TGIF, Agents of Impact!
Going exponential. We tend to overestimate change in the short-term and underestimate change in the long-term. That truism comes in handy when assessing COP26, which for all its hesitancy and compromise reflected the new climate consensus: the acceleration has begun (see No. 2, below). That the timelines are not urgent enough, the pledges not binding enough, the conversations not inclusive enough belies the fact the players are finally on the field. It’s time to de-hedge positions and put everything down on net-zero – not in 2050, not in 2040, but ASAP.
The pandemic demonstrated the speed with which faster, better, cheaper products and services can scale (No. 5). When the flow of capital shut off, tech solutions popped up and the digitization and connectivity of business and commerce jumped 10X (join next week’s Agents of Impact Call to hear how. RSVP). Emerging from the disruption are fintech, crypto and software services that have slashed cross-border remittance fees and enabled savings accounts and pay-later services for gig workers (see Agent of Impact). There are worse bets in global capital markets than the $5 trillion lending opportunity to small and medium-sized businesses, the lifeblood of every economy (No. 1).
Electrification is in its own super-cycle of faster, better, cheaper and sustainable, enticing talent and investors (see Dealflow). Inflation may present short-term headwinds, but “the overall trajectory has not changed,” Imogen Rose-Smith writes in her latest column (No. 4). But executing the needed system-upgrade is far from inevitable. The energy, innovation and actual performance data is there. Are the votes? Leadership, not capital, is the limiting factor. – David Bank
🎧 Impact Briefing. On this week’s podcast, host Brian Walsh is back from Glasgow and joined for an institutional impact roundtable with Imogen Rose-Smith and David Bank. They sort out the Marks and the Gretas at COP26 and chew on inflation’s impact on… impact. Plus, the headlines. Tune in, share and follow us on Apple, Spotify or wherever you listen.
🌍 Next week’s Call: The disruption in small business financing in emerging markets. Enterprise software. Crowdfunding. Fintech. Crypto. A new crop of tech entrepreneurs and investors see small and growing businesses as a big and growing market. Join Daniel Kimotho of crypto platform Celo (see below); Hilda Moraa of Pezesha, an alt-credit fintech; Luyanda Jafta of The People’s Fund; Daniel Goldfarb of Lendable; and other pioneers of a revolution in small business financing, Tuesday, Nov. 16, at 8am PT / 11am ET / 7pm Nairobi. RSVP today.
The Week’s Agent of Impact
Tatenda Furusa, ImaliPay. A tragedy in Nairobi spurred Tatenda Furusa to follow his calling. The serial entrepreneur from Zimbabwe was working for digital payments company Cellulant and was one of the lucky ones to escape the DusitD2 Hotel terrorist attack in January 2019. “I thought to myself, if something had happened to me, what legacy would I leave?” he tells ImpactAlpha. “My deep passion was to start a business in Africa that would impact millions of lives.” Less than a year later, Furusa borrowed $10,000 from his family in Zimbabwe to co-launch with Sanmi Akinmusire the fintech startup ImaliPay to provide services for Africa’s gig workers. Apps like Uber, Glovo and Lynk connect about nine million “online” gig workers in Africa today. The Mastercard Foundation estimates there will be 80 million by 2030. ImaliPay aims to be a one-stop shop for savings, credit and insurance services. “We want to be the financial services provider that knows your gig, what you do, how much you earn,” Furusa says, “to help you move from not having your payslip recognized to being recognized, to having access to micro-credit and to building a credit score.”
ImaliPay launched with a simple Whatsapp bot and two products. Buy-now-pay-later financing, popular in Kenya, helps workers get goods and services related to their gigs, like smartphones, fuel or car parts. An earned-wages savings account allows workers to get paid less frequently—something Nigerian workers were demanding of ride-hailing services and other gig apps. “Savings is our biggest product in Nigeria, because the culture there is to only take a loan if you really, really need it,” Furusa explains. ImaliPay offers alternative credit-scoring to give workers an on-ramp as it adds more sophisticated financial services, including a mobile app and insurance. ImaliPay raised pre-seed funding from Mercy Corps Ventures, FINCA Ventures and other investors (Furusa’s friends and family made additional investments as well). The company operates in Kenya, Nigeria and South Africa and wants to serve 100,000 customers by the end of next year, Furusa says. The legacy of the Nairobi attack helps him keep things in perspective. “Whenever there are issues at ImaliPay,” he says, “I realize it’s never as grave as you think.” – Jessica Pothering
The Week’s Big 6
1. The disruption in small business financing in emerging markets. From fintech to crypto, enterprise software to crowdfunding, the pandemic accelerated tech-driven underwriting and lending solutions for producers and distributors, along with retailers and service providers that have been underserved by commercial banks and development finance institutions. Venture-backed tech startups like MarketForce and Field Intelligence in Kenya, Nuvemshop in Brazil, and Finja in Pakistan deployed digital tools and data-driven finance to help small businesses stay afloat. Now they are targeting the $5 trillion financing gap for emerging market small businesses. Shake it up.
- Africa’s crypto craze. Blockchain-based systems are facilitating fast, low-cost payments, stable currencies for savings, and financial inclusion. “The general mission is to build a financial system that creates the conditions for prosperity for everyone,” says Umar Sebyala of Celo, the organizer of a global developers network for inclusive, responsible crypto. HODL on.
2. Pricing carbon at COP. Negotiators are finalizing rules to turn carbon offsets and allowances into fungible assets tradable across geographies. Offsets have become controversial as a way to avoid operational changes, but a global climate market would help set a high and increasing price on carbon. “It changes pricing and changes incentives and so it changes behavior,” says Emergent’s Eron Bloomgarden. Hash it out.
- NEW: The coming carbon removal crunch. Demand is outstripping supply for high-quality carbon offsets. “Strong demand signals from the buy-side can help offset-suppliers secure the funding to start their projects and scale,” writes Elba Horta of Puro.earth. The Finnish company, majority-owned by Nasdaq, matches corporate offtakers with early-stage carbon removal projects. Read on.
3. Equitable economy on the agenda. Convening the departments of Commerce, Treasury, Labor and Transportation, along with the Securities and Exchange Commission and Small Business Administration, around economic equity for communities of color was just a start, says Margot Brandenburg of the Ford Foundation, which co-hosted the first Interagency Convening on Equitable Economic Growth. At the convening, the Families and Workers Fund committed $25 million to champion high-quality jobs, and Novata, a private-markets ESG data platform, announced a $21 million raise. Equity stake.
4. For green investors, what goes down does come up. Inflationary pressures and the recent surge in oil prices is challenging environmental, social and governance, or ESG, investing, particularly for the divestment crowd. In her latest column, Imogen Rose Smith examines the blowback, bluster and true believers in ESG’s biggest test case yet. Green is still good.
5. Building sustainable supply chains. Even before the pandemic, supply chains were frayed by underinvestment and the chase for cheap labor. The widespread shortages of products from autos to paper towels provide “an open invitation to do things differently,” writes Yana Kakar of Dalberg Advisors. “That will require investors to step up, put their short-term interests aside, and proactively work with corporations to build a better future.” Read on.
6. Managing small business emissions. Small businesses in advanced economies contribute to up to 70% of industrial pollution. Yet fewer than one in 10 measure emissions. “Small businesses should be able to understand their emissions, so that they can focus on executing their core missions and improving their environmental footprints,” says Proof of Impact’s Evan Vahouny. He offers four ways to do so in a guest post. Add it up.
The Week’s Dealflow
Spotlight: Climate funds. Wealthy nations still have not met their promise of $100 billion per year to bridge the climate finance gap in emerging markets (for context, see “$100 billion is just a down payment on financing the climate transition in developing nations”). Commercial investors are getting more comfortable. Allianz Global and the European Investment Bank secured commitments for a €500 million ($574.1 million) fund to invest in climate impact funds and projects in Africa, Asia, Latin America and the Middle East.
- New funds. World Central Kitchen launched a $1 billion fund to provide disaster relief for communities impacted by extreme weathe. Firstime Ventures raised the first $50 million for a climate tech fund.
Electric vehicles. Inspiration secures $200 million from ArcLight to help commercial fleets go electric… Stockholm and Nairobi-based Opibus raises $7.5 million in equity and grants to convert African busses to electric vehicles… German EV maker Sono Motors launches its initial public offering in the U.S… EV pickup truck and SUV maker Rivian reaches $100 billion valuation in its IPO debut.
Clean energy. Spain’s EDP Renewables acquires a majority stake in Sunseap Group… Helion Energy rakes in $500 million for fusion energy… Shell stands up a $1.4 billion fund for Shell Ventures to provide growth equity funding for energy-transition companies.
Education and skills. Seasoned scores $19 million in Series A funding to expand its hiring platform for hourly food service workers… Evergreen Coast takes a majority stake in edtech startup DreamBox… Oikocredit and Opportunity International commit $100 million to back education lending in low-income countries.
Financial inclusion. JUMO secures $120 million to help banks expand access to financial services for consumers and small businesses in emerging markets… Aruwa Capital invests in Pngme to use phone data to improve lending in Africa.
Health and wellbeing. Morocco’s CIM Sante Group secures a $10 million equity investment from Finnfund’s Global Impact Fund to meet increased demand for healthcare services in the country.
Low-carbon transition. rePlant Hemp is looking to raise $500 million to back ventures in hemp-based food, construction materials, textiles, bioplastics… Sway scores $2.5 million to replace single-use plastic packaging with seaweed-based, zero-carbon bio plastic.
Ocean finance. Credit Suisse facilitates $364 million for The Nature Conservancy’s blue bonds program.
The Reconstruction. Northwestern Mutual accelerator backs five Black founders… National Equity Fund raises $85 million to create access to equity capital for Black, Indigenous and people of color-run housing developers.
The Week’s Talent
Brandon Zeigler, ex- of the Walton Family Foundation, joins Global Endowment Management as a director on its impact investment team… Rethink Capital Partners hires Amy Nelson, ex- of Venture for America, as chief strategy officer and Alison Smith, ex- of Cornerstone Capital, as a partner focused on growth… Ingrid Michalski, ex- of Waycrosse, joins North Sky Capital as a fund operations analyst.
Carletta Ooton, ex- of Amazon, joins Apollo as head of ESG for private equity… Meryam Omi, formerly with LGIM, will lead Climate Arc, a new climate finance organization… Camille Walker, ex- of NPower, is named executive director of the Local Initiatives Support Corp. Detroit… Phil Kirschman, ex- of Cornerstone Capital Group, will lead Manchester Capital Management’s ESG and impact investing efforts.
The Week’s Jobs
Schneider Electric is hiring an environmental specialist in the U.K… RE Sources is looking for a finance director in Bellingham, Wash… Boston Impact Initiative seeks a field-building program manager in Boston… Kensington Corridor Trust is looking for a community organizer in Philadelphia… East Bay Community Foundation is hiring a grants and scholarship manager in Oakland.
End Citizens United is looking for a finance and compliance intern in Washington, D.C… The Nature Conservancy is looking for an associate director of corporate and foundation relations in New York… ImpactAssets has an opening for an investment officer and an associate… Capital Impact Partners is hiring an investment analyst in Arlington, Va… The Thomson Reuters Foundation is looking for a data equity and digital rights specialist in Nairobi.
That’s a wrap. Have a wonderful weekend.
– Nov. 12, 2021