The Brief | February 23, 2021

The Brief: Neighborhood trusts, block power, SheEO’s network effects, borrowing well, small businesses in India and Indonesia

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Greetings, Agents of Impact! 

Hop on The Call. On today’s Agents of Impact Call, entrepreneurs like Grasslands Cameroon’s Manka Angwafo and Kuli Kuli’s Lisa Curtis, fund managers like WIC Capital’s Evelyne Dioh and Pax World Funds’ Julie Gorte, and field builders like ANDE’s Richenda Van Leeuwen and GenderSmart’s Suzanne Biegel explore how investments by, in and for women are generating tangible climate benefits and returns across geographies and asset classes. Join us on Call No. 27, today at 9am PT / 12pm ET / 5pm London / 8pm Nairobi. Zoom right in.

Featured: ImpactAlpha Original

Neighborhood trusts are taking on speculators and building community wealth. Real estate speculators have new competition on the block: neighborhood trusts organized by residents determined to have a say – and a stake – in the growth of their communities. In Philadelphia and Atlanta, as well as Tulsa, Los Angeles and Portland, community actors are harnessing legal structures and evergreen investment funds to preserve ownership of commercial and residential assets in fast-gentrifying neighborhoods. “The goal of these structures is to transition assets off the speculative market and to retool who’s in control and who’s benefiting from the value generated by those assets long term,” says Camille Canon of San Francisco-based Purpose Foundation, which has expanded to real estate after helping businesses structure ownership to share economic value with stakeholders. “All of these are experiments in different aspects of the question of community-based ownership.”

The Kensington Corridor Trust has acquired nine commercial properties (with five more under agreement) in Philadelphia’s Kensington neighborhood, a former textiles district just a few miles from downtown, with blight and vacancies alongside small businesses and civic associations. The permanent trust (after a transition, the majority of the board will be community residents and business owners) will determine the use of the facilities. It’s important that “the neighborhood be the one to dictate what’s happening and how it’s happening, what they want to see in their corridor. They’re the impacted folks,” says community organizer Adriana Abizadeh, who leads the trust. In Atlanta, Purpose is working with The Guild to allow residents to purchase shares (and reap dividends) in a community investment trust through which The Guild acquired a mixed-use property in Capitol View, a Black neighborhood in the southwest part of the city. Local organizations in Kansas City and Tulsa are working with the nonprofit Trust Neighborhoods to pioneer “mixed income neighborhood trusts” that acquire and rehab residential properties and preserve the majority of units at current rents to prevent displacement. 

Keep reading, “Neighborhood trusts are taking on speculators and building community wealth,” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

Brooklyn’s BlocPower raises $63 million to green U.S. buildings. BlocPower works with utility companies, government agencies and property owners to retrofit city buildings in underserved communities and finance environmentally-friendly heating and cooling systems for small and mid-sized property owners. BlocPower has retrofitted more than 1,000 buildings and has projects underway in two dozen cities.The company’s Series A investment round includes $8 million in equity and $55 million in debt. “By combining emerging technologies, our software platform and our new innovative green financing solution, we can now provide sustainable upgrades to millions of buildings in underserved communities,” says BlocPower’s Donnel Baird.

  • Free to dream. The funding round was led by American Family Institute, AccelR8 and Goldman Sachs. American Family Institute is affiliated with American Family Insurance, which is announcing a commitment of $105 million over five years to social impact startups addressing in the company’s “Free to Dream” pillars: economic empowerment, education and health equity, climate resilience, criminal justice reform, and workforce diversity, equity and inclusion. Kapor Capital, Elemental Excelerator, CityRock Venture Partners, the Schmidt Family Foundation and Salesforce Ventures also participated in the round. 

Women’s investment community SheEO commits $500,000 to five entrepreneurs. Serial entrepreneur Vicki Saunders launched SheEO in 2015 to redesign how women-led businesses are supported. The network of 30,000 investors extended no-interest loans to Sonja Ebron’s Courtroom 5, which provides legal support for individuals without a lawyer; Wanona Satcher’s Makhers Studio, a green manufacturing and real estate business; Arielle Loren Palmer’s 100k Incubator, a business funding app for women; SaLisa Berrien’s COI Energy, an energy management software developer; and Terri-Nichelle Bradley’s Brown Toy Box, which makes educational products to empower Black and Brown learners. All five businesses were founded by women of color. SheEO is ramping up additional commitments in the U.K. and Australia in the coming weeks. 

  • Better capital. Saunders says the male-centric venture capital world is starving women-led businesses of appropriate growth capital. “All of the solutions we have are basically a female version of the existing male model. Those are taking us backwards,” Saunders told ImpactAlpha. “I thought, ‘What if a million women crowdfunded a billion dollars and loaned it out to other women working on critical priorities?’” The Toronto-based organization has mobilized $6 million in zero-interest loans for roughly 100 women-led businesses. 
  • Peer selection. SheEO offers financial and non-financial support through its membership base. Its investment decisions are made based on a peer-selection model. In the pandemic, members in each country hosted weekly calls to support struggling business owners. None of the businesses in its network have failed. “Every week we were ranking businesses ‘red,’ ‘yellow,’ and ‘green,’ and asking, ‘Where are you on the spectrum and what do you need?’” Saunders said. “Everyone just rolled up their sleeves.” 
  • Read on.

Borrowell raises $25 million and acquires affordable credit provider Refresh Financial. Toronto-based Borrowell supports financial health for under-served Canadians through credit education, monitoring and coaching. It serves 1.5 million customers. The company raised growth-stage funding from a raft of investors that include Kensington Capital Partners and Chicago-based impact investor, Impact Engine

  • Financial inclusion. Impact Engine’s Priya Parish said the firm invested in Borrowell to support financial mobility for a diverse base of Canada’s borrowers. Borrowell is the ninth investment from the Impact Engine Private Equity Fund, which makes direct investments and invests in first-time impact private equity funds (see, “Impact Engine steps into private equity with $31 million growth fund”). Impact Engine has also raised two impact venture capital funds. 
  • More

Dealflow overflow. Other investment news crossing our desks:

  • Kinara Capital raises $10 million to support India’s small businesses. The women-led lender offers collateral-free loans to micro- and small businesses across India. It has loaned out $271 million, mostly to first-time borrowers, since 2011. Its latest funding includes a mix of debt and equity led by IndusInd Bank. The U.S. International Development Finance Corp. provided a 100% guarantee. 
  • Indonesia’s RateS scores undisclosed investment to launch small businesses online. The social networks-focused e-commerce platform is part of the “enterprise tech” boom helping small businesses go digital. The Series A round was co-led by Vertex Ventures and Genesis Alternative Ventures.
  • NBA star Russell Westbrook backs digital bank Varo Bank. Westbrook led the digital bank’s $63 million investment round and will join as an advisor to support Varo’s expansion in communities of color. 

Agents of Impact: Follow the Talent

Trevor Neilson of WasteFuel, Rini Greenfield of Rethink Food, and Phillip Bayt of Ice Miller join the board of Novus Capital… Creation Investments names Emily Stella, ex- of Russell Investments, as head of investor relations and promotes Tyler Day to partner… Capital for Climate has openings for a head of research integration and a head of climate funds researchClosed Loop Partners is recruiting a principal for Closed Loop Ventures Group in New York… The U.S. Impact Investing Alliance is hiring an operations assistant…  SEAF is looking for a communications manager in Washington, D.C… Align Impact seeks a remote summer investment analyst.

Thank you for your impact.

– Feb. 23, 2021