The Brief | December 16, 2021

The Brief: Diversifying asset management, smart subsidies for smallholder farmers, guaranteeing medical credit, India’s family offices, 206 gender-lens funds

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Greetings, Agents of Impact!

Featured: Institutional Impact

Not Cricket: Diversity in asset management must be more than woke signaling. The unfolding scandal in English cricket over racism and discrimination against players of Pakistani and Indian descent contains warnings for the asset management and financial services industry, Imogen Rose-Smith writes in her latest Institutional Impact column on ImpactAlpha. Last month, retired cricketer Azeem Rafiq testified before the U.K. Parliament about the appalling racial and ethnic abuse he and other players of South Asian descent experienced at the Yorkshire County Cricket Club, one of the U.K.’s top clubs. This month, in its report, “Diversity and Inclusion: Holding America’s Largest Investment Firms Accountable,” the U.S. House Committee on Financial Services found the representation of Black asset management executives rose to 3.4% last year – from 3% in 2019. “There is more work to be done,” was the report’s understated assessment. The Knight Foundation’s Diversity in Asset Management project found that diverse-owned firms represent just 1.4% of U.S.-based assets under management. “Azeem Rafiq’s story relates to asset management in at least two ways,” Rose-Smith says. “The first is just the sheer amount of talent that we leave on the table when we choose to allow, or participate in, discrimination.” 

The second is that “performative box-checking to appease stakeholders and political pressure” can make asset owners and investment managers less inclusive, objectifying women and BIPOC colleagues and building hostility and resentment. Rose-Smith suggests a (depressing) game: “Pull up the website for the investment office of any university endowment or outsourced CIO business. Read their diversity statement. Then take a look at the diversity of their investment team.” Institutional Investor’s Leanna Orr did just that for Washington University in St. Louis and juxtaposed the screenshots on Twitter (the university has since updated its website). “What is required is a top-down, bottom-up commitment to a culture of inclusion,” Rose-Smith writes. “Absent that, efforts at diversity, equity and inclusion can not only fail but calcify, and become part of the very problem they claim to correct.”

Keep reading, “Not Cricket: Diversity in asset management must be more than woke signaling,” by Imogen Rose-Smith on ImpactAlpha. Catch up on all of Imogen’s Institutional Impact columns.

Sponsored by the U.S. Impact Investing Alliance

Working together to drive equitable economic growth. A group of 60 impact-oriented businesses and investors, including the U.S. Impact Investing Alliance and B Lab, have come together as the Coalition on Inclusive Economic Growth to work with government to accelerate the equity agenda. The Alliance’s Fran Seegull and B Lab’s Andrew Kassoy report on early wins in efforts to shift from shareholder primacy to stakeholder capitalism and to renew community investing. “We need a whole-of-government approach to truly tackle this equity problem,” Don Graves, deputy secretary of the U.S. Commerce Department, said at an interagency convening on equitable growth last month. “But we all know government can’t solve it alone. We need strong public-private partnerships with all of you to scale solutions.”

Dealflow: Catalytic Capital

Carbon America scores $30 million to capture and sequester carbon. The Colorado-based company provides financing, development and management services for carbon capture and sequestration projects. “Carbon Capture has been around for a long time,” said Hans Kobler of Energy Impact Partners, which participated in the Series A round. “What’s been missing is the ability to finance, build and operate carbon capture projects, at scale, in an efficient, cost effective way.” Carbon America is on a mission to help the biggest carbon emitters in North America reduce their footprints, said co-founder Alex Lau

  • Climate finance. Other investors in the round include ArcTern Ventures, Canada Pension Plan Investment Board, Golden Properties and ​​the Grantham Environmental Trust’s Neglected Climate Opportunities Fund. Separately, Paris-based B Corp Sweep raised $22 million to build a data platform for large companies to track and lower their carbon footprints.
  • Onward

Aceli Africa raises $27 million to boost lending to agribusinesses in East Africa. Most East Africans depend on agriculture for their livelihoods, but loans to grow their businesses are scarce. Aceli, launched last year, provides a first-loss cushion of up to 8% to lenders to back high-impact agribusinesses that prioritize gender inclusion, food security and climate resilience. It has issued 254 loans totaling $30 million to bring new lenders into the marketplace. The impact: $108 million has been injected into rural East African communities, creating full-time jobs for 4,700 people. The new donor commitments came from the Dutch Ministry of Foreign Affairs and the U.K.’s Foreign, Commonwealth and Development Office. Aceli has raised $62 million to date. Share this post.

Medical Credit Fund raises €32.5 million for second fund supporting health clinics in Africa. The Nairobi-based debt provider has made loans of more than €120 million ($135.5 million) since 2009 to help 6,500 small, privately-run clinics in Africa acquire equipment and facilities. MCF’s second fund will focus on clinics providing healthcare services such as malaria prevention and treatment, as well as maternal and childcare. The fund “will help bridge the financing gap for small and medium-sized health businesses, allowing entrepreneurs to finance construction work, purchase equipment, and prevent medicine stock-outs,” said MCF’s Arjan Poels. Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • U.S. Treasury Secretary Janet Yellen and Vice President Kamala Harris announce nearly $9 billion in investments in community development financial institutions and minority depository institutions through the Emergency Capital Investment Program.
  • Hippo Harvest, which uses machine learning and robotics to optimize greenhouse growing systems, raises $11 million from Congruent Ventures, Amazon Climate Pledge Fund, Collaborative Fund and Energy Impact Partners.
  • Battery Future Acquisition Corp., a special purpose acquisition company targeting companies accelerating the shift from fossil fuels to electrification, raises $300 million.
  • Private equity firm Hamilton Lane receives nearly $200 million in commitments for its second impact fund.

Signals: Gender Smart

More than 200 funds apply a gender lens and most are setting firm quotas. The fourth edition of the Project Sage survey found 206 investment funds that incorporate a gender theme in their investments strategies, up from 138 in Project Sage 3.0. “We are seeing an increase in the number of funds for which gender is one of many impact considerations,” the market report from Catalyst at Large and Wharton Social Impact Initiative found. “As such, the edges of the now-larger circle are getting blurrier.” Perhaps as a result, a majority of investors are solidifying their commitments with firm mandates. More than 60% of the 206 funds have set quotas for the number of investments or percentage of capital that must be allocated to gender-lens strategies. Funds that cite gender as their top impact priority include Acumen Latin Impact Ventures, Africa-focused Alitheia Partners, and New York-based CARE Enterprises. Fundraising remains tough, with the funds reporting commitments of only $6 billion against their collective target of $13 billion; totals barely budged in the first half of this year.

  • Diverse angles. Investing in support of women and girls’ equality is “a multifaceted concept, and one that is not precisely defined,” the authors write. Among the common gender lenses investors use: gender equity in company ownership and leadership; products and services that improve the lives of women and girls; and companies that improve the lives of female customers and through their supply chains.
  • Keep reading

India’s family offices are on the hunt for proof of impact. Impact investing in India has climbed to more than $10 billion in the last decade. What hasn’t budged is the participation of high net worth individuals and family offices. The two groups of investors contribute just 3% of India’s impact capital, finds a report from India’s Impact Investors Council and Waterfield Advisors. Among the active investors: the family office of Sunil Kant Munjal, chairman of the private conglomerate Hero Enterprise, which made a one billion rupee (roughly $15 million) investment in impact investor Aavishkaar. “Impact investing is nothing but investing sensibly,” said Munjal. “It’s only right that Indians should be investing in this space.” Others include the Raintree Family Office, technologist Paula Mariwala and healthcare-focused investor Bhairavi Shibulal.

  • Measurable impact. About 80% of India’s wealthy individuals and family offices do not make subsequent impact investments. “The inability to demonstrate social impact results was a key barrier in undertaking impact investment,” the report authors write. There is a substantial opportunity for fund managers “to tap into the pool of family offices and high net worth individuals with concessionary expectations by strengthening their impact measurement and management and showcasing impact more effectively.”
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Agents of Impact: Follow the Talent

Regina Wallace-Jones, ex- of Mindbody, joins Lendstreet as chief operating officer… The Beacon Fund is looking for an impact investments officer in Denver… CapShift seeks an impact investing fellow and impact investing internAcumen is hiring a fundraising manager in New York… Dalberg seeks a community of practice program manager for the Americas in Washington, D.C. or New York… Clean Air Fund is looking for a head of private sector engagement in Indiana… Vertue Lab is hiring a part-time project manager.

Thank you for your impact.

– Dec. 16, 2021