Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Alt-credit and mobile-money apps give African fintechs a closeup view of climate risks – and opportunities. Financial technology firms have leveraged billions of data points across mobile phones and social media to transform loan underwriting for the emerging consumer class. In turn, data from those users is providing fintech service providers real-time insight into something else: the accelerating climate impacts on farmers and rural communities and the urban poor. In Africa, demand for climate data is growing across supply chains to underwrite micro-insurance for farmers and logistics operators, hedge supply-chain risk, and also create a variety of derivatives and other sophisticated products. “Fintech can supercharge the reach and affordability of solutions that have the potential to reduce the exposure of climate vulnerable populations and help them with preparedness,” says Bethany Kanten of BFA Global, which backs inclusive tech startups in underserved communities through the Boston-based advisory firm’s Catalyst Fund.
Simple mobile transactions provide a wealth of data about where farmers are based and the personal and financial information that is increasingly tied to individuals’ mobile phone numbers. “By the time the farmer has finished just one action on the back end, we have so much information about them,” says Patrick Sampao of ACRE Africa. The Nairobi-based spinoff of the Syngenta Foundation and the Global Index Insurance Facility facilitates access to crop insurance to help smallholder farmers secure their livelihoods against flood and drought. Insurance tech venture Pula, also in Nairobi, is leveraging government programs and non-governmental funding schemes to deliver affordable insurance coverage to small farmers. Gro Intelligence, which started in East Africa, and other climate aggregators are collecting weather and climate data and using artificial intelligence to forecast risk scenarios across food and agriculture and other sectors. Many fintechs have yet to proactively incorporate climate risks into their products, says Dan Block of Mercy Corps Ventures, which is seeing the pervasive effects of climate change across its portfolio of roughly 20 early-stage impact companies (see, “Can fintech startups combat climate change?”). If fintech companies don’t get climate-smart quickly, he adds, “then we’re missing out on opportunities and exposing ourselves to significant risks that we’re not seeing.”
Keep reading, “Alt-credit and mobile-money apps give African fintechs a closeup view of climate risks – and opportunities,” by Jessica Pothering on ImpactAlpha.
- In other news. The Rise Fund invests $200 million for a minority stake in Airtel Africa’s mobile money business.
Dealflow: Follow the Money
Adani Green Energy secures $1.4 billion loan for renewable portfolio in India. The renewable asset management arm of India’s Adani Group aims to develop a 25-gigawatt portfolio of wind, solar and hybrid power projects by 2025. The company’s long-term ambition: to “produce the least expensive green electron” and “become the largest renewable player in the world,” said AGEL’s Vneet Jaain. The $1.4 billion revolving credit facility from 12 international banks will support that buildout, starting with a 1.7-gigawatt portfolio of wind and solar renewable projects in Rajasthan.
- Green milestones. The deal is one of the largest renewable project financings to date in India and among the first certified green hybrid project loans in India’s renewable energy market. It comes as the world’s third biggest emitter eyes a net-zero by 2050 goal.
- Dive in.
CIM backs Salary Finance to support affordable loans for underserved workers. Community Investment Management is providing Salary Finance with $150 million in debt financing over the next three years to provide affordable loans for working Americans financially impacted by COVID, especially those in underserved communities. U.K.-based Salary Finance partners with employers to help workers contribute automatic savings and refinance debt. It expanded to the U.S. in 2018 with the goal of helping 10 million Americans get rid of debt and save money.
- COVID lending. CIM, a San Francisco-based provider of strategic debt capital to responsible lenders, raised $10 million in July to help fintech lenders get small business loans flowing to underserved businesses in Colorado (see, “Community Investment Management raises $10 million for COVID lending in Colorado”).
J.P. Morgan Private Bank closes $150 million Global Impact Fund. The fund aims to build a diversified portfolio of impact investment funds focused on financial inclusion, climate change and health and wellness in alignment with the U.N. Sustainable Development Goals. The Global Impact Fund is supported by J.P. Morgan’s alternative investments and sustainable investing teams, as well as Tideline, which helped structure the fund of funds. It has already committed to four undisclosed impact venture, growth and buyout managers, as well as two co-investments. The “unprecedented need and demand right now for impact investing” positions the bank to play a key role, said Tideline’s Ben Thornley, “including by helping channel more capital to diverse managers.” Share this post.
Dealflow overflow. Other investment news crossing our desks:
- Harlem Capital, which invests in under-represented founders, led a $2.5 million seed funding round for flexible workspace startup Workchew (see, “Harlem Capital raises $40 million”).
- Pollinate secured $50 million to help small and mid-sized businesses recovering from the pandemic access capital and digital tools.
- Online grocery startup Weee! raised $315 million to expand to underserved Asian and Latino communities across the U.S.
Signals: Ahead of the Curve
Sustainable snapshot: Growth of social bonds challenges green bond funds. The growth of green bonds has been accompanied by the rise of green bond funds – thematic funds investing in corporate, municipal, sovereign and structured bonds issued to fund environmental projects. Green bond funds, including five mutual funds and two ETFs, added $34.6 million in net assets last month, largely from institutional investors, to reach $1.2 billion. This marked the eleventh consecutive monthly gain in assets for green bond funds. While green bonds continue to grow modestly last year, the COVID-19 pandemic spurred the issuance of social and sustainability bonds, which crossed the $300 billion level and overtook green bonds. That could present a challenge for green bond funds, which may be forced to expand their mandate to also include social and sustainable bonds.
- Capital flows. ImpactAlpha is partnering with Sustainable Research and Analysis in New York to provide timely market snapshots of trends and developments affecting the sustainable investing market. Henry Shilling, founder and director of research, was senior vice president at Moody’s Investors, where he led efforts to expand disclosure around environmental, social and governance, or ESG, risks.
- Keep reading, “Growth of social bonds challenges green bond funds,” by Henry Shilling on ImpactAlpha.
Agents of Impact: Follow the Talent
The National Coalition for Community Capital is recruiting a (remote) director of administration… Quantified Ventures is hiring a senior associate of health and human services in Washington, D.C… Nia Impact Capital has an opening for a client services and operations manager in Oakland… Funding U seeks a director of marketing operations in Austin… Impact Investing Institute is looking for a communications and engagement manager in the U.K. or Europe for a maternity leave cover… Net Impact is accepting applications for its Future of Energy Challenge through Apr. 9… The Bee Conservancy is accepting applications for its Sponsor-A-Hive initiative, which will award 500 homes for native bees to schools, gardens and community groups.
Impact Capital Forum is hosting Investing in Founders of Color featuring 1863 Ventures’ Melissa Bradley on Wednesday, Mar. 24… Resources for the Future and the Urban Institute are kicking off a new webinar series with “Environmental Justice: Lessons from History and a Look to the Future,” on Wednesday, Mar. 24… The SEIU Capital Stewardship Program and CtW Investment Group are hosting “The Racial Wealth Gap: Are U.S. Banks Part of the Problem?” featuring law professor and author Mehrsa Baradaran and Activest’s co-founder Ryan Bowers Tuesday, Mar. 30… GenderSmart and VC Include are hosting Capital Connect, focusing on Africa, Tuesday, Mar. 23.
Thank you for your impact.
–Mar. 22, 2021