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Catalytic Capital: Ceniarth’s Diane Isenberg lays down a “1/10th Challenge” for wealthy families (podcast). The founder of the $400 million family office has been skeptical of what she considers unrealistic expectations (including in ImpactAlpha) that the COVID crisis and rising awareness of racial and economic injustice will usher in radically new approaches to investing. So, instead of a 10x Challenge, Isenberg is proposing what she dubs the “1/10th Challenge,” calling on other high-net-worth family offices to allocate just 10% of their portfolios to the kind of low-return but high-impact investments that Ceniarth calls impact-first capital preservation opportunities. “You get higher impact in racial justice, in gender equality, in climate,” she says. “You don’t need to go 100% all-in with this, as we have, for this to be meaningful. If everybody did a little bit, it would be hugely transformative.”
Isenberg, who established Ceniarth as a single-family office in 2013 after coming into wealth created by her father, is the rare wealthy individual unafraid to call out other wealthy families, as well as some shibboleths of impact investing. “I do feel like the high-net-worths haven’t really stepped up,” Isenberg said in the latest episode of ImpactAlpha’s Agents of Impact podcast. She’s heartened that investments once dismissed as “concessionary” have more recently been elevated to “catalytic.” But she’s still surprised that even development finance institutions require risk-reduction in order to commit their capital. Last year, Ceniarth committed $3 million in first-loss protection that helped catalyze a $50 million commitment to Global Partnership’s Impact-First Development Fund from the U.S. International Development Finance Corp. “I just thought it hysterical that Ceniarth has to protect the United States,” she says. “But if that’s what they need to get the money out the door…” In April, Ceniarth stepped up with $3 million in deposits and zero-interest loans to help community development financial institutions, or CDFIs, accelerate lending to rural and Native American communities largely neglected by the federal government’s Paycheck Protection Program. “That nuance, the difference that accepting a lower rate of return makes in terms of who you’re impacting and how you’re impacting them, is huge,” she says. “It’s absolutely huge.”
Keep reading and listen in to, “Ceniarth’s Diane Isenberg lays down a “1/10th Challenge” for wealthy families (podcast),” by David Bank on ImpactAlpha.
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Dealflow: Follow the Money
Lightship Capital backs food tech startup FreshFry. Louisville, Ky.-based FreshFry has developed a plant-based product to help food service businesses extend the life of frying oil. FreshFry’s “pods” strip water, acids, metals and other impurities from cooking oil, slowing breakdown while improving taste. Food distribution giant Sysco sells FreshFry’s product nationally. The Black-owned company raised $3.3 million from Lightship Capital, which backs under-represented founders, and Open Prairie Rural Opportunities Fund, an agrifood venture investing initiative of the U.S. Department of Agriculture.
- First deal. Cincinnati-based Lightship’s investment in FreshFry comes on the heels of its $22 million first close (see, “Investing in racial justice by shifting narratives, power and capital”). “When starting a new fund, you want to select a first investment that signals the quality of your future selections to your investors,” said founder Candice Matthews Brackeen.
- Sustainable product. FreshFry’s tech was developed by co-founder Jeremiah Chapman, who collected cooking oil to convert to biofuel as a student at University of Louisville. FreshFry’s pods are made of plant waste. They aren’t biodegradable or compostable but the company claims they’re earth-safe and “will actually capture pollution in soil.”
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Soplaya raises €3.5 million to streamline food logistics in Italy. Soplaya launched in 2018 to connect local food producers to restaurant chefs with a platform to handle collection, warehousing and delivery in the northern regions of Friuli Venezia Giulia and Veneto. Then COVID hit. To help producers stay in business, it launched a home delivery service. Its ability to pivot quickly enabled the company to raise institutional funding amid the pandemic, co-founder Mauro Germani told ImpactAlpha. Milan-based early-stage venture capital firm P101 and CDP Venture Capital SGR-Fondo Nazionale Innovazione co-led the round.
- Local but diverse. Germani says Soplaya’s positive impact is two-fold: it shortens the supply-chain between where food is grown and consumed, reducing the food chain’s carbon footprint. And it helps producers access markets outside of traditional wholesalers, which often skirt local or organic products, “increasing the diversity and democratization of the food system.”
- Dig in.
Meyer Memorial Trust commits $25 million to racial justice in Oregon. The Portland-based foundation launched the five-year grant initiative to reverse the racial injustice “built into the framework of a state founded on stolen lands and explicit in its exclusion of Black people,” writes Meyer’s Michelle DePass. The $775 million trust has disbursed its first $1.3 million through the initiative, including $200,000 each to Black United Fund, KairosPDX, Portland African American Leadership Forum, Self Enhancement Inc. and Urban League of Portland, The Oregonian reports. Earlier this week, Open Society Foundations committed $220 million to racial justice groups.
Signals: Ahead of the Curve
Investing in news and media by and for people of color. Blavity’s $1.5 million raise from the W.K. Kellogg Foundation (and another $9.5 million from earlier investors) helped demonstrate the investability of a media company built by and for Black people. Blavity is among a new crop of Black press outlets, including The TriiBE, The Root and The Plug, “changing the lenses of victimization and dysfunction into lenses of empowerment and agency,” writes Neiman Reports’ Deborah Douglas. But media entrepreneurs of color still struggle to raise capital to grow, facing similar biases, exclusionary networks and lack of support as other diverse entrepreneurs. They also face revenue disruptions and other uncertainties that affect media generally. In “Investing in equitable news and media projects,” Transform Finance and Ford Foundation unpack the challenges facing media organizations by or for historically overlooked groups, particularly people of color, and lay out opportunities to mobilize capital.
- Diversifying investors and owners. Women-led angel investing groups such as Gina’s Collective and Shondaland have demonstrated interest in media. Film and publications are among the target investment areas of Baron Davis Enterprises, which is also a Blavity investor. Foundations including Kellogg, Open Philanthropy and The California Endowment are forward thinking in funding for-profit entities. Catalytic foundation program-related investments could take more risk to seed equitable media. The Membership Puzzle Project is helping publications convert to cooperatives. (Bleu Media’s Devon Christopher Johnson, Her Agenda’s Rhonesha Byng and Anastasia Williams are curating a list of Black-owned media companies).
- Equitable structures. Revenue-based financing that returns capital to investors as a percentage of revenues removes the need for exits through sales, acquisitions or public offerings, the report says. Grant-like instruments structured as equity can boost governance rights of the grantmaker and allow grant makers to participate in the upside. Financing for specific projects, such as films or thematic series, “can play an important role in providing small bets around potential ancillary revenue streams that, if fruitful, can strengthen the overall sustainability of a media enterprise.” Pooled structures, like that of New Media Ventures, can serve as a clearinghouse of investable opportunities in equitable media.
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Investing with an LGBTQI lens. Criterion Institute has a new guide for impact investors, asset managers, philanthropists, and gender lens investors for investing with a lesbian, gay, bisexual, transgender, queer, and intersex lens. Criterion’s take: understanding how LGBTQI considerations are material to investment decision-making can help all investors uncover hidden opportunities and undervalued risks.
Agents of Impact: Follow the Talent
Sylvain Carle, ex- ofReal Ventures, joins SecondMuse Capital as a senior director… Notley is hiring a program manager for its HomeFront Fund in Austin… AARP Foundation seeks a senior advisor of impact investing in Washington, D.C.
Thank you for reading.
–July 16, 2020