The Brief | August 12, 2019

The Brief: Kiva’s next act, safety net for digital nomads, anti-slavery tech, U.K.’s creative economy, BlackRock’s stranded assets

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Q&A: CEO Neville Crawley wants Kiva to change systems as well as lives. Neville Crawley was building algorithmic trading strategies in the morning – so his afternoons were free to help reinvent Kiva, the wildly successful microfinance crowdfunding platform launched in 2005. Now he’s putting his ideas into practice as Kiva’s CEO. “I think there’s opportunity for us over time to become a multi-billion dollar fund manager, I really do,” Crawley told ImpactAlpha in Kiva’s San Francisco headquarters. “I think there’s demand in the market and we have the ability to place a lot of capital in an impactful way.”

If Kiva 1.0 was everybody’s favorite example of tech-based crowd power to do good, Kiva 2.0 is about becoming a serious manager of serious capital, and a key part of the inclusive fintech infrastructure. Kiva Capital is an effort to leverage Kiva’s microfinance distribution partners for underwriting loans. As a demonstration project, Crawley is raising the Kiva Refugee Investment Fund, targeted at $30 million for lending to refugees and displaced people and the communities that host them. “We have historical data. We have the relationships, the pipes if you will, where we can move the money back and forth. And we have the data,” says Crawley. “There’s need and demand for a scaled, multi-strategy, truly impact-first asset manager. That’s what we’re aiming to be.” And Kiva Protocol, a digital identity scheme that is Kiva’s alternative to expensive and inadequate credit reports, is rolling out in its first country, Sierra Leone. “Our thought experiment was, ‘If this system did exist, we’d create all of these financial identities and they’d have credit histories and they could become bankable,’” Crawley says. “In many ways, that could make more of a difference than moving money.”

Keep reading, “Q&A: CEO Neville Crawley wants Kiva to change systems as well as lives,” by David Bank on ImpactAlpha. 

Dealflow: Follow the Money

Lumachain raises $3.5 million to fight slavery in food supply chains. The Sydney-based startup’s blockchain platform tracks the origin, location and condition of food in supply chains to boost transparency and ethical sourcing. The product will help firms comply with the Modern Slavery Act, introduced in Australia last year. Lumachain was founded by Jamila Gordon, a Somalia-born ex-Qantas executive, who was forced into child labor as a five-year-old. “I always knew I would create the technology where we would connect big companies around the world to buy products and sell products anywhere, knowing those products were ethically sourced and produced, and there’s no modern slavery involved,” Gordron told SmartCompany. Lumachain’s $3.5 million round was led by Main Sequence Ventures, the innovation fund of CSIRO, Australia’s national science agency. Dig in.

SafetyWing raises $3.5 million to build “safety nets” for digital nomads.Technology and the internet make it possible for people to live and work from where they want. Most insurance policies and social programs, however, are only available to people in their home country. SafetyWing, a Y Combinator graduate, is building a “global social safety net,” targeting digital nomads and remote workers. The first product from the Norway-based startup is a subscription travel medical insurance available to anyone living outside of their home country. The firm raised $3.5 million in seed funding led by Nordic and Baltic-focused VC byFoundersCredit Ease Fintech Fund and DG Incubation also participated. More.

HESTA Super Fund invests AUS $20 million in sustainable, affordable housing. The Australian pension fund for people working in health and community services invested in ‘Nightingale Village,’ carbon-neutral residential apartment project in Brunswick for community workers from Nightingale Housing and Social Ventures Australia.

Nesta invests £1 million into the U.K.’s creative economy. Nesta’s Cultural Impact Development Fund backed InHouse Records, a prison record label, and Saffron Hall, a performing arts venue, while the nonprofit’s Arts Impact Fund invested in the Emerge FestivalartFix and the Story Museum.

Signals: Ahead of the Curve

BlackRock’s stranded assets. BlackRock owned 5% of PG&E before the California utility collapsed in what the Wall Street Journal called “The first climate-change bankruptcy.” BlackRock was also the biggest loser ($19 billion) in General Electric’s fall from grace, after the company bet big on fossil fuels as energy market began to shift to renewables. Over the past decade, BlackRock’s fossil fuel investments have lost investors $90 billion in value, according to new research from the Institute for Energy Economics and Financial Analysis. Three-quarters of those losses came from investments in four companies: ExxonMobilChevronRoyal Dutch Shell and BP. As the world’s largest asset manager, with a $6.5 trillion portfolio, BlackRock “has the power to lead globally to address climate risk, yet to-date it remains a laggard,” says Tim Buckley of IEEFA. “It is BlackRock’s fiduciary duty as a global leader to lead.”

  • Passive management. BlackRock maintains it has little control over its $4.3 trillion in passively managed investments, according to IEEFA. But, “passive funds should not mean passive owners,” concludes a Create Research report of 127 pension plans. The survey found that more than a quarter of those surveyed said index managers were not meeting their stewardship goals. BlackRock peers AmundiNorges BankAP4Storebrand and KLP have all developed low carbon investing strategies that provide comparable-risk adjusted returns.
  • Risk mitigation. Environmental, social and governance, or ESG, criteria may help investors reduce their exposure to such climate risks. In the case of PG&E, the company had long been warning of its climate-related risks; ESG investment managers had taken heed. Of the roughly 1,200 sustainable equity funds tracked by Bloomberg, just 34 held shares of PG&E. The percent of BlackRock’s total assets allocated to environmental, social and governance, or ESG, funds: 0.8%. That leaves 98.2% exposed to uncompensated, but not unforeseen, risks (see, “As assets flow to ESG investing, investors on the sidelines face hidden risks”).

Agents of Impact: Follow the Talent

Ed Cremean joins KEEN Growth Capital as vice president of operations. Simone Luke joins the Orlando-based impact investing fund as vice president of strategic sales; Sally Maxwell joins as senior financial planner and analyst… Edtech startup Kinvolved is hiring a director of K-12 client success in New York… Luminate is recruiting a finance and operations director in Washington DC and a head of information technology in London… Rockefeller Foundation is looking for an associate of innovative finance in New York… The Sorenson Impact Center seeks a manager of impact investing and a senior associate of impact investing in Salt Lake City… Community Outcomes Fund at Maycomb Capital is hiring an investment associate in Brooklyn… Plug in to the ThePLUG, a new Black innovation economy publication from journalist (and ImpactAlpha contributor) Sherrell DorseyImpactAlpha subscribers get 10% off ThePLUG’s annual or monthly subscription.