Greetings, Agents of Impact!
Reshaping capitalism to drive real change. Sir Ronald Cohen joins ImpactAlpha’s David Bank in the third episode of SOCAP’s series highlighting Cohen’s book, Impact. The session, with Suzanne DiBianco of Salesforce and Franz Paasche of PayPal, will explore corporate venture capital, stakeholder accountability and “impact-weighted accounts.” And meet special guest, Vivienne Harr of Laudato Tree, Tuesday, Sept. 29 at 12pm ET. Catch the replays and register here.
Dealflow: Follow the Money
Blue Meridian, Schmidt Futures back ‘career impact bonds’ via Social Finance’s UP Fund. Career impact bonds finance vocational training with the kind of income-share agreements offered by an increasing number of universities as an alternative to crushing student debt (see, “Income-share funds expand college finance options for low-income students”). Boston-based Social Finance has invested in two training programs: General Assembly’s accelerated tech education program and Acuitus’ IT education program, which targets veterans. Next up: diesel mechanics. “I’m excited to share that we’re starting to see results with graduates finding good jobs in the current environment,” Social Finance’s Tracy Palandjian tells ImpactAlpha. The UP Fund will provide up-front capital to up to a dozen programs training underserved adults and students for high-growth sectors like IT, healthcare and the green economy. Students repay the training costs after they get well-paying work; UP Fund’s investors get repaid based on the success of the training program in helping place graduates in such jobs.
- First close. UP Fund is one of the first impact investments from Blue Meridian, a $2 billion collaborative of more than 15 foundations aimed at solutions for youth and family poverty that was incubated by the Edna McConnell Clark Foundation. “Despite our best attempts at accountability, the mechanism for financing schools today allows people to get paid whether students actually get a good outcome or not,” Blue Meridian’s Jim Shelton, a former U.S. deputy secretary of education, said in a video call. “The question is, can we realign the incentives so that the best outcome for students is also the best outcome for the investitutions.” Other investors include Schmidt Futures, Blue Haven Initiative, The Shapiro Foundation, and donor-advised fund accounts at Fidelity Charitable and Vanguard Charitable. Social Finance has raised $22.4 million towards its target of $40-50 million.
- Risk shift. In addition to tuition, career impact bonds cover costs for extra job coaching, emergency childcare, rent and transportation to give students the greatest chance of success (see, “Career impact bonds transfer risk to investors as the future of work arrives (podcast)”). The financing structure “puts the worker at the center of the future of work,” says Palandjian. Typically, students bear the risk of their investments in career mobility. “The career impact bond reallocates that risk away from students to impact investors and training providers.” (Listen to Palandjian’s conversation with David Bank on ImpactAlpha’s Agents of Impact podcast.)
Citi Impact Fund secures $50 million to invest in Black entrepreneurs. Citi launched its $150 million impact fund in January to invest its own capital in companies addressing workforce development, financial inclusion, sustainable energy and water use, and high-impact infrastructure, with a focus on women and other underrepresented founders. Citi has now allocated an additional $50 million in capital to invest specifically in Black founders.
- Early deals. Citi Impact Fund fund recently made its first four investments, backing waste-to-energy company Fulcrum BioEnergy; ICON, which prints 3D homes for the unhoused; affordable housing marketplace PadSplit; and The Mom Project, a female-founded marketplace connecting women to good jobs.
- Racial equity. Citi, which manages nearly $2 trillion in assets, has committed $1 billion to help close the racial wealth gap in the U.S. Other pledges include: $550 million to support homeownership for people of color and affordable housing by minority developers; $350 million in business with Black-owned business suppliers; $100 million in investments in minority-owned depository institutions, like banks and credit unions; and $100 million in grants.
- Sound bites. Hear Mastercard’s Marla Blow, Beeck Center’s Erika Davies, Activest’s Ryan Bowers and Illumen Capital’s Daryn Dodson in excerpts from Agents of Impact Call No. 23, Changing the investment algorithm to advance racial justice. Listen.
- Keep reading.
E8 angel network makes three cleantech investments. The Seattle investment network’s philanthropic venture fund, Decarbon8-US, collectively invested $115,000 in L.A.-based Xeal, which makes electric vehicle charging software; Austin-based Earthly Labs, which helps breweries and beverage companies off-set carbon emissions; and Golden, Colo.-based Steelhead Composites, which designs vessels for storing hydrogen. E8’s impact fund is backed by Silicon Valley Community Foundation, ImpactAssets and the Stolte Family Foundation.
Ghana-based Viamo expands low-tech information service in Africa. Chicago’s VestedWorld backed Kumasi-based Viamo, which claims to reach 30 million users in 26 countries, ImpactAlpha has learned. This year, it reached 15 million people with health information and alerts related to COVID. Viamo launched in 2012 to deliver alerts to mobile users through SMS, interactive voice response and other basic channels. The aim was to provide news and information about healthcare, agriculture, education, financial services, as well as entertainment, to people with simple feature phones, low levels of literacy, or living in remote areas with poor connectivity. Terms of the deal were not disclosed.
Strengthening trust in impact investing. Impact verification holds the key to scaling impact investing with integrity. Learn more about impact verification and how it can bring greater accountability, discipline, and comparability to the market, with Tideline’s Christina Leijonhufvud, CDC Group’s Nick O’Donohoe, LeapFrog’s Andrew Kuper, Rockefeller Foundation’s Maria Kozloski and Ford Foundation’s Roy Swan. Thursday, Oct. 1 at 12pm ET. RSVP today.
Signals: Ahead of the Curve
New fund aims to bridge the ‘city climate finance gap.’ Cities account for 70% of global CO2 emissions, a figure that’s going up as an estimated 2.5 billion more people migrate to urban areas by mid-century. Cities in emerging markets, already strapped for capital and expertise for sustainable infrastructure projects, face additional budget cuts due to lost revenues and higher costs in the COVID crisis. The City Climate Finance Gap Fund, launched at last week’s Climate Week NYC, will provide funding and technical assistance to help cities advance clean energy, water, and other infrastructure projects and build a high-quality project pipeline for investors. “There is no sustainable future without sustainable cities,” said the World Bank’s Mari Pangestu during the fund’s announcement.
- Catalytic capital. The governments of Germany and Luxembourg have put an initial €55 million ($64 million) into the City Climate Finance Gap Fund; other partners include the European Investment Bank and Global Covenant of Mayors. They hope to raise €100 million and unlock at least €4 billion in total funding to meet the challenge.
- Green jobs. A dozen cities with more than 36 million residents pledged to divest from fossil fuels and advocate sustainable investment and green jobs. Berlin, Bristol, Cape Town, Durban, London, Los Angeles, Milan, New Orleans, New York, Oslo, Pittsburgh, and Vancouver have already signed onto the “Divesting from Fossil Fuels, Investing in a Sustainable Future” declaration.
Agents of Impact: Follow the Talent
The MBA Impact Investing Network & Training, or MIINT, will become Turner MIINT after a $2.5 million contribution from Turner Impact Capital’s Bobby Turner and his wife, Lauren Golub Turner. The initiative is hosted by Bridges Impact Foundation and Wharton Social Impact Initiative… The Nature Conservancy is hiring a director of public advocacy and engagement in Seattle… Zoom is seeks a head of social impact for a new social impact initiative… Yunus Social Business is looking for a carbon financing consultant… Common Future has openings for a managing director in New York, Washington, D.C. or Oakland and a chief operating officer in Oakland.
Financial advisor Revalue is accepting applications from investors for its Collaborative Fall Cohort… Samasource earned B Corp certification and completed its randomized control trial (see, “Agent of Impact: Leila Janah, Samasource, 1982-2020“)… Common Future’s Rodney Foxworth will join Impact Entreprenuer’s Laurie Lane Zucker for a virtual fireside chat on Wednesday, Sept. 30… Impact Finance Center and Oweesta are launching an Indigenous Communities Investor Club on Tuesday, Oct. 13.
Thank you for reading.
–Sept. 28, 2020