Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Investors swarm to the growing “famtech” market for new parents. Millennials—the first generation of digital natives—are growing up and having kids. And they’re turning to tech-enabled solutions to stay healthy, lower the cost of childcare and buy baby gear. If they can’t find them, they are increasingly creating their own. The generational shift is driving a new wave of innovation aimed at the challenges of parenting in the modern age—from the need for more informed healthcare for moms and newborns to juggling the demands of childcare and careers. Call it childcare tech, parenting tech, tech for families, or simply, famtech. A diverse range of investors is calling it a big opportunity. In the past six years, venture firms have deployed some $500 million into startups targeting early parenthood solutions. Forbes estimates the emerging “new mom economy” at just under $50 billion. Childcare, for example, is often the single biggest monthly expense for working families—it can swamp mortgage payments and it exceeds the average cost of in-state college tuition in more than half of U.S. states.
Capital is flowing to solutions. Mahmee, a digital network of care for new mothers, on Monday announced a $3 million seed round from venture funds managed by Arlan Hamilton and Steve Case, as well as investments from Serena Williams and Mark Cuban. In May, Brooklyn-based Sawyer, whose scheduling app helps parents book and pay for everything from soccer to robotics activities for their kids, pulled in $10.6 million. And Cleo, a healthcare-focused employee benefits platform for working parents, raised $27.5 million in March. For Zoe Schlag of TechStars Impact, whose first accelerator cohort included BridgeCare, a Seattle company using artificial intelligence to make childcare more affordable, the impact is in relieving the financial burden of childcare for working families. It’s also a broader gender lens play, Schlag told ImpactAlpha. “So much of this burden falls on women.” Which may explain why many “famtech” founders are women. Mahmee was founded by Melissa Hanna and her mother, Linda Hanna, a nurse. Cleo was founded by Shannon Spanhake, a former deputy mayor of San Francisco. And Sawyer’s female cofounders met at Rent the Runway. Four of the six portfolio companies of Atlanta-based BeCurious, which invests exclusively in famtech, are, you got it, female-led.
Keep reading, “Investors swarm to the growing “famtech” market for new parents,” by Amy Cortese on ImpactAlpha.
Dealflow: Follow the Money
Pure Salmon plans $250 million sustainable aquaculture plant in Lesotho. The Highlands of the land-locked Southern African country are known for some of the purest natural water reserves in the world. The 20,000-metric-ton Atlantic salmon facility would be the first land-based “recirculating aquaculture system” in Africa, providing a local, sustainable source for the continent’s growing appetite for fresh fish. When completed in 2023, Pure Salmon estimates the plant will employ 250, run completely on hydro-electric power and account for 8% of Lesotho’s gross domestic product. The firm plans to offer shares to the community through direct ownership of the facility. Pure Salmon is a portfolio company of 8F Asset Management, a Singapore-based impact investing asset management firm. The Lesotho site is being developed with the Lesotho National Development Corporation. Land-based recirculating aquaculture systems are cleaner than traditional aquafarming, “but have largely failed to attract private capital at a sufficient scale to reach their full commercial and impact potential,” according to “Towards a Blue Revolution.” In October, Pure Salmon announced it would invest $152 million in a Japan-based facility. The firm’s first plant, in Poland, is fully operational. Other projects are underway in China, Bahrain, the U.S. and Europe. More.
Finix raises $17.5 million to help companies control their own payments. “Horizontal” payment providers like Stripe and Square provide merchants complete end-to-end payments infrastructure, for a small fee per transaction. “Vertical” providers, like MindBody and Veeva, help software companies bring payments in-house to grow profits and market share. Finix, a three-year old San Francisco-based startup, is the latter sort, effectively “white labeling” payments infrastructure for companies large enough to bring payments in-house (about $50 million in annual revenue) and streamlining the process to allow businesses to build payment systems in as little as 60 days. The savings add up. One client, Lightspeed, says it saves 0.40% on every transaction processed (or $4 million on every $1 billion in revenue). Bain Capital Venturesled the $17.5 million round, which also included Visa, Insight Partners and Aspect Ventures. Earlier investors included Village Capital, Homebrew, Precursor Ventures, Act One Ventures, Class 5 Global and Argo Ventures. Dig in.
Signals: Ahead of the Curve
Forest risk: Losses – and opportunities – mount in corporate supply chains. Global corporations including Walmart, Estee Lauder and IKEA are putting their brands and supply chains at risk by failing to disclose deforestation risks. Alternatively, addressing “forest risk” presents a $27 billion opportunity – and that’s just for the minority of companies currently investing in sustainability across their supply chains. A new report by environmental non-profit CDP (previously Carbon Disclosure Project), found that less than 25% of companies track the financial impact of deforestation on their businesses. Those that did, calculated potential losses of $30.4 billion. “The low level of reporting on this data point suggests that this figure is significantly under-reported—and that companies are perhaps unaware of the potential cost of forest risk,” says CDP in its “The Money Trees” report. CDP solicited 1,500 global companies for their deforestation commitments and impact disclosures, as requested from investors and other third party organizations, in four key forest-related commodities: cattle, timber, soy and palm oil. Only 306 responded, while an additional 364 companies have declined disclosures for at least three consecutive years. “The silence is deafening when it comes to the corporate response to deforestation,” CDP’s Morgan Gillespy said.
- Non-commitments. Less than 25% of companies have made “zero deforestation” commitments for each commodity group, which may discourage other types of action, like supplier engagement, supply traceability or third party certifications.
- Reputation risk. “Companies are already telling us reputational risk is the top risk they see from deforestation,” Gillespy said. Investors increasingly “demand this information to understand their exposure to risk related to these highly scrutinized commodities and expect companies to understand their financial exposure as well.”
- Leaders. French cosmetics company L’Oréal is taking the issue head on. The firm has developed a Sustainable Palm Index to assess suppliers’ commitments and achievements in fighting deforestation.Empresas CMPC, a Chilean pulp and paper company, is concerned with forest fire risk. The company has invested in its capabilities to predict, detect and combat fires with a fleet of 20 aircraft and 1000 firefighters, as well as software and sensors for the simulation and analysis of fire propagation.
- Laggards. Three percent of companies don’t know if they “produce, use or sell materials or products that contain one of the four forest risk commodities” while an additional 11%, including Associated British Foods, The Kraft Heinz Company and Avon, don’t report commodity-linked revenue.
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Agents of Impact: Follow the Talent
Korn Ferry is recruiting a director of environmental, social and governance impact reporting for an unnamed financial services company… RSF Social Finance is looking for a senior manager of client engagement… The Aspen Network of Development Entrepreneurs is hiring a partnerships associate in Washington D.C… BlocPower seeks a financial analyst, senior analyst or associate in Brooklyn… Transform Finance is hosting “Pooling Loan Guarantees,” a July 24 webinar featuring Catherine Covington of MCE Social Capital and Aner Ben-Ami of Candide Group… In September, Transform Finance is hosting its two-day Institute for Social Justice Leaders in New York… The Workers Lab seeks applications to its Innovation Fund for new solutions to problems faced by working people.
– July 17, 2019