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The Brief: Systemic impact investing (audio), China’s plant-based meat, CDFI merger, WorldRemit buys Sendwave, U.K. jobs bond, agri-tech trends in India



Greetings, Agents of Impact! 

Featured: Agents of Impact Call Replay

Rooting out racism as a systemic risk (audio). Investors have been talking about systemic risks at least since the Great Financial Crisis of 2008. More recently, climate change, income inequality and, suddenly, pandemics have been recognized as systemic risks as well. The current discourse on racism uses systemic in a different way, recognizing the culture, policies and institutions that particularly disadvantage Black people. This month’s Agents of Impact Call No. 22 joined two conversations that are too often separate: systemic risk and systemic racism. Is racism a systemic risk? “Oh, hugely so,” said Demetric Duckett, managing director of Living Cities’ Capital for the New Majority. “The way we got to black Africans being enslaved in great part was because they were easily identifiable. We built an entire system around controlling that very population. It’s a system, and we should own it that way.”

In a world where value is generated by talent, innovation and networks, a system rooted in exclusion, hierarchy and control is increasingly archaic. Like fossil fuels, racism has a long tail. But like fossil fuels, it’s a relic of an obsolete system. To even begin to play a role in uprooting systemic racism, investors have to modernize investing itself, said Sinclair Capital’s Jon Lukomnic, author of the forthcoming book, Investing that Matters. Modern portfolio theory doesn’t deal with systemic risks, or opportunities, he said. “If there’s a systemic racism issue in the United States, and the gatekeepers of capital – including myself and everyone who’s running capital – are overwhelmingly white, then we have to look inward first to fix that, in order to get capital to where it’s needed in society and to improve overall returns.” That issues of social equity and racial justice are so complex is why they represent sources of financial and impact alpha, said Cambridge Associates’ Sarah Hoyt. “I think that’s where a lot of managers can find their edge.”

Keep reading, and listen to the audio replay of ImpactAlpha’s Agents of Impact Call No. 22, “Rooting out racism as a systemic risk.” 

Dealflow: Follow the Money

China’s Starfield Food & Science Technology snags $10 million for plant-based meat. Chinese alt-meat producers are racing to roll out products and establish positions in the world’s largest consumer market. Shenzhen-based Starfield derives protein from seaweed to make meat substitutes for anything from burgers to mooncakes. Its Series A round was backed by Chinese investors including Sky9 Capital, Matrix Partners China and Joy Capital, and follows seed funding from Beyond Meat-backer New Crop Capital and impact-focused Dao Foods International. 

  • Food security. Meat alternatives already were gaining favor as a way to reduce planet-warming emissions and obesity. COVID-19, which may have sprung from a wet market in Wuhan, China, has focused attention on a new set of health risks (see, “The future of meat may be meatless). The Chinese government aims to halve the country’s meat consumption by 2030. 
  • More.

Merger of Broadway Financial and City First Bank aims to boost capital for underserved areas. The joining of the Los Angeles and Washington, D.C.-based community development financial institutions will create the largest Black-led depository institution in the U.S., with more than $1 billion in assets under management and $850 million in deposits. The new institution is a public benefit corporation. Get the scoop.

Microsoft seeds Siebert Williams Shank small business fund with $25 million. Siebert Williams Shank, a woman- and minority-owned investment bank, is launching the Clear Vision Impact Fund to invest in small and mid-sized businesses, with a focus on underinvested communities of color. The New York and Oakland-based bank is seeking to raise $250 million. 

WorldRemit acquires Africa-focused remittance app Sendwave for $500 million. With the cash and stock deal, the U.K.-based money transfer app is building its presence in Africa as COVID accelerates the shift to digital banking (see, Remittance fintechs meet the COVID moment). Boston-based Sendwave, backed by Y Combinator, has built a rapidly growing remittance service in East and West Africa. WorldRemit’s investors include Accel and TCV, as well as LeapFrog Investments. 

The Skill Mill floats social impact bond for ex-offender employment program. The U.K.-based social enterprise will offer a six-month work training program for 224 young people at risk of slipping back into the criminal justice system. The Skill Mill will only be paid if the program meets its outcome goals over a four-year period. The funding was led by Northstar Ventures and Big Issue Invest, along with CAF Venturesome and the Resonance West Midlands SITR Fund. Social Finance is the project sponsor.

Esusu raises $2.3 million to dismantle barriers to housing. The Harlem-based company helps renters build credit. Acumen Fund, Concrete Rose Capital, Global Good Fund, Impact America Fund, Next Play Ventures, and Zeal Capital Partners participated in the seed round, bringing total capital raised to $4 million.

Signals: Ahead of the Curve

Eight predictions for the future of Indian agriculture. By 2030, India will be home to more than 1.4 billion people who will collectively spend $1.6 trillion annually on food. City dwellers will outpace the rural population. A quarter of Indians will be part of the upper-middle class, demanding not only more protein in their diets, but more meat. For India to feed its population sustainably, agriculture has to become profitable for India’s 130 million smallholder farmers, and farms have to become more climate-resilient. In a new report, impact investor Omnivore outlines eight trends driving agrifood tech investing in India: 

  • High-tech and automated. Cheap, accurate remote sensing (from satellites or drones), better artificial intelligence, near-universal access to the Internet and reliable connectivity will bring small farms online, “sensing and communicating their vitals of weather, nutrients, moisture, and crop health, as living breathing systems.” Pay-as-you-go robotics and precision farming equipment will enable “true and deep automation of farm activities,” compensating for India’s shrinking rural population and agriculture labor force. 
  • Virtual consolidation. Startups and government programs in India have begun connecting farmer identities, climatic models and retail data into a “composite map of the agricultural ecosystem.” Omnivore says the information platform will expand to better enable private players to offer farmers customized products, like insurance and credit. As smallholders increasingly become part of formal farming collectives, companies like ViridisRS are working to ensure the transition is inclusive of women farmers, many of whom remain excluded from land titles and land control.
  • Tech-enabled meat. India is not as “vegetarian” as many people think, and its growing consumer class wants meat, not “meat alternatives.” By 2050, meat consumption is expected to nearly double from 2000 levels; increased poultry and seafood consumption will lessen the environmental impact, compared to livestock. Insect-based feeds from Protix or Ynsect improve recycling of agricultural waste. Humane animal husbandry will be supported by new technology, like Stellapps, which monitors dairy cows and milk production.
  • Dig deeper.  

Diversity rider. Venture capital firms Act One Ventures, Greycroft Partners, First Round Capital, Maveron, SVB Capital, Harlem Capital Partners, Fifth Wall, Plexo Capital, Precursor Ventures and Equal Ventures commit to bring in Black and other underrepresented groups as co-investors on deals.

Agents of Impact: Follow the Talent

Mark Carney, ex- of the Bank of England, joins Brookfield Asset Management as vice chair and head of ESG and impact fund investing… Rachel Robasciotti launches Adasina Social Capital, a sister company to investment advisor Robasciotti & Philipson, to align investors with social justice movements… Bank Australia becomes a certified B Corp.

CalPERS is hiring a human capital manager… Overdeck Family Foundation seeks a program analyst for its early impact portfolio… Cartica Management is looking for an analyst in Washington DC… Tideline is recruiting an analyst in New York or San Francisco… FLOW is hosting “Impact investing in water,” featuring Mazarine Ventures’ John Robinson, Green Thumb Industries’ Michael Fields, Spring Point Partners’ Margaret Bowman, and ​​​​​​​John McIntyre of American Family Insurance Institute for Corporate and Social Impact, on Tuesday, Sept. 29 (see, “Water deals flow amid droughts and storms”).

Thank you for reading.

–Aug. 27, 2020

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