The Brief | February 3, 2020

The Brief: Just Mercy’s impact, micro private equity in South Africa, seat at Everytable, Melinda Gates’s bet on women’s inclusion

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Greetings, Agent of Impact!

Featured: ImpactAlpha Original

How ‘Just Mercy’ producer Scott Budnick is leveraging box-office appeal for social impact. Filling theaters for the new justice and redemption movie Just Mercy isn’t the end game for executive producer Scott Budnick. “It’s where we start,” he says. The true story of lawyer and activist Bryan Stevenson, who has helped hundreds of wrongfully convicted death row inmates gain their freedom, Just Mercy stars Michael B. Jordan, Jamie Foxx and Brie Larson and has earned more than $30 million at the box office. Budnick, the producer of blockbuster comedies such as The Hangover, is an executive producer and co-financed the film through One Community, his new financing vehicle for a slate of upcoming film and TV productions with social impact messages. A non-profit arm, Good FilmsImpact is driving a $10 million campaign, Represent Justice, to spur reform in the U.S. criminal justice system and dignity for individuals directly impacted by it, who are disproportionately people of color.

“We do not want to make the ‘take your medicine, eat your vegetables’ films,” says Budnick, who has raised $50 million of a planned $150 million for One Community. “We want to make commercial films that draw people in, get wide audiences, win awards and can move a lot of people.” The firm is backing films with big social messages – and big stars, big studios and big marketing budgets. The slate approach reduces risk in the hit-and-miss movie business, while seven-figure social impact campaigns also are smart marketing. Budnick’s backers include Endeavor Content, which put up $25 million (and also co-financed Just Mercy), and its high-profile network, including Starwood Capital’s Barry Sternlicht, Live Nation’s Michael Rapino, Variety owner Dan Loeb, Philadelphia 76ers owner Michael Rubin and Kimberly Steward’s K Period Media. The Ford Foundation added a $5 million program-related investment. As social impact entertainment has grown, says One Community’s board chair Roy Salter, “so too have sources of capital widened, given that many of these features are highly commercial and profitable.” Impact investors and philanthropists are increasingly keen to expand from documentaries into commercial film. Says Ford’s Christine Looney, “There is emerging potential to use film for narrative change and to continue to diversify the entertainment industry with new voices and faces.”

Keep reading, “How ‘Just Mercy’ producer Scott Budnick is leveraging box-office appeal for social impact,” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

Holding company Secha Capital takes a stake in Rush Nutrition. Boring sectors are exciting to Secha Capital. The South African “micro-private equity” firm launched with 35 million rand ($2.7 million) to invest in small agri- and consumer goods businesses with solid growth and job creation potential. It made its first investment in beauty products company nativechild in 2017. Its sixth investment is Rush Nutrition, a female-run, healthy snacks company. Secha’s investment will provide sufficient working capital to bridge the gap between production and banking revenue from sales. Secha’s Kuhle Mnisi joins the Rush team as COO. Rush will also get a financial boost from South Africa’s Jobs Fund to temporarily cover eight new employee salaries. 

  • Holding company. Secha makes equity investments off of its own balance sheet, without the timeline pressures of an investment fund, and supplies the team with operational and management support. Secha says this structure allows it to make patient investments and ensure that long-term growth objectives are aligned (see, “The New Alternatives: Holding Companies that Build Assets and Impact of ‘Infinite Duration’). Other impact and mission investors building hold-cos rather than funds include i(x)CoPeace and The Craftory. (Further reading: Breaking the chains of the 10-year fund is harder than it looks.”)
  • Jobs as impact. In a country with one of the highest unemployment rates in the world, job creation is Secha’s primary impact lens. South Africa’s small businesses account for 90% of formal businesses, but few are able to expand beyond their founding teams.
  • Dig in

Everytable scores $2.5 million to back under-represented franchise owners. The L.A.-based healthy and affordable restaurant chain is looking to open 25 new branches run by entrepreneurs of color in underserved neighborhoods. The financing comes in the form of program-related investments (PRI) from the Annenberg Foundation and the California Wellness Foundation. Everytable previously secured a $1.5 million PRI from the Kellogg Foundation to pilot the franchise model.

Chicago gets backing from Melinda Gates to support women in tech. Gates’ Pivotal Ventures committed $50 million to the Gender Equality in Tech Cities initiative to boost women’s leadership and participation in emerging tech hubs. The initiative will support Chicago and two other cities over five years.

Atlanta affordable housing fund will track social impact. Commercial real estate leaders are planning to raise a $25 million Atlanta Affordable Housing Fund to offer low-cost financing to build or preserve 1,500 affordable rental units. The fund will track social as well as financial returns.

Agents of Impact: Follow the Talent

Radhika Shroff, ex- of Accion Global Investments, joins Nuveen as impact investing managing director… XXcelerate has merged with Women Led and named Amy Jermain executive director. The Oregon-based accelerator is accepting applications for its fourth cohort… Blue Meridian is hiring a managing director of its places portfolio in New York… seeks a chief relationship officer… Johnson & Johnson is looking for an investment manager for its global community impact group in High Wycombe, U.K… Sonen Capital seeks an investment analyst in San Francisco… Chan Zuckerberg Initiative is hiring a director of engagement and inclusion in Redwood City, Calif.

Thank you for reading.

–Feb. 3 2020