Catalytic Capital | February 24, 2018

The Brief’s Big Nine: Lessons from New Revivalists, Abraaj’s Naqvi steps back, financial…

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Greetings, ImpactAlpha readers!

Lessons in how building companies can create pathways to prosperity.When you meet and talk with dozens of leaders working to revive entrepreneurship in cities and towns across the U.S., you’ll find some common threads. Over the last few weeks, ImpactAlpha has featured a series of profiles of these “New Revivalists,” in collaboration with the venture capital firm Village Capital.

Among the takeaways: Go to overlooked places. Solve real problems. Give entrepreneurs space to grow. Revolving loans make the world go ‘round. Build businesses on revenues, not venture capital. And most importantly, spot hidden and underestimated talent.

Those elements can make entrepreneurship more than a get-rich quick scheme for a well-connected and well-placed few. Intentional steps can help startups succeed, and succeed in creating jobs and pathways to prosperity across race, gender and geography.

The New Revivalists are not only accelerating a rebound in U.S. entrepreneurship, but giving it a new face. Read New Revivalists are using these six strategies to revive entrepreneurship and the American Dream,” by Dennis Price and David Bank on ImpactAlpha.

New Revivalists are using these six strategies to revive entrepreneurship and the American Dream

#Featured: The Brief’s Big Nine

1. NEWS: Abraaj’s Arif Naqvi hands over reins offund-managementbusiness. The founder of the $13 billion growth-markets private-equity giant is stepping aside from the firm’s fund-management business, which will be governed by an independent board of directors and management team, Abraaj said in a statement. Naqvi will continue to lead Abraaj Holdings. The reorganization comes amid a dispute between Abraaj and four limited partners, including the Gates Foundation, in the Abraaj Growth Markets Health Fund.

What we know about Abraaj’s $1 billion health fund — and its dispute with the Gates Foundation and…

2. Demand for “missing middle” fund managers in emerging markets.Capital has been hard to come by for seed-stage ventures and other small and growing businesses in emerging markets’ “missing middle.” To tackle that challenge, Capria Ventures in 2015 began training and investing in a network of first-time fund managers in Latin America, Africa and Asia. Last year, that network completed seven investments. Now, Capria says its 11 fund managers are on track to raise nearly $200 million in 2018 (The network currently manages $105 million). Capria is recruiting new fund managers.

Capria fund managers expect to raise $200 million to bridge “missing middle” gap in Global South

3. Meeting the working-capital needs of global nonprofits. Open Road Alliance is expanding a $5 million pilot loan program designed to help international nonprofits and social enterprises overcome one-time cash crunches. The Alliance, founded and backed by philanthropist Laurie Michaels, plans to disburse at least $50 million in loans over the next five years. Trusted nonprofits are good borrowers.

Open Road Alliance expands working-capital loan fund for social-sector organizations

4. It’s game on for financial engineering for the Sustainable Development Goals…The latest cases-in-point are the nine instruments selected by the Climate Finance Lab, a private-public partnership that has already launched 25 financial vehicles that have mobilized $978 million, including $228 million from Lab members themselves. The new candidates include mechanisms for accelerating clean energy, sustainable land use and low-carbon transit, including financing for low-carbon auto rickshaws. Wonk out on this.

Nine financing structures to overcome barriers to low-carbon solutions

5. …And for experiments in new financial models in underserved U.S. communities. Philadelphia-based Opportunity Finance Network awarded $5 million to five community development financial institutions testing new ways to give low-income communities greater access to finance. Experiments include pay-for-success funds, “patient-equity” products for early-stage minority entrepreneurs, and long-term debt and equity for commercial solar projects. See who is rolling in dough.

Opportunity Finance Network backs five community development finance institutions

Meet these New Revivalists…

6. Kapor Capital’s Brian Dixon is turning inclusion into a competitive advantage. Oakland-based Kapor Capital’s eight-person investment team is packed with people of color and women, including 34-year-old Brian Dixon. Dixon says his fellow venture capitalists are missing the point about diversity. “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,” Dixon tells ImpactAlpha. “That is the opportunity that, as investors, you’re always looking for.” That’s impact alpha.

Brian Dixon: The 34-year-old African-American VC turning inclusion into a competitive advantage

7. Access Ventures’ Bryce Butler is quarterbacking capital into Louisville’s neighborhood economies. “We need an organization or a person or an entity within these communities to say, ‘OK, what’s the end goal?’ Butler tells ImpactAlpha. He is the founder of the nonprofit venture firm Access Ventures, which coordinates loans, equity investments, grants and technical support for entrepreneurs and organizations making the local economy work for more people. The community quarterback’s job, he says, is to ask, “What’s keeping them from accessing the markets? And what solutions can we help bring to bear?” See Butler’s playbook.

Bryce Butler: Quarterbacking capital into Louisville’s neighborhood economies

8. De Witt, Arkansas is powering an entrepreneurial revival with regenerative agriculture. One example of the town’s revival is the development of a local biofuel industry. Farmers and entrepreneurs, educational and finance institutions, conservationists and faith communities have focused on connecting community assets to market demand to build lasting livelihoods, writes Amy Hartzler of the Business Alliance of Local Living Economies (BALLE), on ImpactAlpha. Key to the model: identified demand and confirmed anchor customers. The elements of success.

Rural Arkansas powers an entrepreneurial revival on camelina and biofuels

9. What should local innovation hubs learn from The California Model?Elements of California’s, er Silicon Valley’s, approach to entrepreneurship are germinating in cities and communities across the country. On the latest Returns on Investment podcast, Imogen Rose-Smith, an investment fellow at the University of California, isn’t so sure the California Model is a valuable export. For its problems, look no further than…California, with its massive housing crisis and growing income inequality. ImpactAlpha’s David Bank is more optimistic.

The California Model: Inclusivity and shared prosperity or exclusivity and inequality? (podcast)

Onward! Please send news and comments to [email protected].