The Brief | September 10, 2019

The Brief: Zebras take on unicorns, Africa’s soil startups, climate-analytics consolidation, St. Paul’s creativity economy

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Greetings, Agents of Impact!

Gathering Agents of Impact in New York. The low-carbon transition is inevitable, says Andrew Lee, but investors can help speed and shape the disruption. Lee, who heads sustainable and impact investing in the Americas for UBS Global Wealth Management, will join ImpactAlpha editor David Bank at an exclusive Agents of Impact gathering next week. Special guest: author Richard Morais, whose latest novel includes an impact investor grappling with climate change. ImpactAlpha subscribers are invited to join the discussion at an intimate networking opportunity, Thursday, Sept. 19 at 5:30 at Liquidnet’s New York headquarters. RSVP today.

Signals: Ahead of the Curve 

Zebras dazzle as unicorns falter. WeWork’s troubled initial public offering may come to represent the “absolute limit case of unicorn craziness.” The loss-making co-working (and so much more) company slashed its valuation by a cool $20 billion and its IPO still may yet be shelved. As unicorns lose their magic, a type of startup of a distinctly different stripe is emerging as an alternative. Where unicorns score financing rounds, “zebras” celebrate revenues. Unicorns seek customer acquisition; zebras want their customers to succeed. Unicorns favor competition and disruption; zebras prioritize cooperation and social benefit. Zebras Unite drew a line in the startup sand two years ago with “Zebras Fix What Unicorns Break.”

The zebra movement will move from grassroots team to a proper organization with an undisclosed amount of funding from Omidyar Network. Founders Aniyia WilliamsAstrid ScholzJennifer Brandel and Mara Zepeda have built a network of 4,000 members and an online information hub serving diverse communities of founders that have been overlooked by venture capitalists hunting unicorns. “A more diverse tech community will also allow new, previously overlooked ideas to flourish,” writes Omidyar Network’s Sarah Drinkwater. 

  • New normal. It is zebras, not unicorns, that appear more aligned with the new business ethos (see, for example, the Business Roundtable’s CEO pledge to stakeholders last month). “Underrepresented CEOs like us — women and people of color — have had no other option but to build companies in the manner described in the Roundtable’s more humane re-orientation,” wrote the founders.
  • Capital pathways. A more patient startup requires more patient capital. Zebras Unite is part of a broader effort to create “alternatives” to the high-risk, equity-based venture capital typically used to fund unicorns (see, “VCs that help startups raise revenues, not rounds). Zebras Unite’s Scholz will join more than 140 Black, Latinx, female entrepreneurs, as well as 50 investors, including Kesha Cash and Henri Pierre-Jacques, at Village Capital’s Pathways to Capital event Thursday in Philadelphia. Alternative capital is on the agenda.
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DealFlow: Follow the Money  

Land Accelerator targets financing gap for African soil startups. Turning sugarcane waste into cooking fuel. Growing neem trees to make natural pesticides and insect repellants. Providing affordable piped water for smallholder farmers. These are some of the restorative services offered by the startups in this year’s Land Accelerator, a World Resources Institute and Fledge bootcamp program for African entrepreneurs working in sustainable agriculture and forestry. The program addresses climate change and poverty by supporting sustainable businesses that create local jobs. The 14 startups from eight countries include Niger-based E3D, the neem products producer, Shoots & Roots, a South African commercial nursery, and Rejuvenate Umhlaba!, a Zimbabwe-based company creating a market for land restoration offsets in Africa. The startups fall in the “missing middle,” WRI’s Sofia Faruqi told ImpactAlpha, and need capital to scale. The program culminates with a Demo Day Thursday in Nairobi. Dig in.

MSCI ramps up climate analytics with Carbon Delta acquisition. Four-year-old analytics company Carbon Delta will enable MSCI to expand its climate risk assessment and reporting, improving investors’ understanding of their portfolios’ exposure to climate risks and impact. Moody’s in July acquired a majority stake in climate risk analytics company Four Twenty Seven.

Capcito raises €7 million to boost working capital for small businesses. The Swedish fintech company runs instant and automated credit assessments based on small businesses’ invoices or accounting software to approve working capital loans—a financing gap that many struggle to fill. Capcito is part of a growing startup club helping small businesses overcome cashflow management and short-term financing challenges.

Knight Foundation commits $2 million to St. Paul’s creative economy. The biggest beneficiary is the Minnesota Museum of Art. Other creative organizations funded include the Minnesota Opera, the St. Paul Public Library, and the Creative Enterprise Zone’s arts and mural festival. The Knight Foundation also gifted $250,000 to the Saint Paul Downtown Alliance’s sustainable Business Improvement District work and the City’s “Tech for All” workforce initiative.

Agents of Impact: Follow the Talent

Patty Abramson, pioneer gender-lens investor, passed away at age 74… Chan Zuckerberg Initiative is hiring a director of inclusion and engagement in Redwood City… Last chance to register for “Impact investing and social impact media,” a Mission Investors Exchange members-only virtual brown bag today at 3pm ET open to guests of Upstart Co-Lab.

Thank you for reading. 

– Sept. 10, 2019