Greetings, Agents of Impact!
Signals: Ahead of the Curve
How place-based strategies in Virginia and other states are leveraging private capital for public good. Virginia Community Capital has turned a $15 million seed investment from the state in 2006 into more than $600 million in loan originations to finance thousands of affordable housing units, healthcare facilities, small farms, businesses and jobs. The community development financier is among the leaders of Virginia’s emerging impact investing ecosystem. A map of 185 “impact capital holders” in the commonwealth has identified more than $230 million in impact capital deployed through 900 deals last year. Impact Finance Center’s Colorado Impact Initiative, New Mexico Impact Investing Collaborative, Michigan Collaborative, Minnesota Impact Investing Collaborative, the Georgia Social Impact Collaborative and other state-level initiatives are also demonstrating the role local investors can play in creating thriving economies in their own backyards (see, “Invest in where you know: Impact investors rediscover the power of ‘place’”).
The map and accompanying report from the Virginia Impact Investing Forum, which is housed within Social Entrepreneurship at University of Virginia, projects another $222 million will be deployed by community and private foundations and community development financiers in the coming year. That represents a tiny fraction of the $19 billion the university team believes could be unlocked with more networking and training, success stories and talent. The list doesnot include university endowments, pension funds or family offices, which would add tens of billions of assets that could be activated for impact. “More and more impact investments are being made every year,” says UVA’s Christine Mahoney, who led the project. “But there’s still a lot of capital on the sidelines.” In Virginia and the broader Appalachian region, communities, local advocacy groups and place-based investors are building a financial ecosystem for a more economically diverse and sustainable post-coal future (see, “Seeding Appalachia’s sustainable future with public and private capital”).
- Impact pioneers. Virginia is for Entrepreneurs, founded by former Virginia Gov. Terry McAuliffe and Sen. Mark Warner, teamed up with venture fund Village Capital to connect local startups with venture funds like Steve Case’s Rise of the Rest fund. Other impact investors in the commonwealth include Virginia Foodshed Capital, a revolving loan fund for small farmers, as well as Richmond Memorial Health Foundation and Community Foundation for a Greater Richmond. Allagash Opportunity Zone Fund is mobilizing capital to renovate existing housing stock for middle-class and lower-middle class residents. Top investment sectors include education, health, housing, food and agriculture.
- Share this post.
Dealflow: Follow the Money
Mastercard deposits $20 million through CNote’s network of community development financial institutions. The financial services giant’s deposit will be placed with CDFIs in $250,000 slugs and managed by Oakland-based CNote. CNote has helped retail investors put their savings to work in support of under-served businesses and communities since 2017. It launched its “Promise” account earlier this year to make the same opportunity available to accredited investors (see, “Cash is hot: Investors find new options to put deposits to work for community development“). Mastercard’s $20 million is the latest example of a corporate giant investing its cash reserves with organizations on the frontlines of the COVID economic response and recovery. CNote’s Cat Berman calls cash the “low-hanging fruit” of impact investing.
- Corporate cash. Netflix’s $10 million cash deposit in Jackson, Miss.-based HOPE Credit Union inspired 125 other companies to follow suit, increasing HOPE’s lending power by $25 million. HOPE’s Bill Bynum calls such investments “life-changing capital” (see, “How corporations can make good on their racial equity pledges”). A shift of just 1% of the cash held by companies in the S&P 500 could add $20 billion in deposits to Black-owned financial institutions like HOPE. Even more helpful: equity deposits to strengthen CDFI balance sheets (see, “Corporate deposits in CDFIs are good. Equity investments would be even better”).
- High-need areas. A third of U.S. counties are experiencing high economic vulnerability because of the pandemic; 20% of those are predominantly Black. CNote’s county-by-county map helps investors identify counties facing the greatest need by overlaying economic vulnerability data with Black demographic data.
- Read on.
Natural Order Acquisition Corp. readies a SPAC to invest in alternative proteins. Beyond Meat made a splash last year as the first of the “plant-based meat” companies to go public. Another one may soon hit the public markets via a special purpose acquisition company, or SPAC. Natural Order Acquisition Corp. is looking to raise $250 million to invest in “technologies and products related to sustainable plant-based food and nutrition,” according to its SEC filing. The company is listing on the Nasdaq exchange.
- SPAC expansion. SPACs are a hot impact investing trend for capital-intensive ventures like clean technology and high-tech agriculture (see, “Greenhouse venture AppHarvest will reach the Nasdaq before its tomatoes reach consumers”).
- Check it out.
Oikocredit backs BizCapital to help Brazil’s small businesses recover. Rio de Janeiro-based BizCapital launched in 2016 to help small businesses shut out of traditional bank lending. The company has ramped up its lending in response to COVID, which has hit Brazil particularly hard. Dutch impact investor Oikiocredit committed $3 million to BizCapital’s $15 million Series B equity round. Germany’s DEG, MercadoLivre’s corporate venture fund MELI Fund, Quona Capital, Monashees, Chromo Invest and 42K Investments committed the other $12 million in June.
Agents of Impact: Follow the Talent
The Local Initiatives Support Corp. elects Alisahah Cole of CommonSpirit Health to its national board of directors… Lord, Abbett & Co. is recruiting a head of ESG investing in Jersey City, N.J… Quilter Investors seeks an ESG data analyst in London… Open Society Foundations is looking for an associate investment principal for its Economic Justice program in London… Instiglio has an opening for a senior associate in Rabat, Morocco… Impact Entrepreneur will host Amy Francetic of Buoyant Ventures and Michael Whelchel of Big Path Capital, Thursday, Oct. 29… The Triple Bottom Line Group is holding its Asia conference, Nov. 18 – 20… ImpactCity The Hague’s virtual ImpactFest starts tomorrow, Oct. 27.
Thank you for reading.
–Oct. 26, 2020