Greetings, Agents of Impacts!
Agents of Impact Call No. 15: Making the mark in impact management. Join Tideline’s Christina Leijonhufvud and Nuveen’s Allison Spector, LeapFrog Investments’ Roshni Bandesha, and Alan Rousso of the European Bank for Reconstruction and Development for an inside look at best practices in impact management. Tideline is sponsoring The Call to share aggregated results from a dozen independent verifications of investor alignment. ImpactAlpha’s David Bank will host the discussion of common approaches and shared challenges, Thursday, April 23 at 9am PT / 12pm ET / 5pm London (please note corrected time). RSVP today.
Double Feature: ImpactAlpha Originals
Fintech lenders expand access to COVID relief funds for small businesses. Earlier action and COVID testing could have saved lives. Faster and more effective financial support could still save millions of small businesses and their employees. In the second week of the federal Paycheck Protection Program, the prognosis was not good for many small businesses that have struggled to access the U.S. relief program, which offers forgivable loans to firms with fewer than 500 workers. The PPP loans are primarily flowing through big banks and established Small Business Administration lenders, which doesn’t reflect the evolving small business capital market. This week, the government broadened PPP distribution to include non-bank lenders like PayPal, Intuit and Square with technology to quickly assess risk and more leeway to lend than highly regulated banks.
The COVID crisis may be fintech’s moment to shine. “This is where we see ultimately the value of speed and online presence,” says Jacob Haar of Community Investment Management, which provides capital to mission-driven online lenders. Three-quarters of Intuit’s QuickBooks Capital customers have fewer than four full-time employees. Nearly six of 10 Square Capital loans went to women-owned businesses; more than one in three to minority-owned businesses. “We’re seeing smaller businesses who have been turned away from banks,” says Funding Circle’s Ryan Metcalf. StreetShares, which serves veteran-owned businesses, is providing technology to community-based lenders while it waits for its own PPP approval. The government relief program could establish community-based and fintech-enabled distribution channels for impact, philanthropic, catalytic or blended capital, in addition to public funds. “It is incumbent on impact investors to reach businesses as quickly as possible,” says Haar. “How do we step up with all the capital we have in our toolbox to serve folks who need capital other than what commercial capital can provide?”
Keep reading, “Fintech lenders expand access to COVID relief funds for small businesses,” by Amy Cortese on ImpactAlpha.
Sustainable Investing Challenge points to the direction of finance talent. MBA programs generally teach students what’s achievable with standard tools like venture capital, private equity and debt. Business (and public policy) students competing in this year’s Kellogg-Morgan Stanley Sustainable Investing Challenge first imagined what’s possible, then engineered financial instruments to make it happen. Competition finalists pitched products to reduce plastic waste, eradicate homelessness, curb carbon emissions, and integrate refugees. Over video this week, judges selected three teams (to be announced this morning) for Friday’s virtual finale. For a decade, the student teams “have crafted financially-innovative solutions to intractable social and environmental problems,” says Megan Kashner of Northwestern’s Kellogg School of Management.
- Getting real. “We see components of concepts that were in the finals four or five years ago that are now mainstream investment theses pursued by some of the world’s largest investors,” says Morgan Stanley’s Jamie Martin. The COVID crisis is making stark issues around social inequality, global health and climate, says Equilibrium Capital’s Dave Chen, an adjunct professor at Kellogg who helped start the challenge in 2011. “They are getting a sense of how real some of the plans they put together really are.”
- Cultivating talent. More than 2,000 students from all over the world have participated in the competition. Winners have gone on to launch Blue Forest, Greenprint Partners, Secha Capital and Carbon Yield. Hannon Armstrong’s Chad Reed, whose Forest Conservation Notes’ team won the 2015 competition, flipped from an intelligence career into climate finance. The Sustainable Investing Challenge, he says, is “about building a pipeline of professionals who can enter the space on the ground running.”
Keep reading, “The Sustainable Investing Challenge points to the direction of finance talent, by Dennis Price on ImpactAlpha.
Dealflow: Follow the Money
54gene closes $15 million to accelerate genomics research in Africa. Medicine is moving towards customized treatments and drugs based on genetic research. 54gene wants to ensure that African patients aren’t left out. The Nigerian startup is building one of Africa’s first biobanks to serve as a database for new therapeutics (MedGenome raised $55 million last week to do something similar in South Asia). 54gene will use its Series A funding to co-develop treatments and clinical programs in Africa, which may include a pandemic response. “Our specific expertise places us in a unique position to contribute immediately and rapidly to get COVID-19 testing off the ground and further support testing efforts in Nigeria,” 54gene’s Abasi Ene-Obong told ImpactAlpha. The company’s long-term pandemic strategy aims to understand disease resistance, susceptibility and long-term immunity. The funding round was led by Adjuvant Capital, Novartis and the Gates Foundation, with participation from Y Combinator, Better Ventures, Fifty Years and others.
- Under-representation. Treatments for infectious and non-infectious diseases require genetic research and data. But less than 3% of genetic data used in therapeutics development comes from people with African ancestry. “Africa is not producing genetic data,” said Ene-Obong. “The biggest labs in Africa still ship bio samples for testing in Europe, because they don’t have that capability.”
- Fast-track. 54gene was launched 15 months ago by diagnostics startup StackDx. It secured pre-seed funding from Microtraction, an early investment fund that aims to help African startups overcome early funding gaps, then followed with a $4.5 million seed round last July. Early funding makes a big difference when starting up a company in many African countries, Ene-Obong said. “Deep technology, particularly in the biotech industry, requires more resources, however.”
- Go deeper.
Indonesia’s KoinWorks raises $20 million to help small businesses access financing. The peer-to-peer lending platform, which launched in 2016, is working to expand access to finance for small businesses affected by the COVID pandemic. Quona Capital, EV Growth and Saison Capital took equity stakes, while Triodos Bank provided debt financing.
Renewable Energy Performance Platform backs Tanzania’s first wind farm. Rural energy developer Rift Valley Energy Group secured $1.2 million from the U.K.-government-backed investor to install a 2.4-megawatt wind farm in Tanzania’s rural Iringa region. Construction is slated for May completion.
Agents of Impact: Follow the Talent
Cal Harris, who worked with the Michael Bloomberg campaign, joins Economic innovation Group as director of communications… Blue Haven Initiative seeks an associate in Cambridge, Mass… SEAF is hiring three interns in Washington, D.C… Aeris is offering new investors free access to Aeris Performance Maps, its quarterly financial update on community development financial institutions, or CDFIs.
Thank you for reading.
–Apr. 15, 2020