Greetings Agents of Impact!
In today’s Brief:
- Visions for community ownership in California and beyond
- Revenue-based financing in Bolivia
- Impact exit in India
- The model for climate tech
Featured: Ownership Economy
Community Vision’s ownership strategy for combating displacement of small businesses and nonprofits in California. How can communities combat displacement and gentrification? By putting control and ownership of land and real estate in the hands of locals. Community Vision’s strategy for California’s low-income and communities of color goes beyond home ownership. The community lender is helping small businesses, nonprofits and others providing vital community services become owners of the buildings they operate in. “We talk a lot about gentrification and displacement of renters, but it’s true for small businesses and nonprofit tenants as well,” Community Vision’s Nate Schaffran tells ImpactAlpha. This year’s impact report from the $130 million community development financial institution details its financing of community ownership for positive social outcomes in housing, healthcare and education.
- Community-based. Community Vision has provided nearly $32 million in loans across 34 deals this year, mostly to minority-led community organizations developing properties for their services. Projects in the CDFI’s loan portfolio include the rehabilitation of a 3,000-square-foot youth development center in San Francisco’s SoMa neighborhood, which is home to a Filipino community that was displaced from other parts of the city due to discrimination in residential lending and development, Schaffran said. In the northern California city of Yreka, Community Vision is financing the redevelopment of an old library into an innovation and incubation center for local small businesses. The CDFI says it has created or preserved more than 200 affordable housing units and nearly 326,000 square feet of social purpose real estate this year.
- Pre-development. Community Vision is looking to deploy between $40 million and $50 million next year, with a focus on pre-development financing for community housing and real estate developers in its California Community-Owned Real Estate program. The CalCORE program supports community development corporations and community land trusts like South Tower Community Land Trust, a Latino-led nonprofit looking to develop affordable housing in Fresno’s South Tower neighborhood. Also in Fresno, Southwest Fresno Development Corp. is looking to revive a once thriving and majority-Black corridor. The East Palo Alto Community Alliance and Neighborhood Development Corp. is seeking to acquire and rehabilitate permanent affordable housing for low- to moderate-income families.
- Keep reading, “Community Vision’s ownership strategy for combating displacement of small businesses and nonprofits in California,” by Roodgally Senatus on ImpactAlpha.
How community ownership benefits investors and communities. Community ownership models “can open up more equitable economic opportunities in communities experiencing long-term disinvestment,” write Aisha Benson of Nonprofit Finance Fund and Christina Hollenback of Justice Capital in a guest post on ImpactAlpha. From Indigenous-owned clean energy to community-owned real estate, local ownership models around the US are demonstrating how profits can be recirculated in communities. “By deploying the right capital at the right stage of development to community-owned efforts,” they write, “impact investors and philanthropic funders can support value-creating, frontline, community-tested solutions.” Communities can reap a share of the profits in the form of “reinvestment in key services, or direct payments or credits to community members.”
- Restorative infrastructure. In New York state, PUSH Buffalo has helped put 25% of the real estate in its neighborhood under community ownership. That’s enabling better standards of living, below-market-rate rents and clean energy for residents, the authors say. The Standing Rock Sioux Tribe’s SAGE Development Authority is building one of the first Indigenous-owned, commercial-scale wind farms. The project will generate clean energy and millions in revenue over its 25-year lifecycle. Profits will be reinvested in other community-owned infrastructure, including regenerative agriculture and household energy efficiency.
- Keep reading, “How community ownership benefits investors and communities,” by Aisha Benson and Christina Hollenback on ImpactAlpha.
Dealflow: Financial Inclusion
Impaqto Capital provides revenue-based financing for tuGerente in Bolivia. Santa Cruz-based tuGerente provides digital inventory and financial management support for Bolivia’s informal and small businesses to help them streamline operations, boost capacity and secure business loans. The startup works with 1,000 small businesses and plans to expand to Peru and Mexico. Ecuador-based Impactqo Capital provided the company with $150,000 in revenue-based financing to support its growth. “Already positioned as a leader in Bolivia, we look forward to seeing tuGerente expand regionally and benefit thousands more small business owners around the region,” Impaqto’s Michelle Arévalo-Carpenter said in a statement. TuGerente will make quarterly payments on the loan for up to five years, based on its income. A portion of the financing will be used to strengthen tuGerente’s impact management practices.
- Financial inclusion. Impaqto chose to back tuGerente after being connected to the company by the Gender Scaling Financing Facility, which matches high-impact companies with potential investors. The facility, funded by the Swiss Agency for Development and Cooperation, provided a grant to study tuGerente’s impact on underserved entrepreneurs. It found that more than 40% of the company’s customers are women; more than a quarter come from low-income backgrounds. About 22% of customers have secured bank financing for their businesses since adopting tuGerente’s software. The study provided the impact data Impaqto needed to go forward with the investment. The Swiss agency has helped cultivate impact proof points and financing in Latin America, backing Roots of Impact’s “social impact incentives” in Mexico, Ecuador, Colombia and Central America (see, “How incentives can successfully steer capital toward impact“).
- Check it out.
Canadian pension fund co-leads $180 million investment for supply chain financing in India. Many of India’s nearly 63 million small to medium-sized businesses lack access to credit tailored to their needs. Mumbai-based Mintifi offers flexible supply chain financing for businesses in the country’s smaller cities and towns. Its products include revolving credit lines, collateral-free loans and invoice-based financing. It also facilitates payments between small businesses and larger brands like Parle Products, Honda and Tata. Mintifi’s $180 million Series E round was co-led by Netherlands-based Prosus, which invested $80 million for a more than 10% stake. Teachers’ Ventures Growth, the venture and private equity arm of the Ontario Teachers’ Pension Plan, also led the round.
- Impact exit. The latest round of capital provided an exit for early investors such as Lok Capital, Mintifi’s earliest backer. The Delhi-based impact investor saw an 11x return on its capital, according to Mintifi. The round also provided liquidity for employees via the company’s employee stock ownership plan. International Finance Corp., a repeat investor who participated in Mintifi’s $110 million Series D last year, also sold some of its shares.
Dealflow overflow. Investment news crossing our desks:
- Pittsburgh-based impact funding marketplace Honeycomb Credit acquired Raise Green, a crowdfunding platform for clean energy and placed-based impact projects and businesses. (Crowdfund Insider)
- JFFVentures invested in Besolo, a startup that helps self-employed workers in the US with accounting, tax filings, and healthcare and retirement plans. (JFF Ventures)
- Growtheum Capital Partners made a $121 million investment in Philippines-based Mets Logistics to expand its network of food cold storage facilities around the country. (The Edge Malaysia)
- Mission Driven Bank Fund invested in FNBC Bancorp, a community development financial institution that works in underserved communities in Arkansas and Missouri, to expand FNBC’s first time mortgage program and small loan program. (Mission Driven Bank Fund)
Impact Voices: Climate Tech
The New York model for how cities can build robust climate tech innovation ecosystems. “New York’s transformation into a climate tech hub can serve as a blueprint for establishing climate innovation centers in other cities worldwide, writes Todd Khozein of SecondMuse. His organization worked with the New York City Economic Development Corp. to provide entrepreneurs with mentorship, workforce development, funding and technical expertise. Last year, climate startups in New York City attracted $664 million in venture or growth funding, creating more than 133,000 jobs. Newlab’s New Climate Futures event at Climate Week NYC this fall featured dozens of entrepreneurs with ready-to-deploy technologies. “Those are real and investable solutions amid a $100 trillion climate transition,” Khozhein writes in a guest post on ImpactAlpha.
- Hardware is hard. Climate tech startups with a hardware focus must navigate complex manufacturing processes, addressing questions of when to make, when to buy, and how to find and collaborate with key suppliers. Working with NextCorps, Second Muse developed Scale for ClimateTech, an acceleration program that provides immersive training on manufacturing for growth-stage climate companies. Looking to scale their modular solar canopy, for example, the startup Urban Energy, received advice from technical experts and changed their product from steel to aluminum for lighter weight and easier installation.
- Keep reading, “The New York model for how cities can build robust climate tech innovation ecosystems,” by SecondMuse’s Todd Khozein on ImpactAlpha.
Agents of Impact: Follow the Talent
Incofin adds managing partner Serkan Alhan to its management board… Impact Finance Belgium seeks a project management intern in Brussels… The Coalition for Green Capital is looking for a manager for financial planning and analysis in Washington, DC… Also in DC, the Council on Foreign Relations is looking for a fellow or senior fellow for climate change policy… The National Wildlife Federation is hiring a climate education program manager in Brooklyn, NY.
The Tipping Point Fund on Impact Investing has awarded its latest batch of grants to Impact Capital Managers, Lafayette Square Institute, Responsible Asset Allocator Initiative and Sustainable Investing Research Initiative… Ownership Capital Lab and Transform Finance are co-hosting, “Ownership Lens Investing: the employee ownership opportunity,” tomorrow, Dec. 12 (see, “Meet 22 funds raising capital to finance high-impact transitions to employee ownership”)... US SIF will host a webinar on the launch of its “2024 US Sustainable Investing Trends” report, Wednesday, Dec. 18.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– Dec. 11, 2024
