The Brief | August 4, 2022

The Brief: Policy entrepreneurship for inclusive growth, microfinance acquisition in Kenya, upskilling neurodiverse professionals, catalytic capital for crises

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Greetings, Agents of Impact!

Featured: Policy Corner

Policy entrepreneurs’ are scaling up local innovation to drive inclusive growth. Bree Jones of nonprofit developer Parity had been working in West Baltimore for just a couple of years when a local legislator asked her to write a draft bill to address a housing policy problem: the “appraisal gap.” The appraisal gap is differential between the cost of renovating an abandoned building and the lesser amount for which a bank would appraise the finished building. “I never thought of myself as a policymaker,” Jones told ImpactAlpha. “But I am always trying to look at the root cause of the issue.” The bill she drafted, modeled after the Neighborhood Homes Investment Act in the earlier Build Back Better plan, was passed unanimously by Maryland’s state legislature (though the governor has declined to appropriate funds to it). Jones’ organization aims to renovate and preserve 200 homes for the West Baltimore community each year. But her bill “has the ability to create thousands of additional homeownership units across the state,” she says, and be replicated in other states. The effort landed Jones a spot as one of four participants in a new policy incubator from the nonprofit Common Future. The idea: give entrepreneurs and activists with deep knowledge of an issue a chance to focus on developing policies that can broaden their impact and lead to innovative laws. 

  • Proximate voices. Policy can be a powerful tool to mobilize capital and action for inclusive growth. But most policy is cooked up by well-funded think tanks and corporations. “Economic policy is due for a refresh,” says Common Future’s Lauren Paul. New voices, she says, can bring innovative ideas to policy circles. “Those closest to the problem are closest to the solution.” As the Biden-Harris Administration prioritizes inclusive growth, Paul says groups like Common Future want to ensure that community leaders have a say in how those public investments are made.
  • Policy entrepreneurs. The participants – Trevor Smith of Liberation Ventures, Keneshia Raymond of the Tucson Urban League, and Roque Barros of the Imperial Valley Wellness Foundation, as well as Jones – will each receive $50,000 over the next year to develop their ideas. Says Paul, “Every time we’ve ever opened space and given folks permission to think about policy, the quality of their ideas is truly incredible.”
  • Bottom up. Smith, in New York, plans to mine the resurgent U.S. reparations movement for narratives and stories that legislators can use in policy frameworks that address racial and economic disparities. Reparation policies are making progress in states from California to New Jersey and cities including Evanston, Ill. and Tulsa, Okla. “Reparations aren’t going to be passed in Washington, D.C.,” says Smith, who writes the newsletter, Reparations Daily(ish). They’re “going to come to D.C. from the grassroots.”
  • Keep reading, “‘Policy entrepreneurs’ are scaling up local innovation to drive inclusive growth,” by Amy Cortese and Dennis Price. And take a spin through ImpactAlpha’s Policy Corner.

Dealflow: Inclusive Fintech

Emerging market neobank Umba acquires majority stake in Kenya’s Daraja. More than half of adults in Africa still don’t have access to banking and financial services, including mobile money accounts. San Francisco and Lagos-based Umba aims to bridge the financial inclusion gap with products and services for the underserved. The fintech startup offers unlimited free and flexible money transfers, cash back for online bill payments, and low-interest loans to customers. It’s acquiring a 66.6% stake in Daraja, a Kenyan microfinance institution, to build up its presence in Kenya. Umba raised $15 million in a pre-Series A round in April to support its pan-African expansion.

  • Digitalization. Umba’s investment “will support the digitization of Daraja as it moves to providing ‘anytime, anywhere’ services to its customers,” the Central Bank of Kenya wrote on the transaction. “This is aligned to CBK’s vision of a microfinance banking sector that works for and with Kenya.”
  • Share.

Daivergent scores $3.3 million to support job seekers with disabilities. Around a fifth of the global population has cognitive variations such as autism, dyslexia and ADHD. Few workforce software solutions are designed for neurodivergent people. New York-based Daivergent uses data to provide personalized vocational, social and other life skills training, then connects trainees with corporate and tech employers for IT and customer service jobs. About a third of Daivergent’s management team is neurodiverse. “I’m committed to providing a competitive talent pool that employers need and raising the bar on what high-quality upskilling looks like for 70 million neurodivergent families like mine,” says Daivergent cofounder Byran Dai, whose brother has autism.

  • Inclusive investing. Zeal Capital Partners led Daivergent’s seed round (see, “Agent of Impact: Nasir Qadree, Zeal Capital Partners“). The company’s solution “meets a unique need and reduces barriers to employment and upskilling for the neurodiversity and disability community,” said Zeal’s Jason Gibb, who will join the company’s board. Other investors in the round include Kapor Capital, Remarkable Ventures and Divergent Investments.
  • Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • Australian green hydrogen company Hysata raises A$42.5 million (US$29.5 million) in a round led by Virescent Ventures.
  • CEI Ventures closed its Good Jobs Fund at $21.5 million with backing from Annie E. Casey Foundation and others.
  • Carlyle launched a decarbonization-linked financing program that will tie financing to borrowers’ achievement of climate-related targets.
  • Denver-based New Community Transformation Fund seeks to raise $50 million to invest in minority-led, early-stage businesses in Colorado.
  • United Way Miami and Social Finance launched the United Way Miami Workforce Project to upskill Miami residents.

Impact Voices: Catalytic Capital

How UNICEF’s ‘bridge fund’ is speeding the delivery of aid to Ukraine and other crises. The U.N. Children’s Fund was created in the wake of World War II to help the millions of new refugees across Europe. That mission is still relevant today. Nearly 10 million people have fled Ukraine; another six million have been internally displaced. More than five million Ukrainian children need aid. To keep up with refugee challenges, the humanitarian rights organization, better known as UNICEF, set up a special bridge fund a decade ago to expedite delivery of goods and supplies into conflict and disaster zones. The fund is one reason a six-truck convoy from Copenhagen was able to deliver 70 tons of crucial medical supplies to the Ukrainian city of Lviv on March 5th, just 11 days after the Russian invasion began. With traditional donations, “humanitarian organizations do not get those funds right away,” explains UNICEF’s Cristina Shapiro in a guest post on ImpactAlpha. “We need multiple kinds of financing options to respond to the intensifying war in Ukraine and other emergencies across the globe.”

  • Creative philanthropy. The bridge fund is a tool UNICEF uses to speed the procurement and delivery of supplies and programs. It controls a pool of protected grant funding, and then borrows against that at a rate of $3.50 for every $1 donated. The fund has provided $19.1 million to expedite UNICEF’s humanitarian response in Ukraine alone. “That means trucks full of supplies – clean water, first aid kits, midwifery kits, emergency surgical equipment and resuscitation kits – arrive earlier,” writes Shapiro, “which translates directly into lives saved.”
  • Keep reading, “How UNICEF’s ‘bridge fund’ is speeding the delivery of aid to Ukraine and other crises,” by UNICEF’s Cristina Shapiro on ImpactAlpha.

Agents of Impact: Follow the Talent

Santhosh Ramdoss is promoted to chief investment officer at Gary Community Ventures… Developing World Markets opened an office in Tbilisi, Georgia, with Khatia Babukhadia as its due diligence manager and data analyst, Tamar Baiashvili as credit risk manager, Levan Okradze as associate regional representative, and Zinaida Vasilenko as regional representative… The U.N.’s Climate Change High-Level Champions team seeks a financing nature lead.

The Institute for Nonprofit Practice is recruiting a development coordinator in Waltham, Mass… McKinsey is hiring a manager of communications for ESG and environmental sustainability… Social Finance seeks a director of impact investments… ImpactPHL seeks a remote director of brand and narrative… Gratitude Railroad is recruiting a remote impact investing analyst… Big Society Capital is hiring an ESG and equity, diversity and inclusion manager in London.

Annie Patton Power (an Agent of Impact) is hosting an innovative finance networking event in San Francisco on Wednesday, Aug. 17… The UNDP and the Convention on Biological Diversity are offering a free eight-week online course on ecosystem restoration… Culture & Climate and TEDxCrenshaw will highlight ideas at the intersection of climate and justice in South Central L.A., Thursday, Aug. 18… A grant from Surdna Foundation will allow The Investment Integration Project to expand tools for investors to add system-level investing strategies into their asset management. 

Thank you for your impact!

– Aug. 4, 2022