Greetings, Agents of Impact! Tune into this ImpactAlpha partner event:
- Return to Workplace Summit. Top researchers and organizational leaders address how to ensure a successful return to the office at Reset Work’s Return to Workplace Summit, today, June 22. Led by veteran business journalist Kevin Delaney, Reset Work’s free email newsletter brings you best practices for transforming your workplace in this moment and beyond.
Featured: Capitalism Reimagined
Turning the renewed power of workers into a lasting pillar of stakeholder capitalism. These days, American workers could well be saying, as Richard Fariña wrote and Nancy Sinatra sang, “Been down so long it looks like up to me.” Widespread labor shortages are forcing many companies to pay a bit more, offer additional training, expand their hiring pools, and provide steadier shifts, greater flexibility or improved work environments. The modest improvements come after decades of erosion in the economic fortunes of lower and middle-income earners. Such widespread stagnation puts investors at risk as well, by slowing economic growth, deepening recessions and exacerbating political polarization. Inclusive prosperity, then, depends on further enhancing the power of workers to defend and expand on recent gains and demonstrate the logic of driving economic growth from the bottom up. Such power means the ability to secure an increased share of corporate profits for workers rather than shareholders, and to make the ‘S’ in ESG stand for ‘Share the Wealth.’ “We believe that we will have a healthier economy – one that is better for employees, businesses and society – only when working people have greater power, agency and voice at work, individually and collectively,” the Omidyar Network writes in “Our Vision for the Future of Workers and Work.”
- Treat workers as assets, not liabilities. “While CEOs say ‘People are our most important asset,’ most treat employees as costs to be reduced, instead of capital that can appreciate, not depreciate, via experience, training and collaborative teamwork,” HIP Investor’s R. Paul Herman tells ImpactAlpha.
- Codetermination and equitable compensation. Board seats for workers are planks of both the Reward Work Act, introduced by U.S. Senator Tammy Baldwin, and the Accountable Capitalism Act, from Senator Elizabeth Warren. “Revise the mandate of board compensation committees, which have presided over inflating executive pay and diminishing returns to other employees, to make them responsible for overseeing a more equitable pay distribution for the entire company workforce,” suggests Leo Strine, former chief justice of Delaware.
- Ban, or at least tax, stock buybacks. “The most direct instrument for reallocating the nation’s economic resources to create employment opportunities for Americans is to stanch the flow of corporate cash to shareholders,” economist Bill Lazonick argues (see, “Stakeholders stake new claims on corporate cash to finance an inclusive recovery”).
- Don’t mourn, organize! The PRO Act, passed by Congress in March, would strengthen union organizing efforts and their ability to secure contracts. “We’re looking at new forms of worker organizing, and extending work and organizing to sectors where you can’t have unions – sectors like care and other parts of the economy that labor law has excluded,” Omidyar Network’s Chris Jurgens said on ImpactAlpha’s podcast this month (see, “Mobilizing policies and power for an economy that works for all”).
- Drive growth from the bottom up. “What is needed is to rewire the economy for the 21st century: a boost in both public and private investments in order to give everyday people and future generations the tools they need to thrive in the modern economy,” says Center for American Progress’ Andres Vinelli. Paid family leave policies and investments in early childhood education and childcare could increase labor force participation and thus economic growth.
Keep reading, “Turning the renewed power of workers into a lasting pillar of stakeholder capitalism,” by David Bank on ImpactAlpha.
- Capitalism Reimagined. In partnership with Omidyar Network, ImpactAlpha is taking up the challenge of enhancing worker power in Agents of Impact Call No. 29, “Rewriting rules and designing policy for the stakeholder economy,” Tuesday, June 29 at 10am PT / 1pm ET / 6pm London. RSVP today.
Dealflow: Venture Gap
Google for Startups launches second $5 million Black Founders Fund. Google launched its inaugural $5 million Black Founders Fund last year as part of its $175 million initiative to promote economic opportunity for Black Americans (see, “Scaling the ‘capillary banking system’ to expand access to capital“). The fund awarded $100,000 in cash for 76 Black founders, who have gone on to raise more than $38 million, according to Google. The second vehicle will provide $100,000 in non-dilutive funding for 50 additional Black founders.
- Catalytic capital. Tech companies like Google, Apple, Netflix and PayPal have contributed to the slight rise in capital going to Black founders (see, “Seven ways finance has changed in the year since George Floyd’s murder”). A record 306 venture investments in Black-founded startups has boosted the share of U.S. venture capital funding going to Black founders to 1.4% so far in 2021, up from around 1% over the last four years.
- Black-led funds. Venture capital funds led by Black managers and looking to deploy capital to Black entrepreneurs include Sixty8 Capital, which raised $20 million for pre-seed and seed-stage women and minority-led tech ventures. Collab Capital raised $50 million to invest in Black-led early-stage businesses building generational wealth in Black communities. Harlem Capital raised $134 million in just five months to invest in startups led by women and minorities. Kesha Cash’s Impact America Fund raised $55 million to support technology companies disrupting systemic racism.
- Check it out.
S2G Ventures backs five blue economy startups. The agrifood-focused impact investment firm last year raised $100 million for its Ocean and Seafood Fund to invest in early and growth-stage companies developing alternative proteins, algae and seaweed, aquaculture and supply chain innovation, ecosystem services and ocean health solutions (see, “S2G Ventures closes $100 million for sustainable oceans fund”). It is writing checks of up to $2 million for seed-stage investments, and around $5 million for later-stage deals, S2G’s Larsen Mettler told ImpactAlpha. “We have a robust pipeline.” S2G is looking to make two more investments by year end.
- Sustainable oceans. S2G led rounds in ReelData, which uses sensors and AI technology to help farmers manage land-based aquafarms; Israel’s ViAqua Therapeutics, a biotech startup aiming to improve resistance against diseases in the aquaculture sector; and Molearer, whose chemical-free nano-bubble tech can improve water treatment, food production and resource recovery. It also invested in Ocean Surveillance Company to combat illegal maritime activities and zero-waste Fishmeal and Oil Technology Company.
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Dealflow overflow. Other investment news crossing our desks:
- Gates Foundation-backed Global Health Investment Fund exits medical device company Alydia.
- Chanel anchors Landscape Resilience Fund’s targeted $100 million fund for sustainable agriculture and forestry.
- Kenyan agtech venture Apollo Agriculture secures $1 million from Bamboo Capital’s Agri-Business Capital Fund to finance, insure and advise smallholder farmers.
- Adidas is among the backers of Spinnova’s IPO, which values the Finnish sustainable textiles company at €275 million ($328 million).
Impact Voices: Alt-Finance
The why, what and how of structured exits. Impact investing leans heavily on traditional equity and debt financing, even though such capital isn’t a good fit for 99% of impact ventures. In Adventure Finance, Aunnie Patton Power argues for an alternative model: structured exits. Neither equity nor debt, she writes, “structured exits are well-suited to a wide range of businesses due to their adaptability for different contexts and funding needs.” Terms are based on a plan for investors’ eventual exit. India-based GetVantage charges a flat fee for loan-like revenue-based financing for companies with solid revenue projections. Mexico-based Adobe Capital used convertible revenue-based financing to capitalize affordable housing company Provive – and got a guaranteed 2.5x return. Investors offering mezzanine financing can secure modest interest alongside a profit-sharing or warrant-based “kicker” that boosts returns. Says Patton Power: “The opportunity is facilitating funding that is tailored to the needs of entrepreneurs while giving funders a predictable return on their investment.” Wonk out.
Agents of Impact: Follow the Talent
Vegan Investors is soliciting applications from innovative vegan startup companies led by women and founders of color for its fall showcase… The Clean Fight accelerator has opened applications for its second program, focusing on companies working to decarbonize mass-market buildings… WorkRise is requesting proposals for research and ideas that can “build credible and actionable knowledge that strengthens change-makers’ ability to advance workers’ interests and mobility.” (See, “Turning the renewed power of workers into a lasting pillar of stakeholder capitalism,” above).
Microsoft is hiring a carbon removal program manager in Redmond, Wash…. Octopus Renewables is recruiting an associate/senior investment associate in London… MaRS is looking for a manager of social finance at its MaRS Discovery District innovation hub in Toronto… Net Impact has openings for an associate director of growth and an associate director of community… M&G seeks an ESG community manager in Scotland.
Thank you for your impact.
–June 22, 2021