TGIF, Agents of Impact!
We’re taking a “brief” break on Monday. We’ll be back in your inbox on Tuesday, Apr. 14. Keep the news, tips and submissions flowing.
Weekly Briefing. On ImpactAlpha’s weekly podcast, host Brian Walsh talks with Amy Cortese about how community banks and local lenders are getting small-business relief loans to underserved communities (see No. 1, below), and with David Bank about the leader of one of those community development financial institutions, Southern Bancorp’s Darrin Williams, this week’s Agent of Impact. Check out this week’s Impact Briefing, and follow the podcast on Apple, Spotify or wherever you listen.
The Week’s Big 5
1. CDFIs bridge racial gaps in COVID recovery. While big banks made excuses, smaller lenders and community development financial institutions rushed to get emergency business loans approved, especially for vulnerable and hard-hit minority owners. As the federal government weighs an expanded relief package, advocates are calling for an expanded role for community development financial institutions, or CDFIs, to make the loans, which are forgivable if businesses keep employees on the payroll. “Big banks don’t do well in providing capital in underserved communities,” Southern Bancorp’s CEO Darrin Williams told ImpactAlpha. “I’m pushing for communities of color, rural communities, markets without Internet access.” Get mobilized.
- CovidCap. Tip of the hat to Cathy Clark and her CASE i3 team at Duke University’s Fuqua School of Business for pulling together a searchable listing of more than 380 regional, national and global capital offers of relief grants or loans, worth more than $363 billion. Add your own.
2. Ratcheting up the tech mobilization for COVID solutions. The science and tech mobilization that helped win World War II left behind antibiotics, microwaves, nukes, computers and more. To face down today’s global threat, impact-oriented investors, technologists and entrepreneurs are looking for breakthroughs in vaccines and therapeutics, telehealth, climate, information, and education. The response could “benefit generations of people to come,” Fifty Years’ Seth Bannon says in a Q&A with ImpactAlpha. Impact tech.
- Early results. Fifty Years’ portfolio company BilliontoOne said this week it has validated its high-throughput COVID-19 test, which could provide capacity for a million tests a day. In Kenya, Eneza Education, a FINCA Ventures investee, has partnered with telecom giant Safaricom to ensure free access to its digital learning platform and is acting as a COVID-19 health information channel as well. Check it out.
3. Responsive capital for emerging markets (audio). Even before the crisis, not enough capital was flowing to small and growing businesses that are the lifeblood of emerging market economies. Capital providers and other ecosystem leaders supporting such businesses across Africa and Latin America called for capital that is “responsive to the need, fast, simple, speedy,” said Courageous Capital Advisors’ Laurie Spengler on ImpactAlpha’s latest Agents of Impact conference call, co-hosted with the Collaborative for Frontier Finance. Get it going.
- Commitments. The African Development Bank expanded its COVID relief package to $10 billion commitment, including a $3 billion social impact bond issuance… The Inter-American Development Bank issued a $2 billion bond for COVID relief as part of a $12 billion package for Latin America and the Caribbean… The Visa Foundation will provide $210 million for COVID relief, with a gender lens.
4. Impact voices grasp for lessons from the pandemic. Laying out principles and drawing out lessons seems to be an antidote to the pervasive disorientation. Reactions and responses to the COVID crisis have poured in from Agents of Impact around the world. Some guest contributions:
- Lenders, not heroes. Ceniarth’s Diane Isenberg and Greg Neichin are sticking with the family office’s strategy of patient, impact-first lending, which is needed now more than ever. “It did not take a crisis for us to realize that vulnerable communities need deeply concessionary capital to survive.” The less money Ceniarth loses, however, the more money it can push toward the recovery. “When this ends, the world will still be unfair and unequal,” they write. Hear them out.
- Long-term commitments. Elevar’s Sandeep Farias says the venture firm is talking with its investors about the availability of capital for its portfolio companies. Some LPs are co-investors in Elevar’s portfolio companies as well. “We are urging them to double down on the commitments we have already made to our portfolio companies, because we believe those investments carry long-term value.” Check it out.
- Mitigate systemic risks. Individual investors and the financial system at large should invest and lend in ways that enhance, not destroy, systems, argue The Investment Integration Project’s William Burckart and Steve Lydenberg. For example: Halt investments in corporations that avoid taxes; and consider business loan forgiveness in extenuating circumstances – like COVID. More ideas.
- Rounding up the social finance profs. Impact financing approaches like bridge loans, pay-for-success financing and of course, philanthropic capital, may be apt for the moment, according to professors in the Impact and Sustainable Finance Faculty Consortium. Kellogg School’s Megan Kashner rounds up ideas from Rehana Nathoo of Georgetown University, John Tobin-de la Puente of Cornell University and Vicente Servigon Caballero of ESPAE in Ecuador. Study up.
- Keeping impact on track. Dealmaking in mainstream financial markets is stalling, but impact investors are taking a more nuanced approach to working with investees, say Chintan Panchal of RPCK Rastegar Panchal and Confluence Partners’ David Press. Such collaboration may give impact investors a leg up. Hear them out.
5. Return of Keystone XL. Just when COVID-19 appeared to sound the death knell for the oil industry, governments, banks and investors began pouring money back into the beleaguered Keystone XL tar sands pipeline. Propping up the project exposes the hollow climate pledges of banks like JPMorgan and investors like BlackRock, and a lack of government foresight on how to invest trillions of dollars in economic infusions sustainably. “The actions people take today will set the course over the next decade,” warns CarbonTracker’s Andrew Grant. Read the room.
The Week’s Agent of Impact
Darrin Williams, Southern Bancorp. Since the U.S. government’s $350 billion Paycheck Protection Program kicked in a week ago, Williams and his team have processed $42 million in loan applications. Working through last weekend, Southern Bancorp in Little Rock, Ark., processed loans as small as $8,000 for an African American-owned radio station and less than $2,000 for a photography studio. That effort got the attention of Fox News, and that got the attention of the White House, which invited Williams to represent community development financial institutions, or CDFIs, in a video conference with the president. “Please consider a carveout for CDFIs,” in the next relief package, Williams urged President Trump. “We have a proven track record of promoting economic stabilization, job preservation and job creation in some of the hardest hit rural, urban and immigrant communities.”
Williams, who served three terms in Arkansas’ House of Representatives, has led Southern Bancorp since 2013. Back then, the $1.5 billion bank was still working its way out of loans it had taken in the last recession. Williams restructured the bank’s finances, established a quarterly dividend, and employee stock ownership plan, and raised $34 million in common equity. That creates liquidity for investors in CDFIs, which are required to make 60% of their loans in low-income communities. “Southern Bancorp is paving the way for a new kind of efficient capital raising for CDFIs.” Williams told ImpactAlpha. CDFIs will need that kind of stability to help underserved businesses and communities weather the COVID crash – and get access to federal relief. Williams said businesses in the small towns of the Arkansas and Mississippi delta “haven’t had an opportunity like this before, in good times or bad times… The last thing that some of our small business customers need is more debt. What makes this PPP so important is it’s 100% forgivable. It’s an infusion of capital in their business.” – David Bank
The Week’s Dealflow
Food and agtech. DeHaat secures $12 million to link India’s farmers to markets… VanderSat uses satellite data to expand farmer insurance coverage… DFC loans $5 million to Twiga Foods to promote food security… Aavishkaar re-ups investment in Indian agtech startup Ergos.
Low-carbon economy. Schneider Electric and Breakthrough Energy Ventures back Natel Energy’s ‘restoration hydro.’
Impact tech. SourceDay raises $12.5 million to help businesses streamline supply chains.
The Week’s Talent
Kauffman Foundation promotes Philip Gaskin to vice president of entrepreneurship… Michael Stone, co-founder and chief investment officer of TPG’s Rise Funds, becomes co-managing partner of TPG Growth… Edward Mason joins Generation Investment Management from the Church of England… Microsoft’s Brandon Middaugh has been named director of the company’s Climate Innovation Fund.
Lindsay Smalling, ex- of SOCAP, joins 60 Decibels as head of U.S. sales… Parnassus Investments’ Iyassu Essayas, Community Capital Management’s Kristin Fafard and Etho Capital’s Amberjae Freeman join the board of The Forum for Sustainable and Responsible Investment. Impax Asset Management’s Steve Falci and Trillium Asset Management’s Jonas Kron were elected for a second term.
The Week’s Jobs
Boston Ujima Project seeks a director of investments… Closed Loop Partners is looking for a communications associate… Access Ventures is hiring an investment associate in Louisville, Ky… Participant Media is hiring for a senior counsel position in Los Angeles… Align Impact has openings for an investment analyst and a philanthropy and impact investing summer intern in Santa Monica, Calif.
B Corp Greenprint Partners is looking for a director of finance/CFO in Chicago… Common Impact seeks a chief program officer and a director of technology in Brooklyn, N.Y… Kiva is hiring an investment associate in Bangkok or Bogotá… The Sunrise Project seeks a global investor senior strategist… The Global Reporting Initiative is seeking members for its decision-making and advisory bodies.
Thank you for reading.
–Apr. 10, 2020