The Brief’s Big 7: Remaining rich, looking through impact lenses, stakeholders stake their claim, terms sheets for the 80%



Greetings, ImpactAlpha readers – and writers!

We’re proud to be the place Agents of Impact come to drive the conversation forward. Diane Isenberg’s thoughtful piece (and scoop, no less!) on Ceniarth’s shift of more than $200 million in its portfolio was as forthright a statemeant on the responsibilities of wealth as we’ve seen in awhile. “I have the privilege of doing what I do because my father was very good at making money,” Isenberg wrote. “For me, the most responsible choice I can make is to abandon the need to make more money, while trying to preserve and recycle it to do future good.” Your “Impact Voices” are coming through loud and clear. Drop us a line at editor@impactalpha.com if you have something to say.

Featured: The Brief’s Big 7

1. Strategic lenses give impact investors a sustainable edge. Gender-lens investing helped create a marketplace for women’s equity and inclusion. Now, other advocates are recasting their issues not as problems to solve but as investment trends to ride. From refugees and migrants to creativity and the arts, it seems everybody has a “lens.” In his weekly column, ImpactAlpha’s David Bank says that’s a service to investors, for whom such lenses can be a way to see around corners. “How can impact investors make money if we’re limiting our investable universe to deals that do good?” Nonprofit Finance Fund’s Antony Bugg-Levine tweeted in response. “We identify markets poised for growth where we have expert knowledge that finds the best deals.” What’s your lens?

2. Ceniarth to shift more than $200 million to ‘impact-first capital preservation.’ All the hoopla around “market-rate” impact investing left Ceniarth’s Diane Isenberg cold. “If you are rich today and invest in a manner that generates deep impact, and returns your capital with a yield in line with inflation and reasonable expenses, you will still be rich tomorrow,” she wrote in a guest post on ImpactAlpha. Isenberg’s opus.

  • The new strategy identifies managers and direct investments that support enterprises directly serving poor and underserved communities such as Global Partnerships, GroFin, Water Equity, and Root Capital.
  • Ceniarth will move money out of “conventional” impact investing vehicles such as Generation Capital Management, Boston Common Asset Management, Bridges Investment Management and Bain Capital’s Double Impact, which seek market-beating returns.
  • Rallying cry. “Impressive manifesto and continued proof that #impinv has more than one path,” tweeted Upaya Social Ventures in India. “One of the most daring and creative organizations in our space,” wrote Candide Group’s Aner Ben-Ami. “It is about appropriate financial returns, not so-called market-rate returns!” agreed Charly Kleissner. What’s your take?

3. Corporations don’t need Elizabeth Warren to ‘benefit’ from stakeholder capitalism. U.S. Sen. Elizabeth Warren legislation would require companies with more than $1 billion in revenue or 5,000 employees to become “benefit corporations.” In a guest post on ImpactAlpha, B Labs’ Rick Alexander notes that state-level benefit-corporation laws already give directors and managers greater discretion to create long-term value for all stakeholders, not just shareholders. Watch this space.

  • Employees at the table. Blue Dot Law’s Bruce Campbell says ‘benefit corporations’ have an inherent limitation – those with economic power remain the arbiter of stakeholder interests. On ImpactAlpha’s subscriber-only Slack channel, Campbell raises  “questions around power dynamics – i.e. employee board representation and limiting executive stock gains.” He’s interested in “the idea that government forces at least one other stakeholder group – the employees – to the table.”

4. Financial inclusion means challenging the roots of exclusion. Financial exclusion makes the lives of the working poor more insecure, costly, and constricted. In a guest post on ImpactAlpha, Lexi Doolittle of the international nonprofit S3IDF examines the flip side of financial inclusion. “Unpacking and codifying these realities, she says, is key to “the interventions and incentives necessary to achieve the blue-sky Sustainable Development Goals of poverty alleviation and inclusion.” Proven interventions.

5. Deals of the week. Drink from the deal firehose all week long on ImpactAlpha.com. A few that stood out:

6. Growing demand for ‘demand dividend’ as an alternative to venture capital. The structure lets a venture repay investors from profits after the firm hits a certain revenue threshold. In Nicaragua, Agora Partnerships is testing the model, sometimes called a variable-payment obligation, as a way to extend financing to women entrepreneurs based on cash flow rather than collateral. Gaining traction.

  • Alternative Capital Summit. Investors and entrepreneurs will explore, “financial instruments for the 80% of businesses that are underserved by traditional debt and venture capital,” in Denver, Colo., Sept. 27-29. Register.

7. Investors are putting serious cash into black and Latino-founded businesses. Harlem Capital’s in-house search for black- and Latino-led companies raising significant capital turned up 105 U.S.-based startups with black and Latino founders that have raised $1 million or more, or $2.7 billion in total. Ten of the 140 investors, including Harlem Capital, Backstage Capital and Kapor Capital, backed nearly one-third of the firms. Kapor Capital’s Brian Dixon told ImpactAlpha, “We’re going to see a company with a diverse set of founders solving a problem that hasn’t been solved before because of their particular lens.” Diverse talent.

— August 24, 2018.

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