The Brief | April 19, 2021

The Brief: Deploying endowments, FINCA forward, carbon drawdown, fungi bacon, urban aquaponics, Caribbean’s inclusive recovery

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Greetings, Agents of Impact! 

There’s still time to participate in this ImpactAlpha partner event: Next Normal Now. Registration has broken 1,000 for “Re-imagining Capitalism for Our Future,” from the Global Impact Investing Network. A chat with Ford Foundation’s Darren Walker will be followed by breakout rooms for investors and entrepreneurs focused on inclusive economic growth. Join in for free, tomorrow, Apr. 20. Register now.

Featured: The Reconstruction

Rey Ramsey on deploying 100% of foundation assets toward positive impact and racial equity (podcast). The case for breaking down philanthropy’s historical divide between the investment side of the house and a foundation’s mission or programs gets stronger with each new foundation that bridges the chasm. The Nathan Cummings Foundation says it has nearly fulfilled its commitment made three three years ago to align 100% of its $450 million endowment with its mission goals (see, “With new pledge, another foundation moves to align endowment with mission”) and has found that aligning its endowment with positive impact turns out to drive decent returns as well. “People hide behind the issue of financial returns. And that is a ruse and it is an excuse,” Nathan Cummings’ Rey Ramsey tells host Monique Aiken in the latest edition of The Reconstruction podcast on ImpactAlpha. “We believe that our new mission-aligned strategy produced stronger returns than our traditional approach would have despite all of the challenges in 2020,” Ramsey and board chair Jaimie Mayer write in Values Proposition,” a report on the foundation’s journey to date. 

Ramsey, an independent board member who took over as interim CEO last year, offers Nathan Cummings’ experience as a lesson to other foundations moving to align assets and mission. Skepticism remains strong on foundation boards and investment committees, as well as among “outsourced chief investment officers,” or OCIOs, which manage a large chunk of the nearly $1 trillion in U.S. foundation assets. The foundation also found OCIOs have a collective weakness in hiring and advancing a diverse workforce, investing into diverse-led funds, and incorporating perspective on racial, gender, ethnic or economic justices. The foundation, with support from Global Endowment Management, has increased the portion of its portfolio managed by funds that are majority-owned by women and/or people of color to 28%. The foundation has moved up The Impact Management Project’s impact scale, allocating 19% to “solutions” such as L+M Development, Precursor Ventures and BBG Ventures. Echoing themes from the conversation with Tiffany Manuel on last week’s The Reconstruction podcast, Ramsey says, “There are a number of characteristics we need, but the most important is will. You’ve got to overcome the pervasive disbelief that certain things are not possible.”

Keep reading and listen in, “Rey Ramsey on deploying 100% of foundation assets toward positive impact and racial equity (podcast),” on ImpactAlpha. Catch up with all The Reconstruction podcasts on Spotify, Apple or Anchor.

Dealflow: Follow the Money

FINCA Ventures makes three investments in financial and economic inclusion. The impact investing arm of microfinance organization FINCA International added three companies to its portfolio of early-stage tech companies targeting services for informal and low-income emerging markets’ workers. South Africa-based Kuunda Digital offers overdraft coverage for mobile money agents. Amsterdam-based Meridia uses mapping to help smallholder farmers secure title to their land. And Nairobi-based ImaliPay provides financial services for emerging market gig workers.

  • Doubling down. FINCA’s Forward program provides grant capital and technical assistance for three-to-six month proof-of-concept projects for increasing financial access for low-income consumers. USAID seeded FINCA Forward in 2018. FINCA Ventures is looking to raise $25 million to add debt and equity investments to help scale up promising ventures.
  • Test case. FINCA Forward backed Kuunda’s HapaCash Overdraft product to provide liquidity for informal money agents that help low-income consumers convert mobile money into cash and vice versa. The agents face cash-crunches of their own. “If the agents are unavailable due to a lack of liquidity, customers cannot meaningfully engage with digital financial services,” FINCA’s Josh Kirton told ImpactAlpha. Kuunda offers daily overdraft protection, so agents can complete the day’s customer requests. In a six-month pilot in Tanzania last year, Kuunda provided 300,000 overdraft disbursements, totaling $2.2 million to M-Pesa mobile money agents. “That’s $2.2 million in customer transactions that would have otherwise been denied,” said Kirton.
  • Forward march.

Carbo Culture raised $6.2 million to lock up carbon in biochar. The Helsinki-based company converts wood chips and other biomass into stable biocarbon that the company says can lock carbon away for 1,000 years. True Ventures, Cherry Ventures and Swiss climate investor Übermorgen Ventures backed the woman-led company. The technology is designed around “one of the largest drawdown mechanisms in the world: the natural carbon cycle,” said Carbo Culture’s Henrietta Moon.

  • Going negative. Carbon capture and storage tech, an estimated $1 trillion annual opportunity, is getting increased attention as it becomes clear reduced emissions won’t be enough to meet global climate goals (see, “How negative can carbontech entrepreneurs go?”). Canada’s Svante raised $75 million in February to capture carbon from industrial sources.
  • Check it out

Persefoni raises $9.7 million to help investors manage carbon footprints. Companies pledging to zero out their greenhouse gas emissions and stay ahead of regulators need additional precision in calculating their emissions. Tempe, Ariz.-based Persefoni’s software helps companies such as private equity giant TPG manage their carbon footprints. Launched last year, Persefoni secured $9.7 million from Rice Investment Group and the sustainable investing group of oil and gas-focused investor NGP.

Dealflow overflow. Other investment news crossing our desks:

  • Alt-protein company Atlast Food secures $40 million to scale up production of fungi ‘bacon.’
  • Accra-based fintech BezoMoney clinches $200,000 to help Ghana’s consumers build savings.
  • Gurgaon-based Vidyakul scores $500,000 in seed funding to offer vernacular online education to India’s rural students.
  • France’s Les Nouvelles Fermes raises €2 million to build a 54,000-square-foot urban aquaponics farm.

Signals: Ahead of the Curve

Overheard at the Island Finance Forum: Caribbean’s inclusive recovery. Volcanic eruptions in the Caribbean that have caused residents of Saint Vincent and the Grenadines to flee their homes lent urgency to last week’s Island Finance Forum hosted by Island Innovation. “Crises are unfortunately not a surprise to most islanders,” said European Investment Bank’s Alexandra Almeida. Financial experts, island policymakers and investors at the forum said the road to economic recovery and inclusive growth leads through the clean energy transition and financial inclusion for islanders. The EIB has committed to delivering at least half of its annual financing to climate action and environmental sustainability by 2025, and to divest from the fossil fuel industry by the end of 2021.

  • Capital for small enterprises. Global island economies reliant on tourism have taken a hit in the pandemic. In the Pacific Islands, many women entrepreneurs lacked access to appropriate financing even pre-COVID. “With COVID, a lot of these women that have started micro-businesses connected to tourism have lost the opportunity to sell their services and products,” said New Zealand Pacific Business Council’s Catherine Sumpter.
  • Renewable energy. Inflationary energy sources: fossil fuels. Deflationary energy sources: wind and solar. BNP Paribas’ Mark Lewis called on island governments to learn the difference. The deflationary dynamic of renewable energy should drive net-zero targets, making projects more affordable. “It’s not only the right thing to do for the planet, it’s the smart thing to do for their taxpayers and energy consumers,” said Lewis.
  • Women and youth. Bank of Guam’s Jackie Marati said women and young people lack financial access in Guam, which “results in huge opportunity costs to the global economy and in particular to the island’s economy.” Marati added digital and branchless options can make services simpler and more affordable. “By not innovating, financial institutions are missing a promising opportunity, leaving millions behind that could contribute to a healthy and inclusive economy,” she said.
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Agents of Impact: Follow the Talent

Intel Corp. names Dawn Jones as chief diversity and inclusion officer and vice president of social impact… KKR is recruiting a vice president of strategic ESG and impact reporting in New York… The Visa Foundation seeks an investment officer in Washington, D.C… Kapor Capital is hiring a portfolio services director in Oakland… Village Capital is looking for a program manager for Europe based in London. 

GenderSmart Investing and VC Include’s “Capital Connect” showcase tomorrow, Apr. 20, will highlight five South Asia focused funds… 17 AssetManagement, The Collective and SOCAP Global are hosting “Philly Forward: Real Estate as a Portal to Change,” with The Collective’s Sandra Dungee Glenn, Beltraith Capital’s Steven Sanders, If Lab’s Tayyib Smith, Rey Ramsey of Nathan Cummings Foundation, and other guests, Thursday, Apr. 22. Register for free.

Thank you for your impact.

– Apr. 19, 2021