TGIF, Agents of Impact!
Overconfidence can lead to complacency. Doomsaying can be self-fulfilling. The next few days will be fraught with confusion about what emotions are safe to feel. As Americans vote, volunteer and stand vigil, former CBS Evening News anchor Dan Rather’s oft-derided sign-off doesn’t seem so silly: Courage.
Impact Briefing. On this week’s podcast, host Brian Walsh chats with ImpactAlpha’s Amy Cortese about investors’ rush into green tech, and with Impact America Fund’s Kesha Cash, this week’s Agent of Impact. Plus, the headlines. Tune in, share, and follow us on Apple, Spotify or wherever you get your podcasts.
The Week’s Big 5
1. In emerging markets, banks are not banking small businesses. In South Africa, Zambia, Kenya, Ghana and elsewhere, even guarantees and multibillion-dollar COVID relief packages have not changed banks’ lending practices. Fintech companies and alternative debt funds are positioned to step up. In a guest post, Susan de Witt of the University of Cape Town’s Bertha Center and Drew von Glahn of the Collaborative for Frontier Finance offer five recommendations for empowering “non-bank financial intermediaries” to lend to credit-worthy businesses that banks are turning down. Capital call.
- COVID pivots. Development Partners International’s Runa Alam speaks with USAID INVEST’s Vanessa Holcomb-Mann about food, pharmaceutical, finance and other essential businesses that are adapting to meet the pandemic’s challenges. Q&A.
- Prioritizing the poor. Acumen created two relief facilities for businesses supporting low-income communities. Otho Kerr explains how the impact investor rallied portfolio companies on behalf of those most vulnerable to the pandemic’s stresses. Read on.
2. Investors place their bets on the shift to clean electricity. Joe Biden got nervous about his accidentally honest acknowledgement, “I would transition from the oil industry, yes.” But financial markets and investors have already voted in favor of replacing oil and gas with solar, wind and batteries. Already this year, global investors have poured nearly $5 billion into battery storage, smart grid, and energy efficiency – almost double last year’s pace of investment. A dozen U.S. companies making electric vehicles, batteries and charging infrastructure plays, like ChargePoint, are projected to bring in about $6.5 billion from public market investors, via special purpose acquisition companies, or SPACs. In the battleground state of Pennsylvania, the 74,000 clean-energy jobs are more than triple the 23,000 petroleum-related jobs. Dial it up.
3. Distributing capital is one thing; distributing power is another. Impact investors are using donor-advised funds to shift power to the people and communities. The Kataly Foundation convened grassroots environmental justice organizers from the U.S. and Puerto Rico – all of them women of color – to decide on grants and investments. Candide Group’s Olamina Fund is giving a vote on investments to an advisory committee representing financial institutions led by women and people of color. “Even people with a lot of money and a lot of power are starting to get the sense that they need to draw from a bigger circle,” says RSF Social Finance’s Kelley Buhles. The story.
4. Backing Black-led lending institutions. The Local Initiatives Support Corp. launched the Black Economic Development Initiative in June with $25 million from Netflix. Square, Costco and other companies also are backing the strategy to support Black-led lenders and close the racial wealth gap. It’s in corporations’ self-interest, LISC’s George Ashton writes in a guest post, to ensure that they have a strong future customer base for their products. Get his take.
5. Virginia’s private capital for public good. The commonwealth is a case study in how place-based ecosystems can mobilize private capital to finance affordable housing, healthcare facilities, farms, businesses and jobs. At least 185 “impact capital holders” deployed more than $230 million through 900 deals last year. Impact investing collaboratives in Colorado, New Mexico, Michigan, Minnesota, Georgia and other states also are demonstrating the role of local investors in creating thriving economies in their own backyards. Invest in place.
The Week’s Agent of Impact
Kesha Cash, Impact America Fund. Two years ago, ImpactAlpha recognized Kesha Cash as an Agent of Impact for her cutting-edge investment thesis: the billion-dollar opportunities in tech solutions that drive ownership, opportunity and empowerment in communities of color. Now, Cash has the scratch to prove out that thesis, closing one of the largest funds ever raised by a sole Black female general partner. Impact America’s $55 million second fund and its 67 institutional limited partners are betting on the disruption of systemic racism. “We are looking for those opportunities where impact drives business growth, where it drives financial performance, and where it positions our companies to have a unique competitive advantage in the future,” Cash says on this week’s Impact Briefing podcast. It won’t be easy for cookie-cutter VCs to copy Cash in spotting opportunities like Mayveen and ConnXus and SoLo Funds and Esusu and Upswing. “We underestimate the importance of cultural competency,” says Cash, who grew up low-income in Orange County, Calif., and was the first in her family to go to college. “It’s really rare to have people that come from low-income backgrounds that really understand the challenges of community and have spent enough time in community to then bring that perspective back to their investment analysis.”
Low-income people pay a tax for being poor, Cash says, spending more money for low-quality financial services, home and child care, transportation and education. The opportunity: Tech solutions that lower the cost and increase the quality, steered by community-rooted founders. Cash’s ultimate goal: “To reshape, redistribute, reimagine the economic pie, so that more people are well off and can afford to take care of their families.” Each member of her six-person team is a person of color, a woman, or both; many come from the communities portfolio companies serve. More capital for underinvested markets is a good thing, says Cash. “But we want that capital to run into the markets in a way that creates more value for the community versus the continuation of extraction and exploitation.”
- Share Cash’s Agent of Impact story, and like it on Instagram.
- Disruptive innovation. Get the full story by reading “Impact America’s $55 million second fund is hunting for unicorns in the disruption of systemic racism,” on ImpactAlpha.
The Week’s Dealflow
Returns on inclusion. New and under-represented fund managers get a $50 million boost from PayPal… LISC bets on Fearless Fund with $750,000 investment in first-time fund managers… Mastercard deposits $20 million through CNote’s network of community development financial institutions… Soros Economic Development Fund joins anchor investors in Illumen Capital.
COVID recovery. Rockefeller Foundations commits $1 billion to clean energy and healthcare for COVID recovery… Oikocredit backs BizCapital to help Brazil’s small businesses recover… European impact investors launch $40 million emergency fund for smallholder farmers.
Inclusive economy. Acceso acquires Exensio to help small farmers in Latin America and the Caribbean… Dukaan raises $6 million to help India’s small merchants launch mobile shops… Evergreen Cooperatives helps Ohio coffee chain transition to worker ownership.
Fund news. Draper Richards Kaplan Foundation launches $80 million fund for early-stage social entrepreneurs.
Impact SPACs. Natural Order Acquisition Corp. readies a SPAC to invest in alternative proteins.
Institutional shift. Russell Family Foundation moves $14 million to ESG and impact strategies.
The Week’s Talent
The Week’s Jobs
Lord Abbett & Co. is recruiting a head of ESG investing in Jersey City, N.J… Quilter Investors seeks an ESG data analyst in London… Open Society Foundations is looking for an associate investment principal for its Economic Justice program in London… Instiglio has an opening for a senior associate in Rabat, Morocco… Aceli Africa is hiring a head of policy and partnerships in Nairobi or Kampala… The Equality Fund seeks a senior manager of investment strategy in Ontario.
Aeris is looking for a financial institutions rating analyst… BlackRock is hiring a vice president of corporate sustainability in New York… Yunus Social Business is looking for a director of partnerships and investor relations in Berlin… Echoing Green seeks a director of development in New York… US SIF is hiring a director of research and education in Washington, D.C… Mass Mutual is looking for an impact investing associate in Boston.
Thank you for reading.
–Oct. 30, 2020