Greetings! And a warm welcome to all of the Agents of Impact from USAID and The Conduit.
Featured: ImpactAlpha Original
With ‘mezzanine capital,’ iungo capital seeks to fill a gap for East Africa’s small and growing family businesses. Longstanding financing challenges for small and growing businesses in Africa have only been exacerbated by the COVID crisis (see, “Needed: Responsive, aggregated and accessible capital for (once-) growing businesses”). One-quarter of the portfolio companies of iungo capital (which uses the lower-case style for its name) have halted operations, at least temporarily; others have laid off as much as 75% of their staff. But the Netherlands- and Uganda-based capital provider is playing offense as well as defense. It has secured nearly $500,000 from the Doen and Schooner foundations for concessionary relief funding to help its two dozen portfolio companies survive the lockdowns. A new $4 million commitment from the U.S. International Development Finance Corp., or DFC, will enable the company to cut checks to additional promising businesses in its pipeline.
The estimated $1 trillion annual financing gap for companies too large for microfinance, too small for bank financing, and not a match for venture capital has been a long-running discussion among many impact investing and international development organizations. iungo is one of East Africa’s too-few capital providers for such ‘missing middle’ companies. Its terms for ‘mezzanine’ financing, a flexible category including financial terms that are neither traditional debt nor equity, offer small businesses the inventory finance and working capital they need. Structured exits, in the form of repayments, give investors greater certainty of at least a modest return. “iungo stands out as unique in our portfolio,” the DFC’s Richard Greenberg tells ImpactAlpha, citing the firm’s ability to write checks averaging $200,000, mostly to light manufacturing enterprises in agrifood, water or renewable energy. “Most are family businesses,” iungo’s Roeland Donckers says. “They don’t want equity because they don’t want to give up ownership. They want to pass their business on to their kids.”
Keep reading, “With ‘mezzanine capital,’ iungo capital seeks to fill a gap for east Africa’s small and growing family businesses,” by Jessica Pothering on ImpactAlpha.
Dealflow: Follow the Money
Affordable housing startup PadSplit closes $10 million. The Atlanta-based company manages single-family homes, renting out individual rooms to make housing affordable for low-income families. PadSplit, which launched in 2017, manages more than 1,000 units in Atlanta for tenants earning less than $35,000 a year. The Series A financing will help it expand to Houston and other markets, AtlantaInno reports. Earlier investors Core Innovation Capital, Kapor Capital, Impact Engine and Cox Enterprises reupped, and were joined by Alate Partners and Citi. Check it out.
Finnish vertical farming startup iFarm raises $4 million… The deal follows financing for several other indoor farming ventures, including mega-greenhouse operator AppHarvest and seed producer Unfold, a partnership between Bayer and Temasek to serve the growing indoor agriculture market. Gagarin Capital, Matrix Capital, Impulse VC, IMI.VC and several angel investors backed iFarm’s round.
…While Ankur Capital invests in seafood tech venture Captain Fresh. The startup will use the funding to build out its seafood supply-chain traceability tech. Mumbai-based Ankur led Captain Fresh’s $2.3 million funding round as impact investors dial up commitments to sustainable seafood, fisheries and oceans startups. Indonesia’s eFishery just raised a Series B round to help smallholder fish farmers invest in tech upgrades. S2G Ventures and Mirova have both recently closed $100 million-plus seafood-focused funds.
Minnesota-based Finnovation Lab selects social impact fellows. The nine entrepreneurs in Finnovation Lab’s third cohort are addressing public service, mental health, inclusive media and access to education for the Black, Indigenous and LGBTQ communities. Founders get $50,000 in seed capital, a healthcare stipend and workspace.
Impact Voices: Pass the Mic
Business founders turn to equity crowdfunding to raise capital during COVID. When the Detroit City Football Club needed capital to survive the COVID crisis, the professional soccer team tapped not typical investors, but the people of Detroit. Within a few days, the team’s Wefunder equity-crowdfunding campaign raised over $1 million from more than 3,000 fans and supporters, who became part-owners of the hometown team. “These new shareholders of Detroit City FC will go to more games, buy more merchandise, and cheer more loudly,” writes Wefunder’s Jonny Price in an ImpactAlpha guest post. Founders finding it harder to raise capital from institutional or accredited investors during the pandemic are having success with friends, neighbors, peers and the growing community of non-accredited investors looking to make an impact (see, “Democratizing business financing and ownership to build community wealth”). “If ever there was a historical moment for a democratic, community-based, people-powered approach to investing in startups and small businesses, this is that moment,” Price writes.
- Shutdown success. The monthly volume of equity crowdfunding on Wefunder, Republic, StartEngine and other sites has nearly doubled since February to almost $20 million. Volume at Wefunder, which now offers founders the ability to recruit a lead investor and roll individual investors into a single line on the cap table, grew from $2.6 million in February to $6.5 million, according to Price. Last month, the crowdfunding site launched 51 new fundraising campaigns (up from a previous high of 26); 5,487 people made their first investment in a startup on Wefunder, a new record.
- Crowdfunded deals. Black entrepreneurs Angela Benton (Streamlytics) and Pierre Laguerre (Fleeting) each raised the Reg C maximum of $1,070,000 on StartEngine and Republic in June and July respectively (see, “Equity crowdfunding changes who gets financed”). On Wefunder, Los Angeles distillery Lost Spirits raised $1.5 million, Seattle-based Copperworks raised $1 million from customers and community members, and Everydae became another female-led startup to raise seven figures, all since March. Virtual reality-based office startup Immersed raised $2 million in the week after graduating from Wefunder’s XX COVID Accelerator.
- Read Price’s full post.
Agents of Impact: Follow the Talent
Aniyia Williams, founder of Black & Brown Founders and co-founder of Zebras Unite, joins Omidyar Network as principal of beneficial technology. Deldelp Medina is the new executive director at Black & Brown Founders… KKS Advisors’ Anuj Shah joins Nossa Data as an advisor… TZP Group is looking for a vice president on its impact investing team in New York… Calvert Impact Capital is hiring an analyst and officer/senior officer in Bethesda, Md… Van Leer Group seeks a mission-related investments consultant in the Netherlands.
Croatan Institute is hosting “Fixed income investing in regenerative agriculture and resilient food systems” with Croatan’s Josh Humphreys and David LeZaks, along with Allison Rowland of the Council of Development Finance Agencies and Kevin Dick from Delta Institute, on Wednesday, Aug. 26 (see, “Agriculture funds are investing billions to regenerate soil – and communities”).