The Brief | July 16, 2018

The failure podcast, Etsy competitor shuts down, community banking impact, ImpactAssets portfolio companies

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Greetings, ImpactAlpha readers!

Featured: Returns on Investment podcast

Will Abraaj’s ambitious global health strategy survive the scandal?Measuring the long-term implications of a successful impact investment is hard enough. Measuring the social impact of a failure is even more complex. The latest Returns on Investment podcast takes up the case of the $1 billion Abraaj Growth Markets Health Fund. The fund is now embroiled in the larger scandal that has engulfed Abraaj Group. “We feel a special obligation to get all over this because we were, you could say, taken in, by the Abraaj story,” ImpactAlpha’s David Bank says in queuing up the discussion. As liquidators seek another manager for the fund, he argues, “The champions of that investment have to say, ‘This is how we’re going to safeguard that mission, and double-down on that mission.’”

Roundtable regular Imogen Rose-Smith, an investment fellow with the University of California, compared the Abraaj scandal to an earlier blow-up that rocked the impact investing world in a different way: the 2010 initial public offering of SKS Microfinance. An insider tell-all book by former CEO Vikram Akula has been pulled from publication, but Rose-Smith got her hands on a copy. “I would make the case that impact investing needs failure,” she says in the podcast, “because it needs to grow up and it needs to be more robust in its diligence and its rigor.”

Read on and listen in to the Returns on Investment podcast, “Will Abraaj’s ambitious global health strategy survive the scandal?” And subscribe to all of ImpactAlpha’s podcasts on iTunesStitcher or wherever you listen.

Dealflow: Follow the Money

Online artisan marketplace DaWanda shuts down. The German Etsy competitor launched in 2006 as an online market for artists and craftspeople to sell their work. The company has decided with its investors to shut its doors and support sellers in migrating to Etsy. Changes in the e-commerce sector, including growth from other major online marketplaces and do-it-yourself sales platforms, appear to be behind DaWanda’s decision to close up shop. Go deeper.

Solar startup Oolu secures Series B funding. The Senegalese startup, which installs home solar systems on a subscription basis, serves 34,000 households in Senegal, Mali and Burkina Faso. The company was incubated by Y Combinator. French renewable energy investor GAIA Impact Fund invested an undisclosed sum in Oolu’s Series B funding. Read on.

ResponsAbility extends $5 million in debt to Kinara Capital. Bangalore-based Kinara Capital lends to small business owners in India that are too large for microfinance lenders but too small for commercial banks. Zurich-based responsAbility Investments extended the term debt to Kinara following its $14.7 million equity raise last October. That round was led by Gaja Capital with backing from Gawa Capital, the Dell Foundation, and Patamar Capital. Here’s more.

Impact Voices: Pass the Mic

The social impact of community banks in local economies. There are roughly half as many community banks in the U.S. as there were four decades ago. Community banks work with small businesses which do not have financing alternatives in the public or private capital markets. The Banc Funds Company, a bank-focused private equity firm in Chicago that has invested $5 billion in 3,000 small, U.S. financial services companies since 1986. Charles Moore, founder and president tells ImpactAlpha that more and more clients and limited partners are asking the firm, “What’s your impact?” The Banc Funds is building a database and cataloging the impact of its community bank portfolio. In a guest post on ImpactAlpha, Moore makes the case for what he calls the undervalued role of community banks in local economies. “Community banks provide capital for new and growing businesses and housing loans,” he writes. “Community growth, community prosperity, and bank success go hand-in-hand.”

Read, “The social impact of community banks in local economies,” by The Banc Funds’ Charles Moore, on ImpactAlpha.

Agents of Impact: Follow the Talent

Tessa Tennant, founder of Merlin Ecology Fund, one of the U.K.’s first green funds, and co-founder of the Carbon Disclosure Project, died July 7. Responsible Investor’s obituary… Former Whole Foods co-CEO Walter Robbjoined Chicago agrifood venture capital firm S2G Ventures… CDC Group is recruiting for its gender equality and women’s economic empowerment team… The roster of investments by ImpactAssets’ $425 donor-advised Giving Fund highlights 300 impact companies (including ImpactAlpha).

July 16, 2018.