The Brief: Veteran entrepreneurs, Rise Fund’s Ugandan dairy deal, sustainable clams, CoPower acquisition, profitable smallholder finance



Greetings, Agents of Impact!

Featured: ImpactAlpha Original

Veterans build ecosystems for an entrepreneurial revival. Veterans have a natural affinity for entrepreneurship. Just ask the founders of Nike, Fed-Ex, WalMart and USAA. The leadership, team-building, and decision-making skills military servicemembers cultivate in their active duty turn out to be critical for entrepreneurial success. For many veterans, it’s just a given that they would seek to drive positive social impact as part of their ventures. “Those that have self-selected to be in the service will self-select to have a social impact,” says Mark Rockefeller, cofounder of StreetShares, an online lending platform that has lent nearly $200 million to veteran-owned businesses since 2013. “StreetShares provided me capital when I couldn’t get it anywhere else,” service-disabled veteran Brad Halsey told ImpactAlpha. His venture, Building Momentum, provides innovation and technology training to military professionals.

A developing ecosystem shows promise in reversing the plummeting rates of “vetrepreneurship.” After World War II, roughly half of returning service members started their own ventures. About 40% of Korean War vets started businesses. Since 9/11, less than 5% have pursued their own ventures. A critical change: WWII vets had access to low-cost loans to start a business via the G.I. Bill, a feature the modern version is missing. Veterans are more likely to hire other veterans, so fewer vet-owned companies contributes to employment challenges for returning military professionals.

  • Dealflow. Denver-based CirrusMD raised $15 million in May to roll out its virtual health advice and diagnosis services to 200,000 patients at three V.A. facilities. The PenFed Foundation’s Veteran Entrepreneur Investment program invested in former naval aviator Abe Kamarck’s True Made Foods, which makes healthier, vegetable-based condiments like ketchup and sriracha. The U.S. Department of Veterans Affairs and agencies in Massachusetts and New York launched a three-year pay-for-success project to help veterans suffering post-traumatic stress disorder. Orion Talent, which matches companies and U.S. military veterans moving into the mainstream workforce, was acquired last year by private-equity firms L2 Capital Partners and Lakewood Capital.
  • Regional hubs. Two regions that stand out in a study by the Center for a New American Security: the Washington-Baltimore corridor and Austin, Texas, where the new U.S. Army Futures Command serves as a hub around which “veterans can build successful technology startups without flocking to Silicon Valley,” write the authors.
  • Access to capital. Angel and venture funds focusing specifically on veteran founders include Hivers & Strivers, Veteran Ventures Capital, TFX Capital and LunaCap Ventures. Veteran-run Bunker Labs offers networking, education and other services for veteran entrepreneurs in dozens of cities as well as online. Next month, yogurt maker Chobani will kick of its first incubator program for veteran-founded food startups.

Keep reading, “Veterans build ecosystems for an entrepreneurial revival,” by Amy Cortese on ImpactAlpha. 

Dealflow: Follow the Money

Rise Fund backs Uganda’s Pearl Dairy Farms. TPG Growth’s Rise Fund made its second dairy investment in Ugandan dairy processing company Pearl Dairy, which buys and processes milk from more than 10,000 Ugandan dairy farmers. Rise Funds acquired a 34% stake in Pearl for an undisclosed sum. The deal follows The Rise Fund’s 2017 investment in Dodla Dairy in India. Agribusiness remains a small part of the portfolios across the two Rise Funds, which have raised as much as $4 billion. Most of the funds’ publicly disclosed deals have been in financial services, healthcare and education. Read on.

Oceano Fresco raises €2.7 million for offshore clam farm. Sustainable protein is a hot investment space. Portugal’s Oceano Fresco’s play: farmed clams. “We don’t need to only look for alternative protein solutions to meet the world’s food demands. Nature already has solutions,” Ocean Fresco’s Bernardo Ferreira de Carvalho told ImpactAlpha. Bivalves, like clams, are a simple, low-energy species that provides high quality, healthy protein with minimal inputs and no antibiotics. “Plus, they filter the water so they are good for the sea environment,” Carvalho said. Oceano Fresco’s €2.7 million ($3 million) capital infusion from Portugal’s BlueCrow Capital, will go to developing its first off-shore farm. The company will grow two clam species native to southern Europe that are threatened by invasive clams from Asia. It will open the farm in October 2020 and begin harvesting in 2022 or 2023. Check it out.

Fish 2.0 wraps up competition that has supported 600 seafood innovators. The Fish 2.0 competition has been a go-to source for investors seeking sustainable seafood opportunities since 2013. It wrapped up its fourth, and final, competition with 38 teams. The six winners include seafood cold-chain product maker Fortuna; alternative fish feed producer Montana Microbial Products; healthy hatchlings supplier Australian Crayfish Hatchery; wholesale seafood marketplace Yorso; blockchain-based supply chain traceability startup Wholechain; and robotics venture Aquaai, which makes a robotic fish to monitor fish farms. The ventures highlight emerging themes, including sustainable protein feeds, supply-chain transparency, and online marketplaces that connect producers and buyers. “We set out to prove that sustainable innovation in the seafood sector could thrive and accelerate if entrepreneurs and investors were connected and supported,” said Fish 2.0 founder Monica Jain. “I am truly happy to say that we have done just that.” More.

Pearson snaps up Lumerit Education to help workers advance their education. San Antonio-based Lumerit partners with companies and universities to offer pathways for employees to complete a post-secondary degree. The British education publishing company made the $29 million acquisition was made through its “Accelerated Pathways” business line.

Member-owned Canadian bank acquires clean energy finance company CoPower. Toronto-based CoPower has raised $30 million with green bonds since 2013 to boost clean energy adoption and energy efficiency across Canadian communities. The company is being acquired by Vancity Community Investment Bank, a subsidiary of Vancity, a $27.4 billion credit union that serves Canada’s native communities.

Signals: Ahead of the Curve

Digital and financial innovation is transforming small-farmer finance. A wave of digital and financial innovation is changing perceptions around the profitability of lending to small farmers in emerging markets. “With greater breadth, depth and innovation in rural financial services than ever before, there are new opportunities emerging to close the persistent rural finance gap,” write the authors of “Pathways to Prosperity.” That gap for the world’s 2.5 billion smallholder farmers has widened from $150 billion to $170 billion since a 2016 from ISF Advisors (then the Initiative for Smallholder Finance) and RAF Learning Lab.

  • Digital promise. Digital technologies that improve credit scoring, distribution infrastructure, farmer training programs, and more are changing the landscape of agricultural finance, say the report’s authors. For early experimentation to evolve into proven, scalable solutions, “a new level of investment support to ensure that innovation continues” is required.
  • Smarter money. At least 80 impact-driven agricultural funds with at least $19 billion dollars are actively seeking deals. The market needs “more effective connections between capital need and right-fit capital supply, as well as advances in the structures used to deploy capital,” say the authors (see “Getting smart about subsidies to bridge the agricultural financing gap”).
  • Perception shift. Services providers are coming to see rural households as dynamic clients, driving a shift in the risk-adjusted return expectations of the smallholder investment opportunity (see, “Perceptions of profitability drive ‘fundamental shift’ in small-farmer finance market).
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Agents of Impact: Follow the Talent

FaithInvest is recruiting an executive director in Bristol… UBS seeks a sustainable investing strategist in New York and Hong Kong or Singapore… Women Moving Millions is looking for a director of programs in New York… Global Citizen is hiring a philanthropy policy director and a senior director of environment and climate in New York… Co-Impact is recruiting a director of programs and learning in London.

Thank you for reading. 

– Nov. 11, 2019

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