups. The philanthropic arm of Exelon Corp. will offer grants to early startups developing technologies with commercial potential to boost energy efficiency, electric transportation, and infrastructure and community climate resilience. Exelon will match the funding with in-kind services.

Mon Ami raises $3.4 million to help lonely seniors. The digital platform connects isolated seniors and dementia patients with college students, who earn fees for scheduled visits. Freestyle Ventures and Cowboy Ventures led the funding.

Agents of Impact: Follow the Talent

Applications are open for the ImpactAssets 50, the nonprofit financial services firm’s annual list of impact fund managers. New this year: a category for emerging impact managers with less than three years experience or under $25 million in assets under management… Eric Rice, ex- of Wellington Management, joins BlackRock as head of active equities impact investing… Geneva-based Reyl Group forms Asteria Investment Managers to focus on social and environmental impact investing… Natixis and EDHECinfra partner to evaluate the impact of environmental, social and governance factors on infrastructure investing…

Chan Zuckerberg Initiative is hiring an investment analyst in Redwood City… Kiva is looking for an investment manager in Portland, San Francisco or Colombia… Omidyar Network India is recruiting an investment associate in Bangalore… 60 Decibels seeks short-term researchers based in Madagascar, Nepal, Liberia, Mexico, Malawi, Bangladesh, Tanzania, Myanmar, Cote d’Ivoire, Bolivia, Egypt and Ethiopia.

Thank you for reading. 

– Oct. 8, 2019

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