The Brief’s Big 9: Philadelphia-bound, the impact delta, follow the talent, private-debt benchmarks



Happy Friday, ImpactAlpha readers!

There’s a reason ImpactAlpha has been publishing so many stories on Philadelphia, even beyond the fact that our own Dennis Price and his family moved back last year.  We’ve been tracking locally-driven economic revivalacross the U.S.; Philly is testing approaches also taking hold elsewhere. Can local institutions and impact investors effectively direct capital to entrepreneurs and other agents of impact and change urban dynamics of economic dislocation, income inequality and racial division?

That question will be center-stage next week at Total Impact, the first outing for a new conference series from the Good Capital Project. The two-day fest in Philadelphia aims specifically to show financial advisors that impact investing offers an appealing and accessible edge, especially with women and millennial clients. Good Capital (which also owns the fall SOCAP conference in San Francisco) teamed with ImpactPHL, Philly’s new impact-investing consortium. ImpactAlpha is the event’s media sponsor.

The conference kicks off as Philadelphia takes its turn in the media glare, after two black men were arrested while waiting for a meeting at a local Starbucks. The city’s rifts have not been erased by a 21st-century economic revival and strong job growth. Poverty persists, especially along racial lines. The challenge for those looking to accelerate impact investing broadly, and for Philadelphia’s homegrown investors, goes even beyond increasing the flow of “good capital” into zip codes where it doesn’t usually flow. Total impact requires new models of neighborhood regeneration and inclusive prosperity in which everyone is welcome.

It’s the last minute to get last-minute tickets. Join ImpactAlpha in Philadelphia at Total Impact, April 26-27.

Featured: The Brief’s Big Nine

1. The Impact Alpha: Impact alpha, meet impact delta. The all-knowing market is pricing the advantages from good environmental, social and especially governance practices into firms’ valuations, in both public and private markets. That makes it tougher to get good ESG performance on the cheap. David Bank’s column highlights investors that are getting ahead of the curve with “impact delta,” backing companies that are not yet operating with ESG best-practices, and moving them there. Change is good.

2. Abraaj watch. The growth-markets private-equity firm is ready to resign from management of its $1 billion Growth Markets Health Fund, backed by the Gates Foundation, IFC, CDC and other high-profile investors, the Financial Times reported this week. A new plan would put the fund in control of an interim manager until a permanent home for the fund is found, allowing the fund to manage existing investments and deploy the remaining $500 million. The backstory.

3. Follow the talent. Impact investing is no longer just a passion at business schools around the world. It’s a smart career move for next-generation grads that are future leaders of finance. The Kellogg-Morgan Stanley Sustainable Investing Challenge and MIINT competition both crowned winners developing solutions for climate adaptation and resilience. “They will see market opportunities, where others would see concerns about public policy issues,” Morgan Stanley’s Audrey Choi told ImpactAlphaNext-gen leaders.

4. Has sustainable finance turned a corner? Record green bond issuances. Carbon-divestment momentum. Green finance leadership by China and the European Union. There are signs that policy nudges to align global markets with sustainable development goals are taking hold. Take stock of progress.

5. Deals of the week. Drink from the firehose every morning in our new Dealflow newsletter, or check the stream anytime on ImpactAlpha.com. Here’s a peek:

  • New Revivalists. Virginia launches seed fund for homegrown entrepreneurs… The Community Foundation of Greater Atlanta stands up an impact fund for arts, community development, education, well-being and nonprofits… Eight organizations awarded funds to train U.K. workers.
  • Food and farmer finance. Local Crate raises funds for its locally sourced meal-kits… InspiraFarms secures funding to help preserve harvested crops… Aqua-Spark, Obvious and Real Ventures backXpertSea’s fish-tracking tech… Omnivore backs AgNext to improve ag data.
  • Democracy-tech. BallotReady secures financing to provide information about candidates in U.S. elections.
  • Climate finance. Hewlett Foundation aims to activate retail banks for climate action… Wunder Capital raises serious money to scale U.S. commercial solar financing… Redaptive raises funds for building energy efficiency-as-a-service… BioCarbon Engineering’s financing will help plant trees with drones.
  • Ed-tech investing. BookNook’s reading tool secures funds for expansion… Gray Matters Capital accelerates Indian edtech startups.

6. Corporations point their venture capital strategies at impact. Corporate venture capital funds are targeting companies with social and environmental impact, as parent companies enter new markets, target new customers, deploy new business models, attract new talents and reap new sources of value. “On the one hand, it means impact/sustainability has made it and this is a viable business that people will pay a lot of money for,” says Imogen Rose-Smith, a fellow at the University of California, and regular of ImpactAlpha’s Returns on Investment podcast. On the other hand, she asks, “Do we lose the ability to apply technology to innovation as a force for good? Is it possible to keep the impact DNA that these companies started with as they get picked off by larger firms?” Read on and listen in.

7. Greener tech. Apple said last week that its retail stores, offices, data centers and facilities in 43 countries are now powered fully by renewable energy sources. The iPhone maker also secured supplier commitments to power production with 100% clean energy. That really means: Apple has built or bought renewable energy capacity to cover its electricity usage. Many facilities are connected to the grid, not directly to renewable sources. Still it matters.

  • On-demand ride company Lyft… said all of its rides are now carbon-neutral (through carbon-offset purchases).
  • Google… has purchased enough renewable energy from sources built specifically for Google to match 100% of the electricity it uses.

8. Benchmarks for impact investing with private-debt. Equity gets the glory, but private debt and fixed-income instruments are the largest asset class in impact investing, accounting for one-third of assets under management. The takeaway from a new analysis of the performance of 50 private debt impact funds and 102 community development loan funds: impact investments in private debt offer relatively low but stable returns. Performance data.

9. A pension plan for the gig economy? Fintech startup Blueprint Income is making a bet that simplified annuities — insurance contracts that offer a steady stream of income to retirees — will appeal to a new generation of freelancers, independent contractors and gig workers, as well as salaried employees concerned about retirement. “People have a desire for steady income security,” says Blueprint’s Matt Carey. See for yourself.

Thank you for reading. We hope you have a relaxing weekend. Get more at ImpactAlpha.com.

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