Greetings, Agents of Impact!
Featured: Impact Voices
These 12 impact funds are catalyzing transitions to employee ownership. Employee ownership, through which businesses share assets and agency with the workers who create the wealth, is a proven path to a more equitable economy. Employee-owned firms increase income, assets and savings among workers; are more productive and less likely to fail; and are more committed to their local communities. Last year, employee-owned firms were less likely than peer firms to lay off employees (see, “Turning the small business crisis into an opportunity for equitable employee ownership”). Now, a growing number of funds dedicated to transitioning businesses to employee ownership are hitting their stride. “Impact investors hold the power to provide the capital and drive a revolution in enterprise ownership that would result in a far more equitable and just economy, more resilient to future shocks,” write The Democracy Collaborative’s Marjorie Kelly and Kendeda Fund’s Diane Ives in a guest post on ImpactAlpha. What’s more, employee ownership conversion funds can fill in the middle of a portfolio with low-risk investments in mature firms.
Funds focused on employee ownership range from mission-driven funds like the Fund for Employee Ownership at the Evergreen Cooperatives of Cleveland, which offers investors concessionary returns, to private equity funds with mid-range returns from 12% to 15%. The Democracy Collaborative’s recent report, “Opportunity Knocking,” identifies a dozen existing and emerging funds using employee ownership conversions to grow wealth for low-wage workers. The A&H Legacy Fund, being developed by Bethesda, Md.-based Apis & Heritage Capital Partners, aims to address the racial wealth gap by converting businesses with large workforces of color to employee ownership (see, “Black and brown employee ownership for the post-COVID economy“). Mosaic Capital Partners in Charlotte, N.C., has created scores of employee-owners by selling their middle-market portfolio firms to employee stock ownership plans, or ESOPs. Canada’s Social Capital Partners this year helped Taylor Guitars become 100% owned by its more than 1,200 employees through an ESOP. The nonprofit Accelerate Employee Ownership initiative has financed transitions to cooperative ownership for a glass company and a solar installer in California and a green cleaning business in Minneapolis, among other companies. The Business Legacy Fund is building a network of cooperatives in southwest Ohio.
Keep reading, “These 12 impact funds are catalyzing transitions to employee ownership,” by Marjorie Kelly and Diane Ives on ImpactAlpha.
Dealflow: Follow the Money
Republic rides growth of crowdfunding to its own $36 million financing. The New York-based crowdfunding portal was ready for the new crowdfunding rules that now allow companies to raise up to $5 million. Republic hosted the campaign for online creator marketplace Gumroad, which became the first company to hit the new cap – in one day (see, “Retail investors demonstrate the power of the crowd”). Then Republic announced a blockbuster round of Series A financing for itself. “We are at the early stages of a multi-decade super-cycle of retail empowerment,” said Richard Kim of Galaxy Interactive, which led the $36 million round along with Tribe Capital, Motley Fool Ventures and Broadhaven Ventures (Prosus Ventures made its investment through a purchase of Republic Notes, a profit-sharing digital security). Republic, founded in 2018 by former AngelList executives, facilitated 48 “regulation crowdfunding” and accredited investor deals that raised $17.5 million in January and February, more volume than it saw in all of 2019. Republic has also acquired crowdfunding sites focused on real estate (Compound), small business (NextSeed), and video games (Fig).
- Funding the crowdfunders. Wefunder launched its own fundraise on Honeycomb, which snagged a $1.7 seed round this week to expand nationally (see, “Main Street crowdfunding platform Honeycomb secures $1.75 million to expand nationwide”).
- Share the wealth.
Pixxel raises $7.3 million to launch satellites for agri-analytics. The Bangalore-based venture is launching its own hyperspectral satellites to improve analysis of ground-level crop and water information for the agriculture sector. Agtech impact investor Omnivore and Techstars led the round. Lightspeed Ventures, Blume Ventures and growX participated.
- March dealflow. India’s agri-food tech investment scene is booming (see “Digitization of smallholder farming draws investors to Indian agtech startups”). Earlier this month, Omnivore backed AGRIM, a B2B marketplace for agri-inputs, in its $2 million funding round alongside India Quotient and Accion Venture Lab. AGRIM is streamlining and improving transparency in India’s agri-inputs market by connecting rural retailers of seeds and other products to producers, logistics services and credit. Captain Fresh, which aims to improve quality and freshness in India’s seafood supply, raised $3 million from Ankur Capital and Matrix Partners India.
Dealflow overflow. Other investment news crossing our desks:
Access to… Biotech Nano Cures snags $20 million to bring treatments for COVID-19 to emerging markets… Skill Struck raises $1.3 million for STEM education for under-represented K-12 students… Health tech company Unite Us scores $150 million to invest in community-based organizations focused on social care.
Clean energy. Noon Energy secures $3 million seed funding led by Prime Impact Fund to develop long-lasting batteries… Haiti’s Off-Grid Electricity Fund lends $80,000 to Palmis Enèji to import solar energy products.
Fund news. Baltimore-based investment manager T. Rowe Price launches New Global Impact Equity Fund, its first impact fund… DFC backs Missio Invest impact fund to lend to agri-businesses run by Catholic organizations.
Signals: Ahead of the Curve
A grand challenge surfaces solutions to upskill Americans for the future of work. Technology is replacing people. Gig jobs are replacing full-time work. Unions are organizing (see, “Why pension funds and other Amazon investors are backing the workers in union battle“). And remote work is here to stay. “No matter how you look at it, the future of work is now,” said Angela Jackson of venture philanthropy New Profit. The nonprofit is testing 15 early-stage solutions for upskilling American workers with 25,000 workers and $6 million in funding in its Future of Work Grand Challenge. Five ventures from MIT Solve’s Reimagining Pathways to Employment challenge join 10 ventures from partner XPRIZE’s Rapid Reskilling Competition (see, “XPRIZE identifies 10 rising startups solving workforce challenges”).
- Solvers at work. ChargerHelp! is employing local workers to monitor electric vehicle charging stations. The Last Mile is reskilling formerly incarcerated individuals. Generation USA offers a job training bootcamp. Centro App offers training for small businesses and new entrepreneurs grappling with the impacts of COVID. Arts2Work is developing apprenticeships for digital media and creative careers. New Profit has recruited organizations in Dallas, San Diego, Western Michigan, Southeastern Virginia, Hartford, Conn. and Worcester, Mass. to test the interventions.
- Check it out.
Kevin Durant is the NBA’s top scorer… for impact. A new tool created by impact holding company CoPeace assigns a score to athletes’ positive impacts. Durant scored 70 out of a possible 100, followed by his Nets teammate Kyrie Irving. The Warriors’ Draymond Green, the Wizards’ Russel Westbrook, and the Lakers’ LeBron James round out the top five. The VIBE tool (for Valuation of Impact Brand Equity) analyzes more than two billion data points from social media, contracts and charitable initiatives. The idea, says CoPeace’s Craig Jonas, is to demonstrate “the power of sport for good” and to “aid brands in undertaking business endeavors that have positive measurable impact.” CoPeace, naturally, launched a crowdfunding campaign on fellow Public Benefit Corp. Wefunder. Slam dunk!
- Holdco. CoPeace, founded in 2018 by former sporting event professionals, counts waste management company Advanced Sustainable Technologies and CoPeace Sport in its stable of companies. It has a stake in Harlem-based Uncharted Power.
- Just do it.
Alternative protein producers tap the public capital markets. Investors are taking notice of the growing global demand for plant-based foods – and the opportunity to curb the carbon footprint of modern agriculture and meat production. The alternative meat market will grow by 28% per year and reach $85 billion by 2030, UBS forecasts. Plant-based dairy could be worth $37.5 billion by 2025. Leaders Impossible Foods and Beyond Meat are valued at a combined $6 billion (see, “Impossible Foods raises $300 million as demand for plant-based meat surges”). Canada’s Nabati Foods is planning to go public after raising $7.7 million to expand its plant-based brand to the U.S. Israel-based MeaTech becomes the first lab-grown meat company listed on Nasdaq, having raised $22 million. In the Philippines, Monde Nissin Corp. is looking to expand its plant-based foods business internationally and has filed for an IPO that could raise up to $1.3 billion. Dig in.
Agents of Impact: Follow the Talent
Zee de Gersigny of agri-investor Victus Global Capital is appointed director of the Collaborative for Frontier Finance. She steps in for CFF’s Sarah Johnson, who is pausing her role for maternity leave… Martina Edwards of Access to Capital for Entrepreneurs Inc. joins Atlanta-based Zane Venture Fund as partner… The Economist is hosting “A post-pandemic path to inclusive SMB economic recovery,” Thursday, Mar. 25… Media company e27 is hosting “Beyond innovation: Building tech for social impact,” Friday, Mar. 26.
Thank you for your impact.
–Mar. 18, 2021