Greetings, Agents of Impacts!
Featured: ImpactAlpha Original
World War II produced antibiotics, computers and nukes. What COVID may leave behind. COVID-19 is our World War II. The science and tech mobilization that helped win the war also left behind antibiotics, microwaves, nukes and computers. Now, a new generation of impact-oriented investors, technologists and entrepreneurs are looking for breakthroughs in vaccines and therapeutics, telehealth, climate, information and education to face down a global threat on a similar scale. Fifty Years’ Seth Bannon senses the pregnancy of the COVID moment. Bannon and his partner, Ela Madej, have green-lit potential solutions at more than a dozen companies in the “deep tech” VC firm’s portfolio. “Just about every entrepreneur I talk to, is saying, ‘Is there a way that I can help?’ and is taking action,” says Bannon in a Q&A with ImpactAlpha. “I don’t think there’s ever been a time where the world has focused on one problem like this in my lifetime.” Bannon and Madej have extended at least $25,000 to seven portfolio companies. By using founder-friendly “uncapped” convertible notes,” they were able to move cash quickly and push off most negotiations to the ventures’ next round of financing.
Other tech investors and mission-driven entrepreneurs also are rising to the moment. Over 1,000 startups applied to crowdfunding platform Wefunder’s “fight the virus accelerator,” which offers $50,000 in similarly uncapped “SAFE” notes. Companies in the portfolios of Village Capital, Techstars Impact, SJF Ventures and other impact funds have pivoted to potential COVID solutions. Schmidt Futures, an effort of former Google chairman Eric Schmidt and his wife Wendy, is convening philanthropists to quickly cut checks of up to $1 million. Among 50 Years’ portfolio companies, HelixNano is developing a vaccine that could not only vaccinate against COVID, but against potential mutations of the coronavirus. BillionToOne, is repurposing its prenatal genetic testing to create a COVID-19 test capable of performing a million tests per day. Industrial chemicals company Solugen, which uses enzymes to produce hydrogen peroxide, is stirring up vats of hand sanitizer and shipping it – for free – to health care facilities. If this generation responds like the Greatest Generation, says Bannon, “We might not only beat back COVID-19, but we might build a technological foundation that benefits generations of people to come.”
Read, “What COVID may leave behind,” a Q&A with Fifty Years’ Seth Bannon, by Dennis Price on ImpactAlpha.
Dealflow: Follow the Money
VanderSat uses satellite data to expand farmer insurance coverage. Hundreds of millions of smallholder farmers in East Africa are facing not only COVID, but also the worst locust swarm in decades. Most of their farmland is uninsured; when they lose crops, they lose income. Netherlands-based agtech company VanderSat uses satellite data to analyze farmland conditions using microwaves, rather than images. That helps insurance companies underwrite smallholder farmer policies in areas otherwise too costly to reach. The crop protection ensures income for smallholders and improves their ability to invest or obtain a loan, Helmer Schukken of Social Impact Ventures told ImpactAlpha. The Dutch impact investor invested “several million” euros in VanderSat (see, “Agent of Impact: Willemijn Verloop, Social Impact Ventures”). VanderSat’s data also helps farmers manage water and irrigation in drought or flood-prone areas. Learn more.
Gates Foundation to invest in manufacturing facilities to accelerate COVID vaccine. The Gates Foundation announced in February that it was turning its attention to climate change and gender equity. That was pre-COVID. The foundation now plans to build manufacturing facilities for seven of the most promising COVID vaccines to accelerate production even before their effectiveness is proven. “It’ll be a few billion dollars we’ll waste on manufacturing for the constructs that don’t get picked because something else is better,” Bill Gates told The Daily Show’s Trevor Noah. But given the lives and trillions of dollars at stake, “it is worth it,” he said. The foundation also has backed, with Wellcome and Mastercard, a $125 million vaccine accelerator. Read on.
DFC loans $5 million to Twiga Foods to promote food security. The U.S. International Development Finance Corp. said the investment will “strengthen food security in Kenya by increasing farmers’ access to markets and improving the agricultural supply chain.” Twiga raised a $24 million equity round, led by Goldman Sachs, last October.
Aavishkaar re-ups investment in Indian agtech startup Ergos. Ergos operates a “grain bank” for smallholder farmers and provides crop logistics, storage and financial services. Impact investor Aavishkaar invested $5 million in the company five years after it made its first investment. In March, Omnivore took a stake in Arya, another startup that offers crop storage and warehousing-based finance for Indian farmers.
Impact Voices: Pass the Mic
We are lenders, not heroes: Ceniarth’s three-part response to COVID-19. There are real heroes in this historic, global healthcare crisis… Then, there are impact investors. “Unfortunately, the moment calls for heroes with MDs, not MBAs,” Ceniarth’s Diane Isenberg and Greg Neichin write in a guest post on ImpactAlpha. The sometimes contrarian single-family office, which pursues a strategy of “impact-first capital preservation,” has come up with principles to guide its response to the pandemic. Among them:
- Stay in our lane. Although every form of capital is simultaneously needed, from grants to loans to guarantees to equity, “we know very little about how to best deploy all those other forms of capital,” say Isenberg and Neichin. “We know how to lend patient, impact-first capital. It did not take a crisis for us to realize that vulnerable communities need deeply concessionary capital to survive. They only need it more now.”
- Build bridges to somewhere. “There is a cold, hard truth that some businesses and funds will not survive this,” the authors write. “If we do not see a plausible path for an enterprise or a fund to survive a major business downturn for six to 12 months, and come out the other side able to eventually pay us back, we cannot responsibly make the investment.”
- When this ends, the world will still be unfair and unequal. Isenberg and Neichin acknowledge that their essay may be “the yin to the yang” of posts like ImpactAlpha’s David Bank’s “Let’s make this s**tstorm matter.” While some aspects of life will be different on the other side of this pandemic, they write, “We do not think things will look much different for the lives of poor people around the planet. As in all crises, they will bear the brunt of economic disruption, social unrest, and illness.” The world will move on, and so will most impact investors. “If this crisis results in just a handful of new impact-first investors committed to long-term sustained investment in marginalized communities that, by our standards, would be a silver lining.”
- Keep reading: “We are lenders, not heroes,” by Ceniarth’s Diane Isenberg and Greg Neichin on ImpactAlpha.
Agents of Impact: Follow the Talent
Participant Media is hiring for a senior counsel position in Los Angeles… Align Impact has openings for an investment analyst and a philanthropy and impact investing summer intern in Santa Monica, Calif… B Corp Greenprint Partners is looking for a director of finance/CFO in Chicago… Common Impact seeks a chief program officer and a director of technology in Brooklyn, N.Y… Kiva is hiring an investment associate in Bangkok or Bogotá… The Sunrise Project seeks a global investor senior strategist.
The Global Reporting Initiative is seeking members for its decision-making and advisory bodies… Phenix Capital has rescheduled its Impact Summit Europe 2020 to Sept. 15-16 in The Hague, Netherlands… IIX is offering a masterclass on Measuring Impact for Sustainability. ImpactAlpha subscribers get $20 off with promo code VMC20.
Thank you for reading.
–Apr. 6, 2020