The Brief | June 15, 2020

The Brief: LeapFrog’s Andy Kuper, vested world, worker-owned holding company, estimating impact assets, law enforcement accountability art

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Greetings, Agents of Impact!

The Call No. 19: Investing in green infrastructure to weather the recession. The pandemic-induced pause in greenhouse gas emissions has provided a glimpse of a low-carbon future. At the same time, long-term, steady yields have rarely looked so attractive. ImpactAlpha’s next Agents of Impact call will explore investments in clean energy and green infrastructure as a path to carbon neutrality – and an income anchor in a portfolio. Join sponsor Greenbacker Capital’s David Sher and other special guests, Thursday, June 18 at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Returns on Investment podcast

LeapFrog’s Andy Kuper on impact, exits and scaling growth in emerging markets through the COVID crisis (podcast). LeapFrog Investments goes into this recession with capital on hand, the fortuitous result of having raised more than $700 million for its third fund last year. That’s a stark contrast to the last recession, when LeapFrog launched its first fund a week after the collapse of Lehman Brothers in 2008. The emerging markets impact investor went on to raise $135 million to prove out its thesis that rising middle classes in Asia and Africa would increasingly demand “wealth and health.” CEO Andy Kuper said the COVID pandemic has strengthened LeapFrog’s “profit with purpose” investment thesis. “There’s no reason why those billions of consumers rising and emerging in Asia and Africa are not going to continue to demand” insurance, healthcare and financial services, Kuper told David Bank in an interview on ImpactAlpha’s latest Returns on Investment podcast. “We have every reason to believe that the thesis of investing in companies serving emerging consumers is only going to be amplified in the coming years, especially if you take the digital dimensions into account.”

In the interview, Kuper criticized what he called the lack of ambition in some parts of the impact investing ecosystem. When he launched LeapFrog, Kuper committed to reaching 25 million low-income customers by the end of 2019. The company’s recent impact report says its portfolio companies reach 205 million people, 164 million of them low-income. Kuper has raised the firm’s ambition for the next decade: to reach one billion people by 2030. Small may be beautiful, he said, but technology is helping “super-scale” LeapFrog companies like WorldRemit and Goodlife Pharmacy. “Impact investing has to be the lever that’s long enough to move this world,” Kuper said. “And this world has four billion low-income people in it, so we really need to focus on those companies that are going to serve tens of millions of people with quality, affordable products and make sure they get the support they need.”

Keep reading, and listen in to, “Leapfrog’s Andy Kuper on impact, exits and scaling growth in emerging markets through the COVID crisis (podcast).” Catch up on all of ImpactAlpha’s podcasts, including our weekly Impact Briefing.

Dealflow: Follow the Money

VestedWorld makes early-stage investments in Vanu and GET IT. The Chicago-based impact investor invests in early-stage companies based in or serving Africa. The company’s two latest investments are Vanu, a Boston-based internet tech company, and Kigali, Rwanda-based GET IT, a food distributor. VestedWorld now has a dozen companies in its portfolio and is investing from its $15 million second fund. It recently invested in Nigeria-based agri-processor Tomato Jos, alongside Alitheia Capital and Acumen.

  • Investing in connectivity… Vanu makes equipment and software to help mobile operators affordably build and operate cellular networks in rural areas. It has operations in India and Rwanda and has partnered with mobile network operator MTN in Zambia, South Africa and Benin. VestedWorld participated in Vanu’s $8.8 million Series A round. The company is looking to raise $11 million.
  • … and food access. GET IT runs a food distribution and logistics company in Rwanda. It uses off-grid cold-storage facilities to prevent spoilage of food from its own farm and other suppliers as it transports farm goods and handles exports. VestedWorld invested an undisclosed amount in GET IT’s Series A round. Nairobi-based venture debt firm EquaLife Capital is also an investor.
  • Check it out.

Worker-owned Obran Cooperative acquires Appalachian Field Services. Obran is a holding company owned by the workers of two Baltimore-based staffing agencies: CORE Staffing, a temporary job-placement company launched and owned by formerly incarcerated individuals, and Tribe Works, which is focused on digital creative services. Obran’s goal is to “create a very big holding company” that fuels profits back to employees of subsidiaries, Obran’s Joseph Cureton told NextCity. It looks for businesses with owners looking to exit and which Obran can help transition to worker ownership (see, Black and brown employee ownership for the post-COVID economy). Its first acquisition is Appalachian Field Services, a home renovation and property management company that employs people recovering from substance abuse. More.

Police accountability initiative Law Enforcement Accountability Project launches. Film director Ava DuVernay launched LEAP to fund 25 performing and visual arts projects exposing police brutality. The Ford Foundation, screenwriter-producer Ryan Murphy and other funders committed $3 million.

Signals: Ahead of the Curve

GIIN estimates impact investing market to be $715 billion, but few investors rally to COVID crisis. The Global Impact Investing Network launched its first survey of impact investors in the wake of the Great Financial Crisis. The network published its 10th survey last week in the midst of a global pandemic. “If crisis exacerbates our most troubling trends,” writes the GIIN’s Amit Bouri, “I am convinced that it can also amplify our most encouraging trends.” Nearly 300 investors managing $404 billion in impact investing assets responded this year (just two dozen responded to the 2010 survey). Extrapolating to a dataset of more than 1,720 impact investors, the GIIN estimates the market to be $715 billion, up from $504 billion last year. Some impact investors are demonstrating resolve in the face of the COVID crisis (see, Investors that demonstrate flexibility and patience prove catalytic in COVID crisis). But only 18 of 122 respondents said they will “likely” commit more capital than planned in response to the pandemic. Almost 60% are “unlikely” to change the volume of capital they plan to commit in 2020; another 20% plan to cut back commitments. Other highlights:

  • The upside. Realized returns are strong across asset classes, with returns on emerging market investments on par with those in developed markets. Allocation growth appears strongest across Europe, East and Southeast Asia and Latin America, as well as in water and sanitation, financial services, healthcare and food and agriculture. Impact investors have coalesced around the U.N. Sustainable Development Goals.
  • The downside. Concerns about “impact washing” loom large; half of respondents called impact measurement and management a “significant challenge.” Almost 40% do not yet independently verify their impact. Allocations among repeat respondents have grown least in sub-Saharan Africa, Eastern Europe, and Central and South Asia, as well as in microfinance and housing. Allocations to education and arts and culture have fallen since 2015.
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Agents of Impact: Follow the Talent

New Island Capital Management is looking for a managing director of private credit in San Francisco… Fidelity Investments is hiring a director of philanthropic strategies in New York… Arctaris Impact Investors seeks a senior fund accountant/controller in Boston… Y Analytics is recruiting an impact solutions associate in Washington, D.C… Spero Ventures is hiring a summer associate in Redwood City, Calif.

Impact online:

  • June 24. Oslene Carrington of Guyana Economic Development Trust is hosting “Caribbean Resilience: Planning for a post-COVID recovery,” with Justin Ram of Caribbean Development Bank, Bank of Jamaica’s Ingrid RileyLizra Fabien of Dominica Association of Industry and Commerce and The Network Journal’s Rosalind McLymont.
  • July 7 and 8. Reuters is hosting the Transform Europe Virtual Series on the low-carbon, circular and inclusive future.

Thank you for reading.

–June 15, 2020