Greetings, Agents of Impact!
Safeguarding impact in emerging markets. The International Finance Corp.’s Operating Principles for Impact Management call for investors to monitor their impact – and respond appropriately. On ImpactAlpha’s Agents of Impact Call No. 18, Symbiotic’s Safeya Zeitoun, Finance in Motion’s Sandra Abella, DEG’s Julian Frede, Blue like an Orange’s Bertrand Badré, the IFC’s Neil Gregory and other Agents of Impact will detail their COVID-crisis responses. Join The Call, Thursday, June 11 at 10am PT / 1pm ET / 6pm London. RSVP now.
- Background reading. There are more than 30 case studies in the IFC’s new report, “Growing Impact.”
Double Feature: Impact Voices
Black and brown employee ownership for the post-COVID economy. Decades of economic policy and investment practice have left American workers, especially workers of color, with stagnating wages, declining wealth and eroding economic security. Time-tested employee ownership models “can both save viable small businesses and contribute to closing the racial wealth gap,” write Philip Reeves and Todd Leverette of Apis & Heritage Capital, which facilitates employee-led buyouts with workforces of color. In a guest post on ImpactAlpha, they propose employee ownership for high-quality businesses being sold or shut down in the COVID disruption. Transitioning ownership to employees, they say, “provides an owner with a dignified off-ramp, captures the underlying value of their business, and positions that business and its workers with the cash reserves needed to survive the downturn, saving jobs in the process.”
- Owner economy. More than 6,000 companies have Employee Stock Ownership Plans, or ESOPs; another 460 companies are organized as worker coops. Employee ownership stakes in U.S.-based ESOPs average $130,000. Employee-owners making less than $30,000 have 17% greater median household net worth and 22% higher median income from wages than non-owner peers.
- Wealth creation. Employee-owners create the kind of incremental value that builds sustainable competitive advantages. “This not only preserves jobs, it creates wealth,” say Reeves and Levette, teammates at the Democracy at Work Institute. Employee shares represent down payments for homes, tuition for a child or grandchild, additional healthcare coverage or an enjoyable retirement. When targeted towards workers of color, say Reeves and Levette, worker ownership, “expands the middle class, closes the racial wealth gap and strengthens the economy.”
- Keep reading, “Black and brown employee ownership for the post-COVID economy,” by Philip Reeves and Todd Leverette on ImpactAlpha.
How gender power imbalances put the COVID recovery at risk (podcast). Power is the thread that connects the surge in gender-based violence during the COVID crisis with violence against people of color, including by police officers, Criterion Institute’s Joy Anderson says on ImpactAlpha’s latest podcast, recorded just as recent protests against racial injustice got underway. An estimated one in three women experience gender-based violence in their lifetime. “That’s material to every investor,” Anderson says. “That’s material to every business. The question is, how do you figure out how it is material?” Mitigating the risks of gender-based violence, a new tool developed by Criterion Institute and UNICEF, can guide investors through due diligence for gender-based risks.
- Industry-specific. Hospitality, which has been hit particularly hard by COVID-related shutdowns, also has particularly high incidences of gender-based violence. So does agriculture. And as many companies shift work from offices to home, domestic violence is becoming a workplace issue that companies have to address. Asks Anderson, “As we’re looking to rebuild industries, is there a way to rebuild it stronger?”
- Read on, and listen in to, “How gender power imbalances put the COVID recovery at risk,” Catch up on all of ImpactAlpha’s podcasts, including our weekly Impact Briefing.
Dealflow: Follow the Money
Collab Capital launches fund for Black founders. Before the economic fallout of COVID and mass mobilization for racial justice, Jewel Solomon Burks, Justin Dawkins and Barry Givens were working to rally more investment capital for Black founders and their business innovations overlooked by mainstream venture capital. The three Black entrepreneurs launched Collab Capital, to provide funding and business support to help early-stage Black-owned startups hit revenue targets and retain control of their companies. “We guide portfolio companies to increased revenues and profitability instead of continuously raising valuations through modern venture capital funding,” the firm says. Kauffman Foundation and hip-hop artist Lecrae seeded the fund, which has a target of $50 million.
- Consumer focus. Collab’s first investment is Hairbrella, a woman-owned business in Atlanta that makes weather-proof caps for women. Founder Tracey Pinkett launched the product and company with a Kickstarter campaign and $75,000 of her own investment, AtlantaInno reports. Collab invested $500,000 to help Pinkett grow sales and expand her product line.
- Founder-friendly. In addition to capital, Collab connects founders to corporate and social influencers and hosts workshops and seminars targeted to Black founders and “the sea of challenges” they face.
- Check it out.
Prime Impact Fund leads Clean Crop’s $3 million round. Massachusetts-based Clean Crop is tackling post-harvest food waste with a chemical-free treatment that kills molds and toxins common to grains and nuts. Carcinogenic aflatoxins, caused by soil-based molds, affect as much as 40% of nut and grain harvests worldwide, Clean Crop’s Dan White told ImpactAlpha. The startup uses ionized gasses, produced by electrically-charging ambient air, to safely eliminate aflatoxins post-harvest. Early-stage climate tech investor Prime committed $1.6 million, its first agtech investment. Factor[e] Ventures, Innova Memphis, Syndicate Fund and Alchemy Fund also participated.
- Impact tech. Prime’s Amy Duffor said that by boosting food safety and preventing food waste, the technology has the potential to “drastically reduce emissions in one of the largest greenhouse gas wedges.”
- Farmer income. Clean Crop is focusing first on peanuts, where harvests with low-levels of aflatoxins can command premium prices. In emerging markets, that could amount to hundreds of millions of dollars in new revenue for growers. “Many new agtech innovations focus on on-farm challenges,” said White. “The low hanging fruit is all in the supply chain.”
- Dig in.
Agents of Impact: Follow the Talent
Global Impact Investing Network seeks a development officer… Wellington Management is hiring a private equity principal in Boston or London to lead a climate-focused venture fund… Blue Access is recruiting a chief impact officer in New York… Fifth Third Bank is hiring a sustainability analyst in Cincinnati… Good Food Institute is looking for a research fellow… ThePlug launches a 10-week data journalism fellowship focused on tech companies and racial justice.
Thank you for reading.
–June 10, 2020