The Brief | December 7, 2022

The Brief: Investing in the creative economy, overheard at Mission Investors Exchange, small-business loans in Colorado, reducing plastic waste in Latin America

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Greetings, Agents of Impact!

Featured: Overheard at Mission Investors Exchange 

Upstart Co-Lab’s pipeline of creative economy deals is now an investable impact strategy. The “creative economy” of fashion, food, film, video games and other art and culture industries has emerged as a powerful driver of quality jobs, vibrant communities, and social and economic inclusion. It’s also now an impact investment thesis. New York-based nonprofit Upstart Co-Lab has created the Inclusive Creative Economy Strategy, a pooled investment vehicle for fund managers and entrepreneurs of color in creative enterprises that build livelihoods and inclusive communities. “We believe that the creative economy can be the door to welcome artists, art lovers and cultural institutions into a bigger conversation about impact investing,” says Laura Callanan, the former top official of the National Endowment for the Arts who launched Upstart in 2016.

  • Creative structure. Upstart’s strategy is structured as a “multi-donor fund,” managed by ImpactAssets, that allows donors to pool and invest their philanthropic assets in a specific theme. Denver-based Bonfils-Stanton Foundation, Atlanta-based Souls Grown Deep Foundation, and artist turned impact investor Lorrie Meyercord have committed a total of $3.5 million to the new strategy. Even before the new vehicle, Upstart helped about a dozen individual and institutional investors deploy $13 million into 16 funds and companies.
  • Join the conversation. Callanan will discuss “Investing in the creative economy,” with Chris Crothers of the Jessie Ball DuPont Fund, Caroline Jacobs of UTA Ventures, Michelle Rhodes-Brown of the Walters Art Museum, and Paskho’s Patrick Robinson at the Mission Investors Exchange conference in Baltimore, today at 9:30am ET.
  • Keep reading, “Upstart Co-Lab’s pipeline of creative economy deals is now an investable impact strategy,” by Dennis Price on ImpactAlpha.

Also at MIE: 

  • Centering communities. Before Frederick Douglass, the slavery abolition movement in the U.S. was dominated by white voices. Douglass was the “first-ever real slave who spoke out as an abolitionist,” shared Robert Ross of the California Endowment. The lesson for impact investors: “Stay proximate to the point of injustice,” said Ross, quoting Bryan Stevenson from Equal Justice Initiative (read, “How The California Endowment is investing for health and racial equity.”) “If you’re trying to impact the community and you’re not working directly with the people impacted by the challenges, sorry, but you’re probably not doing impact investing,” added Nick Tilsen of Indigenous-centered NDN Collective.
  • Self-determination. Tilsen, a member of the Oglala Lakota Nation, started NDN Collective to mobilize capital and resources for Indigenous-led and -centered organizations. Less than 0.5% of philanthropic funding goes to Indigenous communities. NDN has facilitated $200 million in grants and investments to tribal businesses and projects and operates its own community development financial institution. To make financing more accessible, NDN is doing away with credit scoring. Tilsen called on investors to do more to support Indigenous communities as stewards of their land, which contain most of the world’s biodiversity. “We’re actually leading in solving some of these problems without the investment,” Tilsen said. “Imagine if the investment existed.”
  • Wealth creation. A range of models exist for helping underserved and historically marginalized individuals and communities build wealth: ESOPs, worker-ownership trusts, cooperatives, neighborhood trusts. Many individuals and communities are reluctant to participate because of a lack of information about the models and the benefits. “You have to educate the folks you’re looking to serve,” said John Holdsclaw IV of Rochdale Capital (see, “Agent of Impact: John Holdsclaw IV). “We’ve got to do a better job in the underresourced communities that we serve – to teach them that there will be a lot of meetings. But you will own your home. You will own your business.”
  • Follow ImpactAlpha’s updates at “Overheard at Mission Investors Exchange,” from Jessica Pothering and David Bank.

Dealflow: Place-Based Investing

LISC teams up with Colorado Health Foundation to back diverse-owned businesses. Local Initiatives Support Corp.’s Colorado BIPOC Micro Equity Fund provides “equity-like” capital to small business owners of color in disadvantaged Colorado communities “that are poised to grow but haven’t had access to the capital they need,” explains LISC’s George Ashton. The $2 million pilot fund, which is back-stopped by the Colorado Health Foundation, will make investments of $50,000 to $250,000. After a year, owners will repay the capital with a share of revenue if they’ve hit agreed-upon revenue targets. “If a business is unable to hit its growth metrics, philanthropy steps in and assumes the obligation on behalf of the business,” said the Colorado Health Foundation’s Ben Bynum

  • Expansion plans. The BIPOC Micro Equity Fund has made a $200,000 loan to Taco Block, a four-year old taco catering business, to build a commercial kitchen and outfit two taco trucks. LISC’s growth capital structure “is a great fit for us because we don’t have to put any money down,” said Taco Block’s Adrian Bonilla, who owns the business with his wife, Brenda. LISC also backed Alchemy Ritual Goods, an Indigenous-owned spiritual goods shop and clinic, to “expand our business into new avenuesm along with a larger, more beautiful shop,” said Alchemy’s Lalania Carrillo.
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Sun King gets $10 million to finance off-grid solar in Africa. Sun King will use the proceeds from Symbiotics’ green bond to “extend affordable off-grid solar financing to underserved communities across Africa, helping them to electrify their homes and turn off the kerosene lamps,” said Sun King’s Krishna Swaroop. Symbiotics issued the bond via its Micro, Small and Medium Enterprise Bonds issuance platform. Proparco, France’s development finance institution, invested in the bond. Sun King earlier this year raked in $260 million in Series D funding. Plug in

Dealflow overflow. Other investment news crossing our desks:

  • LongPath Technologies raised $22 million in Series A funding to help oil and gas operators track methane emissions.
  • Gawa Capital’s Huruma Fund provided a $12 million loan to Brazil’s Cresol Baser to help small-scale farmers adapt to climate change.
  • RepAir Carbon scored $10 million in a Series A round backed by Zero Carbon Capital, Equinor and Shell Ventures for its direct air carbon capture technology.
  • Kenyan social commerce startup Kapu snagged $8 million in seed financing to help consumers save on food costs.

Signal: Circular Economy

Circulate Capital eyes opportunities to tackle plastic waste in Latin America. Singapore-based investment fund Circulate Capital, which has backed projects in South and Southeast Asia, now sees an opportunity to reduce plastic waste in Latin America. The $175 million fund was launched in 2018 with investment from some of the world’s biggest plastics producers and users including PepsiCo, Procter & Gamble, Dow and Mondelēz. A new study breaks down the circular economy opportunities in Latin America and the Caribbean. Many countries in the region already have policies to eliminate waste by reusing, repurposing or recycling materials. Implementation has been limited, creating a window for the private sector to help tackle plastic pollution in the region, the study says.  

  • Big Four. Opportunities are ripest in Chile, Colombia, Mexico and Brazil, in part because they generate the most plastic waste. Brazil churns out almost 10 million tons of plastic waste per year, but its waste management sector is fragmented. With smaller populations and lower plastics consumption, countries in the Caribbean are unlikely to attract significant foreign investment in the plastics circular economy. The E.U.’s new strategy pushes beyond current global norms. For Latin America to catch up, “investors and catalytic capital are urgently needed to advance the sector and build the plastics circular economy at scale,” according to Circulate’s report.
  • Read on.

Agents of Impact: Follow the Talent

Banks Benitez, ex- of Uncharted, joins Ezra Climate as head of venture development (for background, see “Common Future and Uncharted merge to expand entrepreneurship and wealth-building in underserved communities)… Ontario Teachers’ Pension Plan Board appoints Anna Murray, ex- of Sun Life Capital Management, to the role of senior managing director and global head of sustainable investing… David LeZaks of the Croatan Institute joins Planetary Health Collective’s board.

Global Impact Investing Network is looking for a director of climate solutions in New York… Also in New York, Blue Dot Capital seeks a senior associate or associate of ESG research and integration… Selby Jennings is recruiting a climate tech VC partner in San Francisco… Omidyar Network is hiring a principal for responsible technology in Redwood City, Calif.

The MacArthur Foundation is looking for a senior impact investments officer in Chicago… The Nature Conservancy is looking for a director of operations and business development in Little Rock, Ark… The International Finance Corp. is hiring a director of development impact measurement in Washington, D.C.

UPDATE: The House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets hearing, featuring Fran Seegull of the U.S. Impact Investing Alliance, Cambria Allen-Ratzlaff of JUST Capital and other field leaders, has been rescheduled for Thursday, Dec. 8 at 9am ET. Watch live.

Thank you for your impact!

– Dec. 7, 2022