The Brief: Financing fintechs in emerging markets, green earth impact fund, plant-based home goods, data centers in Africa, cultural impact bonds

The team at

ImpactAlpha

Greetings, Agents of Impact! 

👋 Connect with us. Catch ImpactAlpha’s David Bank at Neighborhood Economics this week in Jackson, Miss. Dennis Price is at Big Path Capital’s MO Summit in Austin, Texas. Roodgally Senatus is covering “Impact investing in the inclusive creative economy” at the Rockefeller Foundation in New York. 

Tune into these ImpactAlpha calls:

📞 Heading for Change. 2X Global’s Suzanne Biegel will share details about the Heading for Change donor-advised climate + gender fund on a Zoom call co-hosted by ImpactAssets and ImpactAlpha, tomorrow, April 25 (RSVP).

📞 Good green jobs. Join ImpactAlpha and Jobs for the Future on LinkedIn Live to kickoff JFF’s Quality Green Jobs Regional Challenge and a new funding opportunity to support green jobs. JFF’s Taj Ahmad Eldridge will interview JFF’s Sara Vander Zanden and Lucy Fernandez, Thursday, April 27. (RSVP).

And one more thing: 

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Featured: Agent of Impact Podcast

Helping emerging market lenders ‘leapfrog’ the US. (podcast). Jacob Haar’s work in microfinance in Azerbaijan inspired him to tackle obstacles to financial inclusion at home in the United States. For a decade, Community Investment Management, an institutional impact investment fund, has provided capital to technology-enabled, or “fintech,” lenders to small businesses. Now, Haar and CIM are bringing their financial-access solutions back to emerging markets. “Over the last 10 years that we’ve been funding fintech in the US, we’ve seen emerging markets—which were quite a bit behind with many of those innovations, digital infrastructure and other things—in some ways leapfrog where the US is,” Haar tells ImpactAlpha’s David Bank on the latest Agents of Impact podcast. For example: embedded finance is driving access to small business credit via non-traditional lenders like logistics, inventory and software services firms. The model exploded amid the pandemic, as millions of informal and brick and mortar businesses shifted online out of necessity. 

“The opportunity that exists today, because of some fundamental shifts in the way underlying credit-worthy customers are being reached, understood, lent to without as much risk—it’s very compelling,” Haar says. CIM, which has backed US lenders such as Founders First and Camino Financial, is ramping up its global lending activities to ensure fintechs are able to continue innovating and promoting financial inclusion. “In the current environment, there’s a great need and opportunity for folks like us who are lending,” he says. Progress could be jeopardized by inflation and high interest rates, as well as the shrinking venture capital market, he adds. “There definitely is a lot more risk.” But many fintechs that raised significant funding rounds during the pandemic-era venture boom “have the ability now, in a challenging market, to build short-duration portfolios that will be solving many pain points for underlying customers.”

Dealflow: Climate Capital

BlueOrchard’s Green Earth Impact Fund secures $25 million from Luxembourg’s ministry of finance. “As we face unprecedented environmental challenges, it is essential that we take bold action to protect our planet and ensure a sustainable future for all,” said the ministry’s Yuriko Backes, whose agency’s commitment includes a layer of first-loss capital. The Green Earth Impact Fund seeks to raise $250 million to invest in private equity, debt and real assets funds focused on climate adaptation and mitigation, water protection, and biodiversity in emerging markets. BlueOrchard launched the fund of funds last year with its parent company Schroders to offer investors “the opportunity to invest in climate action and biodiversity in growth markets, contributing to the protection of vulnerable communities and a just transition,” said BlueOrchard’s Phillip Mueller

  • Strategic partnerships. Blue Orchard will manage the fund’s investments; Schroders will provide risk and portfolio services. Schroders acquired a majority stake in BlueOrchard in 2019. “Our joint focus will now move onto capital raising in Luxembourg, across Europe and other international markets,” Schroders’ Finbarr Browne said.
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EcoSoul Home raises $10 million for eco-friendly home goods. Bellevue, Wash.-based EcoSoul sells plant-based tableware, kitchenware, toilet paper and compostable bags to customers in the US, India, China and Vietnam. The Series A funding, led by Accel, will support EcoSoul’s expansion to home care, baby and feminine care products in Canada, Germany, the UK and United Arab Emirates. EcoSoul estimates the global market for eco-friendly and sustainable home goods is expected to reach $300 billion by 2030.

  • Good jobs. EcoSoul says the majority of workers who make its plastic- and tree-free products are women from rural communities in India. The company says employees receive fair wages, free meals  and transportation. Since 2020, EcoSoul estimates it has reduced the use of three million pounds of plastic and saved 24,000 trees.
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Dealflow overflow. Other investment news crossing our desks:

  • Incofin scored funding from Degroof Petercam Asset Management and Korys to expand its impact in emerging markets. (Incofin)
  • Raxio Group secured a $33 million sustainability-linked loan from the Emerging Africa Infrastructure Fund to build inclusive data centers in underserved African job markets including the Democratic Republic of the Congo, Mozambique, Cote d’Ivoire and Tanzania. (EAIF)
  • Sydney-based Novalith Technologies raised A$23 million (US$15.4 million) in a Series A round led by Lowercarbon Capital to commercialize its cheaper and greener lithium extraction technology. (Novalith)
  • London-based Floodlight snagged seed funding to streamline small businesses’ finances and accounting. (EU-Startups)

Impact Voices: Creative Economy

How cultural impact bonds can finance creative sectors to drive economic growth. Like the $1 trillion-and-growing market for green, social and sustainable bonds, “cultural impact bonds” can “accelerate and sustain a dynamic creative economy that contributes to social progress,” argues Adriano Picinati di Torcello of Deloitte Luxembourg in an essay excerpted from, Creativity, Culture & Capital.” Global contributors in the essay collection from Nesta, Fundación Compromiso and Upstart Co-Lab make the case for social and economic benefits of impact investments in the creative economy (earlier essays in the series include Yo-Yo Ma’s Culture connects us,” and The impact of COVID-19 on Africa’s creative sectorsfrom Heva Fund’s George Gachara). Creative sectors are some of the fastest-growing sectors in the global economy yet suffer from a lack of funding,” says Picinati di Torcello. The disconnect is “driving a need to explore new alternative sources of revenue and partnerships and reconsider many traditional funding models.”

  • Creative structuring. Cultural bonds could be fixed-income instruments for art, music, food and other creative projects that encourage sustainability, Picinati di Torcello says. They could include tax exemptions and credits for investors that provide monetary incentives to support social issues and develop the creative industries. And, he asks, “could the World Bank and European Investment Bank lead the way, as they did with the initiation of the green bond market?”

Agents of Impact: Follow the Talent

The Copia Group names Beata Kirr, ex- of Bernstein Private Wealth Management, as chief impact officer… Ryan Edwards, former project finance director at Silicon Ranch Corp., joins Monarch Private Capital as renewable energy manager… Closed Loop Partners is hiring a project director for the Center for the Circular Economy in New York… The Children’s Investment Fund Foundation seeks a climate analyst in London. 

Capital One is recruiting a social impact program execution director in the Washington, DC metro area… A.P. Moller-Maersk has an opening for a head of sustainable procurement in Denmark… The Center of Innovation for Diversity, Equity, and Inclusion in Finance is looking for an executive director… 2X Global is on the hunt for a remote fundraising and partnerships lead. 

This year’s Goldman Environmental Prize winners include Delima Silalahi, an Indigenous environmental activist in Indonesia; Finland’s Tero Mustonen, whose leadership helped convert degraded former industrial mining and forestry sites into biodiverse wetlands; and Alessandra Korap Munduruku, who organized community efforts to halt mining development in Brazil’s Amazon rainforest. 

Thank you for your impact.

– April 24, 2023