The Brief | June 8, 2020

The Brief: Call No. 18: Managing for impact, diverse fund managers, Softbank and a16z back Black founders, smart sewage, Australian impact investing

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Greetings, Agents of Impact!

The Call: Monitoring and managing for impact in the time of COVID. The challenges of the pandemic present opportunities for impact investors able to help firms maintain operations and jobs and contribute to a sustainable and inclusive recovery. The International Finance Corp.’s new report, “Growing Impact,” assesses the potential for positive impact in emerging markets. On ImpactAlpha’s Agents of Impact Call No. 18, David Bank and the IFC’s Neil Gregory will talk with Symbiotic’s Safeya Zeitoun, Finance in Motion’s Lloyd Stevens, DEG’s Julian Frede, Blue like an Orange’s Bertrand Badré and other Agents of Impact about managing for impact through the crisis. Join The Call, Thursday, June 11 at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Impact Voices

Diverse fund managers are ready to shift capital at scale. Family offices, endowments, foundations and their investment consultants are letting structural barriers and implicit biases get in the way of opportunities for innovation, impact, and yes, alpha, by overlooking funds run by women and people of color. “I’m surrounded by Ivy League-educated asset allocators on the one hand, and on the other, diverse fund managers investing in world-changing innovations,” VC Include’s Bahiyah Robinson writes in a guest post on ImpactAlpha. “Demand is not meeting supply.” Among the excuses she hears from potential limited partners: The checks are too small. The managers are not institutional grade. There is no anchor investor. “They are forgetting that it’s a bigger risk not to invest,” she says.

Fund managers on Robinson’s VC Include platform include Kim Folsom of Founders First Capital, which closed a $100 million venture debt fund to scale women of color-founded companies, and Carmen Palafox and Noramay Cadena of MiLA Capital, who are investing in “Tech You Can Touch,” along with a 30,000-square-foot fabrication facility and co-working space in Los Angeles. The convergence of the COVID-19 crisis and a growing civil rights movement, she says, makes it imperative to invest in diverse managers with pipelines of founders needing capital to build their companies. “This is a Kairos moment, an opportunity to create a new reality that is kinder, more loving and inclusive,” Robinson writes. “That opportunity starts with changing our collective relationship to money and access to capital.”

Keep reading, “Diverse fund managers are ready to shift capital at scale,” by Bahiyah Robinson on ImpactAlpha.

  • Andreesen Horowitz launches donor-advised fund for diverse entrepreneurs. The Talent x Opportunity, or TxO, fund will combine seed capital with a 10-month training program it describes as an “accelerator for the unseen.” The donor-advised fund was seeded with $2.2 million from the firm’s partners. A16z’s co-founder, Ben Horowitz, and his wife, Felicia, will match up to $5 million in further donations. TxO is managed by a16z’s Nait Jones, who has written about his own run-ins with police. The firm says the fund will support “entrepreneurs who did not have access to the fast track in life but who have great potential” (see, Investing in racial justice by shifting narratives, power and capital).
  • SoftBank creates $100 million fund for entrepreneurs of color. The Opportunity Growth Fund will focus on Black and Hispanic founders. The fund came together within 24 hours, SoftBank’s Marcelo Claure told CNBC. “We spoke to Masa Son about the privilege that we see at SoftBank, being one of the largest tech investors in the world, and we needed to do something big about it.” SoftBank will forego management fees and reinvest half the gains into diverse entrepreneurs. Stacy Brown-Philpot of TaskRabbit and Paul Judge of Atlanta-based TechSquare Labs will sit on the investment committee.
  • Go deeper. The Black Founder list from People of Color in Tech includes nearly 250 Black founders that have received venture capital backing… Candide Group’s Jasmine Rashid compiled “The financial activist playbook for supporting Black lives.”
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Dealflow: Follow the Money

‘Smart sewage’ startup raises $4.2 million to track COVID-19. BioBot Analytics uses sensors in sewer systems to analyze cities’ waste. The women-led company has been working with cities to identify the scale of COVID-19 infections to inform re-opening plans. The funding round was led by MIT-affiliated venture firm The Engine and included AmFam Institute Impact Fund, Y Combinator and DCVCMore.

Credit Suisse readies new environmental fund. The Credit Suisse (Lux) Environmental Impact Equity, to launch on June 25, will invest in publicly-traded small- and mid-cap companies tackling challenges such as climate change, pollution and natural resource depletion.

Electric truck maker Nikola goes public via ‘special purpose acquisition company.’ The Phoenix-based company plans to debut its electric semi-truck in 2021, with hydrogen-powered models to follow in 2023. Nikola, which is backed by investors including ValueAct, Bosch and CNH Industrial, will trade on Nasdaq under the symbol NKLA.

Signals: Ahead of the Curve

Environmental concerns drive growth in Australia’s impact allocations. Back in 2016, Impact Investing Australia found just $1.2 billion impact-aligned investments across the country. Since that inaugural survey of the field, Australian investors have increased their allocations more than 16-fold to $20 billion. The sector is expected to grow to as much as $100 billion by 2025, according to “Benchmarking Impact” from the Responsible Investment Association Australasia, which builds from the 2016 report. Australia’s nearly $3 trillion in pension assets are the third-largest pool in the world. The takeaways:

  • Going green. Roughly 87% of Australia’s $20 billion in impact investments is environmentally-focused. The country is grappling with the impacts of climate change, from the death of coral reefs to raging wildfires (see, Dangerous climate change is here now). “Our economy is dominated by resources—fossil fuels and natural gas—so there’s a sense of wanting to balance that ledger,” Jonathan Sheridan of fixed-income firm FIIG told ImpactAlpha amid Australia’s devastating summer wildfire season.
  • Social focus. Social impact investing in Australia is a “fast evolving but still relatively immature market,” states RIAA’s report. The $2.5 billion in socially focused investments represents a 10-fold increase since RIAA’s last benchmark in 2018. Most of the activity is in affordable housing, indigenous communities, and social impact bonds addressing youth unemploymenthomelessness and other issues.
  • Innovative finance. Pension fund Christian Super last year took an equity stake in Swiss impact investing firm responsAbility to expand its impact portfolio. FIIG helped VisionFund International raise A$20 million ($13.8 million) from Australian investors in a “kangaroo bond” that will help the organization expand global microfinance services. Impact Investment Group structured an A$600,000 impact-linked loan for social impact employment startup Xceptional and launched a place-based impact fund to invest in social enterprises, community solar, social impact bonds and sustainable agriculture in Western Australia.
  • Jump in.

Agents of Impact: Follow the Talent

  • Credit union veteran Maurice Smith becomes the new chairman of the board for the National Cooperative Bank… Town Hall Ventures is looking for a vice president in New York… Omidyar Network seeks a senior vice president/head of programs in Redwood City, Calif. or Washington, D.C… American Century Investments is recruiting an ESG research analyst in New York… Kiva is hiring an impact investment intern in Portland.

    Online this week:

    • Monday, June 8 to Friday, June 11. Asian Venture Philanthropy Network’s Virtual Conference 2020 will feature Monetary Authority of Singapore’s Jacqueline Loh, Johnson & Johnson’s Ong Ai Hua, Standard Chartered Bank’s José Viñals and others.
    • Tuesday, June 9. Moving the Market Initiative and The Investment Integration Project are hosting “Launching Understanding Systemic Social Risk: A Roadmap for Financial Industry Action”… CERES continues its online conference program with “Investors Aligning with the Paris Agreement – Setting Investment Portfolios on a Path Toward Zero Emissions.”
    • Tuesday, June 9 to Thursday, June 11. Spectrum Virtual hosts “Creating an inclusive impact community” featuring Color Farm Media’s Erika Alexander, Verizon’s Michelle Arrington, Impact America Fund’s Kesha Cash, Color Of Change’s Rashad Robinson and others.
    • Thursday, June 11. i(x) investments is launching Family Impact, a series for family offices. Its first discussion is “Can We Build Back Better? The Role of Private Capital in the Economic Recovery”… Impact Entrepreneurs is hosting “Understanding the Impact of the Creative Economy” with Upstart Co-Lab’s Laura Callanan, Fundación Compromiso’s Carolina Biquard, HEVA Fund’s George Gachara and Conscious Endeavors’ Jack Meyercord… and ImpactAlpha’s Agents of Impact Call No. 18 takes up “Monitoring and managing for impact in the time of COVID” (see above).
    • Friday, June 12. Faith & Finance: “A Blueprint for Local Investing,” with Ross Baird, David Robinson Sr. and David Robinson Jr.

Thank you for reading. 

–June 8, 2020