TGIF, Agents of Impact!
The Week’s Agent of Impact
Delilah Rothenberg, Predistribution Initiative. It’s easy to pile on private equity. The industry’s predilection for heaping debt and risk onto companies and workers, while paying itself lavishly, has been blamed for the demise of brands from Toys R Us to Hostess Brands. Last month, TOMS Shoes, the social enterprise darling bought by Bain Capital in 2014, was handed over to creditors as it struggled to repay a $300 million loan. To be sure, changing market conditions and other factors played a role in the busts. But “PE” has made itself a target for critics, including presidential candidate Elizabeth Warren, whose Stop Wall Street Looting Act would rein in some of PE’s most abusive and lucrative practices.
If Warren is wielding a stick, Delilah Rothenberg is dangling a carrot to entice the industry to reform itself. As founder of the Predistribution Initiative, she’s trying to nudge private equity fund managers to create investment structures that share wealth with workers and communities. Rothenberg spent 15 years in finance and private equity herself before having “a bit of an existential crisis” about her own responsibility in exacerbating inequality. Her manifesto last year called out PE’s excessive compensation, which can top $100 million at the largest firms. (The initiative’s name suggests that instead of only redistributing wealth via taxes or charity, we should also address the means by which that wealth is created). As Rothenberg and her team have met with fund managers, asset owners, labor advocates and other stakeholders, she has sharpened her focus on fund structures. One proposal: earmark some of private equity managers’ carry, or share of profits, for workers who create value at the portfolio companies. Many private equity fund managers themselves know change is coming. Says Rothenberg, “I’ve been pleasantly surprised by the willingness to engage by some of these asset managers.”
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- Read “Leverage, compensation and taxation: Doing due diligence on investment fund managers,” by Delilah Rothenberg and Amanda Feldman on ImpactAlpha.
The Week’s Big 6
1. 2020 is the year capital markets shift…or else. ImpactAlpha is on the lookout for signals that exclusion and extraction are giving way to inclusion and regeneration. Long-term value creation may be the watchwords, but what’s really at stake is power. We’ll track those dynamics across five key themes this year. Look ahead.
2. Big opportunities in Africa’s small businesses. Local and regional impact investors say the real opportunities on the continent aren’t traditional mainstays like oil and commodity exports. They’re focused on financial inclusion, logistics and smallholder agriculture. “There are so many more investment opportunities in Africa than people will see from afar,” says Goodwell Investments’ Wim van der Beek. Take a closer look.
3. African policymakers get into the startup act. Entrepreneurs tackling challenges like financial inclusion and food distribution are critical to Africa’s economic vitality. To spur such innovation, Senegal passed a Startup Act, following a similar law in Tunisia. At least 10 more African countries have startup legislation in the works. Check it out.
4. Water investments begin to flow. Shortages of clean water, along with infrastructure deficiencies, poor government policies and challenges of global warming, are spurring opportunities for investments that improve water access and alleviate scarcity. Tap in.
5. Community impact in Opportunity Zones. The capital gains tax breaks available in Opportunity Zones are spurring potentially transformative investments in low-income neighborhoods, but federal regulations lack impact measurement guidelines. A new tool from the Urban Institute can help investors ensure projects meet community needs. Check it out.
6. Blame climate change for Australia’s fires. Climate scientist Michael Mann studies the links between global warming and extreme weather events. He got a firsthand view while vacationing in Australia’s Blue Mountains as fires raged across the valley. Feel the heat.
The Week’s Dealflow
Returns on inclusion. Hillbilly Elegy author J.D. Vance, ex- of the Rise of the Rest fund, launches Narya Capital to invest in startups in underserved cities away from U.S. coastal hubs. Backers include Peter Thiel, Marc Andreessen, Eric Schmidt and Scott Dorsey… Royal Street Ventures raises $16 million for Middle America startups… Impact X raises fund to support underrepresented entrepreneurs.
Community finance. MassHousing issues first sustainability-focused housing bond… French social housing fund Immobilier Impact Investing tops €100 million.
Farmer finance. Iroquois Valley Farmland REIT raises $6 million for soil restoration funding… FMO backs Acumen’s climate resilience fund for Africa’s farmers.
Inclusive economy. Inclusiv raises $45 million Southern Equity Fund to support credit unions… Julaya raises early funding to bring digital payments to informal businesses.
Food and agtech. Equilibrium Capital recruits Revol Greens for southern California greenhouse… Seed company Nu Genes raises $6 million to serve climate-vulnerable farmers.
Basic needs and security. Edquity raises seed funding to help colleges provide emergency student aid.
Well being. Melinda Gates’ Pivotal Ventures and Techstars seek to accelerate longevity innovation.
Fund news. Swedish “impact-first” fund reaches €61 million first close.
The Week’s Talent
Matthew Bishop, ex- of The Economist, is leaving the Rockefeller Foundation to work on a new book and other projects… Sharon Alpertsteps down as president and CEO of the Nathan Cummings Foundation. The board will conduct a national search… Richard Woo, ex- of the Russell Family Foundation, joins Tiedemann Advisors’ Impact Advisory Council… Kim-Andrée Potvinjoins Bamboo Capital Partners as head of operations from Landolt & Cie.
Arabesque S-Ray addsTodd Arthur Bridges as global head of sustainable investing and ESG research and Manuel Piñuela as CTO… Annie Olszewski, previously of The Wing and the Global Impact Investing Network, joins Impact Capital Managers as director of programs… Margot Brandenburg, ex- of Rockefeller Foundation and founder of MyStrongHome, is joining the Ford Foundation’s mission investments team as senior program officer… Enclude Capital’s Laurie Spengler is stepping down as CEO, a year after the firm’s acquisition by Palladium.
The Week’s Jobs
Quona Capital is looking for a platform and cross-border investment associate in Washington D.C… Accion Venture Labseeks an India investment officer in India or Washington D.C… Liquidnetseeks an impact investing graduate associate in New York to support its Capital for Good project… Boundless Impact Investing is looking for an expert in sustainable working forest management… Cowen Investment Managementseeks an analyst or associate for its sustainable investments team.
Community Capital Managementhas an opening for an impact research and reporting associate in Boston or Weston, Fla… The Global Impact Investing Network is looking for a manager in New York to drive adoption of its IRIS+ and impact measurement program… Tesla is scouting for a local government policy advisor in Fremont, Calif… The Decolonizing Wealth Project seeks a program manager in New York… Impact investor Snowball is hiring an investment analyst in London… Credit Suisse has an opening for an impact advisory associate in Zurich.
Thank you for reading.
— Jan. 10, 2020