The Week in impact investing: Convergence

The team at

ImpactAlpha

TGIF, Agents of Impact! 

🗣 Connecting the dots. Climate commitments. Conscious consumers. Technology disruptions. And more capital committed to equity and inclusion. The convergence of seemingly disjointed trends presents the possibility of a more just and sustainable future, glimpses of which ImpactAlpha presented this week:

The once-in-a-generation U.S. infrastructure bill, for example, will draw on the work of Agents of Impact who understand the impact of flows of capital on people, places and the environment. “Now is the moment for impact investors and their partners to take decades of experience investing in the built environment and apply their knowledge to rebuilding communities across the country,” Kresge Foundation’s Lourdes Germán and Aaron Seybert wrote in a guest post. The climate strategies of companies and organizations like PosiGen, BlocPower, Neighborhood Sun, The Nature Conservancy and others that focus on low-income communities, they say, “are well positioned to absorb this capital with equity at the center of their strategies.”

On this week’s Call (see below), Jessica Pothering introduced African entrepreneurs pioneering innovative financial vehicles and technologies, from crowdfunding to crypto, that are expanding access to capital for small and growing businesses. Amy Cortese showed how new rules are aiming to stitch together the patchwork of carbon markets, and that green infrastructure projects are attracting big money from investors. Sara Minard prodded Christian and other faith-based investors to align long-held values with new investment models to mobilize capital for the U.N. Sustainable Development Goals. Kelly Burton describes on The Reconstruction podcast that an ecosystem of support is arising around Black and Brown entrepreneurs. And Bridgespan Social Impact identified more than 160 racial-equity funds that are deploying capital to raise the power, agency and wealth of BIPOC individuals and communities. Look around: Agents of Impact are at the convergence of powerful trends. – Dennis Price

🎧 Impact Briefing. On this week’s podcast, host Monique Aiken gets an investor’s takeaways from the Glasgow climate summit with FullCycle’s Stephan Nicoleau. Plus, the headlines. Tune in, share and follow us on Apple, Spotify or wherever you listen.

🏦 Next Call: Capitalism Reimagined. A sustained, inclusive and collective effort is needed to replace a market economy with an economy that uses markets to serve the common good. The New Capitalism Project is exploring what such a system could look like, what’s holding it back, and the portfolio of ideas and initiatives that can move it forward. The Coalition for Inclusive Capitalism’s Meredith Sumpter, Indigenomics Institute’s Carol Anne Hilton, Majority Action’s Eli Kasargod-Staub, the Global Impact Investing Network’s Amit Bouri and other Agents of Impact will discuss inside/outside interventions for a broken economic system. In partnership with Omidyar Network, ImpactAlpha presents the third call in our series, Capitalism Reimagined, Tuesday, Nov. 30 at 10am PT / 1pm ET / 6pm London. RSVP today.

The Week’s Call (recap and replay)

How tech innovation is bridging gaps in small business financing in emerging markets. The boom in African fintech startups began before COVID-19. The economic shutdowns and financial dislocations of the pandemic supercharged the tech disruption. “We’re moving from digitally-enabled fintech to a digitally-native environment,” Lendable’s Daniel Goldfarb said on ImpactAlpha’s Agents of Impact Call this week. Banks, he explained, “suddenly are getting disintermediated.” Case in point: data-powered lending to the continent’s informal, micro and small businesses. In Kenya, four-year-old Pezesha is becoming a go-to alternative-credit and lending partner for e-commerce and “enterprise tech” providers like Twiga Foods, Jumia and MarketForce, which are digitizing micro and small businesses with digital payments and inventory management. “We’ve been able to democratize working capital by connecting underserved small businesses with access to affordable capital through seamless integration with partners,” said Pezesha’s Hilda Moraa

Lendable, which finances fintechs, has seen a 30% increase in transaction volume across its digital payments portfolio since the pandemic started – at the expense of legacy institutions, like banks, MoneyGram and Western Union. South Africa’s The People’s Fund, a crowdfunding platform for purchase-order financing, grew its lending volume from two million South African rand in its first year to 150 million rand, or about $10 million, last year. Its tech-enabled due diligence is what allows the company to affordably extend loans as small as 10,000 rand ($640). “In the market we operate in, almost no one can do what we do,” said The People’s Fund’s Luyanda Jafta

Commercial banks, along with development finance institutions and multilateral banks, pledged billions of dollars to help emerging market small businesses survive and recover from the COVID-19 pandemic. Local businesses have yet to see much of that money. Goldfarb said it’s perhaps unreasonable to expect banks to fill a $5 trillion small business financing gap in emerging markets; their primary duty is to protect customers’ deposits. Banks “are kind of maxed out on the kinds of things that they can do,” agreed Daniel Kimotho of the blockchain platform Celo. “That creates this new opportunity where disruption has to come from outside.” 

The Week’s Dealflow

Spotlight: Upskilling health workers. The U.S. is facing a major shortage of healthcare workers. “Rather than waiting for workers to show up, it’s incumbent upon healthcare providers like us to build talent from within,” Sandie Tracy of Ro Health told ImpactAlpha. New York-based Achieve Partners acquired the Seattle-based medical staffing and home health agency to advance an apprenticeship program for entry-level healthcare workers, primarily school nurses and behavioral therapists. The apprenticeship program will address near-term needs “and build stronger talent pipelines for the years to come,” said Tracy.

  • Health investors. Johnson & Johnson Impact Ventures backed NextStep, which offers tuition-free training for workers looking to become certified nursing assistants (J&J Impact Ventures sponsors ImpactAlpha’s Investing in Health coverage).

Climate finance. Climate Fund Managers raises $675 million for green blended finance fund… Energy Impact Partners raises more than $1 billion for its second fund… Ocean 14 Capital secures €60 million for a blue economy impact fund… Evergrow raises $7 million to off-take carbon reduction projects… ADT acquires rooftop solar systems provider Sunpro Solar for $160 million… The Clean Fight NY, a nonprofit climate tech accelerator, backs nine companies working to retrofit non-luxury residential and commercial buildings in New York.

Small businesses. ZenBusiness raises $200 million to scale support for micro entrepreneurs… Founders First Capital Partners scores $11 million to provide revenue-based financing for U.S.-based small businesses… Nomod scores $3.4 million to help small merchants in emerging markets get paid online… Pentina, a buy now, pay later app for vendors and merchants in emerging markets, raises $2.2 million to expand internationally.

Conservation finance. Bridges Fund Management backs Tier 1 to help corporate customers recycle and resell computer equipment… Food giant Mondelez International joins Circulate Capital’s Ocean Fund as a limited partner to help collect and recycle plastics… Bioenergy Devco secures $100 million to build biogas digesters in the U.S.

Impact tech. MindX raises a $3 million Series A round to train students in rural Vietnam for careers in tech… The Rise Fund backs Renaissance, a global edtech venture that provides math and reading lessons for PreK-12 schools… DrugStoc scores $4.4 million to improve Nigeria’s pharmaceutical supply chain.

Agrifood investing. Incofin backs Exportables to meet growing demand for hot peppers by sourcing directly from smallholder farmers in Peru… Aqua-Spark backs Portugal’s sustainable seafood company Oceano Fresco.

Financial inclusion. Stori rakes in $200 million to advance financial inclusion for underserved consumers… South African fintech MFS Africa takes in $100 million in equity and debt funding from Goodwell Investments, Lendable and Norsad Finance.

Returns on inclusion. New York Life Insurance Company invests $50 million in Enterprise Community Partners’ Enterprise Community Loan Fund to improve access to affordable housing for low- and moderate-income families in the U.S.

The Week’s Talent

Neil Hardwick, formerly of WPP, is named CEO of RethinkX… SASB founder Jean Rogers joins Blackstone as global head of environmental, social and governance… Kristen Lang, ex- of Ceres, joins Boston Trust Walden as deputy director of ESG investing… Kunle Apampa, ex- of Goldman Sachs, joins Capricorn Investment Group as director of client advisory and partnerships.

The Week’s Jobs

FINCA International is hiring a director of philanthropy in the U.S… Advantage Capital is looking for a vice president of minority business enterprise investing in New Orleans… Grant Thornton is recruiting a senior consultant of sustainable finance, ESG and impact in Amsterdam… Calvert Impact Capital is hiring an investment analyst in Bethesda, Md… The Aspen Institute is hiring a deputy director of strategy for its energy and environment program in Washington, D.C… Mission Driven Finance seeks a real estate strategist.

Water.org is recruiting a strategic development executive… CDC is looking for a quant analyst of asset allocation and capital solutions in London… The Joint Center for Political and Economic Studies is hiring a senior policy analyst… Mercy Corps Ventures is hiring a director of operations and strategy… 60 Decibels has openings for analysts and for a senior business development manager for supply chains… Nia Impact Capital is looking for a financial analyst in Oakland… Apollo Global Management seeks an impact measuring and monitoring associate in New York.

That’s a wrap. Have a wonderful weekend. 

– Nov. 19, 2021