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The Week in impact investing: Impact FOMO



TGIF, Agents of Impact!

Disruption. Inflection point. Crossing the chasm. FOMO. We’ve been using every breathless tech-era cliche in the book to herald a new financial system shaped by sustainability and inclusion. No doubt, there’s confirmation bias in the data points we tend to notice. Certainly, we’re calling trends we hope will play out (see, Capital sets sail for the inclusive and sustainable future). To be sure, there’s plenty of work ahead. Nothing is inevitable. But something has changed. Agents of Impact are marching toward a different future. That’s a parade politicians of all stripes should jump in front of.

– David Bank, editor and CEO

The Week’s Agent of Impact

Martin Muoto, SoLa Impact. The Nigerian-born entrepreneur and investor was investing in zones of opportunity before there were Opportunity Zones. Muoto has acquired, rehabbed and operated low-income housing in South Los Angeles since 2008. In 2014, with Gray Lusk, he launched SoLa Impact, which now manages a family of funds expanding access to quality affordable housing and jobs in Watts, Compton, South Central and other low-income communities, while providing investors a competitive return. Nearly all of SoLa’s tenants are people of color; one-third have been homeless. Growing up in northern Nigeria gave Muoto an appreciation of both poverty and opportunity. “If you can understand the risk in these communities, you can make really good returns,” the former venture capital partner told ImpactAlpha. Muoto moved to the U.S. to study at the University of Pennsylvania, on a full scholarship. Last year, SoLa’s nonprofit gave $100,000 in college scholarships to students in South L.A. 

SoLa’s work has been supercharged by the capital-gains tax breaks available for Opportunity Zone investments. The firm closed its third fund at $115 million to build affordable housing and community services in South L.A. SoLa also will build out its first commercial project: the Beehive, a 92,000-square-foot campus for startups, creatives and established businesses across six 100-year-old brick buildings that were once part of a Goodyear Tire factory. The idea is to provide amenities that are scarce in the area and to attract companies that offer quality jobs. Rents will be discounted for nonprofits and social enterprises serving the local community. SoLa’s work won a grand prize for urban-focused funds in this week’s Opportunity Zone Catalyst competition at Sorenson Impact Center’s Winter Innovation Summit. Investor enthusiasm has been so great that SoLa is launching a follow-on fund. Muoto follows what he calls the four P’s: profit, purpose, passion, and pragmatism. “I think we’re all trying to figure out how to balance those four objectives in our professional lives,” he told the Los Angeles Sentinel. “For me, it’s very easy to be completely invested.” – Amy Cortese

The Week’s Big 6

1. Calling the inflection point and other 2020 trends (podcast). Asset owners are pressing asset managers for move-the-needle impact on climate change and greenhouse gases. “What’s materially different from the past is that almost everybody is realizing we have now hit inflection,” Equilibrium Capital’s Dave Chen tells ImpactAlpha’s David Bank in the latest Institutional Shift podcast. From sustainable infrastructure to soil carbon, the podcast calls out nine trends to watch for in 2020. Collect the whole set

2. Leveraging box-office appeal for social justice. Filling theaters for the new justice and redemption movie Just Mercy isn’t the end game for executive producer Scott Budnick. “It’s where we start,” he says. Budnick co-financed the film through One Community, his new financing vehicle for a slate of upcoming film and TV productions with big social impact messages. “We want to make commercial films that draw people in, get wide audiences, win awards and can move a lot of people.” Read the script.

3. Demonstrating impact in Opportunity Zones. The Catalyst Opportunity Fund wants to debunk the perception that Opportunity Zones capital-gains tax breaks are driving only dubious developments, dislocation and gentrification. The fund, seeded by Utah entrepreneur and philanthropist Jim Sorenson, has closed four Opportunity Zone investments that it says demonstrate positive community impact. ImpactAlpha scooped its latest investment, in South Central Los Angeles impact developer SoLa Impact (see Agent of Impact, above). Dig in.

4. Early-stage impact in emerging markets. Small and growing businesses drive local economies but capital providers backing them face continuing challenges. Fund managers from Senegal, Kenya and Pakistan joined last week’s Agents of Impact Call No. 12 to share their unique, locally-tailored investment models, challenges to scale and opportunities. First-time funds are “where the biggest innovation is happening,” said Catalyst at Large Suzanne Biegel. With The Call, ImpactAlpha kicked off our deep dive on financing for small and growing businesses, in partnership with the Collaborative for Frontier Finance and Visa FoundationView from the ground.

5. Catalyzing inclusive growth in agriculture markets. For Africa’s smallholder farmers, funding a systemic shift can deliver higher impact than even smart investments in individual enterprises, argues consultancy FSG in “Bending the Arc.” Examples abound, from Kenyan dairy to Ugandan sesame. Go deeper.

6. A half-dozen more tools to reshape finance. More than two dozen Agents of Impact responded to ImpactAlpha’s call for ideas as part of our What’s Next series with the Global Impact Investing Network. Check out the final batch of suggestions, which address government accountability, “true cost” corporate reporting, and AI-based impact reporting. Check it out.

The Week’s Dealflow

Locavesting. Arctaris leads a $25 million initiative to back Baltimore’s business owners… BlueHub Loan Fund floats $75 million Sustainability Bond for community development… Turner Impact Capital invests in workforce housing in Seattle… Atlanta affordable housing fund will track social impact… Blueprint Local makes Opportunity Zone investment in Baltimore’s Penn Station.

Low-carbon economy. Los Angeles Cleantech Incubator raises $5 million impact fund… Generate Capital raises $1 billion for sustainable infrastructure-as-a-service… Greenlane Renewables joins with SWEN Capital Partners to decarbonize natural gas… New York State earmarks $6 million for clean energy co-investments.

Institutional shift. U.K. pension scheme Nest signs onto Blackrock’s ‘sustainable cash’ product… Nasdaq buys OneReport to ease environmental, social and governance data reporting.

Capital on the frontier. CDC Group backs Africa’s banks to ratchet up small business finance… Holding company Secha Capital takes a stake in Rush Nutrition.  

Returns on inclusion. Everytable scores $2.5 million to back under-represented franchise owners… Chicago gets backing from Melinda Gates to support women in tech. 

Education and jobs. Coding bootcamp Galvanize acquired by K12 for $165 million.

Food and agtech. AppHarvest closes $11 million for high-tech greenhouse venture.

Wellbeing. TPG Growth’s Evercare adds Bangladesh hospital group to its network.

The Week’s Talent

Cliff Prior is moving on from Big Society Capital to become chief executive of the Global Steering Group for Impact Investment. The GSG’s Amit Bhatia is stepping down in March after a three-year term. Big Society Capital will search for a new CEO… Thane Kreiner is stepping down as executive director of Miller Center for Social Entrepreneurship later this spring to help found an as-yet-undisclosed impact enterprise… Kelly Goldstein joins Harlem Capital Partners as a senior associate… Tami Kesselman joins LOHAS Advisors as a partner… Radhika Shroff joins Nuveen as impact investing managing director… XXcelerate merged with Women Led and named Amy Jermain executive director.

The Week’s Jobs

Blue Shield of California is looking for a director of social impact in Oakland… Credit Karma seeks an executive director for its new charitable foundation in San Francisco… The Wonderful Company is hiring a director of philanthropy and programs in Los Angeles… Rise of the Rest is recruiting an investment associate in Washington D.C… Boundless Impact is looking for a content editor in New York… Sunwealth is hiring a project associate in Cambridge, Mass… Incofin Investment Management seeks an agro investment analyst for Latin America in its Bogotá office.

Inclusiv is recruiting a director of resiliency and clean energy finance and other roles in New York… CARE seeks a managing director for CARE Social Ventures… Blue Meridian is hiring a managing director of its places portfolio in New York… Conveners.org seeks a chief relationship officer… Johnson & Johnson is looking for an investment manager for its global community impact group in High Wycombe, U.K… Sonen Capital seeks an investment analyst in San Francisco… Chan Zuckerberg Initiative is hiring a director of engagement and inclusion in Redwood City, Calif.

Thank you for reading.

–Feb. 7, 2020

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