The Brief | July 19, 2023

The Brief: Participatory investing toolkit, fintech in Southern Africa, electric bike bankruptcy, peak Larry Fink

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Greetings, Agents of Impact!

Featured: Community Finance

How some communities and funders are practicing ‘participatory investing’ to share power as well as capital. Community-led investing. Grassroots community-engaged investing. Participatory investing. By a variety of names, the practice of shifting investment decision-making power to communities that are closest to solutions has become a hot topic among impact investors. A handful of nonprofit funds have pioneered the model, from the Boston Impact Initiative and Ujima Project in Boston, to the East Bay Permanent Real Estate Cooperative Fund and Real People’s Fund in Oakland. Putting the ideas into practice has proved trickier for larger institutions, including philanthropic foundations, which collectively hold more $1 trillion in assets. To help foundations on their journeys, Common Future and World Education Services’ Mariam Assefa Fund have released an online toolkit for participatory investing – their preferred term for the investment approach that gives meaningful power and ownership to historically excluded communities over capital strategy, design, implementation and outcomes. “In order to be good stewards and create meaningful impact, institutions must rethink who is at the table and how decisions are made,” says WES’s Smitha Das. “Participatory investing, at its best, deepens trust and relationships to ensure that investment decisions are rooted in community.” 

  • Community-led. The Heron Foundation three years ago declared it would hand over investment authority to a half dozen or more local communities. “We’re just the asset owner,” Dana Bezerra, then Heron’s head, told ImpactAlpha at the time. “Instead of extracting the wisdom from these communities in order to make deployment decisions, why don’t we start a process of handing over the deployment?” The Samuel Fels Fund has committed $5 million to a participatory process that centers Philadelphia’s Black community. In Chattanooga, Tenn., Footprint Foundation has set aside $4 million over five years to be allocated by a community group as grants and, more recently, mission-related investments. “The entire process is iterative and murky,” says Footprint’s Lisa Pinckney. The work “involves extending invitations, tending to relationships and creating learning opportunities.”
  • Keep reading, “How some communities and funders are practicing ‘participatory investing’ to share power as well as capital,” by Amy Cortese on ImpactAlpha. 

Dealflow: Financial Inclusion

World Bank supports fintech startups from oft-overlooked markets in Southern Africa. Four of the 10 participants in the World Bank-backed Fintech Challenge hail from Lesotho, Botswana and Namibia. Botswana’s Ipachi Capital has developed a mobile banking and payments app for unbanked small businesses. Namibia’s FundRoof connects rural residents to financing to build homes. In Lesotho, a country with little entrepreneurial infrastructure and even less private investment, Chaperone provides mobile money services in partnership with financial institutions and telecoms, and Prime Capital offers affordable small business loans. The competition awards small investment readiness grants to early-stage enterprises providing affordable financial services to underserved communities and businesses.  

  • Money magnet. Six cohort members hail from South Africa, the region’s biggest and most active venture market. Moya Money is a financial planning tool for freelancers. Fintr is a gamified financial planning tool for young people. Bento allows employees of small businesses to manage earnings and benefits. Abela, Sum1 Investments and Thumeza rounded out the group. More than 90% of venture capital invested in Southern Africa last year went to South African startups. Southern African countries rank near the bottom in venture investment activity on the continent; last year, the amount of funding to the region fell by nearly half from 2021.
  • Check it out

Dealflow overflow. Other news crossing our desks:

  • The slow fundraising environment is hitting EQT Future, Swedish global investor EQT’s impact buyout fund, the firm’s CEO Christian Sinding acknowledged. The fund, launched in 2021 with a €4 billion ($4.5 billion) target, has raised €2.7 billion so far. (New Private Markets)
  • Sylvera, a UK-based carbon credit ratings company, raised $57 million in Series B financing from SpeedInvest, Balderton Capital and other investors to expand to the US. (Sylvera)
  • The Dutch operations of VanMoof, an Amsterdam-based manufacturer of electric bikes that has raised $190 million in venture capital, was declared bankrupt by a Dutch court. (TechCrunch)

Signals: BlackRock Watch

BlackRock’s latest move has climate advocates asking, ‘What’s up with Larry Fink?’ Larry Fink has jumped from the frying pan into the fire. Last month, the BlackRock CEO said he was backing off of the term “ESG” after it had become “weaponized.” But controversy didn’t stop the once-vocal advocate for climate action from naming the head of Saudi oil giant Aramco to BlackRock’s board. Fink has been a fixture at the kingdom’s annual “Davos in the Desert” gathering, skipping it in 2018 after the murder of Washington Post columnist Jamal Khashoggi, but returning the next year. The $9 trillion+ asset manager is partnering with Saudi Arabia’s sovereign wealth fund to invest in infrastructure in the region. Fink said Amin Hassan Ali Nasser, who has led Aramco since 2015, has “a unique perspective on many of the key issues facing our firm and our clients.” Yale University’s Jeffrey Sonnenfeld told CNBC, “The Saudis are entitled to a voice on this board. They’ve got a trillion dollars invested in there. But not this guy.”

  • Backtracking. Fink, who once extolled the virtues of environmental, social and governance, or ESG, investing, has scrubbed the three letters from his annual letters. In June, he told attendees at the Aspen Ideas Festival that he was “ashamed of being part of this conversation.” BlackRock has delegated proxy voting decisions – what some asset managers consider stewardship – to institutional and, increasingly, retail investors. Fink, along with his peers at State Street and Vanguard, had become a public bogeymen for the ESG haters. “For the first time in my professional career, attacks are now personal,” he lamented.
  • Peak Fink. Alison Taylor of NYU’s Stern School pegs “peak Larry Fink” to January 2020, before the Russian invasion of Ukraine and the loud Republican campaign against ESG and “woke capitalism.” States including Florida and Utah have pulled some $4 billion from BlackRock funds. “The lack of moral courage from society’s most wealthy and powerful members in the face of political retaliation sure is fascinating – and depressing,” Taylor recently wrote. “I’m not calling the end of ESG. I am calling the end of the Fink era and its shallow, win-win rhetoric.”
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Agents of Impact: Follow the Talent

DeAngela Burns-Wallace, a former member of Kansas Gov. Laura Kelly’s cabinet, will become CEO and president of the Ewing Marion Kauffman Foundation. Interim CEO Susan Chambers will return to the foundation’s board… The US Environmental Protection Agency names Theresa Segovia, ex- of the Department of Justice, as principal deputy assistant administrator of the environmental justice and external civil rights office. Karim David Marshall, a former candidate for Washington, DC’s city council, joins the same office as a senior adviser.

Skoll Foundation’s Debbie Santos joins Rhia Ventures’ board of directors… Karen Kelleher, ex- of LISC Boston, is named president of the BlueHub Loan Fund… Apollo seeks an ESG legal counsel in London… E3G is recruiting a senior policy advisor to lead the team’s work on German climate foreign policy, and a senior policy advisor for its clean economy team in London… This year’s Gratitude Investor Gathering will take place in Scotts Valley, Calif., Sept. 10-13.

Thank you for your impact.

– July 19 2023