Greetings, Agents of Impact!
Featured: Policy Corner
Financing employee ownership and accounting for human capital kick off Year of the ‘S.’ Workers’ newfound leverage goes beyond the upsurge in union organizing. A majority of Americans believe companies should prioritize the economic security of their workers. Even private investors are recognizing the competitive and operational advantages that come from ‘S’ (for social) factors like workplace equity, skill development and upward mobility. “We see real opportunities to generate bipartisan support for compelling policy ideas related to empowering workers and investing in community resiliency,” Fran Seegull of the U.S. Impact Investing Alliance wrote in her policy roundup last month.
- Move over, private equity. Here comes worker ownership. Who better to buy an established, profitable small business than the employees who work there? But when it comes time for the aging generation of business owners to retire or otherwise exit, many still accept offers from private-equity buyers, or perhaps from direct competitors. Both routes are more likely to result in laid-off workers, shuttered facilities and empty storefronts. Making employee ownership competitive with private equity is the aim of a raft of state and federal initiatives. Up next: Proposed U.S. Small Business Administration guarantees for low-cost loans to employee-ownership transition funds, much like existing incentives for Small Business Investment Companies, which helped kickstart the venture capital industry. “At the end of the day, we want investors to come in and do this,” Ownership America’s Jack Moriarty tells ImpactAlpha. “Certainly if they have an appetite for social impact. But even just to make this a mainstream asset class.” More from David Bank on ImpactAlpha.
- New rules to account for a key corporate asset: employees. Policy proposals on the docket could usher in the biggest changes in decades in the way corporations account for their workforces. The shifts start to treat employees as assets, not liabilities, and could spur companies to invest in their employees’ success rather than cutting them as costs. Human capital and intangible assets represent almost 90% of corporate value, up from just 17% in 1975. The only worker-related data corporations are currently required to disclose is headcount. The Security and Exchange Commission is mulling a rule that would mandate more detailed corporate disclosures on key elements of human capital, such as a company’s use of part-time and contract workers, turnover rates, total workforce cost, and diversity, equity and inclusion metrics. Another boost: the Financial Accounting Standards Board, or FASB, is looking to break out employee compensation from the broader category of “Selling, General & Administrative,” or SG&A in bean-counterese. “What we’re reflecting in the financial statements is not really the reality for a lot of the companies,” says JUST Capital’s Cambria Allen-Ratzlaff. “It’s very difficult for investors to make decisions when you have bad or incomplete information.” More from Amy Cortese on ImpactAlpha.
- RSVP for tomorrow’s Call: Year of the ‘S.’ Fran Seegull will join special guests Jack Moriarty of Ownership America, Cambria Allen-Ratzlaff of JUST Capital and Jesse Van Tol of the National Community Reinvestment Coalition on Agents of Impact Call No. 49, tomorrow, Feb. 22 at 10am PT / 1pm ET / 6pm London. Last chance to RSVP. Catch up on ImpactAlpha’s impact policy coverage at Policy Corner, sponsored by the U.S. Impact Investing Alliance.
Dealflow: Investing in Oceans
IKEA’s backer stakes Ocean 14 Capital to €30 million to supercharge the blue economy. The commitment from Ingka Investments, along with €10 million from Morocco, brings London-based Ocean 14’s fundraising to €130 million ($139 million) for investments in aquaculture and alternative proteins, reducing plastic pollution, protecting ecosystems and ending overfishing. Investing to advance a sustainable blue economy was a key talking point at this year’s World Economic Forum Annual Meeting in Davos, Switzerland. “Davos 2023 radically shifted the dial on the conversation this year,” said Ocean 14’s Chris Barnes. Ingka Investments is part of Ingka Group, the largest owner and operator of IKEA Retail. Ocean 14 has made four investments to date, including in Syaqua a supplier of specialized shrimp to hatcheries and farmers, and expects to grow its portfolio to about two dozen companies in three years.
- Ocean motion. The OECD estimates the “blue economy” could be worth $3 trillion by 2030, providing jobs for 40 million people. “There is a powerful undercurrent of momentum emerging as people are increasingly waking up to the fact that ocean’s health is the engine to economic growth and critical to national and global development,” Barnes said.
- Young ocean entrepreneurs. Last week, Triggering Exponential Climate Action, or TECA, invested in seven oceans and seafood startups in Kenya, Egypt, South Africa, Uganda, Zimbabwe and Tanzania. Next week, 70 young climate and ocean entrepreneurs, scientists and activists are expected in Panama at the sixth Our Ocean Youth Leadership Summit, co-hosted by the Sustainable Ocean Alliance. The Alliance has supported more than 222 ocean “solutions” (see, “OK Doomer: These young entrepreneurs aren’t giving up on the climate or the oceans”).
- Check it out.
COMMUNITYx snags $2 million to build the Instagram of social and environmental activism. COMMUNITYx raised more than $1.2 million for the mother of Tyre Nichols, the 29-year-old Black man who was fatally beaten by Memphis police officers last month. “COMMUNITYx worked with Memphis activists to help mobilize over 500,000 people to take action on Justice4Tyre, gained thousands of petition signatures, and worked with local activists to achieve initial demands in Tyre’s case,” said Arian Simoneof Fearless Fund, which led the seed investment round in the San Jose-based social network. COMMUNITYx connects global activists to petitions, events and fundraising campaigns around racial justice, climate change, LGBTQIA+ and women’s rights, and health and human rights.
- Racial justice activism. The Black and brown women-led tech venture was co-founded by Chloë Cheyenne, whose father, Andrew Sledd, a Black man, was shot over a dozen times by Chicago undercover cops inside of his home in March 1989. By the time the police realized they had the wrong address on their search warrant, Sledd was bleeding on the floor. He remains physically handicapped, 34 years later, with one of the bullets still lodged in his spine.
- Inclusive capital. COMMUNITYx will use the financing to add corporate and philanthropic partners to its online platform. Other investors in the round include Goodwater Capital, Techstars and Black Ambition, a nonprofit founded by Grammy Award-winning singer Pharrell Williams. NBA alums Baron Davis and Matt Barnesalso invested. COMMUNITYx has raised $3.1 million to date.
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Dealflow overflow. Other investment news crossing our desks:
- Twentyeight Health raised $8.3 million in pre-Series A funding from Impact Engine, SteelSky Ventures and other investors to provide telehealth services to Black and other communities of color.
- Mexico City-based neobank Vexi scored $8 million in a round backed by Pomona Impact to offer low-interest credit cards to young people in Mexico.
- Paris-based Bibak snagged €6 million ($6.4 million) in equity and debt funding to replace single-use plastic food packaging with reusable food containers.
- Blackrock, through its $4.5 billion BlackRock Global Infrastructure Fund, acquired a majority stake in Canadian waste management company Environmental 360 Solutions.
Six Short Signals: What We’re Reading
👩🏾🔬 Blue-collar tech jobs. The central Ohio region around Columbus – site of the first new fabrication plant spurred by the CHIPS Act – is one place to look for ideas on how to deliver on the promise of accessible semiconductor manufacturing jobs. (Brookings Institution)
📣 Backlash to the ESG backlash. Americans overwhelmingly want companies to speak out on issues that are important to their employees and customers and try to have a positive impact on their communities. (Global Strategy Group)
⚡ Supplying Lithium. The race is on for countries to secure stable and resilient lithium supplies to meet demand for batteries in electric vehicles, energy storage systems and other devices and appliances. The discovery of a major deposit of lithium pushes India into the world’s top five national lithium reserves (Quartz). How do lithium-ion batteries work? An explainer. (Energy.gov)
🇪🇺 Rapid-response energy shift. Europe turned an energy crisis into a green energy sprint with the potential to knock a full decade off the continent’s decarbonization timeline. (New York Times)
🌳 Forest intelligence. Purdue launches a new AI-based global forest mapping project. (Purdue University)
🌱 Climate career toolkit. Track, research, apply, and land the climate job of your dreams. (Climb)
Agents of Impact: Follow the Talent
President Biden appointsJonathan D. Lovitz, ex- of Lovitz Strategies, as director of public affairs of the U.S. Economic Development Administration… Laurie Felker Jones, an advisor to impact funders and founders, joins 2x Global as 2X certification lead… John Vaske, ex- of Temasek, is named chief executive officer of Farmers Business Network, replacing co-founder Amol Deshpande… PayPalseeks a remote treasury impact investing intern.
Village Capitalis looking for a Mexico City-based investment analyst for Latin America… Root Capitalis hiring a remote manager for reports and proposals… Autodeskhas an opening for a sustainability and foundation executive communications manager in San Francisco… CIVICUSis recruiting a chief officer of innovation and sustainability… United Nations Foundationsis looking for a chief executive officer for the Digital Impact Alliance in Washington, D.C… The University of Oxfordseeks a researcher for the TABLE Initiative… JFF Ventures is recruiting a remote senior analyst.
Thank you for your impact.
– Feb. 21, 2023