Greetings, Agents of Impact!
Featured: Impact Voices
How some corporations are driving capital to Black founders and investors. A growing number of corporates are unlocking inclusive innovation by scaling not only in what they invest, but in whom they invest. A sampling of corporate venture capital and other initiatives from PayPal, Salesforce, Samsung and other companies suggests major corporations are beginning to see that dismantling systemic racism is not simply a moral imperative. “By scaling and partnering with diverse investors and entrepreneurs, corporates can activate purpose and unlock new avenues for inclusive innovation,” write veteran corporate venture capitalists Marcelino Ford-Livene and Moses Choi in a guest post on ImpactAlpha. “We are optimistic about what corporates can do.”
PayPal, for example, is investing in Black and Latinx-led venture capital funds through a $50 million commitment that has backed managers such as Chingona Ventures, Vamos Ventures, and Zeal Capital Partners. Salesforce Ventures co-launched the Black Venture Institute to onboard more Black venture capitalists as part of a $100 commitment of “intentional capital” toward companies led by Black and under-represented minority founders. Samsung Next established its Diverse Founders Initiative “to source innovation and create innovation that is inclusive and representative of the population.” Starbucks’ Community Resilience Fund will invest $100 million in underserved communities by 2025, in partnership with community development financial institutions, or CDFIs. Netflix, Twitter, and Square have their own $100 million commitments to racial equity and inclusion. Portions of the proceeds from Alphabet’s $5.75 billion in sustainability bonds issued last fall are going to diverse startup founders, small businesses in underserved communities, and a YouTube fund for Black creators and artists. Of note: in issuing the bonds, Alphabet enlisted minority-owned broker-dealers, including CastleOak Securities.
Keep reading, “How some corporations are driving capital to Black founders and investors,” by Marcelino Ford-Livene and Moses Choi on ImpactAlpha.
Dealflow: Follow the Money
Main Street crowdfunding platform Honeycomb secures $1.8 million – for itself. Most crowdfunding platforms focus on startups raising equity. Pittsburgh-based Honeycomb, founded by a sixth-generation community banker, helps local restaurants, food trucks and yoga studios raise debt funding from their communities. The funds will support Honeycomb’s nationwide expansion, as “regulation crowdfunding” takes off (see, “New crowdfunding rules set to boost investment in diverse startups and founders”). The seed round was led by the venture capital arm of American Family Insurance, along with Innovation Works, K50 Ventures, Reinforced Ventures, Flight.vc and Pittsburgh’s Urban Redevelopment Authority.
- Underserved. More than 57% of the businesses that have raised money in Honeycomb are women or minority-owned, and 55% have been in low-to-moderate income communities. Average loan size: $40,000, too small for banks and traditional capital providers.
- Share this.
IFC backs Vinci Capital Partners to invest in small businesses in Brazil. The private investment arm of the World Bank Group is investing $20 million in the Rio de Janeiro-based private equity firm’s Vinci Impact and Return IV fund. Vinci aims to finance small and mid-sized businesses serving low-income Brazilians in healthcare, education and nutrition. At least 35% of the fund will be invested in the country’s underserved northern region. International Finance Corp.’s Carlos Leiria Pinto said the IFC is keen “to play an important countercyclical role in Brazil during a period of crisis.” This is the IFC’s second investment in Vinci Capital Partners.
- Impact alpha. An IFC analysis of its equity investments since 1961 suggests the portfolio outperformed the S&P 500 index over the same period by 15%. The IFC’s Hans Peter Lankes said the IFC’s mandate for impact helped it “find equity opportunities that other investors missed, by investing in markets that lacked access to capital.”
- Dig in.
3X5 Partners closes $100 million to invest in global health and climate action. The Portland-based venture capital firm says its mission is to “invest in what the world needs.” It raised $100 million for its third fund to make $15 to $20 million investments in startups responding to the climate crisis and supporting better healthcare. “Far from being an encumbrance, investing in essential solutions is the source of our performance,” said 3×5 Partners’ Nicholas Walrod.
- Technology solutions. 3X5 Partners has backed SOURCE, which uses solar power to extract clean drinking water from the air; Vapotherm, which created technology for patients needing ventilator support; and Smart Wires, which builds power flow control technology to help utilities optimize electric grids.
Dealflow overflow. Other investment news crossing our desks:
- Bridges Fund Management acquired a majority stake in digital home and lifestyle brand Nkuku, which works directly with artisans worldwide.
- Microinsurance startup Bimaplan raised $500,000 to provide affordable insurance to low and middle-income consumers in India.
- San Diego-based HCAP Partners, which takes a “gainful jobs” investing approach, led a Series B investment in BetterNight, a digital sleep care startup.
Signals: Ahead of the Curve
In Danone’s drama, union pension fund advisor CtW turns the tables. “Activist” investor Artisan Partners may have thought it had exacted its revenge on the French food giant when it succeeded in ousting Danone CEO Emmanuel Faber this week. Artisan was one of the .06% of Danone shareholders that opposed Faber’s move last year to make Danone the first public company to adopt the French “entreprise à mission” legal framework. A champion of sustainable business, Faber began reporting Danone’s “carbon-adjusted EPS,” or earnings per share, and recruited Agents of Impact including Hiro Mizuno, Ngozi Okonjo-Iweala and Rockefeller Foundation’s Rajiv Shah to Danone’s “mission committee.” Artisan jumped on Danone’s lagging share price as sales slowed, particularly in China.
Then, one of its own investors jumped all over Artisan. CtW, an advisor to $250 billion in union-affiliated pension funds, blasted Artisan for itself combining the roles of chairman and CEO after it had criticized the arrangement at Danone, and called for the replacement of Artisan’s compensation committee for “awarding outsized discretionary cash bonuses.” In contrast, CtW’s Dieter Waizenegger called Danone’s mission-driven conversion “a significant step towards more responsible and sustainable business strategy that should be supported by asset managers concerned with environmental, social and governance issues.”
- Labor power. CtW Investment Group works with unions affiliated with Change to Win, a federation representing nearly five million members. CtW “organizes workers’ capital into an effective voice for accountability and retirement security,” according to its website. Union pension funds have become increasingly active in supporting worker rights at both public and private companies in their portfolios (see, “Why pension funds and other Amazon investors are backing the workers in union battle”). Note to Waizenegger: Why stick with Artisan?
- Impact activism. Artisan’s activism took a page from the old shareholder-primacy playbook, prioritizing profits and short-term returns. A new crop of activist investors is flipping the script. Their bet: accelerating the low-carbon transition and improving ESG performance will boost companies’ long term value (see, “There’s a new impact sheriff in town: activist hedge funds”). Engine No. 1, for example, is seeking to shake-up ExxonMobil, while Inclusive Capital Partners’ Jeffrey Ubben joined Exxon’s board to push for change from within.
IFC and the GIIN harmonize impact standards. The need for common metrics to measure and compare companies’ impact has become more urgent. The Joint Impact Indicators from the Global Impact Investing Network and International Finance Corp. bring together the GIIN’s IRIS catalog with IFC’s Harmonized Indicators for Private Sector Operations, or HIPSO, which cover gender, equality, jobs and climate.
- Impact merger. The Tipping Point Fund awarded a combined $500,000 in grants to bring together the International Integrating Reporting Council and the Sustainability Accounting Standards Board, which are merging into a new nonprofit entity, the Value Reporting Foundation.
- Tune in.
Agents of Impact: Follow the Talent
Scott Kupor, managing partner at Andreessen Horowitz, and Katherine Lauderdale, chief legal officer of PBS, join the board of the Global Impact Investing Network. “Impact investing is increasingly becoming mainstream for institutional investors globally,” Kupor said… Marla Blow, ex- of the Mastercard Center for Inclusive Growth, joins the Skoll Foundation as president and chief operating officer… Katie Drasser, ex- of the Aspen Institute, becomes CEO of Rock Health’s nonprofit arm… Visa appoints Michelle Gethers-Clark, ex- of the United Way in Greensboro, N.C., as chief diversity officer and head of corporate responsibility.
Runway is hiring a portfolio director in Oakland… RallyAssets has openings for a manager, private investment researcher, senior associate of business development, and associate of client services… Alterfin seeks an investment manager for its Central Asia microfinance and sustainable agriculture portfolio, based in Bishkek, Kyrgyzstan… 57 Stars is hosting “Digital Revolution: Investing for Impact and Alpha,” on Tuesday, Mar. 23 at 11am ET (ImpactAlpha is a media partner).
Thank you for your impact.
–Mar. 17, 2021