The Brief | April 21, 2021

The Brief: Gender alpha in Pakistan, Earth Day dealflow, Classy’s capital, an inclusive next normal, Mosaic fellows, PhDs to VCs

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Greetings, Agents of Impact! 

Featured: ImpactAlpha Original

In Pakistan, investing with a gender lens gives i2i Ventures an early-stage edge. If overlooked markets and underserved entrepreneurs represent untapped opportunities, Pakistan presents i2i Ventures with a rich bounty of possibilities. The fifth most populous country in the world is one of the smallest recipients of venture capital. Pakistan’s share of the $300 billion in global VC commitments last year: $65.6 million. And women entrepreneurs in Pakistan are particularly underserved. All-female founding teams raised just 6% of venture funding, or $1.8 million, in Pakistan in 2020, while all-male teams claimed 79%, according to Invest2Innovate, the accelerator and research firm that spun out Karachi-based i2i Ventures two years ago. By the end of this month, i2i Ventures expects to have five companies in its portfolio, three of them led or co-led by women. “The gender-lens approach defines how we look at investments and how we build our portfolio,” i2i’s Kalsoom Lakhani tells ImpactAlpha. “Our portfolio and pipeline really reflects innovation across the tech sector in Pakistan right now.”

i2i Ventures’ investment thesis is straightforward: Pakistan is a large and grossly underinvested innovation hub. Because there is so little venture capital, there’s a big upside financial and impact opportunity for those backing early, homegrown technologies that serve local and regional market needs. The firm is tuned into investor interest in finding more women-led companies. Its market study last year found most investors see “no difference in the quality of companies led by women versus those run by men.” The firm has invested in online exam prep provider Edkasa, along with Mauqa Online, a housekeeping booking service, and chat app TelloTalk. “We’re not an impact fund in the strict sense of the word. We are a commercial fund with a gender lens,” says i2i Ventures’ co-founder Misbah Naqvi. “But in a market like Pakistan, there’s impact in bringing goods and services to people in a more efficient way, or more cheaply.” 

Keep reading, “In Pakistan, investing with a gender lens gives i2i Ventures an early-stage edge,” by Jessica Pothering on ImpactAlpha. Catch up on all of ImpactAlpha’s coverage of frontier and growth markets.

Dealflow: Follow the Money

Climate dealmaking accelerates along with Earth Day pledges. Venture capital deals into climate technologies reached a record $16.4 billion in 2020, according to Pitchbook. Here’s a sampling of the latest deals: 

  • Climate-tech funds. Swedish VC firm Pale Blue Dot closes on its €80 million debut climate tech fund to invest in early-stage startups in Europe and the U.S… New Zealand’s Finistere Ventures and New Zealand Growth Capital Partners are raising a NZD$40 million fund to commercialize innovations in sustainable food and agriculture.
  • Capturing carbon. Canada-based CarbonCure Technologies and CarbonBuilt, developed at UCLA, each win $7.5 million for carbon capture and reuse in cement as part of the $20 million NRG COSIA Carbon XPRIZE, which rewarded companies turning CO2 emissions into valuable products.
  • Electrify everything. Electric boat-maker X Shore, a Stockholm-based women-led company, pulled in $17 million to expand production of its Eelex 8000 craft made from recycled bottles, cork and plastic… Polestar, an electric vehicle-maker owned by Volvo (which is itself owned by China-based Geely), raised $550 million, led by China’s Chongqing Chengxing Equity Investment Fund and Zibo.
  • Green infrastructure. Clean energy investment platform CleanCapital secured $300 million from Manulife Investment Management to acquire 63 megawatts of solar projects… Blue like an Orange makes a 106 million reais ($19 million) investment in Órigo Energia to boost solar energy access for small businesses and households in Brazil.
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Software venture Classy scores $118 million to help nonprofits raise funds. San Diego-based Classy develops software to help nonprofits meet financial goals through traditional donations, peer-to-peer fundraising, events and crowdfunding. The company says 6,000 organizations have used the software to facilitate $3 billion in fundraising in 190 countries. Classy’s Series D round was led by Norwest Venture Partners with backing from Salesforce Ventures, Udemy and others. Nonprofits are “increasingly leaning on technology solutions” through the pandemic, says Norwest’s David Su.

  • Streamlining operations. Other platforms serving nonprofits: Charleston, S.C.-based Blackbaud, which acquired social crowdfunding platform JustGiving in 2017; TechSoup, which provides tech support and equipment; financial institutions like arts and culture fund Nesta and Nonprofit Finance Fund, which finance nonprofits transitioning to financially-sustainable models; and Ahmedabad, India-based Azaad De, which offers mobile communications and data collection tools for social enterprises and development organizations.
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Dealflow overflow. Other investment news crossing our desks:

  • Accion Opportunity Fund, a U.S. community development financial institution, secures $40 million from American Express to lend to minority and immigrant-owned businesses.
  • Mastercard invests $25 million in Black and woman-led Fearless Fund to make early-stage investments in women-of-color-owned businesses.
  • Hamilton Lane launches its second impact fund to invest in companies focusing on the clean energy transition, sustainable processes, health and wellness, and community development.

Signals: Ahead of the Curve

Inclusion is driving growth in the ‘Next Normal Now.’ The old normal: exclusion, externalities and growth at all costs. The next normal: inclusivity, responsibility and shared prosperity. “Inclusion grows the pie,” Ford Foundation’s Darren Walker said at “Next Normal Now,” the first in a series of convenings charting systemic change, hosted by the Global Impact Investing Network (ImpactAlpha is the GIIN’s media partner). The next normal broadens “the aperture for opportunity,” says Walker, so that more people are “working their way up through the various systems and structures and succeeding.”

  • Re-imagining capitalism. Growth in the next normal won’t be measured only in dollars, or yen, or euros, or rupees, but by “our shared prosperity,” said the GIIN’s Amit Bouri. Impact investment models and structures already provide “glimmers of that re-imagined future,” he says. Roshni Bandesha says LeapFrog Investments drives economic inclusion by listening to the financial aspirations of low-income customers. Priya Parrish says Impact Engine is investing in employee ownership models to help build wealth among workers. Lasitha Perera of GuarantCo is overcoming misperceptions of risk in emerging markets by listing bonds for projects in Africa and South Asia on the London Stock Exchange.
  • Indigenous futurism. The old normal gives too little consideration to long-term impacts. “Inherent within Indigenous worldview is a deeper sense of impact, a longer sense of time and a deeper sense of responsibility to ourselves and to our own future,” said Carol Anne Hilton, author of Indigenomics: Taking a Seat at the Economic Table. Bolivia, a primarily Indigenous country, embedded the rights of Mother Earth in the Constitution in 2010 to spur international mining companies to adapt to the next normal (hear more from Hilton on the GIIN’s Next Normal podcast).
  • Next up. Climate action is next on the agenda for GIIN’s “Next Normal Now” series, Wednesday, June 16. Stay tuned.
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Agents of Impact: Follow the Talent

Impact Capital Managers places 19 graduate students from traditionally under-represented backgrounds at impact investment funds through its Mosaic Fellowship. The fellows include Benjamin White (with Urban Us), Kendall Bedford (Spring Lane Capital), Mariam Dembele (Achieve Partners) and Stella Liu (Arborview Capital)… New Media Ventures is looking for a vice president of people and operations in the San Francisco area… Envestnet is hiring an impact solutions specialist… Impact Management Project seeks a summer associate.

Fifty Years trained 19 PhD students in venture capital. Meet them on Thursday, Apr. 22… The Paulson Institute and Finance for Biodiversity and other partners are hosting “Finance for Nature: Making Nature Count,” with Hank Paulson, Andrew Deutz of The Nature Conservancy, Sonja Gibbs of Institute of International Finance, Kathy Baughman McLeod of Adrienne Arsht – Rockefeller Foundation Resilience Center, and Simon Zadek of Finance for Biodiversity, Tuesday, Apr. 27… CASA is hosting “Agribusiness investments one year into the pandemic: Where are we now?” with Sami Khan of CDC Group, Martin Fregene of African Development Bank and Sheila Mugyenzi of Uganda Investment Authority, Wednesday, Apr. 28.

Thank you for your impact.

– April 21, 2021