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The Brief’s Big Six: What’s an impact investment, Abraaj-Gates update, New Revivalists lens, East…



Greetings, ImpactAlpha readers!

In Latin America, what’s an impact investment? Earlier this week Magma Partners, a venture firm with offices in Los Angeles and Santiago, Chile, announced the close of its second, $15 million fund, to back early-stage fintech and blockchain companies in Latin America. Last year in a provocative ImpactAlpha post, Magma partner Nathan Lustig wrote “supporting almost any forward-thinking, technology-based venture in Latin America is a form of impact investing.”

Is that impact? We reached out to Lustig and asked him to clarify his belief that almost any Latin America investment is an impact investment. “Most investments in Latin America should be considered impact investments if they’re creating jobs, training employees, and seeding the next generation of entrepreneurs, while not creating an extractive business model,” Lustig told ImpactAlpha. Those are big “ifs,” but provide better context.

He continues. “We believe that the founders we support will be able to build real, sustainable businesses with teams in Latin America, not only helping stop the brain drain, but also taking the best parts of global entrepreneurial culture like stock options, flexible schedules and working on cutting edge technologies, and helping make them more common in Latin America.” Read our full Q&A with Magma’s Nathan Lustig. — Dennis Price

In Latin America, what’s an impact investment?

Don’t miss: The Latin American Impact Investing Forum from Feb. 27 to Mar. 1 in Mérida, Mexico. Register here (20 readers can use code ALPHAFLII for a 40% discount).

#Featured: The Brief’s Big Six

1. What we know about Abraaj’s $1 billion health fund — and its dispute with the Gates Foundation and other investors. When The New York Times and The Wall Street Journal published stories last week about the months-long dispute over the finances of the Gates Foundation-backed Abraaj Growth Markets Health Fund, folks were asking, what’s that about? ImpactAlpha has you covered in this deep dive into the fund’s strategy to reimagine healthcare in the megacities of the Global South. We dig into the public dispute and how the fund ups the ante for private financing for the UN Global Goals. Curl up, grab a cup of coffee, and give us 10 minutes.

  • UPDATE: Since our post ran earlier this week, KPMG completed its review of the Abraaj health fund and verified all payments and receipts, according to a statement from Abraaj. Abraaj and the Gates Foundation both declined ImpactAlpha’s invitation to comment.

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

2. Are impact investors in Kenya overpaying for deals? A new report, based on case studies of 14 businesses and a poll of investment firms, suggests a growing number of impact investors in Kenya, many of them pursuing bigger deals, may be driving up valuations of firms and distorting the market. The perception that social impact investors, in Kenya and elsewhere, may overpay for stakes in startups is not new. Last year, in a NextBillion post, Ceniarth’s Greg Neichin, Diane Isenberg and Mary Roach urged caution on the ‘energy access hype cycle,’ particularly in East Africa. On the state of impact investing in Kenya.

  • Ceniarth’s Neichin took to Twitter: “‘Kenya’s impact glut’… huh, you do say?,” We called this overhyped last year and were called party poopers by many for it. Looks like the data is on our side.”

Too much of a good thing in Kenya?

3. New Revivalists are turning 20th century problems into 21st century opportunities. Last week’s profiles of New Revivalists highlighted how inclusion and diversity are an asset, not a liability, in investing and business. This week’s theme: one person’s market failure is another’s big opportunity.

  • Transforming coal country. Brandon Dennison and Coalfield Development Corp. are preparing West Virginia workers for jobs in green construction, solar installation and sustainable agriculture — and to own their own companies. Read more.
  • Empowering working people. Carmen Rojas and the Workers Lab are infusing low-wage industries with models for worker ownership, employee benefits and fair wages. Read more.
  • Incentives for community investment. John Lettieri and Steve Glickman of the Economic Innovation Group are demonstrating how to get the private sector involved in rebuilding American cities and rural communities. Read more.
  • Expanding small-business lending. Jacob Haar and Community Investment Management are boosting lending to underserved entrepreneurs by using data and technology to better price risk. Read more.

Brandon Dennison: Transforming coal country, one social enterprise at a time

4. The emerging market for inclusive fintech in the US. Many Americans may be financially underserved, but they still spend about $173 billion each year on services and fees to borrow, spend, save and plan. That’s the market for extending financial services to the underbanked and improving financial health in the US. Andria Thomas, of consulting firm Dalberg, shows how credit unions, employers, technology and advocacy can help the underserved find better ways to manage their financial lives. Read all about it.

The emerging US market for inclusive fintech

5. Notes from Seattle’s hopping social impact investing scene. This week’s SOCAP365 conference brought together Capria’s Uma Sekar, Renewal Funds’ Joel Solomon, Seattle Foundation’s Michael Brown and Fledge’s Luni Libes, among others. Some insights from the conference: Diverse investors will create better opportunities; the investors, managers, and leaders of funds need to be as diverse as the groups they’re hoping to invest in; by leading, impact investors can show Wall Street how it’s done. More from MovingWorlds’ Mark Horoszowski.

View from Seattle: Nine ways to create a bigger tent for impact investing in 2018

6. What the Super Bowl tells us about impact investing. The Patriots (and the Vikings and Falcons) — in fact, most of the sports world — underestimated the Eagles, just as investors have misjudged Philadelphia and other cities like it. As a magnet for venture funds, Margaret Bradley of ImpactPHL Ventures, told ImpactAlpha, “Philadelphia may not be the biggest, but we can be a leader; the Eagles represent this beautifully.” Angry birds? Nah, hungry birds.

Philadelphia Eagles: Angry birds? Nah, hungry birds

Onward! Please send news and comments to TheBrief@impactalpha.com.

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