Greetings, Agents of Impact! Thanks to all of you who plugged into Plugged In. Stay tuned for the recap and replay in Friday’s brief.
Featured: Investing in Health
How innovative financing can lower costs and boost demand for digital health solutions in the Global South. Digital healthtech has extended remote care in less accessible areas, aided providers in monitoring the health status of patients, and enabled public health officials to base decisions on population health data. The field of digital health, however, is plagued by challenges around “the sustainability, scalability and integration of solutions within health systems,” writes Ritika Ramasuri of Bangalore-based Sattva Knowledge Institute. A key cause: “The lack of funding mechanisms.” Instruments like volume guarantees, recoverable grants, concessional loans and pay-for-performance contracts can help bring down costs and drive adoption of digital health solutions globally. “All roads lead to blended finance,” Ramasuri writes.
- Supply and demand. For health innovators and entrepreneurs in low-income countries, having a consistent flow of funding across the value chain is “a chronic Achilles’ heel,” says Ramasuri. High per-unit manufacturing costs, cash flow crunches, the high cost of change management, and low demand from healthcare providers can make innovation and solution development a perilous enterprise.
- Guaranteeing impact. Wearables, point-of-care devices, and tele-ICUs could improve health monitoring, screening, and care delivery. Such solutions often have high capital or unit production costs. Bangalore-based Niramai, an AI-based breast cancer screening solution, has reduced screening costs by 60%; however, the $22 per test price tag might still be unaffordable in underserved areas. In such cases, a volume guarantee could provide the necessary price and volume commitment to manufacturing companies and serve as a shock absorber in case of market failures.
- Pay for performance. Lack of awareness and low perceived value of benefits contribute to low uptake of digital health services. A results-based financing instrument such as a social or development impact bond can boost demand by providing upfront funding for programs that improve health-seeking behaviors. With a fresh approach to financing, concludes Ramasuri, “we have the potential to unlock capital at the scale that is commensurate with the needs of these last-mile communities.”
- Keep reading, “How innovative finance can lower costs and boost demand for health solutions in the Global South,” by Ritika Ramasuri of Sattva Knowledge Institute. Catch up on all of ImpactAlpha’s coverage of Investing in Health.
Dealflow: Muni Impact
Southern California utility issues $162 million green bond to finance renewable power. Municipal bonds financing long-term energy purchases are often linked to natural gas. The Southern California Public Power Authority is issuing $162 million in green bonds to support the state’s transition to clean energy sources, specifically wind power. The bonds will refinance an existing power purchase agreement that the SCPPA has with the Windy Point wind farm in Washington state. SCPPA has since 2010 had an agreement to be the sole purchaser of the wind farm’s 262-megawatt generating capacity until 2030. The power purchase agreement with Windy Point plays a key role in helping the state achieve its ambitious renewable energy targets, writes HIP Investor’s Anna Rautenberg. HIP gives the SCPPA an impact rating of 67.1 out of 100, connoting net positive impact. The bond closes on Tuesday, Nov. 14.
- A cut above. Of the 1,718 electric utilities whose impact has been scored by HIP, SCPPA outperforms the average rating of 45. SCPPA relies on coal for just 0.1% of its power, compared to 24% for electric utilities on average, and has no reliance on oil. It also has an above-average supply of fossil-free sources including nuclear, solar and geothermal. One area for improvement: reducing dependence on natural gas.
- Get the details on the electricity bond. ImpactAlpha is featuring the issue as part of our ongoing series with HIP to feature bond issuers with strong social and/or environmental practices.
Rockefeller Foundation awards grants from its $1 billion climate commitment. A total of $11 million will go to 25 organizations working on a range of climate solutions. More than half of the grants ($7.5 million) will go to projects that the foundation says will inform its work, test hypotheses and identify partners. “Partnering with communities on their priorities” will help the foundation more effectively catalyze change, said Rockefeller’s Elizabeth Yee. Another $3.5 million will support specific solutions in energy, health, food and finance.
- Learning journey. The University of the West Indies will design research to help quantify the impact of climate issues on health. Climate Mayors, C40 and Urban Sustainability Directors Network will support city leaders in implementing the US Inflation Reduction Act. Hivos Foundation will create a dialogue with Amazonian communities on how their ancestral knowledge could identify climate solutions. An earlier grant was awarded to Elemental Excelerator to help climate entrepreneurs move from demonstrations to commercialization (see, “Equipping frontline communities for the climate transition”).
ALIVE Ventures backs Teclogi to support truckers in Colombia. Logistics inefficiencies clog the movement of goods, drive up costs, and create unsafe road conditions in Colombia. Bogota-based Teclogi connects companies to drivers to deliver their goods. By cutting out what it says are unnecessary intermediaries, Teclogi claims to cut transportation costs by 40% and give independent drivers an income boost of up to 25%.
- Growth capital. Acumen Latam Impact Ventures, or ALIVE, led the company’s $4.6 million investment round. It backed the company for its potential to “drastically improve the working conditions and socio-economic situation of drivers in the region.” ALIVE is currently raising its second fund.
- Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Vienna-based Refurbed secured €54 million ($57.8 million) to expand its marketplace for refurbished tech products and appliances throughout Europe. Said co-founder Kilian Kaminski, “We as consumers must rethink our consumption in order to reduce the impact on the environment.” (EU-Startups)
- New Jersey-based Princeton NuEnergy clinched $16 million to recycle materials from lithium-ion batteries with a method it says wastes less material, lowers costs and emits less CO2 than traditional methods. (Princeton NuEnergy)
- France’s Goodvest raised €10 million ($10.7 million) to offer savings accounts and life insurance policies that are designed around minimal climate impact. (Les Echos)
Signals: Retail Impact
Impact products for retail investors prove resilient in the face of high interest rates. From real estate to car loans, there are few areas of American life where the Federal Reserve’s “higher-for-longer” interest rate hikes haven’t started to bite. At big banks, deposits have fallen for five straight quarters, as investors chase higher-yielding CDs, money market funds and Treasury bills. Impact-oriented financial institutions may buck the trend. “Retail investors who invest in community impact have always prioritized the non-financial aspects,” says Andrea Longton, author of “The Social Justice Investor,” and a former Opportunity Finance Network executive. “You’re not really seeing them leave.”
- Staying the course. “If anything, we are seeing more demand,” says Catherine Berman of CNote, which offers interest-bearing notes that are invested with community-based lenders. CNote’s Flagship Fund, which is open to all investors, is currently yielding 3%. The high-rate environment “has been tough for us and other nonprofits in the impact space,” Justin Conway of Calvert Impact Capital tells ImpactAlpha. But, he adds, “We provide a lot more value than just the financial return. We have not seen folks leaving to go elsewhere.” Calvert has raised rates for its Community Investment Note, to 5% for five-year maturities and 3.5% for one-year notes.
- Move your money. Neither Calvert’s or CNote’s notes are FDIC-insured, as bank deposits are. Longton suggests MightyDeposits.com to see exactly how banks and credit unions invest depositor money. Still, there’s no better time to explore moving even a bit of cash into impact-oriented banks and cash alternatives, Berman says. “This rate environment is certainly challenging for our incredible community finance institutions. It’s also an opportunity to have a front row seat to see how strong that ecosystem is.”
Agents of Impact: Follow the Talent
Wellington Management is hiring a director of its sustainability group in Boston… BGS Consulting seeks a manager of ESG initiatives in the Baltimore-Washington area… The Nature Conservancy is looking for a communications manager in Dublin, Ohio… Los Angeles Cleantech Incubator is accepting applications for its next cohort through Wednesday, Dec. 20… The Miller Center for Social Entrepreneurship’s applications for its next program are open through March 15.
Thank you for your impact!
– Nov. 9, 2023