Greetings Agents of Impact!
☎️ The Call: Mapping an impact investing path through the new legal landscape. The effects of this summer’s Supreme Court decisions gutting the “administrative state” already are playing out in legal challenges to rules on climate action, labor rights and corporate accountability. To explore how investors can protect critical impact priorities, join Adasina Social Capital’s Rachel Robasciotti, Better Markets’ Dennis Kelleher, B Lab’s Jorge Fontanez and The Shareholder Commons’ Rick Alexander, in discussion with Fran Seegull of the US Impact Investing Alliance and ImpactAlpha’s David Bank, Wednesday, August 14, at 9am PT / 12pm ET / 5pm London (please note time change). RSVP here.
In today’s Brief:
- Setting impact targets for impact funds
- Global reach of Echoing Green’s impact fellows
- A Hollywood drama of impact investing
Featured: Impact Management
Are fund managers ready to set targets to hold themselves accountable for impact? (Q&A). In the early days of impact investing, some investors would make the case for setting impact targets by arguing that you can’t manage what you don’t measure. The not-always explicit response: Yes, and you can’t be held accountable for what you never promised. The latest “Making the Mark“ report from impact verification firm BlueMark found that only 42% of clients set impact performance targets as a condition of their investments. A larger share, 58%, work with portfolio companies to set targets after investments are made. “Over the past four years that we’ve been doing this work we’ve seen a lot of positive trends,” says BlueMark’s Tristan Hackett, lead author of the report. “There’s a lot more consensus on what ‘good’ looks like for impact management.” (Disclosure: BlueMark is a sponsor of ImpactAlpha.)
BlueMark’s fourth “Making the Mark” report rounds up findings from assessments of 111 fund managers representing $234 billion in impact assets under management. BlueMark verifies impact management systems against frameworks like the Operating Principles for Impact Management, and also verifies impact reports and the claims that investors themselves make for their impact outcomes. “We look at three things primarily: the ambitiousness of the target, the materiality of the target, and the measurability of the target,” Hackett says in a Q&A with ImpactAlpha’s David Bank. BlueMark does not yet assess funds’ actual impact. “I do hope that in a couple of years the number of investors setting targets and the amount of data that we have gives us a clearer baseline for understanding performance.”
- Investor pressure. Pressure from limited partners is the key driver of impact accountability, Hackett says. “Limited partners want to have an idea of what to expect from impact performance, and they want to see that general partners are putting their money where their mouths are,” he says. Fund managers, or general partners, can also use target-setting to understand their own impact. “In the absence of targets, how do you know whether your impact monitoring data is good or bad? If you have no clear expectations, it can be tough to make decisions. It’s an important tool for GPs to be able to optimize their own strategies.”
- Target parameters. The ambitiousness of impact targets guides investors to ensure their investment makes a meaningful contribution. Materiality ensures that targets are relevant to business models, products and services, as well as to funds’ impact thesis. And measurability ensures credible data is available over the lifetime of an investment. To deepen accountability, BlueMark is rolling out a service to compare funds’ impact practices and reporting. Benchmarks like the Science Based Targets Initiative for corporate climate impact and the 2X Criteria for gender inclusivity are among a growing number of benchmarks that investors can use to assess their relative impact (ICYMI: “Impact performance benchmark challenges energy investors to raise their game”). “The industry is still a bit far from having clear output data for benchmarking impact,” Hackett acknowledges.
- Keep reading David Bank’s Q&A with BlueMark’s Tristan Hackett, “Are fund managers ready to set targets to hold themselves accountable for impact?” on ImpactAlpha.
Dealflow: Returns on Inclusion
Echoing Green’s newest fellows span 21 countries. The racial equity-focused fellowship and social enterprise incubator in New York attracted more than 2,000 applicants tackling challenges in economic inclusion, education access, climate justice, human rights and health equity. The cohort of 44 fellows includes Siza Mukwedini of Zimbabwe’s Matamba Film Labs for Women, a media enterprise that trains female filmmakers; Kartik Sawhney of the Global Network of Young Persons with Disabilities, a Washington, DC-based nonprofit focused on young leaders with disabilities; Maryanne Gigachanga of Kenya’s AgriTech Analytics, which uses satellite imagery and sensors to provide intelligence on crops and soil to smallholder farmers; Raju Kendre of nonprofit Eklavya India Foundation, which serves first-generation university students; and Tatiana Blanco of Bolivia’s Uru Uru, which is working to restore a lake crucial to Indigenous communities.
- Inclusive cohort. The new cohort is Echoing Green’s most geographically diverse. More than half of the fellows are from Africa. “From the planet’s hottest year yet, to ongoing global threats to democracy, to backsliding on hard-fought progress on racial equity – these are challenging times,” said Echoing Green’s Cheryl Dorsey. Since 2020, Echoing Green has supported 120 fellows and awarded $12 million in follow-on investments.
- Catalytic Capital. Each fellow will receive $80,000 in unrestricted funding during the 18-month fellowship. The combined $3.5 million of capital comes from Echoing Green’s Racial Equity Philanthropic Fund, a $75 million fund backed by the MacArthur and Skoll foundations, MacKenzie Scott, Goldman Sachs’ One Million Black Women initiative, World Education Services and Comcast. Future cohorts will be backed by Echoing Green’s new Signal Fund, which has raised $15.6 million to provide $100,000 to $500,000 in follow-on catalytic funding to 20 Echoing Green fellows.
- Share this post.
HealthCRED lands $1.2 million to finance India’s independent healthcare providers. The Delhi-based fintech startup provides loans to India’s hospitals, clinics, medical equipment buyers and other health services players. “The healthcare ecosystem faces a significant working capital gap, particularly impacting small to mid-sized hospitals with limited capital access and claims management capabilities,” said Nitin Sharma of Antler India, which led HealthCRED’s seed round. HealthCRED provides “cashless claim financing,” allowing health facilities to offer care before insurance companies settle the payments. It also provides supply chain and infrastructure financing, and loans to clinics and doctors to expand their services and facilities.
- Healthcare demand. Demand in India for healthcare services is expanding with the growth of the middle class, chronic diseases like diabetes, and medical tourism. HealthCRED’s early financing will support expansion into southern and western India. Singapore’s TRTL, iSeedVC, AngelList India, DeVc and angel investors invested in the round.
- Check it out.
Dealflow overflow. Investment news crossing our desks:
- Gaussion, a UK-based company focused on EV battery performance, raised $12 million from Autotech Ventures, UCL Technology Fund and other investors. (Autotech Ventures)
- Dutch development bank FMO made a $10 million equity investment in FIDO Solutions, which uses AI and alternative data to underwrite loans to informal and small businesses in Ghana and Uganda. (FMO)
- Cairo-based fintech venture Lucky ONE secured a $3 million convertible note to expand access to credit to underbanked Egyptians. (Africa Private Equity News)
- Y Combinator-backed Farmako of India snagged $1.6 million in seed financing from Goodwater Capital and other investors to expand prescription delivery services in and around Delhi. (YourStory)
Signals: Pop Culture
HBO brings a sleek, sexy and skeptical view of impact investing to a television audience. Impact investing is having a moment in the Hollywood sun or, rather, shade. In the hit HBO television show “Industry,”which returned Sunday night, new plot lines around impact investing, ESG and the green transition could have been ripped from the headlines – of ImpactAlpha.Ex-bankers and showrunners Mickey Down and Konrad Kay are not offering viewers a rosy portrait of impact investing or, really, of finance at all (not unlike impact investing’s previous star turn, on Showtime’s “Billions,” another finance industry saga of wealth and corruption). Studio execs have yet to take up the call by Predistribution Initiative’s Delilah Rothenberg for a “Silicon Valley”-type parody of impact investing (see, “We’ll know impact investing has arrived when it snags its own parody series on Netflix”). But as the season unfolds, Agents of Impact can scratch their impact TV itch with HBO’s dark and salacious trading floor drama. Minor spoilers below.
- Muck-raking. In the season opener, we find our protagonists at Pierpoint, a fictional investment bank and financial services provider, gearing up for the IPO of Lumi, a cleantech company promising cheap renewable power. The posh CEO of Lumi, Henry Muck, possibly with the help of Pierpoint, seems to have fudged his companies numbers to inflate its share price. Woman-led impact hedge fund FutureDawn may be left holding the bag. While some partners at Pierpoint see the green transition and social impact as key to the bank’s diversification and growth, an old-guard partner is concerned about “gearing our balance sheet toward a fad.”
- Tough audience. In a post on LinkedIn, Dmitriy Ioselevich of 17 Communications complained that the show’s characters interchangeably use terms like ESG, ethical investing and impact investing. “I’m hoping future episodes pay a bit more attention to the nuance, and avoid sweeping generalizations about a concept that is ultimately designed to improve decision-making by businesses and investors,” he writes. “If the showrunners are going to build an entire season around something as charged as ESG, let’s at least try to get the basics right.”
- Keep reading, “HBO brings a sleek, sexy and skeptical view of impact to a television audience,” by Isaac Silk on ImpactAlpha. Are you watching Industry’s Season 3? Is the show getting it a) totally wrong b) pretty much right, or c) it’s too early to tell? Share your take with [email protected] or simply by hitting ‘reply.’
Agents of Impact: Follow the Talent
Sorenson Impact Institute names interim head Katie Macc as CEO… Katharine Hersh, formerly with Builders Fund, joins Acelero Learning as chief financial officer… Beatriz Oliveira, previously with Abbott Products Operations, joins Blue Earth Capital as a finance analyst… The International Finance Copr. is hiring an investment officer, investment analyst, principal financial officer and for other roles.
Opportunity Finance Network is recruiting for a communications vice president and senior associate for the organization’s programs under the Greenhouse Gas Reduction Fund… Arnold Ventures seeks an impact investing director for affordable housing in Washington, DC… Azolla Ventures is looking for a fundraising fellow in Florida.
The REAL Mental Health Foundation will host The REAL Summit, Oct. 17-18 in New York. Attendees will explore opportunities at the intersection of finance and mental health… The Mastercard Foundation, CCHub Nigeria, MDF Global and other partners are launching the Mastercard Foundation Fund for Alumni Startups in Transition, or FAST to provide funding and business development support to entrepreneurs from its accelerator programs.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– Aug. 13, 2024
