Greetings, Agents of Impact!
Featured: Impact Voices
Walking the Talk: This moment demands more than investing money. “If you believe that a portfolio of financial investments is the gateway to meaningful and positive impact in life, then I have some prime swamp land in Louisiana I would like to sell you,” says Ivy Jack, head of equity research at NorthStar Asset Management, a socially responsible investment advisor with $726 million in assets under management. In the latest edition of Walking the Talk, ImpactAlpha’s series with Confluence Philanthropy, Jack says investing money alone isn’t enough to meet society’s challenges. As a Black woman in the U.S., “owning what I own” is not simple or straightforward, she says. “Given that I am a values–aligned investor, how does the notion of owning what I own show up in how I live my life?” Her thoughts:
- Investing in democracy. The federal government has been essential to ensuring Black people’s freedom and rights guaranteed by the Constitution, she says. “I believe in paying taxes so that we can have a healthy functioning federal government.” Because the greatest economic gains for Black people have come out of the civil rights legislation, Jack contributes to Stacey Abram’s Fair Fight, Black Voters Matter, the Florida Restoration Project, Black Lives Matter, the Black Futures Lab, and the Equal Justice Initiative (see, “Agents of Impact: Georgia’s organizers“).
- Black leadership. Jack serves on the board of Brookview House, which provides services for homeless women and children; the finance committee of YW Boston, the nation’s first YWCA; and the leadership team for the Racial Justice Investing Coalition. “I believe we should all invest in Black-led organizations that empower Black and Brown people,” she says. Jack has supported her alma mater, Spelman College, and aims to support other historically Black colleges and universities, which produce almost one in five African American graduates.
- Advisors’ personal portfolios. Explore the full series of Walking the Talk guest posts, including contributions from Caprock’s Nick Flores, Veris’ Patricia Farrar-Rivas, Cornerstone’s Erika Karp and Nia’s Kristin Hull.
- Read and share “This moment demands more than investing money,” by Ivy Jack on ImpactAlpha.
Grounding investors in history to ensure this Reconstruction delivers on its promise. Illumen Capital requires the fund managers it backs to participate in an “impact experience” to explore how the U.S. history of racial terror still affects the asset management industry. In Montgomery, Ala., investors met Josephine Bolling McCall, the daughter of Elmore Bolling, a man who built a successful trucking business before he was lynched in 1947 by white men threatened by his business achievements. Illumen’s Daryn Dodson sees a through line to the firm’s research (with Stanford SPARQ) that shows Black fund managers face entrenched bias in the allocation of capital. “By connecting the dots of slavery, the period of racial lynching terror, Jim Crow and mass incarceration, we help investors begin to understand the history that led to the racial disparities seen across investing today,” Dodson writes in a guest post on ImpactAlpha.
- The Reconstruction. Dodson was a guest last month on host Monique Aiken’s The Reconstruction podcast on ImpactAlpha (have a listen: “The Reconstruction: Overcoming racial bias to optimize asset management for returns – and impact”). “We all have a role to play in ensuring this Reconstruction lives up to its promise of building and sustaining equity for communities who have been marginalized by race,” writes Dodson. “We must not allow this opportunity to repeat the unfulfilled promise of the first.”
- Disparate impact. Illumen grounds its investment strategies in the history of health and wellness, education, financial inclusion and climate and sustainability – all systems in which communities of color face stark disparities. Brown v. Board of Education overturned Plessy v. Ferguson in 1954 but even in 2012, schools with 90% or more students of color spent $733 less per student per year than schools with 90% or more white students, Dodson notes. “This history underpins Illumen’s strategy to invest in education technology to reduce disparities facing kids of color,” he says.
- Reasons for hope. Dodson sees “early signs of progress across our portfolio,” with capital flowing to under-represented entrepreneurs and teams becoming more diverse and inclusive. More asset allocators are acting on evidence that including under-represented women and people of color can lead to outperformance, “and are beginning to address gaps across their own portfolios.”
- Keep reading, “Grounding investors in history to ensure this Reconstruction delivers on its promise,” by Daryn Dodson on ImpactAlpha. Catch up on all of The Reconstruction podcasts and coverage.
Dealflow: Follow the Money
Hazel Technologies raises $70 million for packaging that curbs food spoilage. Curbing food waste in the U.S. is a $14 billion annual opportunity. Chicago-based tech startup Hazel Technologies supplies packaging inserts that slow produce decay. The company says it will prevent 500 million pounds of food waste this year through partnerships with major producers and distributors like New Zealand’s kiwi producer Zespri and Canada’s Oppy. Singapore’s Temasek and Pontifax’s global agrifood tech fund backed the company’s Series C round.
- Waste opportunity. “If food waste were a country, it would be the third-largest greenhouse gas contributor on the planet, behind the U.S. and China,” notes Hazel’s Aidan Mouat. Other food-preservation ventures like Apeel and Cambridge Crops make edible food coatings (see, “Food preservation tech company Apeel clinches $250 million”). FoodMaven, Misfits Market and Imperfect Foods are trying to redirect over-supplied and imperfect produce to big buyers and consumers.
- Dig in.
Uganda’s Numida secures $2.3 million to fill gaps in microfinance lending. Kampala-based Numida launched five years ago to provide microfinance institutions better data to underwrite loans to small and informal businesses. When the microfinance lenders proved reluctant to change their approaches, the fintech itself stepped into micro and small business lending. The company has provided $2 million in micro-loans to 3,000 micro and small businesses in Uganda. Its funding round was led by MFS Africa, which develops software to connect digital-payments and mobile-money platforms. DRK Foundation, Equilibria Capital and Segal Family Foundation also participated.
- Fintech for fintech. Nigeria’s digital payments unicorn Flutterwave took a stake in digital “savings circle” venture Bankly. Paystack, another Nigerian digital payments company, was acquired last year by Stripe.
- Read on.
Dealflow overflow. Other investment news crossing our desks:
- Digital bank Hatch raises $20 million to lower the cost of banking and credit for small businesses.
- Indian fintech Credflow secures $2.1 million from Omidyar Network India, Stellaris Venture Partners and Flourish Ventures to help small businesses manage cash flow.
- Black and woman-led Minwo scores seed funding to connect Black and Brown founders to capital and other business resources.
- PT Kandelia Alam, in collaboration with the sustainable trade initiative IDH, will explore blended-finance solutions for sustainable landscape development in Indonesia through a grant from Convergence.
Signals: Ahead of the Curve
Sustainable snapshot: The expanding universe of sustainable money market funds. JPMorgan Chase last month launched a new Empower money market fund share class to support minority-owned and diverse-led financial institutions. At least ten firms now offer sustainable money market funds with a choice of investing options that include a values-based orientation, negative screening, and/or ESG integration, according to ImpactAlpha data partner Sustainable Research and Analysis. JPMorgan’s Empower product, applicable to four of the firm’s money market funds, will be distributed by minority depository institutions and diverse-led community development financial institutions.
- Cash management. Even liquid cash investment can have a positive impact. Institutional and retail investors have expanded choices for investing cash balances on a short-term basis with reduced risk exposure (see, “Cash is hot: Investors find new options to put deposits to work for community development”).
- Collect all 10.
Agents of Impact: Follow the Talent
Gary Gensler, former investment banker and head of the Commodity Futures Trading Commission, was confirmed as chair of the U.S. Securities and Exchange Commission. Gensler is expected to roll back Trump-era attempts to squelch the growth of environmental, social and governance, or ESG, investing. Also on tap: more stringent ESG standards and disclosure requirements.
Karen Karniol-Tambour and Carsten Stendevad will serve as co-chief investment officers for hedge fund giant Bridgewater Associates’ new sustainable investing venture… Athora Netherlands seeks a senior sustainability and impact analyst in Amsterdam… Boutique investment firm Sail Ventures is hiring a senior impact and ESG specialist in The Hague.
The U.S. International Development Finance Corporation is seeking applications for companies looking for financing for distributed renewable energy-related investments in emerging markets… Convergence is hosting “Designing financing structures for nature-based solutions,” Tuesday, Apr. 20 and Thursday, Apr. 22. Convergence’s Asia Natural Capital Window is accepting applications.
The IFC and Environmental Finance are hosting “Investing without borders: accessing emerging market green and sustainability bonds,” Wednesday, Apr. 21… Next Wave Impact’s “Founders of Color Showcase” will feature pitches from Janna Westbrook of Provider Pool, Troy Clarke and Calvin Mackie of Golden Leaf Energy, Debbie Chen of Hydrostasis, and nine other semi-finalists, Monday, May 3. Register for free.
Thank you for your impact.
– Apr. 15, 2021