Entrepreneurship | February 3, 2018

The Brief’s Big Ten: Entrepreneurial revival, climate-risk reckoning, Cape Town’s Day Zero, PGGM’s…

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Greetings, ImpactAlpha readers!

Tell us about the revival underway in your city or town. The periodic awakenings in American history, often born out of cultural and economic stress, created new forms of inclusion and regeneration. Revivals brought people together across lines of class, race and gender, in cities and on farms, challenging elites and arousing public spirits.

And so it is again. “Because people from Cincinnati love Cincinnati,” Derrick Braziel of MORTAR told ImpactAlpha in the kickoff to our New Revivalists series, “there’s a strong desire to see their hometown succeed, to be inclusive and to bridge racial and social inequities.” As in previous eras, today’s New Revivalists are driven by new economic realities: inclusion and diversity are an asset, not a liability. By extension, investing in communities and entrepreneurs overlooked by others is a source of impact alpha. Less than 10% of all venture capital deals go to women, people of color, and LGBT founders, notes New Revivalist Arlan Hamilton, founder of Backstage Capital. “Other VCs may see it as a pipeline problem,” she says. “We see it as an investment opportunity.”

Patterns are emerging as we meet New Revivalists across the country. With their “Indie.vc” approach, New Revivalists Bryce Roberts and Tim O’Reilly are finding they are making more than half of their investments in women-led firms. In Philadelphia, New Revivalist Margaret Bradley is turning on local institutions to homegrown impact startups. At Propeller in New Orleans, New Revivalist Andrea Chan is making sure local entrepreneurs are part of New Orleans’ revival. As Big Path Capital’s Michael Whelchel has said, “This is an arbitrage play for those who identify talent that the majority of the VC community has discounted and overlooked.”

The tweet of the week came from Willy Foote of Root Capital, an international lender to smallholder farmers. “My org @RootCapital is founded on the principle that all #entrepreneurs deserve access to finance,” Foote tweeted. “This great series from @ImpactAlpha and @villagecapital highlights ppl & orgs bringing that same access to finance to entrepreneurs right here in the US.”

– Dennis Price

Let us know about the people, places and policies that are part of the revival going on around you. Drop a note to [email protected].

#Featured: The Brief’s Big Ten

1. Humanity United’s launched an anti-slavery fund. Humanity United, part of the Omidyar Group, has raised $23 million to invest in early-stage technology companies fighting human trafficking and other abusive practices in corporate supply chains around the world. The fund is backed by Walt Disney Company, Walmart Foundation, C&A Foundation, and several impact investors, including the Soros Economic Development Foundation. Yes, you can invest in ending slavery.

Humanity United launches $23 million fund to combat forced labor, other supply chain problems

2. Grameen America taps impact investor capital. The U.S. affiliate of Muhammad Yunus’ Grameen Bank has disbursed more than $820 million in small, short-term loans since 2008, funded largely by traditional philanthropy and concessionary capital from foundations, charitable organizations, individual investors and commercial lenders. This week, Grameen America announced the $11 million Social Business Fund to expand lending to financially underserved women entrepreneurs across the bank’s 20 U.S. branches. According to the bank, it’s the first “in a series of funds” aimed at tapping a new source: impact investors. Read more.

Grameen America closes first microfinance impact fund

3. A climate risk reckoning looms for corporations. The “Investor Agenda” presented at the biannual Climate Risk conference in New York includes specific mandates from the big asset owners that could become de facto requirements for the companies they invest in — which is, effectively, all companies. “It takes the ‘Buts’ off the table and sends a clear message.” Jack Ehnes, CEO of the $252 billion CalSTRS, told ImpactAlpha. If accounting is destiny, reporting under the recommendations will force a reckoning over the valuations of many companies. Fewer excuses not to act on climate.

Pension funds tell companies: ‘No excuses’ for inaction on climate change

4. How do you turn a supertanker? By degrees. Institutional investors that last year declared their alignment with the 2030 Sustainable Development Goals and other impact frameworks are now confronting the hard work of actually managing their investments toward those goals. PGGM, the Dutch pension fund manager with $272 billion under management, took the plunge and mapped its investments with the help of the Impact Management Project, an industry-wide effort to agree on the fundamentals of measuring and managing impact. See how they did.

Dutch pension fund moves from impact alignment to impact management

5. The ‘digital divide’ is getting smaller. The world is on track to achieve the UN Sustainable Development Goal for universal and affordable Internet access in the world’s least-developed countries by 2020, according to a new UN report. Internet access and infrastructure helps achieve other Global Goals as well, including education, health and financial inclusion. Consulting firm Accenture says such goals could push global ICT industry revenues up 60 percent, to $2.1 trillion, by 2030. Read all about it.

The 'digital divide' is narrowing – ImpactAlpha

6. Which is enabling innovation in sustainable food and agriculture.Mobile-Internet connections are boosting innovations in farming finance, logistics and data analysis, helping to push the world toward a secure food supply by 2030. The technology supported shift is a $2.3 trillion annual opportunity that could create 80 million jobs, 90% of them in developing countries, according to 2016 report. All it will take is $320 billion in annual investment, say researchers. The bad news: annual sustainable food and agriculture investment totaled only $4 billion when the report was published. Signs investors are waking up to the food and ag opportunity.

Investors wake up to a $2.3 trillion opportunity in sustainable food and agriculture

7. To boost private investment in the U.N. Global Goals…Public and philanthropic funders need to get smart on the mandates, responsibilities and regulations driving private investors. Pension and sovereign funds, insurance companies, family offices and other private investors are beginning to get the “SDG prize.” But for them to shift the trillions in capital necessary, SDG-aligned investment vehicles and products must look and feel much more familiar. Convergence tells you how.

Four ways to get the private sector to start paying attention to the Global Goals

8. About BlackRock’s letter heard ‘round the world. The latest episode of ImpactAlpha’s Returns on Investment podcast digs into an overlooked part of BlackRock CEO Larry Fink’s letter to to corporate chieftains: His growing concern over the demand from short-term “activist” shareholders for the return of ever-greater amounts of corporate cash to shareholders in the form of buybacks and dividends. Read on and listen in.

BlackRock to CEOs: Get a long-term purpose, stat! (podcast)

9. Is the social impact bond market half-billion full or empty? Collectively, the more than 100 social impact bonds launched to date have mobilized more than $400 million and touched more than 700,000 lives in two-dozen countries (for context, “green bonds” issues have reached more than $120 billion per year). Ten projects report they have given backers a return on their investment and another eight have begun making payments. Growth will come when governments fund social impact bonds not as pilot projects, but from savings in their regular budgets, says Tracy Palandjian of Social Finance US. The talking points on SIBs.

Is the social impact bond market half-billion full or empty?

10. Cape Town’s drought offers an urgent test case for water tech investments. One of South Africa’s biggest cities has barely two months of water reserves left for its four million residents. Cape Town, in the third year of a severe drought, is a global symbol of the imminent threat of climate change, as city officials scramble to prepare for “Day Zero,” when the water runs out. Longer term, the city’s crisis may position it as a leader in innovation for an increasingly water-constrained world. “We need to shift our thinking from crisis- to opportunity-mode,” says local advocate Claire Pengelly. How to mobilize water investments.

Cape Town offers an urgent test case for investments in water

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