Greetings, Agents of Impact!
Traders and investors. This must be a parody, was my first reaction on reading The New York Times’ Matt Phillips’ roundup of ‘investor worries’ about Joe Biden’s rise in the polls. My next impulse was to grab a red Sharpie and mark it up madly. My colleague, Amy Cortese, wanted to send it to comedian Sarah Cooper. Trusted advisor Fran Seegull (see Signals, below), suggested a letter to the editor. Hey, I am the editor! Click through to read, “Traders and investors have different worries.” – David Bank
Signal: Ahead of the Curve
Preparing an impact investing policy agenda for the next administration. Eight small grants from the $14 million Tipping Point Fund for Impact Investing suggest the outlines of a 2021 policy agenda, no matter who wins the November U.S. election. New definitions of fiduciary duty. Standards for quality jobs. Expansion of capital for community development financial institutions, or CDFIs. “Impact investing has appeal across the political spectrum,” says the U.S. Impact Investing Alliance’s Fran Seegull, who is managing the fund. “Government and investors need each other to get to the scale we need.” That such policy development is a “public good” that benefits many investors made it an early focus for the fund, which was launched in December by Blue Haven Initiative, Omidyar Network and the Ford and MacArthur foundations. “We need solutions to ensure capital is deployed to promote opportunity for all, not to further entrench injustice,” said Omidyar Network’s Chris Jurgens.
- Fiduciary duty. B Lab, the nonprofit behind B Corps, will push fiduciaries for increased accountability for impacts on stakeholders. The Principles for Responsible Investment, or PRI, will also take on fiduciary duty and environmental, social and governance, or ESG, disclosure. Potential flashpoint: Proposed U.S. Department of Labor rules on the integration of ESG into pension-fund decision-making. A 30-day comment window expires July 30. “We think the DOL is really out of step with the market,” Seegull told ImpactAlpha.
- Community capital. The Opportunity Finance Network will explore tax incentives to drive capital to CDFIs. Sorenson Impact Center at the University of Utah will propose reforms to the Community Reinvestment Act. Pacific Community Ventures will pull together policies advancing quality jobs and addressing inequality. The Center for Strategic & International Studies will come up with “actionable recommendations” for development finance to foster micro, small, and medium enterprises. The full list.
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Dealflow: Follow the Money
Victress Capital closes $21.7 million fund to back female founders. Lori Cashman and Suzanne Norris started Victress Capital in 2015 to help close the gender gap for venture capital funding. The pair has made 14 seed investments from a “launch” fund, including Daily Harvest, a direct-to-consumer seller of smoothies and chia bowls, and Mented, which makes cosmetics for dark-skinned women. With Fund II, raised mostly from family offices, the Boston-based firm is targeting women-led consumer brands, services and marketplaces with a variety of deal structures. Its first four investees: eco-friendly swimsuit maker Summersalt, nutritional supplements company Rae Wellness, Alyce, a personalized marketing tool, and WaitWhat, a content producer founded by former TED execs.
- Persistent gap. Despite growing awareness of the gender funding gap, venture funding for female founders is stuck in the low-single digits. Of more than 1,300 venture capital firms in the U.S. with a total $444 billion under management, less than 20 funds with combined assets less than $500 million are focused on women-led companies, note Cashman and Norris. Change, they write, “often starts by putting capital in the hands of others knowing that there will be a multiplier effect with that seed investment.”
Sunrun-Vivint Solar mega-deal to create $9 billion solar powerhouse. The merger of the No. 1 and No. 2 residential rooftop solar providers, if approved, could drive much-needed cost efficiencies. (No. 3: Tesla’s SolarCity). Just 3% of U.S. households have installed solar panels. “Becoming the juggernaut of residential solar may be the key to long-term growth,” said Wood Mackenzie analyst Austin Perea.
TPG’s Rise Fund backs Frontier Finance to reach India’s last-mile customers. The Jaipur-based rural distributor raised $2.2 million in a round led by TPG Growth’s Rise Fund, ENGIE Rassembleurs d’Energies and The Singh Family Trusts. The company, founded by Ajaita Shah in 2011, works with more than 4,000 women entrepreneurs to deliver products and services to 700,000 rural customers.
Australia’s $40 million fund of funds targets small businesses in Southeast Asia and the Pacific. The “gender lens” fund from Australia’s Department of Foreign Affairs and Trade will anchor funds and intermediaries that invest in enterprises that are women-led, benefit women, or adopt gender-friendly workplace policies. Sarona Asset Management will manage the fund. Volta Capital and MEDA will provide technical assistance to enterprises.
SOLshare raises $1.1 million for off-grid solar in Bangladesh. Investors include innogy Ventures, the venture arm of German utility innogy SE, and EDP Ventures, the investment arm of Portuguese utility EDP. SOLshare will expand smart solar microgrids in Bangladesh, where more than half the population has no electricity. IIX Impact Partners advised the deal.
Voices: Pass the Mic
The investment case for COVID relief for Africa’s essential businesses. The epicenter of Covid-19 has shifted to South America. New cases are rising quickly in Africa and India. The situation is dire for the developing world. In Africa, 20 million people could potentially lose their jobs and a third of the workforce could be affected. “There is a real concern that tens of millions of people will be pushed into poverty, wiping out the progress made in the last 30 years toward the U.N.’s first Sustainable Development Goal of ‘No Poverty,’” Vital Capital’s Nimrod Gerber writes in a guest post on ImpactAlpha.
- Essential services. Many low- and middle-income communities rely on private, purpose-driven companies to meet basic needs such as food, water and healthcare. Who will ensure that these companies can continue to provide their critical services during – and after – the pandemic? Don’t count on foreign investment, which the U.N. projects will fall 30% to 40% due to the coronavirus economic shocks.
- Impact lifelines. In April, Vital Capital launched a $10 million debt facility to offer loans for essential businesses to get through this wave of coronavirus. Gerber urges other impact investors to extend similar lifelines. Investors looking for a market rate return should consider the effective return on this type of investment, he says. Building a healthcare facility from scratch might require $20 million in capital, yet “to prevent an existing one from closing its doors might only require a loan of $1 million.”
- Keep reading, “The investment case for COVID relief for Africa’s essential businesses,” by Nimrod Gerber on ImpactAlpha.
- ICYMI: COVID-recovery financing facilities aim to bridge capital gaps for small and growing businesses + Building a better post-COVID food system with investments in small businesses in developing economies + ‘Impact Rescue Facility’ targets $1 billion to support small enterprises in emerging markets.
Agents of Impact: Follow the Talent
Kiva is hiring a vice president of strategic partnerships in Portland, San Francisco or Washington DC… Ares seeks a vice president of ESG in Los Angeles… CDC Group is recruiting an investment manager of catalyst strategies in London… CNote is hiring a vice president of sales in Oakland… Earnest Capital is recruiting a part-time head of finance and operations… Align Impact is looking for a data analyst in New York or Santa Monica… Transform Finance seeks a program coordinator for its capital strategies program… Luminate is looking for a regional partner support consultant in Latin America… ImpactPHL is hosting “Is your company’s 401(k) plan aligned with your values?” with As You Sow’s Andrew Behar and ImpactWise’s Michael Cosack, July 23… Calvert Impact Capital relaunched its 2020 investor survey of the needs and interests of the impact industry.