Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Focus on accountability as India’s social stock exchange takes shape. India’s social stock exchange is expected to take the form of an electronic fundraising platform regulated by the Securities and Exchange Board of India that lists both social enterprises and voluntary organizations. The exchange in India promises to diversify capital sources available to more than two million social enterprises across the country, Sneha Philip of India Development Review reports for ImpactAlpha. “A social stock exchange will enable social enterprises to raise capital, provide liquidity to investors, and build a brand that allows the enterprise to attract the best people – those who want to change society,” said Aarin Capital’s Mohandas Pai at last month’s Sankalp Global Summit, in one of the first public discussions of the exchange. Pai, former CFO of Infosys, is part of a working group drafting guidelines for the exchange, which are due by February.
Social stock exchanges have been launched or are planned in Brazil, Canada, Singapore, South Africa, Kenya, Scotland and the United Kingdom. Last week, the Jamaica Social Stock Exchange got a boost with funding from the Inter-America Development Bank. Like them, India will grapple with the challenge of bringing capital to social enterprises at scale while maintaining accountability to impact. McKinsey expects the market for impact investments in India to grow to $8 billion by 2025. “In the desire to build a social stock exchange, we want to make sure that we veer towards a desire for impact as opposed to a desire for returns,” says Bain Capital’s Amit Chandra. While setting up an exchange is relatively easy, says Aavishkaar Group’s Vineet Rai, the real challenge lies in creating liquidity and making it work for the enterprises that are listed. Rai believes that there must be less focus on the financial instruments and more focus on who will buy these instruments. Currently, more than half of social enterprises struggle to raise debt and equity capital, according to a study by Brookings India. “It is time to take our capital markets closer to the masses,” India’s finance minister Nirmala Sitharaman said while announcing the exchange this summer.
Keep reading, “Focus on accountability as India’s social stock exchange takes shape,” by Sneha Philip on ImpactAlpha.
Dealflow: Follow the Money
Plexo Capital seeks “inclusion alpha” with new $42.5 million fund. The GV spinout invests in early-stage ventures and funds led by women and people from minority backgrounds. Plexo’s Lo Toney was still a partner at GV (formerly Google Ventures) when he developed the thesis: Investing in diverse founders and investment managers engaged in underserved markets uncovers under-tapped opportunities for outperformance, or alpha. Plexo has invested in 19 funds, including Africa-focused investment firm Ingressive Capital and Female Founders Fund. The firm is backed by the Ford Foundation, Kapor Capital, historically black college Hampton University, as well as corporates like Alphabet, Intel and Cisco.
- Returns on inclusion. Plexo is the latest fund to raise capital with a diversity lens. Last week, Harlem Capital closed its $40 million first fund (see, “Harlem Capital raises $40 million to ‘change the face of entrepreneurship’”).
- Check it out.
Israel’s Zora Ventures reaches first close for early-stage impact fund. The venture capital firm has raised $4 million toward its $10 million goal for the ZORA Israel Impact Fund, ImpactAlpha has learned. The fund’s first three investments: bio-based agtech startup WeedOUT; Wasteless, a software company tackling food waste; and plastic-alternative packaging startup Solutum.
Übermorgen Ventures raises $20 million to invest in climate startups. The Zurich-based impact fund is looking to raise 50 million Swiss francs ($50 million) to invest in companies addressing climate impacts in food, agriculture, clean energy, green transport and materials. One portfolio company, Delicious Data, helps food service businesses cut food waste.
Africa Development Bank kicks off $270 million fund for impact startups. The bank is raising capital from peer development finance institutions in Europe and elsewhere for a strategy to coax more private sector investment in Africa’s small and mid-size businesses. The fund will make equity investments in fund managers and offer guarantees of up to $5 million.
Impact Engine backs human-resources startup Plum. The Chicago-based impact investor committed an undisclosed amount to Plum, which aims to minimize implicit bias in job searches. Plum is part of a cohort of startups (Searchlight, HeyJobs and Shortlist, to name a few) using HR tech to address workforce recruitment challenges.
- Read more about Impact Engine’s workforce impact investment thesis: “Impact Engine focuses on the future of work with $25 million second fund.”
Agents of Impact: Follow the Talent
LOCUS seeks a credit analyst and an underwriting and credit manager for its community investment guarantee pool… Mercy Corps seeks a ventures investment analyst intern in Portland… Kauffman Foundation is launching a Knowledge Challenge to improve U.S. understanding of entrepreneurship… Applications are open for Acumen and IKEA Social Entrepreneurship’s East Africa accelerator.
Thank you for reading.
– Dec. 9, 2019
