The Brief | March 22, 2023

The Brief: Metrics and mood music in impact reporting, embedded finance in emerging markets, urban resilience in Africa, social cost of carbon, electrify everything

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Greetings, Agents of Impact!

Next week’s Call: Metrics Madness. In partnership with the Southern Reconstruction Fund, ImpactAlpha is identifying key metrics for assessing racial wealth-building investment strategies (nominate your favorite metric). Join Southern Reconstruction’s Napoleon Wallace and other Agents of Impact in the fun finale to Metrics Madness, Wednesday, March 29 at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Metrics Madness

Metrics and mood music in impact reports from Founders First, Mercy Corps Ventures, Upstart Co-Lab and ALIVE. Acumen Latin America Impact Ventures, or ALIVE, tracks the number of informal-economy jobs its portfolio companies have formalized. Upstart Co-Lab reports on how its investments improve quality jobs and sustainable livelihoods. And Mercy Corps Ventures, the investment arm of the global humanitarian relief agency, looks at the increased revenues and property values of end-users. Looking across ImpactAlpha’s latest roundup of impact reports, it’s difficult to make apples-to-apples comparisons. “Impact reporting is inherently more context-dependent and therefore does not lend itself as readily to standardization of data in the way that financial reporting does,” the consultancy BlueMark’s Sarah Gelfand says in an FAQ on impact reporting that accompanies our latest roundup (see earlier editions here and here). Still, the reports provide starting points from which to interrogate the effectiveness of different impact strategies. A sampling: 

  • Founders First: Revenue-based financing for diverse-led businesses. The San Diego-based firm has supported 644 businesses through 54 accelerator cohorts since it launched. About three-quarters have increased revenues, with an average increase of 78%. More than half attracted a total of $65 million in new funding. Through its investment arm, Founders First has deployed $5 million to 27 companies, which have helped increase revenues an average of 26%.
  • ALIVE: Embedding a gender lens to serve low-income customers. Alive says its portfolio companies have helped formalize almost 60,000 jobs, a 186% increase from last year. Nearly half of its portfolio companies’ women; 35% of company leadership positions are filled by women. ALIVE works with 60 Decibels to survey end customers and beneficiaries to track quality of life improvements, and with Value for Women to help portfolio companies develop gender inclusion strategies. 
  • Mercy Corps Ventures: Catalyzing a resilient future in emerging markets. Mercy Corps Ventures’ “resilient future” investment thesis includes adaptive agriculture and food systems, frontier fintech, and climate-smart systems. In 2022, MCV portfolio companies served 4.4 million customers, including 1.3 million women and smallholder farmers. They increased revenues and property values of end customers by $19.3 million, and facilitated $248 million in financing to individuals and small businesses.
  • Upstart Co-Lab: Investing for a creative and inclusive economy. Upstart tracks how investments in the creative economy improve quality jobs and sustainable livelihoods, vibrant communities, and access to capital for diverse and women entrepreneurs. Its new impact report highlights a deal pipeline that includes 300 companies, creative economy-focused funds, and real estate projects targeting more than $2 billion in the next two years.

Dealflow: Financial Inclusion

Credable raises $2.5 million to accelerate embedded finance in emerging markets. A raft of tech-enabled companies are delivering essential goods and services, such as food supplies and transportation, to low-income customers worldwide. They’re increasingly embedding financial services in their business models to improve affordability and boost financial inclusion. Dubai-based Credable wants to accelerate “embedded finance” by designing products and back-end tech for banks, telecom companies and other service providers. Low-income customers interact daily with tech-based services, like mobile networks, e-commerce and gig apps, Credable’s Nadeem Juma told TechCrunch. “Rather than try to create a new channel to bank these customers, we aim to enable these channels through a B2B2C offering that provides the customers with the banking services they need in the channels they’re already in.” Credable’s customers include Vodacom M-Pesa in Tanzania and Diamond Trust Bank in Kenya.

  • Maturing technology. Essential services startups have largely been raising their own capital to on-lend, as Trukkr in Pakistan is doing, or leveraging customer data to enlist traditional banks and financial institutions to do the lending. The emergence of “banking-as-a-service” providers like Credable suggests the ecosystem is evolving and disaggregating. Credable’s seed round was backed by Ventures Platform, Launch Africa and others.
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Verod-Kepple Africa Partners secures $43 million to invest in tech businesses in Africa. The firm is a partnership between Nigerian private equity firm Verod Capital and Kepple Africa Ventures, a Japan and Kenya-based firm. The partners’ first fund’s portfolio includes fintech ventures Moove, a vehicle financing company for Uber drivers in Africa; Ceviant, which offers trade finance in Nigeria; and Julaya, a neobank operating in francophone West Africa. Verod-Kepple says its investments reach more than 800,000 people and have created 2,000 jobs. The fund, Verod-Kepple Africa Ventures, is backed by the Japan International Cooperation Agency and Sumitomo Mitsui Trust Bank. Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • Inclusive fintech investor Quona Capital reupped its investment in Indonesian vehicle financing startup Broom.
  • British International Investment committed €20 million ($21.6 million) to Meridiam’s Urban Resilience Fund to invest in climate-resilient urban infrastructure in Africa.
  • Nuru raised $1.5 million from Renewable Energy Performance Platform, Proparco and E3 Capital to build solar-hybrid minigrids in in the Democratic Republic of the Congo.
  • Maqsad secured $4.9 million from Speedinvest, Indus Valley Capital and others to expand access to affordable online education for students in Pakistan.
  • Nigerian online bank FairMoney acquired PayForce, which provides payment services to small businesses. The deal will expand banking and credit services to PayForce’s customers.

Editor’s note: ImpactAlpha and other publications were duped last week by a phony press release. We apologize for posting a short item about an investment in a company that appears to not exist. dug into the still-unfolding story of “Carbonomy.” Lesson learned! 

Six Short Signals: What We’re Reading

👩🏽‍🦱🧑🏼‍🦱👨🏾‍🦲👩🏻‍ “This ‘distraction’ is potentially the solution.” Black Women in Venture Capital, BLCK VC, 1863 Ventures and Living Cities are pushing back on an op-ed in The Wall Street Journal that claims Silicon Valley Bank was “distracted by diversity demands.” Data shows diverse boards and investing in diverse entrepreneurs is better for business and for the U.S. economy. (1863 Ventures)

Disability tech. Dealroom has compiled a database of more than 100 disability tech startups addressing dyslexia, visual/vision impairments, prosthetics and workplace solutions. (Dealroom)

🏭 Social cost of carbon. The social cost of carbon is an estimate of the cost, in dollars, of the damage done by each additional ton of carbon emissions and the benefit of any action taken to reduce a ton of carbon emissions. In November, the U.S. Environmental Protection Agency proposed quadrupling the price, to $190 a ton. (Brookings Institution)

🚗 IRA’s impact after six months. More than $50 billion in U.S. electric vehicle investments, representing 42% of all EV investments in the last eight years, have occurred in the six months since passage of the Biden Administration’s climate bill. (Environmental Defense Fund)

🔋 Battery storage market. The demand for electric vehicles and utility-scale and distributed storage is driving investment in energy storage, from battery developers to storage integrators. Clean Edge has mapped the emerging ecosystem of battery storage startups. (Clean Edge)

Helping you electrify everything. The Inflation Reduction Act is full of incentives to help you and your family go electric. Rewiring America has compiled everything you need to know to maximize your savings. (Rewiring America)

Agents of Impact: Follow the Talent

James Andrus, ex- of the California Public Employees’ Retirement System, joins Franklin Templeton in the new role of sustainability global markets vice president… Claudia Levan, former principal at General Atlantic, joins Lightspeed Venture Partners as fundraising vice president… Josepha Montana, ex- of Turenne Capital, joins Partech as chief sustainability officer, a new role.

Northern Arc Capital is recruiting a senior associate for offshore debt capital markets in Mumbai… Symbiotics is looking for a Switzerland-based business process and data specialist. JPMorgan Chase’s robo-advisor OpenInvest seeks a wealth management vice president for ESG data partnerships in San Francisco… South Pole is on the hunt for a sustainable finance managing consultant… Breakthrough Victoria is hiring a portfolio construction director in Melbourne.

ImpactAlpha’s David Bank, Syntegral’s Vijak Haddadi and Maoz Michael Brown of the Wharton School will discuss, “Can AI empower the future of impact investing?” tomorrow, March 23… Preventable Surprises is hosting “Divided by a common language: Why board directors and investors see the world differently” with Jon Lukomnik, Monday, April 10.

Thank you for your impact.

– March 22, 2023