Greetings, Agents of Impact!
- Reminder: Tideline is hosting “Impact Investment at the Institutional Tipping Point,” Thursday, June. 10. RSVP.
Featured: Capitalism Reimagined
Omidyar Network’s Chris Jurgens on mobilizing ideas, policies and power for an economy that works for all (podcast). Entrepreneurship is up, stakeholders are in and the President of the United States is vowing to “change the paradigm.” “For the first time in a generation, workers are gaining the upper hand,” The New York Times proclaimed in its lead story on Sunday. Reimagining capitalism is suddenly at the top of the public, and many private, agendas. “We are capitalists. We believe in the power of markets and entrepreneurial innovation to solve big problems,” says Omidyar Network’s Chris Jurgens on a special ImpactAlpha podcast. “But we think the current manifestation of capitalism, particularly in this country, is fundamentally broken.”
The COVID disruption and the racial reckoning illuminated long-standing contradictions in today’s economic system. Pierre Omidyar, who made his fortune as the founder of eBay, and his wife, Pam, are the rare tech billionaires eager to look at the structural flaws of both technology and capitalism. Markets are shaped by power, politics and people, and they can be – and are being – reshaped by movements, policies and investments. In partnership with Omidyar Network, ImpactAlpha is digging into the ideas, rules and power dynamics of what’s next. “We think the game is really about flipping the script,” Jurgens said in the lively conversation. “What we need to do is design markets to serve the well-being of society and stop designing our society around serving the well-being of markets.”
Read on and listen to “Capitalism Reimagined: Omidyar Network’s Chris Jurgens on mobilizing ideas, policies and power for an economy that works for all,” by David Bank on ImpactAlpha.
- The beat and the Call. Follow our coverage of Capitalism Reimagined on our new landing page. And jump into the conversation on Agents of Impact Call No. 29, Tuesday, June 29 at 10am PT / 1pm ET (RSVP today).
Dealflow: Follow the Money
Abhi raises $2 million to help Pakistani workers access earned wages. Nearly 80% of Pakistan’s 217 million people don’t have a bank account; just 1% have access to formal credit. Karachi-based Abhi’s fintech platform helps workers access wages as they earn them, instead of waiting for bi-weekly or monthly paychecks. It’s among a growing crop of “salary advance” companies aiming to improve livelihoods by helping workers manage their finances without payday loans or other forms of extractive debt.
- Earned, not advanced. Workers enrolled with Abhi pay a flat fee or a small percentage of their wages for the service. “Salary ‘advance’ is misleading, since it’s access to the wages you’ve already earned,” explained Misbah Naqvi of Pakistani VC firm i2i Ventures, which backed Abhi (see, “In Pakistan, investing with a gender lens gives i2i Ventures an early-stage edge”). Companies like Hastee and Wagestream in the U.K., and PayMeNow in South Africa, offer similar services. “It’s a moral imperative as much as it’s a business imperative. Access to earned wages is a fundamental right,” Naqvi added. Abhi’s terms are Islamic-finance compliant, MENABytes reports.
- Global investors. The company’s seed round was led by the Swedish emerging-markets venture capital firm Vostok Emerging Finance. Pakistan’s Sarmayacar, U.S.-based Village Global and U.K.-based Zayn Capital also invested.
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Small business investor iungo capital inks 30th deal – and first exit. The Uganda-based fund has made two working capital investments totaling $700,000 in Kenya, backing Kwalito, an avocado and macadamia nut producer, and Cresta, a company that produces poles for rural electrification from sustainably-sourced eucalyptus. The deals bring iungo’s total portfolio to 30, including six investments in Kenya, 23 in Uganda and one in Rwanda. Iungo, which requires companies to improve their environmental, social and governance performance, is a rare source of mezzanine financing for small and medium-sized businesses in East Africa (see, “With ‘mezzanine capital,’ iungo seeks to fill a gap for East Africa’s small and growing family businesses”).
- Portfolio exit. Iungo’s first exit is from Western Uganda Cotton Co., which sources and processes cotton from smallholder farmers. The $500,000, 12-month investment helped the company expand production and increase its organic sourcing.
- ESG benchmarks. Iungo’s two new portfolio companies are required to meet benchmarks for employee wage increases and access to health insurance. The eucalyptus processor also has to ensure that seedlings are replanted at the same pace as tree harvesting.
- Read on.
KKR Global Impact backs EQuest Education’s low-cost schools in Vietnam. The impact arm of private equity giant KKR invested an undisclosed amount in Ho Chi Minh City-based EQuest, which provides low-cost private education to 110,000 Vietnamese students each year. The company will use the investment “to provide quality learning for Vietnam’s millions of students and contribute to the development of a skilled workforce,” said EQuest’s Nguyen Quoc Toan.
- Global impact. The portfolio of KKR’s $1.3 billion Global Impact fund includes India-based small business lender Five-Star Business Finance; GreenCollar, a platform for natural resource project development in Australia; and sustainable packaging company CMC Machinery and labor market analytics company Burning Glass, both in the U.S.
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Dealflow overflow. Other investment news crossing our desks:
- Finnfund invests $5 million in Ethiopian poultry company EthioChicken (see, “Finnfund finances Agflow Poultry to boost livelihoods of Ethiopian farmers”).
- Germany’s OroraTech scores €5.8 million ($7 million) to provide wildfire detection and monitoring for global government agencies, insurance companies and commercial forestry operators.
- Voltz, a Brazilian electric motorcycle startup, snags $17.9 million from Creditas (see, “Shift to electric rickshaws and motorcycles is drawing investors to emerging markets’ e-mobility opportunity”).
- Forward Financing secures a $250 million credit facility to provide revenue-based financing for underserved small businesses across the U.S.
- D.light secures $10 million from French development finance institution Proparco.
Signals: Ahead of the Curve
Tallying the financial risks of biodiversity loss. Mandatory climate reporting is coming, as companies and governments coalesce around the Task Force on Climate-related Financial Disclosures. Next up: nature-related financial disclosure. An initiative modeled on the six-year old TCFD aims to create a framework by 2023 to help organizations report and act on nature-related risks. The Task Force on Nature-related Financial Disclosures, or TNFD, is supported by major financial institutions and the G7 nations (see, “Biodiversity is the new climate change”). “Without urgent action, ongoing loss to biodiversity poses unprecedented risks for business, both now and in the future,” said Refinitiv’s David Craig, co-chair of the task force with Elizabeth Maruma Mrema of the U.N. Convention on Biological Diversity.
- Big picture. Animal and plant species are declining precipitously as their habitats are degraded. Alongside climate reporting, nature-based disclosure can give organizations a complete picture of their environmental risks, Craig said. More than half of the world’s economic output relies upon nature.
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Impaakt: The Hong Kong stock exchange is helping biotech companies raise billions. COVID-19 thrust healthcare and biotech players into the spotlight. The global biotech market size, valued at $449 billion in 2019, is expected to grow by more than 15% a year through 2027. The Hong Kong Exchanges and Clearing Ltd., or HKEX, has become the world’s second-largest biotech fundraising hub, ushering in 47 healthcare and biotech listings in 2020, according to the Swiss impact ratings firm Impaakt. Since 2018, the exchange has helped biotech companies raise $70.7 billion.
- Impact ratings. Impaakt sources impact analyses from a global network of contributors and selects the best analysis from more than 500 submissions each week. Earlier reports: “Despite climate pledges, Goldman Sachs continues fracking finance” and “Campbell promotes circularity as it continues to supply single-use packaging.”
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Agents of Impact: Follow the Talent
Going inside. Impact investing’s original provocateur, Jed Emerson, is joining Tiedemann Advisors as global lead of impact investing. The New York-based wealth advisor manages more than $25 billion in assets, including $3.5 billion in impact strategies. “People will place bets on how long I will last in an institutional environment,” Emerson told ImpactAlpha. “But if we want to talk about how foundations, families and institutions can manage capital in greater alignment with their values, you’ve got to be in the room.” CEO Michael Tiedemann said he has read Emerson’s work (see, “The Little Jed Book: Digging into the why of impact investing”). “We’re unafraid to have someone bold,” he said. Emerson will work with Jennifer Ayer and Brad Harrison, who lead Tiedemann’s U.S. impact investing strategy.
Fiona Reynolds steps down as head of the U.N. Principles for Responsible Investment… Karen Wong, ex- of Mellon Investments Corporation, joins State Street Global Advisors as global head of ESG and sustainable investing… Brian Chase, ex- of BlackRock, joins Quinbrook Infrastructure Partners as managing director and global lead of capital formation and investor engagement… Village Capital is hiring a vice president of partnerships in Washington, D.C… The LTSE (Long-term Stock Exchange) is looking for a head of business development.
Morgan Stanley Wealth Management has openings for a vice president and an assistant vice president on its ‘investing with impact’ team in New York… Rippleworks Foundation seeks a U.S.-based talent partner for its expert network and a programs manager… Cogent Consulting presents “Build Forward Better,” featuring a dozen organizations in the Twin Cities impact investing ecosystem, Thursday, June 10… US SIF: The Forum for Sustainable and Responsible Investment is holding its US SIF Forum, June 14-18.
Thank you for your impact.
– June 8, 2021