2030 Finance | January 27, 2018

The Brief’s Big Ten: American entrepreneurship, private capital for global development, farmer…

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Greetings, ImpactAlpha readers!

Larry Fink’s letter to CEOs was the talk of Davos. But the stunted nature of the conversation shows how far we still are from consensus that every company must “show how it makes a positive contribution to society,” as Fink declared. The reactions fell into three categories, according to Business Insider: “Larry’s right,” “Yes, but,” and “Pissed off.” Or as Sam Zell put it, “I didn’t know Larry Fink had been made God.”

In Davos, Fink’s interviewers on CNBC had a hard time grasping that a largely passive investor like BlackRock could have a stake in social impact. Fink himself acknowledged BlackRock was not going to pressure ExxonMobil, Coca-Cola or Philip Morris to change their businesses. “I believe that companies that have purpose are the best companies in the world,” Fink said. What does “purpose” really mean? Let us know what you think.

#Featured: The Brief’s Big Ten

  1. How inclusive entrepreneurship is rebuilding America from the bottom up. When the American economic revival story is written, it won’t be exclusion and division, nor out-of-town corporations, that brought shared prosperity back to cities and communities across the country. It will be the New Revivalists, who are creating local entrepreneurial ecosystems as a way of rebuilding America from the bottom up. To put faces to this emergent movement, ImpactAlpha has teamed with Village Capital to profile more than two dozen such New Revivalists. The great entrepreneurial awakening.

The New Revivalists: The people, places and policies reviving entrepreneurship — and the American…

2. In Cincinnati, MORTAR’s Derrick Braziel is helping break the startup color barrier. Braziel and his co-founders are on a mission to change the way we identify, resource, and support underrepresented entrepreneurs, locally and nationally. MORTAR’s pop-up retail stores and revolving loan fund is connecting Cincinnati entrepreneurs of color to 21st-century resources. Read Megan McFadden’s New Revivalist profile to see what Braziel and MORTAR are up to in Cincinnati.

Derrick Braziel: Breaking down barriers for Cincinnati’s entrepreneurs of color

3. More funds are targeting overlooked entrepreneurs… Aspect Ventures raised $181 million to inject capital into startups run by women and founders of color. The two groups represent 40% and 30%, respectively, of Aspect’s current portfolio. Melinda Gates and Cisco Systems are investors in the firm’s second fund. Read more.

Aspect Ventures raises $181 million for second fund

4. …and backing firms that recognize community stakeholders. Last month, SoftBank led Lemonade Insurance’s $120 million raise, setting a record for the largest venture round for a “benefit corporation.” B Lab, the organization behind the B Corp certification, says the deal shows that capital markets are warming to new models of corporate governance. B Lab shared its take on ImpactAlpha.

SoftBank’s backing of Lemonade shows benefit economy gaining VC traction

5. The financial sector is playing catch up on gender equality. Progress might be reaching a tipping point, says Arjuna Capital’s Natasha Lamb. She lauded Citi for “stepping into a leadership role on the gender pay gap that we have not seen from any of its US financial peers.” Arjuna helped push Citi to release gender pay data. Why Citi’s move on gender pay equality matters.

Some bankers’ pay is more equal than others

6. In India, inclusive fintech is a bigger ticket. Leapfrog has been ahead of the curve on financial services for new global consumers, backing insurance companies that serve the poor in Africa and small business lenders in India. Now, it’s betting on digital payments and alternative credit scoring. Leapfrog led a $47 million round for Indian small business digital lender NeoGrowth. More on the big deal.

Leapfrog backs digital lender NeoGrowth’s $47 million round

7. How to blend capital in emerging growth markets. Public and philanthropic funders need to do more to convince private investors that “impact” goals point to market opportunities. To finance the Sustainable Development Goals, use language and structures familiar to institutional investors, says a new report from Convergence and the Business and Sustainable Development Commission. More from the report.

Leveraging private wealth for 2030 development debt

8. Climate shock insurance could protect small farmers… A microfinance network, insurance investor and climate risk firm are joining forces in a $10 million fund to help small farmers in the aftermath of climate disasters. WorldVision’s VisionFund International, InsuResilience Investment Fund and Global Parametrics are partnering on a new climate financing effort in four African and two Asian countries. Deals on the scheme.

Climate shock insurance launches for small farmers

9. …While flexible finance can help them grow. One Acre Fund and a unit of the Agora Microfinance network are among a small number of lenders working to plug the $200 billion credit gap for the world’s small farmers — with financial products suggested by farmers themselves. One innovation: loans that farmers can draw down in parts and make repayments when they have cash on hand. Smallholder-specific financial products are a big opportunity.

Flexible loan terms, climate insurance open door to small farmer financing

10. Raising the profile of climate adaptation finance. The world’s richest countries have pledged to mobilize $100 billion per year by 2020 to help less developed countries both fight and prepare for climate change. If you think investment is lagging on climate-change mitigation, financing climate adaption is slower still. CarbonBrief dissects how climate funds are investing their capital. Dig in here.

Climate finance: adapt or mitigate

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