Greetings Agents of Impact!
In today’s Brief:
- Putting youth on the impact agenda in Africa
- Self-driving e-tractors for farmers
- Student success bond in Michigan
- Securing quality, green jobs while we can
Featured: Youth Dividend
Protests in Kenya present an impact opportunity to invest in Africa’s youth. Young people have been at the forefront of Kenya’s six weeks of protests against proposed tax hikes that have left at least 50 people dead and become a referendum on President William Ruto. The protestors are against Ruto’s handling of the economy, the lack of access to basic services, stagnating wages, widespread corruption and visible policy failures. But what are the protesters for? At last week’s Africa Impact Summit in Nairobi, impact investors and development finance institutions presented approaches to job creation, women’s economic empowerment, financial inclusion and energy access that might form the core of a positive agenda. Oddly, few investors made significant efforts to actually appeal to young people in describing their strategies. “We talk about leaving no one behind, but in Africa it’s actually about not leaving young people behind,” Frank Aswani of the African Venture Philanthropy Alliance told ImpactAlpha contributor Lucy Ngige in Nairobi. “We need to honestly reflect, as the impact sector in Africa, on how we have done in opening up opportunities for young people.”
- Youth-lens investing. More than 60% of Africans are under 25. Kenya’s youth unemployment rate is 35%. The continent’s “youth dividend” can be an economic boon – or a social destabilizer. Youth-lens investment strategies – and impact metrics to match – are needed to make sure business solutions and private-sector capital are positively impacting young people. Mastercard Foundation supports nonprofits, academic institutions and fund managers aligned with its goal of connecting 30 million young Africans to job opportunities by 2030. Nairobi-based Shortlist runs training programs to prepare women and youth for Africa’s green transition. The Dutch government’s Challenge Fund for Youth Employment was set up to help 230,000 young people in Africa and the Middle East secure green and digital jobs. The African Development Bank has raised $40 million for its Youth Entrepreneurship and Innovation multi-donor trust fund.
- Impact strategies. African fund managers are developing youth-lens investment strategies shaped by their first-hand experiences. HEVA Fund in Kenya provides loans, grants and capacity building to young entrepreneurs in the creative industries. Aisiki Capital, a women-led fund manager that invests in small businesses in Southern Africa, applies both a gender- and youth-lens to its investment strategy. Alphamundi’s Tim Radjy is factoring young people and the demands of protesters into the firm’s sustainable cities investment strategy, which aims to deliver good infrastructure, clean water, sustainable food production, and clean and affordable energy – all key to defusing unrest. The protests are a “warning and we need to act today,” Radjy says. “And not wait another decade until the warnings become social strife on a much larger scale.”
- Keep reading, “Protests in Kenya present an impact opportunity to invest in Africa’s youth,” by Lucy Ngige on ImpactAlpha.
Dealflow: Agrifood Investing
Monarch Tractor lands $133 million to deliver self-driving e-tractors to farmers. Autonomous vehicles are not just for the streets of San Francisco or Shanghai. Monarch Tractor, a California-based startup, has been producing electric, self-driving tractors for farms since 2022. The tractors can increase farmers’ productivity and efficiency and eliminate emissions associated with traditional, fossil fuel-powered tractors. Monarch’s MK-V e-tractors are made at the Foxconn-owned vehicle plant in Lordstown, Ohio, and sold directly to consumers. They come with an app that provides real-time visibility into multiple vehicles and field data from sensors and cameras. Belgian impact investor Astanor, which invests in early stage agtech ventures, and Taiwan-based HH-CTBC Partnership, a fund affiliated with Foxconn, co-led the $133 million Series C investment. Monarch, which has struggled to manage its growth, will use the funds to develop its AI and autonomous driving features, and expand across the US, Europe and Asia-Pacific. Monarch calls the fundraising the largest round in agricultural robotics history.
- Boosting farm incomes. After reaching record highs in 2022, US farm incomes are shrinking. Net US farm income this year will plunge more than 25% due to lower prices for goods and higher production costs. Monarch believes AI and robotics could address overhead costs, labor shortages, worker safety, sustainability and better data insights. Savings from its e-tractors, which start at just under $89,000, can run into six and seven figures a year, according to the company’s interactive calculator. The startup says the equipment supplements, rather than replaces, human farmers. “Driven by artificial intelligence and electrification, agriculture has arrived as the next frontier for the energy transition and sustainability movement,” said Monarch’s Praveen Penmetsa.
Michigan schools issue $33 million bond to improve student success. School capital projects typically increase both test scores and property values. Lowell Area Schools, in Kent and Ionia counties in western Michigan, raised almost $33 million in the first in a series of education-focused municipal bonds. Proceeds will fund redesigned classrooms and shared learning environments and address aging drainage and mechanical systems. HIP Investor gave the bond an impact rating of 70 out of 100, driven by the issuer’s exceptional performance in graduation rates, math and reading proficiency, and reductions in chronic absenteeism. “More funds for modernizing classrooms to improve learning is what many parents want,” writes Amir Khaleghi of HIP Investor, which helps ImpactAlpha highlight municipal bonds with environmental or social significance. The bond is “expected to benefit all schools in the district and help educational infrastructure to support student performance.”
- Academic outperformance. Issuer impact is one proxy for a bond’s potential impact. According to a 2022 analysis of post-Covid academic proficiency for elementary school students, nationwide student proficiency dropped by 2% compared to 2020, and math scores regressed 3%. Despite that decline, the Lowell Area Schools boosted math and reading skills and outperformed national averages for math and reading proficiency among economically disadvantaged students.
- Read more about the bond.
Dealflow overflow. Investment news crossing our desks:
- Uplimit, which makes an AI-powered software system for upskiling employees, raises $11 million in a round led by Salesforce Ventures. (Uplimit)
- Headway raises $100 million in a round led by Spark Capital to expand mental healthcare services to a more diverse community of patients. (Headway)
- 44.01 completes a $37 million raise led by Norway’s Equinor Ventures to develop carbon sequestration tech that turns carbon into rock. (Impact Investor)
- One Acre Fund raises $1.4 million from Impact Bridge Asset Management to serve one million smallholder farmers by 2030. (Techpoint)
- Rest invests $75 million in TowerBrook Capital Partners’ Delta private equity impact fund. (Investor Daily)
Overhead: JFF’s Horizons Summit
Securing quality green jobs for the future, while we can. Voters are getting a lot of attention in this year’s overheated political climate. But it is the power of workers that will ultimately shape whether or not communities and economies thrive. “The Power of Us” was the theme of the two-day Horizons summit in Washington, DC, which was hosted by the nonprofit Jobs for the Future. JFF’s new Community of Action, backed by the Families and Workers Fund, is helping private equity firms incorporate quality-job strategies (see Ellen-Frank Miller’s guest post, “In private equity, pairing employee ownership with good jobs can unlock wealth for all”). JFF launched the 75 Million Network to create 75 million quality jobs by 2033, focusing on overlooked and disinvested communities.
- On deadline. The US presidential campaign hung over the event. The election outcome could decide the fate of the green, sustainable and inclusive economy at the heart of the historic Inflation Reduction Act, the largest-ever federal commitment to action on climate change. Republicans have vowed to repeal the bill. “On one hand, you have, literally, a trillion dollars that we can leverage to invest in greening low-income communities [and to] build wealth, create jobs, [improve] health, transform communities forever,” said Donnel Baird of Brooklyn-based BlocPower, which delivers green retrofits in aging buildings. On the other, “we may lose all of it in five months.” Baird said his goal is to get as much money as possible into communities before November. “It’s hard for me to focus on anything else.”
- Climate workforce. The Black-led social enterprise Untapped Solutions (formerly ConConnect), which provides job interview training to formerly-incarcerated people, secured the $10,000 prize of a JFF startup pitch competition. Untapped is backed by the De-Carceration Fund, which invests in “justice tech” entrepreneurs. The philanthropic arm of private equity investor Ares Management last year formed a partnership with JFF to train and place 25,000 individuals in green jobs over the next five years. AmeriCorps, the federal national service agency, last year joined climate workforce readiness efforts with the launch of the American Climate Corps. AmeriCorps’ Michael Smith said the Climate Corps “is going to allow young people to turn climate anxiety into climate action.”
- Keep reading, “Securing quality green jobs for the future, while we can,” by Roodgally Senatus on ImpactAlpha.
Agents of Impact: Follow the Talent
Valerie Red-Horse Mohl will step down as president of Known, the financial services and asset management firm she co-founded (see, “Moving capital at scale to elevate communities of color”). Red-Horse Mohl, who will become partner emeritus, will be replaced by Known co-founder Nathalie Molina Niño… Illumen Capital promoted Jason Henning to head of investor relations.
Solar Energy Loan Fund is recruiting a chief financial officer… Common Future seeks a fund development manager… Social Finance is hiring an associate for impact investments… Lafayette Square is looking for a marketing coordinator in Washington, DC… Dalberg is hiring senior project managers in the US, Mexico and Colombia.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– July 25, 2024