Greetings, ImpactAlpha readers!
SOCAP’s “Best Dressed” is back. Impact is in fashion, and ImpactAlpha contributor Maura Dilley and photographer Kelly Pendergrast prowled Ft. Mason to capture the looks of SOCAP18. They asked SOCAP’s best-dressed to look back from 2030 and say what changed the world for the better. Who’s got the swag?
Overheard at SOCAP. The full spectrum of impact investing was on display on Day Three of the annual conference. ImpactAlpha’s team fanned out to catch the conversation. What we heard.
Featured: The Brief’s Big 11
1. The investors steering capital to solutions that benefit refugees. Behind the images of border conflicts and crowded camps, a new narrative is emerging: Refugees as resilient, employable, credit-worthy – and investable. A new report from the Refugee Investment Network identifies more than 100 investors deploying capital to back refugee-owned and -led companies, and companies that deliver benefits to refugees. The growing number of refugee-lens products includes bonds, loan facilities and funds targeting refugee solutions. Paradigm shift.
2. More than 100 funds investing in the creative economy. If you think “arts and culture” when you hear “creative economy,” you’re not thinking big enough. Think creative places, ethical fashion, impact media, sustainable food and other creative businesses that account for 10 million jobs in the U.S. alone. Advocates for the ‘creative economy’ are recasting artists as innovators and a source of business and social value. Upstart Co-Lab has catalogued more than 100 funds that are actively investing. Hiding in plain sight.
3. Living Cities on why – and how – it invests in racial justice. In the latest article in ImpactAlpha’s “Investing in Racial Equity” series with Living Cities, the organization pulls back the curtain on its racial-equity approach to investing. To overcome implicit (and explicit) biases, for example, Living Cities backs fund managers of color. The firm’s $37 million Blended Catalyst Fund is testing alternative ways of underwriting, “with an eye towards expanding access to credit for people of color,” say Ellen Ward and Brinda Ganguly. “Investing in economic justice means investing in racial justice.” Asking the right questions.
4. Will new opportunity zone rules spur small business investing? Impact and community investors have been pushing for federal rules to ensure opportunity zone investments drive improvements and wealth creation for residents of the zones. The two fronts: encouragement for investment in small business; and basic data reporting and transparency. New U.S. Treasury rules made progress on the small-business front. On impact reporting, not so much. What we know.
5. Agent of Impact: Kesha Cash. Kesha Cash isn’t looking to Silicon Valley for startup unicorns. She’s on the hunt for companies capturing billion-dollar markets by better serving America’s overlooked communities. Cash grew up in economic hardship and was the first in her family to graduate college. Today she runs the $10 million Impact America Fund where she invests in scalable, tech-driven companies targeting the basic needs of low- and moderate-income Americans. “I want to shift the narrative about the opportunities and talent that exist in low-income communities,” says Cash. “I want people to see these communities as places where you ‘mine for gold’ and where can find new and untapped talent.” Cash has been named a top-five gamechanger by Forbes, a power investor by Essence, and one of Fast Company’s 100 most creative people in business. Now she’s an ImpactAlpha Agent of Impact. See Cash on ImpactAlpha’s Instagram.
6. ‘Believe in you’ money for black entrepreneurs. Jessica Norwood didn’t set out to create a new kind of loan for black entrepreneurs. But in exploring the persistent racial wealth gap, she zeroed in on the reasons for low rates of business startups among African-Americans. Chief among them: a lack of the kind of early “friends and family” capital that is key to getting such businesses off the ground. The Oakland-based Runway Project initially aimed to raise $300,000; Norwood quickly attracted $1 million to fill the friends-and-family gap. Norwood is now setting her sights on a $10 million fund to expand The Runway Project to three or more additional cities. New Revivalist.
7. Deals of the week. Drink from the deal firehose all week long on ImpactAlpha.com. A few that stood out:
- Fund-raises. Munich-based Ananda raises €50 million to back European impact startups… Carbon Lighthouse and Generate Capital close $65 million energy-efficiency fund.
- Inclusive fintech. Flutterwave raises Series A to connect African businesses to global economy… Incofin commits $10 million to Mexico’s Financiamiento Progresemos… Tez Financial Services raises seed funding to serve Pakistan’s unbanked.
- Farmer finance. Moringa backs Ghanan agribusiness company B-BOVID… Ignitia secures early funding to alert smallholder farmers to weather changes
- Circular economy. PepsiCo Foundation anchors Circulate Capital initiative to fight ocean plastic… Closed Loop Fund secures $10 million from Amazon to improve recycling.
8. Scaling Village Capital. Village Capital is doing early-stage venture capital differently, and getting different results. In less than 10 years, the venture firm has backed more than 100 early-stage firms in sustainable agriculture, health, education, financial services, education and energy around the world. A quarter of the companies are led by a founder of color (compared to an industry average of 2%). Almost half are female-led (vs. 15% for all venture investments). And more than eight in 10 are located outside of conventional startup hubs of California, New York and Massachusetts (vs. an industry average of 25%). Now, the venture firm is aiming to take its model up the capital continuum. Victoria Fram, managing director of VilCap Investments, told ImpactAlpha the venture firm is planning to raise a later-stage fund, likely with a U.S. focus. Where Village Capital goes next.
9. The four “missing middles” among small and growing businesses. The financing gap for small businesses around the world is a yawning $940 billion. “We’re not making progress fast enough,” Omidyar Network’s Chris Jurgens said in announcing the Collaborative for Frontier Finance at SOCAP18. “Millions of businesses are not making impact and billions of dollars is sitting on the sidelines.” The collaborative is tackling the problem by identifying breakthrough financing strategies for four segments: high-growth and niche ventures as well as “dynamic” enterprises and livelihood-sustaining enterprises, including family-run businesses. Wonk out.
10. Measure Better. ImpactAlpha’s Measure Better series, produced in partnership with Acumen, talked with impact measurement experts inside one of impact investing’s most active family offices (Omidyar Network) and the world’s largest foundation (The Bill & Melinda Gates Foundation). Acumen’s Lean Data and other new measurement tools are speeding innovation in measurement. “Just talk to the people,” said Omidyar’s Jessica Kiessel. “It’s not a perfect solution. It doesn’t fit everything, but its simplicity is reassuring.” Said Gates’ Chiara Kovarik, “These are quick surveys, both to administer and analyze…You’re able to iterate and try different things out and get innovative with measurement.”
- Read, “Customer survey data that makes it simpler to embrace the complexity of impact investing, an interview with Omidyar Network’s Jessica Kiessel;
- Read, “Evaluating global development can be fast and innovative,” a Q&A with Gates Foundation’s Chiara Kovarik and Laura Birx;
- Leaf through the full Measure Better series.
11. Finding best-in-class impact investing talent. Kate Shattuck, who heads the impact investing practice at the executive search firm Korn Ferry, helped anchor ImpactAlpha’s popular “Get a job!” conference call last month. To follow up, we asked her what she’s seeing in the marketplace for impact talent. The strongest candidates have the kind of collaborative mindset that comes from crossing sectors and boundaries, Shattuck writes. “Think business and government or finance and social enterprises.” Skill up.
— October 26, 2018.