The Brief | September 17, 2019

The Brief: Iroquois Valley’s direct public offering, gamifying school, Opportunity Zone academy, student-centric financing, Bono’s zipline, Agents of Impact in NY

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Greetings, Agents of Impact!

New York, New York. Join fellow Agents of Impact at our subscribers-only event this Thursday, Sept. 19, from 5:30-7:30 pm, to take stock of climate finance with UBS’ Andrew Lee, author Richard Morais and ImpactAlpha’s David Bank. Bonus: Meet “Returns on Investment” podcast regulars Imogen Rose-Smith and Brian Walsh and ImpactAlpha senior editor Amy Cortese – and enjoy refreshments and the view from Liquidnet’s headquarters in The New York Times Tower. RSVP today.

Featured: ImpactAlpha Original 

Iroquois Valley Farmland’s direct public offering lets smaller investors get a share of ‘soil wealth.’ Tired of gold? Leery of Bitcoin? Smaller investors can now invest in soil wealth. Last month, Iroquois Valley Farmland began offering shares in the 12-year-old REIT to investors with as little as $10,000, via a direct public offering. Previously, only wealthy individuals, foundations and family offices – so-called accredited investors – were eligible to invest. The firm’s real estate investment trust, or REIT, finances the conversion of chemically-farmed land to certified organic production. “We take dead soil and bring it back to life,” Iroquois Valley’s David Miller told ImpactAlpha.

Iroquois Valley is the latest firm to open up once-exclusive impact investments to everyday investors, who have had limited opportunities to make investments that leave a positive mark on the world. CNote, based in Oakland, Calif., invests in community development finance institutions, or CDFIs. American Homeowner Preservation, in Chicago, buys distressed mortgages with the goal of helping families stay in their homes. Reston, Va,-based StreetShares lends to veteran-owned businesses. The companies are making use of an under-the-radar provision of the Jumpstart Our Business Startups Act, or JOBS, Act. The provision is helping Iroquois Valley finance farmers weather the three years required to convert their acreage to organic production. “These farmers are ready, willing and able. What they don’t have is the capital,” says Miller. “We now have a shot at funding all of the growth that is coming at this.”

Keep reading, “Iroquois Valley Farmland’s direct public offering lets smaller investors get a share of ‘soil wealth,’” by Amy Cortese on ImpactAlpha.

DealFlow: Follow the Money

Classcraft raises $7.5 million to gamify K-12 curricula. Classrooms, meet Minecraft. Classcraft helps teachers turn existing curriculum into gamified personalized quests. Investissement Québec led the Quebec and New York-based firm’s $7.5 million ($10 million CAD) Series A financing. Earlier investors, including Whitecap Venture Partners, Brightspark Ventures, and MaRS Catalyst Fund, also joined the round. Classcraft, a certified B-Corp, has grown to reach more than 6 million students in 160 countries by partnering with schools and districts. “If we want to get serious about motivating students to learn, we can no longer ignore what makes games so compelling to young people,” said Ubisoft’s Jean Guesdon, an advisor to Classcraft. “Classcraft has figured out what makes good games and good learning experiences so engaging and applied that knowledge to make school more meaningful and collaborative.” More.

Five cities join Rockefeller Foundation-backed Opportunity Zone ‘academy.’ Rockefeller Foundation wants to ensure Opportunity Zone investments deliver more than just tax-advantaged returns to investors. Its new National Opportunity Zones Academy, created with a $400,000 grant to Smart Growth America, will support community leaders in Chicago, Miami, Seattle, Pittsburgh and Norfolk to build networks and attract investment for projects that generate economic stability and mobility for local residents. An Atlanta “anti-displacement” fund, for example, offsets income tax increases for working class homeowners. “We have focused our attention on community capacity building to really make sure that these deals bring the necessary positive benefits to communities,” Rockfeller’s Otis Rolley told ImpactAlpha. The foundation has provided cities more than $5 million to build cities’ Opportunity Zone capacity since May. Dig in.

AXA Investment Managers’ impact strategy targets basic needs in emerging markets. The asset manager’s fourth impact strategy will invest in private companies delivering healthcare, financial inclusion and other goods and services to emerging consumers in Latin America, South and South East Asian and sub-Saharan Africa.

Klarna’s Niklas Adalberth puts additional €31 million into Norrsken Founders Fund. The additional capital brings Adalberth’s total contribution to the Stockholm-based impact fund to €94 million.

Signals: Ahead of the Curve

MPOWER’s impact report makes the case for student-centric finance. MPOWER’s founders set out to help promising international students pay for a U.S. education when few lenders would lend to them. The borrower data in MPOWER’s first impact report offers a glimpse of how to design more responsible and inclusive education finance, for students from the U.S. as well as around the world. “We didn’t want to solve one problem by creating another,” founder Manu Smadja, himself once an international student in the U.S., told ImpactAlpha. The Washington, D.C.-based company partners with 350 school and has originated more than 2,000 loans to students from 120 countries and to undocumented learners in the U.S. Its model recently got a vote of confidence in the form of a $100 million loan facility from Goldman Sachs.

  • Financial innovation. MPOWER is among the small cohort of organizations developing student-centric models to finance education. San Francisco-based Sixup helps low-income students attain college financing by focusing on outcomes rather than credit scores. “Income-share agreements” allow students to repay tuition after they’re employed and based on a percentage of their salaries.
  • Underwriting potential. MPOWER provides loans of up to $50,000 for a maximum duration of 12.5 years at a flat rate of about 12%. Because its borrowers often have no credit history in the U.S., the company’s forecasting model focuses on students’ future earning potential.
  • Reaching its target. Half of MPOWER borrowers come from families that earn less than $15,000 annually and 17% from families that earn less than $2,500 annually, according to MPOWER’s first impact report. “Their salaries go from $5,000 to $10,000 per year to $70,000 to $80,000 per year,” said Smadja.
  • Financial partner. MPOWER claims its monthly payments cost no more than an average cell phone bill and get reported to credit bureaus, which helps students build their credit profiles. “We see a lot of U.S. students who are in distress getting beat up by their school and their lenders,” Smadja says. “We want students to be successful.”
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Agents of Impact: Follow the Talent

Drone operator Zipline adds U2’s Bono as a director (see, “How Zipline raised $190 million to build a global drone logistics network)… Kate Ahern, ex- of Bain Capital and the Case Foundation, joins Cartica as managing director and head of ESG (Korn Ferry managed the search)… Nuveen CEO Vijay Advani joins the board of directors of the Global Impact Investing Network… Nonprofit Finance Fund is looking for a loan officer in New York… Los Angeles Cleantech Incubator is hiring a fund management analyst… American Sustainable Business Council is convening a webinar, “How Business Practice Can Undermine Democracy Business and Policy implications,” Sept. 18… Economic Innovation Group is hosting “What You Need to Know About Opportunity Zones and Operating Businesses,” on Sept. 24.

Thank you for reading. 

– Sept. 17, 2019