Greetings, Agents of Impact!
🌍 Hop on today’s Call: The disruption in small business financing in emerging markets. Enterprise software. Crowdfunding. Fintech. Crypto. A new crop of tech entrepreneurs and investors see small and growing businesses as a big and growing market. Join The People’s Fund’s Luyanda Jafta (see below), Pezesha’s Hilda Moraa, Celo’s Daniel Kimotho and Lendable’s Daniel Goldfarb, in conversation with ImpactAlpha’s Jessica Pothering and David Bank, today at 8am PT / 11am ET / 7pm Nairobi (no RSVP required). Zoom right in.
Recommended reading. Get the scoop on the innovations and entrepreneurs on today’s Call:
- How technology is disrupting small-business financing in emerging markets
- New channel of capital for small businesses worldwide: enterprise tech startups
- African startups develop crypto tools for inclusive prosperity
- How Lendable parses risks and returns to mobilize capital for inclusive fintech
Featured: Small Business Crowdlending
How The People’s Fund is unlocking capital for small businesses from the crowd up. In South Africa, many Black businesses that bid on government tenders don’t have the upfront capital to fulfill them. The People’s Fund helps Black business owners take on such contracts with loans backed by their purchase orders. The four-year old firm has made purchase-order loans to more than 2,000 businesses with capital supplied by thousands of investors large and small. Rather than interest payments, the loans are repaid with a share of profits. The crowdfunding model recalls the community savings and lending circles common in Africa and beyond. “We’re taking African-centric solutions to create a new financial model,” The People’s Fund’s Luyanda Jafta tells ImpactAlpha. “I think the biggest, loudest thing that The People’s Fund will be remembered for is allowing Blackness to be itself. We’re saying, ‘You don’t need to conform. Come as you are.’”
- Business pivot. Jafta launched The People’s Fund in 2017 as an asset-financing platform, seeded with 3,000 South African rand (then about $225). The venture raised and loaned 1.2 million rand in its first year. But businesses didn’t want to buy hard assets. “They told us, ‘I’ve got a business running. I’ve got an order from a corporation or from government. But I don’t have the capital to execute,’” says Jafta. “I thought, ‘Why aren’t banks paying for this?’” Shifting to purchase-order financing, The People’s Fund doubled its lending volume in its second year. This past year, it loaned more than 150 million rand, or about $10 million. The capital comes from about 120 large investors that have lent 100,000 rand or more, and several thousand others that have invested as little as 100 rand.
- Working capital. A new crop of financial services firms are helping small businesses manage cash flow and grow revenues. Nairobi-based Powered by People and Heva Fund provide purchase-order financing to small-scale artisans and creatives. Sokowatch, also in Nairobi, provides small lines of credit for shopkeepers to stock inventory. Field Intelligence offers inventory financing to Africa’s mom and pop pharmacies. Boston’s Ujima Fund helps portfolio companies connect to large local and regional buyers. Weel in Brazil (now part of neobank BS2) offers cash flow loans. U.S.-based Crowz helps businesses auction their invoices to raise working capital.
- Keep reading, “How The People’s Fund is unlocking capital for small businesses from the crowd up,” by Jessica Pothering on ImpactAlpha. Meet The People’s Fund’s Luyanda Jafta on today’s Agents of Impact Call at 8am PT / 11am ET / 7pm Nairobi. Zoom right in.
Dealflow: Follow the Money
DrugStoc scores $4.4 million to improve Nigeria’s pharmaceutical supply chain. Lagos-based DrugStoc is on a mission to fix the country’s broken pharmaceutical supply chains and distribution channels. The health tech startup helps more than 3,000 hospitals, clinics and pharmacies procure prescription drugs, medications and medical devices. The company “re-engineers the value chain digitally, improving and expanding access to healthcare at the same time,” said DrugStoc’s Chibuzo Opara.
- Health access. DrugStoc says its partners provide affordable health products to 14 million Nigerians. The company’s Series A funding will help it expand cold chain storage for safe distribution. DrugStoc is partnering with Nigeria’s Sterling Bank to provide supply-chain financing.
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Ocean 14 Capital secures €60 million for blue economy impact fund. The London-based fund manager is looking to raise €150 million ($170.5 million) for growth-stage investments in technology companies in sustainable fishing, aquaculture and alternative protein. Ocean 14 will also invest in ocean health and conservation. The European Investment Fund committed €35 million, backed by a first-loss guarantee from the European Fund for Strategic Investments. Other investors include Chr. Augustinus Fabrikker, the investment management arm of Denmark’s Augustinus Foundation; Lukas Walton’s Builders Initiative; and Australia’s Minderoo Foundation.
- Blue economy. European Investment Fund’s Alain Godard said the fund’s commitment will “help create a well-functioning European equity ecosystem for this sector.” Ocean 14 launched in 2019 to invest with a focus on Sustainable Development Goal No. 14: life below water.
- Dive in.
Stori rakes in $200 million to advance financial inclusion for underserved consumers. Traditional banks have excluded hundreds of millions of people in Mexico and the rest of Latin America from access to financial services, especially credit. Since 2019, more than 20 million underserved consumers have applied for credit cards from Mexico City-based Stori to help them build credit. The company is looking to expand its bag of financial services and broaden its reach in Latin America. The $125 million Series C equity round was led by GGV Capital and GIC. Community Investment Management provided $75 million in debt. Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Chamath Palihapitiya’s Social Capital leads a $20 million Series A round for Silicon Valley-based battery component maker Mitra Future Technologies.
- New York Life Insurance Company invests $50 million in Enterprise Community Partners’ Enterprise Community Loan Fund to improve access to affordable housing for low- and moderate-income families in the U.S. (for background, see, and listen to, “The Reconstruction: An equitable path forward to redress racial injustice in real estate”).
- Food giant Mondelez International joins Circulate Capital’s Ocean Fund as a limited partner to help collect and recycle plastics.
Podcast: The Reconstruction
Building an ecosystem for Black and Brown entrepreneurs (podcast). As co-convener of the Black Innovation Alliance, Atlanta entrepreneur Kelly Burton brings together small business owners and startup founders to help Black and Brown entrepreneurs level up – and change the narrative. “The work that we’re doing is about creating a more equitable and just world,” Burton tells host Monique Aiken on the latest episode of The Reconstruction podcast. Launched last year, the coalition of 50 organizations in two dozen U.S. cities includes Aniyia Williams of Black & Brown Founders, Daniel Wright of 1863 Ventures, Luis Martinez of We Tha Plug, and Jessica Norwood of Runway. Burton earlier started Founders of Color to help minority entrepreneurs scale their businesses after struggling to turn a profit with Bodyology, her line of moisture-resistant undergarments specially designed for women. White led-firms generate about 10 times the revenue of Black-led firms and nine out of 10 Black founders are “solopreneurs,” without additional employees. The solutions are not only technical. “The more we lean into love,” Burton says, “the more we will be able to actually achieve a more love-infused world.”
- Keep reading, “Building an ecosystem for Black and Brown entrepreneurs,” by Cesar Chávez on ImpactAlpha.
- Listen to Monique Aiken’s full conversation with Kelly Burton. Catch up on earlier episodes of The Reconstruction podcast and all of ImpactAlpha’s coverage at The Reconstruction.
Agents of Impact: Follow the Talent
SASB founder Jean Rogers joins Blackstone as global head of environmental, social and governance… Kristen Lang, ex- of Ceres, joins Boston Trust Walden as deputy director of ESG investing… Kunle Apampa, ex- of Goldman Sachs, joins Capricorn Investment Group as director of client advisory and partnerships.
The Joint Center for Political and Economic Studies is hiring a senior policy analyst… Upstart Co-Lab seeks to connect with funds, companies, real estate projects and other impact investment opportunities in the creative economy… 17 Asset Management is accepting applications for its sustainable investing, stakeholder engagement and sustainable real estate fellowships.
Thank you for your impact.
– Nov 16, 2021