Greetings, Agents of Impact!
Featured: ImpactAlpha Original
How community investment funds are building resilience to disasters, pandemics and economic shocks. The spreading coronavirus again puts the spotlight squarely on community resilience. As social bonds are tested, communities with deep bonds of trust and localized supply chains will be better able to reduce harm and speed recovery. A growing number of community investment or “aggregated community capital” funds are financing local enterprises and projects. Most are laser-focused on a particular place and, unlike some bigger place-based funds, are typically open to non-accredited investors, with low minimum investments. Some funds give community members a say, if not outright control, over investment decisions. “If ever there was a reminder of the need for local self-reliance and resilience, this crisis is it,” said economist Michael Shuman, co-author of a new “How-To Guide for Building Local Wealth, Equity, and Justice” (Disclosure: ImpactAlpha’s Amy Cortese also is a co-author of the report from the National Coalition for Community Capital and the Solidago Foundation.)
The Boston Impact Initiative and Boston Ujima Fund, for example, which invest in entrepreneurs of color in underserved neighborhoods, prioritize the most vulnerable investors over wealthier ones. “Those that can least afford to lose the money should be de-risked the most,” says Boston Impact Initiative’s Deborah Frieze. “And those who have the most can take on more risk.” In Oakland and now Boston, the Runway Fund partners with credit unions on certificates of deposit that anyone can invest in. Borrowers gain access to loans, technical assistance and support networks. “What does it mean to be friends and family to one another, in a way that is rooted in trust?” says founder Jessica Norwood. “What was made visible for us by the coronavirus is we are all so interconnected, and the investment has to feel that way.”
Keep reading, “How community investment funds are building resiliency to disasters, pandemics and economic shocks,” by Amy Cortese on ImpactAlpha.
Dealflow: Follow the Money
Field Intelligence raises $3.6 million for Africa’s pharmaceutical supply chain. Africa’s healthcare systems are wrought with inefficiencies. The startup Field Intelligence is addressing the availability of pharmaceuticals with software that helps pharmacies forecast, manage and finance drug orders. The four-year-old company has raised $3.6 million in its first round of outside capital. Leading the round was Blue Haven Initiative, the family office of Liesel Pritzker Simmons and Ian Simmons (podcast), with backing from Accion Venture Lab and South Africa’s Imperial and Newtown Partners, and a small impact investor that declined to be named. The deal is Blue Haven’s first healthcare investment, Blue Haven’s Lauren Cochran told ImpactAlpha.
- Public to private. Field Intelligence got its start in 2015 as a software company managing drug inventory, rationing and logistics for Nigeria’s public healthcare system in order to improve traceability and minimize drug losses from expiration. In 2017, it developed subscription-based Shelf Life, now also available in Kenya, to manage inventory forecasting and costs for mom-and-pop pharmacies, which face the same challenges as clinics “but with the extra layer of having to manage a small business,” founder Michael Moreland told ImpactAlpha. Field Intelligence provides inventory financing, allowing pharmacies to pay as they sell. Moreland says its solution is 60% to 80% cheaper than microcredit.
- Africa-eager. The growing appetite for disruptive African tech startups has raised concerns about “herd behavior” as investors crowd around a small number of companies (see, “Where to hunt for impact investments in Africa this year”). Field Intelligence drew interest from more than two dozen investors, including impact funds that tried to get into the oversubscribed round. Moreland and Cochran told ImpactAlpha that Field Intelligence selected investors that would re-up in subsequent rounds. “It took a year, talking to so many investors,” said Moreland. “I wanted to do that once and then grow with those partners.”
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Signals: Ahead of the Curve
The three dozen investors putting Chicago on the impact investing map. Chicago’s 36 impact investing funds and intermediaries comprise one of impact investing’s most active local ecosystems. Since the 1980’s, the group has made at least $10 billion in impact investments, according to a new survey from Impact Engine. Some are becoming household names: Iroquois Valley Farm REIT, Entrepreneurs of Color Fund and S2G Ventures. Half are venture or private equity funds: Mazarine Ventures, Torana Group, True North Venture Partners and more. Others are community investment stalwarts: National Community Investment Fund and Chicago Community Loan Fund. Women-owned Impact Engine itself has raised two impact funds and backed more than two dozen ventures. “I don’t think most people realize how much is happening here and how strong the momentum is today,” says Impact Engine’s Jessica Droste Yagan. “Chicago was home to some of the earliest impact investors in the form of community development financial institutions, and we continue to see leaders emerge here.” San Francisco and New York remain major U.S. hubs of impact investing, but ecosystems are developing in Philadelphia, Oakland, Austin, Boston and other U.S. cities.
- Place-based. Only six investors exclusively invest in the Windy City, including Abundant Venture Partners, Benefit Chicago, Chicago Community Catalyst Fund, Chicago Community Loan Fund, Chicago Neighborhood Initiatives and Sustainable Local Food Investment Group. Six of the funds focus internationally. Not on the list: private foundations like Chicago-based MacArthur Foundation, which has committed more than $600 million to impact investments since the early ‘80s and raised about $100 million for Benefit Chicago (see, “Chicago Model“).
- Upstarts and equities. A dozen Chicago firms began investing with impact in the last four years, including climate-solutions fund Buoyant Ventures, “inclusive” VC Chingona Ventures and sustainable food investor Tilia. Three-quarters of the firms measure and report on impact. The five ESG fund managers on the list actively engage management, including Kabouter Management and High Pointe Capital. Public equity managers in the survey represent 51% of capital deployed.
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Agents of Impact: Follow the Talent
KKR’s Global Impact team names Chee-Wei Wong to head global impact for Asia. He joins Stanislas de Joussineau, head of global impact for Europe, and Sharon Yang, a senior investor for KKR Global Impact in Asia… The Bertha Center seeks a director in Cape Town… Arabesque is hiring a head of compliance and other roles in Boston… The International Finance Corp. is looking for an economist in Washington, D.C.
Thank you for reading.
–Mar. 11, 2020