The Brief | March 17, 2020

The Brief: Social enterprise safety net, mobility rewards, disruption watch, meatless future, coronavirus tech

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Greetings, Agents of Impacts!

Featured: ImpactAlpha Original

Short-term loans are a safety net for social enterprises facing an ‘unexpected OMG moment.’ Mission-driven enterprises and nonprofits jolted by the coronavirus pandemic may not be able to deliver vital services, often to the most vulnerable populations. Depending how long the global lockdown continues, some social enterprises may never recover. Open Road Alliance wants to limit the casualties. The New York-based fund specializes is making short-term bridge loans to dependable social enterprises that encounter what CEO Maya Winkelstein calls “unexpected OMG moments,” including delayed funding rounds, government policy shifts or earthquakes. “We are the everyday emergency room of impact,” Winkelstein told ImpactAlpha. The coronavirus pandemic is a global OMG moment, and suddenly the ER is packed. Winkelstein has heard from a dozen or so companies in the past week, including an off-grid solar provider in Africa that faced a sudden cash crunch when $250,000 worth of equipment was stuck on a shipping palette in Italy.

Open Road’s overlooked corner of the impact market is suddenly on the front lines of impact triage. The organization last week closed on $10.5 million of its targeted $40 million Open Road Impact Fund, its first loan fund open to outside investors. Open Road is working with the Global Impact Investing Network to convene investors looking to set up their own bridge funds or to create a pooled fund to help small businesses through the crisis. A grant fund could directly backstop entrepreneurs. Open Road’s example suggests impact investors are reexamining the level of risk they are willing to take to keep their impact flowing. Doing nothing carries its own risks, of losing not only an investment, but an otherwise healthy enterprise delivering valuable products and services. Says Winkelstein, “You don’t want to scale back the emergency room in the midst of a crisis.”

  • Supporting small businesses. Small and growing companies are particularly vulnerable to quarantines and lock-downs. “For anyone reliant on importing goods or parts, it’ll be tougher and tougher as time goes on,” Sam Miller Hicks of Advance Global Capital, which invests in 64 countries, told ImpactAlpha. “It’s super critical to keep money flowing, especially to the least powerful businesses who will undoubtedly be the first to have longer payment terms imposed on them and the first to be refused bank funding.”
  • Signs of life. The pandemic hasn’t stopped all investment activity. SJF Ventures, for one, closed a new investment on Friday and is working on more, says David Kirkpatrick. “We still want to support great entrepreneurs helping to improve health, climate, education, employment, food systems, mobility, recycling & reuse” he writes. Be safe, he says, “but let’s also keep growing a positive impact economy!”

Keep reading, “Short-term loans are a safety net for social enterprises facing an ‘unexpected OMG moment,’” by Amy Cortese on ImpactAlpha.

Dealflow: Follow the Money

Toyota Tsusho Canada Inc. invests in mobility rewards platform Velocia. Velocia has created an app that rewards people for ditching their cars and using public transit, bike and scooter shares or other non-car modes of transportation. The rewards can be used to pay for future commutes, starting in Miami. Toyota Tsusho, an arm of the automaker that invests in sustainable businesses, has been advising the Toronto-based Techstars alum for two years and invested an undisclosed amount.

Signals: Disruption Watch

Editor’s note: ImpactAlpha has tried to keep you ahead of the curve. That curve just got steeper. The coronavirus is disrupting not only daily life, but outmoded systems and structures as well. We’re on disruption watch. What are you seeing? Email us at [email protected] or reply to this email.

The future of meat may be meatless. When told the coronavirus was brewed in the mix of animals at a Wuhan meat market, future generations may ask, ‘What’s a meat market?’ The carbon footprint of raising animals for meat was bad enough; meat risk now includes the spread of zoonotic diseases like COVID-19. “It’s time to admit that we, as a civilization, have outgrown the dated notion of using animals to produce meat,” Good Food Institute’s Liz Specht declares in Wired. “The current system is broken. It is inefficient, insecure, unsustainable, and extremely unsafe,” she says. “Both plant-based and cultivated meat products remove the food insecurity and zoonotic disease concerns inherent in animal-based food” (watch Specht’s video interview with Reinvent’s Peter Leyden).

  • Alternatives’ rise. Meat’s competitors have a long runway to bring costs down and tastiness up. Impossible Foods raised $500 million this week even as the stock market rout has hammered rival Beyond Meat, which went public in June. The funding, led Mirae Asset Global Investments and including existing investors Khosla VenturesHorizons Ventures, and Temasek, brings the total raised by the Redwood City-based food-tech startup to $1.3 billion. Memphis Meats raised $161 million in January to ramp production of lab-cultured meat.
  • Meat’s risks. If companies were ill-prepared for Corona, just wait for climate change. The world’s five biggest meat companies, including Tyson Foods and JBS, which supply McDonaldsWalmart and Marks & Spencer, face billions in losses and “ruin” if they fail to improve market share in alternative proteins and reduce exposure to beef, according to FAIRR, a global network of investors (managing $20 trillion in assets) addressing risks in protein supply chains. FAIRR’s new climate risk tool suggests Brazil’s JBS, for example, could see profits fall by nearly half from climate risks such as increased feed costs due to poor crop yields, and livestock mortality due to heat stress. Conversely, Canada’s Maple Leaf, which has invested heavily in plant-based proteins, could grow profits 77% by 2050. Coronavirus is a serious red flag for food-company investors, FAIRR’s Maria Lettin told ImpactAlpha. “Investors will certainly be looking even more closely at animal industries to ensure they are managing critical safety issues in a rigorous and robust way.”
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Agents of Impact: Follow the Talent

The European Commission is calling for applications from startups and small businesses with technologies and innovations for treating, testing and monitoring the coronavirus outbreak… Mission Investors Exchange is moving its biennial conference, planned for Atlanta in May, online and hosting a Twitter chat Thursday to share #COVID19ImpInv ideas… Transform Finance is hiring a director and program manager of its capital strategies program in New York… Imaginable Futures (formerly Omidyar Network’s education initiative) seeks an investment analyst in Redwood City… New Island Capital is looking for a real assets associate in San Francisco.

Thank you for reading. 

 – March 17, 2020