Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Investors that demonstrate flexibility and patience prove catalytic in COVID crisis. Forgiveness and patience are rarely taught as crucial investment tools in business school. But such flexibility has become essential as impact investors navigate the new landscape of business shutdowns, lost revenues, supply-chain disruptions and market upheaval that has accompanied the COVID pandemic. And because the restructuring of loan payments and other terms by itself doesn’t require new infusions of capital, impact investors can demonstrate another characteristic that is all too rare in finance: speed. The risk analysis of mission-aligned investors is apt to include potential loss of positive social impact from the companies they support. That makes patience and flexibility a form of “catalytic capital” that can generate, or at least preserve, both financial and social returns.
At RSF Social Finance, investors agreed to reduce the rate of return on their capital – from 1% to 0.5% – as they recognized in late March that COVID-related shutdowns were beginning to disrupt portfolio enterprises in food and agriculture, arts and education, climate and the environment, and economic justice. The California Endowment extended loan interest forgiveness for six months across its entire program-related investment portfolio, without being asked. “Just a powerful act of solidarity,” tweeted Antony Bugg-Levine of Nonprofit Finance Fund, one of the Endowment’s borrowers. Candide Group’s Olamina Fund, which provides capital to lenders serving Black and Native communities, deferred interest payments for six months for borrowers who themselves are extending interest forgiveness to communities in need. Jobs for the Future also deferred interest for two quarters for the portfolio’s education and workforce tech companies serving lower-wage and low-to-mid-skill workers. JFF’s Yigal Kerszenbaum says he is confident investees “will work harder to pay us back later on down the road when they can.”
Keep reading, “Investors that demonstrate flexibility and patience prove catalytic in COVID crisis,” by Dennis Price on ImpactAlpha.
Dealflow: Follow the Money
Domini Impact Investments launches “sustainable solutions” mutual fund. The women-led investment advisor has developed the Domini Sustainable Solutions Fund as a lower-volatility impact equities product for everyday investors. The fund invests in stocks selected based on seven sustainability themes: the low-carbon transition (like clean energy companies), sustainable communities (like affordable housing), clean water and wastewater services, sustainable food, health and well-being (like prevention-focused healthcare companies), financial inclusion, and digital inclusion (like edtech and software for small businesses). Portfolio holdings include design and engineering software company Autodesk, vegan meat company Beyond Meat, Tesla and Zoom.
- Diversifying choices. The mutual fund is Domini’s fourth product, following its U.S and international impact equity funds and its impact bond fund. Domini allows clients to open standard or retirement investment accounts with $1,500.
- Check it out.
Oxwash raises £1.4 million for carbon-neutral laundry service. The U.K.-based startup has engineered machines that filter and recycle water and use ozone to sterilize fabrics, cutting water, chemical and energy use from the traditional laundry process. It operates a cleaning and delivery service for individuals and businesses in Oxford and Cambridge, with plans to expand to London. For delivery, the company uses e-bikes and employs all of its delivery workers, TechCrunch reports. TrueSight Ventures, Founders Factory, Twitter co-founder Biz Stone and Indeed.com co-founder Paul Forster backed the round.
Parallevar secures early funding to bring delivery to Ecuador’s small cities and towns. Delivery services are in high demand worldwide because of COVID, but most services concentrate in bigger cities. Ecuador’s Parallevar focuses on delivering food, medicine and household mainstay items in cities and towns with tens of thousands of people. The company raised $200,000 from Grupo Empresarial Marcos Raúl, a prominent Ecuadorian holding company.
Podcast: Returns on Investment
Career impact bonds transfer risk to investors as the future of work arrives (podcast). The future of work is here. With unemployment soaring and many jobs never coming back, long-forecast shifts in employment patterns that might have played out over a decade or more are snapping quickly into place. To adjust, millions of people in the U.S. and around the world will need retraining, certifications and other support to re-skill for the many jobs for which demand still exceeds the supply of trained workers. That requires capital. In an interview on ImpactAlpha’s Returns on Investment podcast, Tracy Palandjian, CEO of Social Finance, discusses Social Finance’s latest innovation: Career Impact Bonds. “Let’s take the risk away from the student and level the playing field so students only repay the debt when they get a job,” she says.
Read on, and listen in to, “Career impact bonds transfer risk to investors as the future of work arrives (podcast)” on ImpactAlpha. Check out all of ImpactAlpha’s podcasts, including our weekly Impact Briefing.
Agents of Impact: Follow the Talent
Happening soon: Mission Investors Exchange. The MIE 2020 National Conference kicks off Thursday, May 7. The virtual conference is open to non-members for the first time (and ticket prices are significantly reduced). MIE has extended the registration deadline to May 9 at noon ET. Join the conversation.
Cecile Blilious, ex- of Impact First Investments, is named head of impact and sustainability at Pitango Venture Capital… Commercial Agriculture for Smallholders and Agribusiness (CASA) is hosting a series of virtual conversations on “Rethinking Agri-Business Investments Through the Pandemic.”
The World Economic Forum launches the COVID Response Alliance for Social Entrepreneurs with more than 40 organizations to pool knowledge, experience and responses to help social entrepreneurs overcome COVID challenges… The Investor Agenda issues a call to world governments to “prioritize sustainability and equity, and accelerate the transition to a net-zero emissions economy, create new jobs and catalyze the sustainable deployment of private capital” as they formulate COVID recovery plans.
Thank you for reading.
–May 5, 2020