Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Impact investors offer four takeaways for the ‘new capitalism’ (video). Suddenly, it seems, capitalism is being reimagined, reinvented or reset. For impact investing practitioners, however, the “new capitalism” is an overnight sensation 40 years in the making. One of ImpactAlpha’s founding precepts was that financial markets will increasingly need to know what impact investing practitioners have learned over decades of working with communities, supporting entrepreneurs and innovating in financial structures and products. At the Aspen Institute’s recent “Toward a New Capitalism” gathering in Washington, D.C., ImpactAlpha‘s David Bank asked four impact investing practitioners what the broader financial markets need to know.
“We rethink and reallocate risk,” said Social Finance’s Tracy Palandjian, who is working to to deploy “career impact bonds” to help low-income workers get skills and training to improve their livelihoods. “We are thinking about how to disrupt and redefine how capital flows in disinvested communities,” said Capital Impact Partners’ Ellis Carr, who is tapping the public bond markets to finance affordable housing, schools, healthcare and grocery stores that serve low-income communities. “Capital gaps are real. The market cannot solve every single thing,” said MacArthur Foundation’s Debra Schwartz, who manages MacArthur’s $500 million impact investing portfolio. “We need catalytic capital in all of its forms.” Said Morgan Stanley’s Audrey Choi, who has helped build Morgan Stanley’s “investing with impact” platform to $30 billion in assets, “I’ve never yet met an investor who says ‘I don’t want an investment with the same return with less downside volatility.’”
Keep reading, and watch the video, “Impact investors offer four takeaways for the ‘new capitalism’,” by David Bank on ImpactAlpha.
Dealflow: Follow the Money
Accion Venture Lab invests in Egyptian neobank Khazna. Cairo-based fintech Khazna launched in 2019 to bring financial services to 20 million underbanked Egyptians by offering mobile and online bank accounts and salary advances. It raised an undisclosed amount of seed funding from Algebra Ventures and fintech-focused impact investor Accion Venture Lab. Khazna’s first lending product is tied to customers’ earning potential, Accion Venture Lab’s Vikas Raj told ImpactAlpha. Comparing the company with other neobank and fintech approaches, he added, “You can’t just do an unsecured loan over the phone and ensure responsible pricing.”
- Delta dealflow. Accion Venture Lab expects to do more deals in Egypt. “We’re now seeing the Central Bank of Egypt opening up and making financial inclusion a priority,” said the firm’s Ashley Lewis. High rates of “digital acceptance” and experienced entrepreneurs starting their second and third companies are driving solid fintech deal pipeline for investors, she added.
- Check it out.
Rest Less raises seed funding to offer career support to aging workers. The number of over-70 workers in the U.K. has doubled in the past decade. London-based Rest Less helps older workers find career and volunteer opportunities and plan new career paths. “We want to help this underserved, and under-represented group of individuals navigate the challenging and ever changing employment landscape,” Rest Less’s Stuart Lewis said. The company has raised £3 million ($3.9 million) in seed funding from QED Investors, 1818 Venture Capital and several angel investors.
Northern Arc reaches $23 million first close for India debt fund. The fund is the eighth fund from Chennai-based impact investor Northern Arc (formerly IFMR Investment Managers.) Northern Arc will make debt investments of up to $5 million in the micro-, small business, vehicle, and agribusiness finance sectors. The company reached a first close toward a $100 million goal with backing from Partners Group, Anthos Fund & Asset Management and Calvert Impact Capital.
Canada’s CDPQ takes majority stake in Azure Power. Caisse de dépôt et placement du Québec owns 50.9% of India-based solar power developer Azure after acquiring the company’s publicly listed shares. Azure’s Ranjit Gupta said the investment will give Azure “better access to external capital” to expand beyond its 7-gigawatt solar footprint.
Signals: Ahead of the Curve
Backstopping local economies in a global pandemic. In the face of the coronavirus outbreak, local leaders are being forced to sacrifice local economic activity in the national interest. On Friday, Austin canceled SXSW, the tech and culture fest that contributes some $350 million to the local economy – and let go of a third of the festival’s full-time employees. Organizers of Comic-Con, under pressure from Seattle officials, rescheduled the geek convention, which was set to bring 100,000 people into the city at the heart of the U.S. outbreak. Chicago’s Coachella music festival is expected to be postponed. The U.S. government is weighing bailouts for big hotel and cruise companies. Entrepreneurship advocate Victor Hwang tweeted, “America needs more bailing out of little people who make and create things, like products we need and jobs that pay the bills.” Seattle Mayor Jenny Durkan said measures taken to mitigate the spread of coronavirus will hit the 200,000 people who work in small businesses hardest. “I want to get as much federal relief into the hands of those businesses,” she said. Some efforts underway around the globe:
- Softening the blow. The Japanese government will provide interest-free loans for small- and medium-size companies that experience a sharp drop in revenue. In China, where most Beijing restaurants remained closed, the government will allow small and medium-sized businesses to defer payments, and pay lower rents and interest on loans. Taiwan’s $2 billion package includes loans for small businesses, subsidies for tour agencies, tax cuts for tour bus drivers, and food vouchers to Taiwan’s night markets. Italy has provided small business tax cuts and credits as part of billions of dollars in aid. President Trump is scheduled to meet with Senate leaders today to discuss proposals for a payroll tax cut, assistance for hourly workers and loans to small businesses.
- Recovery grants. Nonprofits are being hit by the coronavirus disruption as well. “Donors need to act now to ensure these organizations can not only help us through the crisis but also be in a position to rebuild our communities in the future,” writes Nonprofit Finance Fund’s Antony Bugg-Levine in The Chronicle of Philanthropy. Among Bugg-Levine’s suggestions: Provide unrestricted funding, pay full costs and mobilize recovery grants.
- Catching up. Congressional Democrats are seeking to provide interest-free loans of up to $2 million to outbreak-affected businesses. They are urging banks and regulators to be flexible with consumers and businesses that miss payments due to temporary virus-related disruptions. The $8.3 billion in U.S. coronavirus funding so far is focused exclusively on healthcare. “States and cities are going to have to act in the national interest right now to prevent a broader epidemic,” says Scott Gottlieb, the former chief of the Food and Drug Administration. Needed now, he says, is assistance to people and cities “to try to give them an incentive to do this.”
- Tech mobilization. In China, Alibaba is waiving service fees and rents on warehouse space for small merchants. Ant Financial will offer interest-free or low-interest loans to Hubei-based merchants. JD.com is creating a chatbot to collect patient information at triage. In the U.S., Google and Microsoft are providing temporary free access to enterprise conferencing tools.
- Share this post.
Agents of Impact: Follow the Talent
LOCUS’ Teri Lovelace will become executive director of the Community Investment Guarantee Pool (see, “Funders pool $33 million in credit guarantees to catalyze community investments”)… Triodos Investment Management names Shawn Westcott as investor relations manager for the Nordics… Transform Finance is looking for a director and a program manager for its Capital Strategies Program in New York… Common Future launches Common Future Bridge Fellows to support local economy leaders in the southern U.S. who are closing the racial wealth gap through support for entrepreneurship and community health- and wealth building.
Conveners.org will host a call, Thursday, March 12, with Caspian Agency’s Heather Mason and Seed Global Health’s Esther Johnston to discuss risk factors and mitigation measures for gatherings in the age of COVID-19… William Burckart, Steve Lydenberg and Jessica Ziegler of The Investment Integration Project are seeking help choosing a title for their new book on system-level investing. Take the five-minute survey.
Thank you for reading.
–Mar. 10, 2020