TGIF, Agents of Impact!
🗣 Down to earth. The stock market plunge, in technology stocks in particular, is spurring soul searching in venture markets. Valuations are dropping. Layoffs are mounting. Expectations, at least for the moment, are resetting. “Growth at any cost is DEAD, the new strategy needs to be profitable growth,” tweeted former Softbank investor Marcelo Claure. “It’s time to build real companies, with real technologies, to solve real problems,” added Lux Capital’s Bilal Zuberi. That would be a philosophical shift for many venture firms and tech founders, but not all. “It’s like everyone is becoming a woman or minority founder. I love it. Welcome!” tweeted Brian Brackeen of Lightship Capital. He clarified: “Because of bias, they couldn’t assume the next check. They have operated this way from day one.”
Necessity breeds innovation: In overcoming racial and gender bias. In operating in high-impact sectors. In overlooked geographies. HomeStake Venture Partners is using revenue-based debt and equity to invest in rural food and health businesses. Common Future and Uncharted are merging to expand character-based lending and other community-wealth building tools to more communities. Kevin Jones is connecting neighbors to fill capital gaps in their own cities (see Agent of Impact, below). On next week’s Call, we’ll dive deep into inclusive alternatives to venture capital, with Kim Folsom of Founders First, Jonny Price of Wefunder and other financial innovators (don’t miss it!)
The market shakeout may fuel the incipient backlash against ESG and impact investing. But there’s no escaping the responsibility of investors and business executives in building a fairer and more resilient society, as Michael Musuraca and Jerome Tagger of Preventable Surprises argued this week in a guest post for ImpactAlpha. The politics of corporate responsibility are on display in the cases of McDonald’s and Disney and Twitter. Financial elites wrestled with such questions this week at the Milken Institute Global Conference, reports Rachel Reilly of Aces and Archers. ImpactAlpha is tracking the dynamics across off-grid solar in Africa and green affordable housing in the U.S. If the new economic reality really does favor real companies solving real problems, Agents of Impact are here to help. – Dennis Price
🎧 Impact Briefing. ImpactAlpha’s David Bank joins host Brian Walsh to talk about alternative financing models for startups and to share his conversation with Kevin Jones from the Neighborhood Economics gathering in Indianapolis. Jones is this week’s Agent of Impact. Plus, the headlines.
- Listen to this week’s episode, and follow all of ImpactAlpha’s podcasts on Apple, Spotify or wherever you listen.
👋 Next week’s Call: Startup financing for the rest of us. There’s more than one capital market for startups and small businesses. As rates rise and growth slows, inclusive and non-extractive financing models can help build real companies with real revenues. Agents of Impact who will share innovative structures on Call No. 42 include Kim Folsom of Founders First Capital and Wefunder’s Jonny Price, along with Astrid Scholz of Zebras United and Armillaria, Ron Boehm of Boma Investments, Andrea Armeni of Transform Finance, and Kevin Jones of Neighborhood Economics (see below). Explore alternatives to venture capital for startups and small businesses, Tuesday, May 10 at 10am PT / 1pm ET / 6pm London.
- Answer The Call. RSVP today.
The Week’s Agent of Impact
Kevin Jones, Neighborhood Economics: Turning strangers into unlikely allies. Jones played an early role in convening the disparate, and sometimes unruly, tribes of impact investing under the tents of the SOCAP conference, which was sold in 2017. Kevin Jones was in Indianapolis this week, again bringing together “strangers who could become unlikely allies” in shifting capital and power. This time, Jones is trying to mobilize local church endowments for investments in neighborhoods and entrepreneurs that don’t often see that kind of capital. The Neighborhood Economics gathering was designed as a workshop for church officials, foundation executives and “localists – people who want to invest to create a community that their grandchildren can come back to,” Jones tells ImpactAlpha. “Those are three kinds of capital, and they’re learning to work together on local problems,” including Indianapolis’ high rates of eviction. Catalytic capital, he says, “is the capital that’s needed for the folks that don’t typically get it.”
Jones grew up in the Bay Area, cut his teeth as a newspaper publisher in Mississippi, made some money in the dot-com era, built and sold SOCAP, and now lives on a farm in Asheville, N.C. “I’m a serial entrepreneur, successful eight times with my wife,” Rosa Lee Harden, says Jones. “Unsuccessful the time I didn’t have her in the business.” In North Carolina, Jones and Harden have helped pilot a $2.8 million Community Equity Fund to backstop businesses that don’t qualify for loans. “The big problem is that there are all these loan funds trying to reach marginalized communities, and they don’t get out the door,” Jones says. That’s because the businesses they’re trying to support don’t have early equity capital, like friends and family funding. The solution: “Equity before debt, that’s paid back by revenue share.” Jones is excited about Neighborhood Investment Trusts, which are “really, neighbors investing in neighbors to save Black Wall Streets from predatory hedge funds that want to displace them,” he says. He has helped create trusts in Baltimore, Chicago, Seattle, Kansas City, Los Angeles, Atlanta and elsewhere. “All these isolated innovations are discovering that they have so much in common that they didn’t realize,” says Jones. “And when they find that they’re not alone, they get really energized.”
- Keep reading, “Kevin Jones, Neighborhood Economics: Turning strangers into unlikely allies,” by David Bank on ImpactAlpha and share the story on Instagram.
The Week’s Dealflow
Deal spotlight: Climate resilience. Little by little, more investment capital is targeting climate resilience in emerging markets. Lightsmith Group, which closed a $186 million climate resilience fund earlier this year, backed Brazil’s Solinftec to help farmers in Latin America “become more responsive to changing weather and climate conditions,” Lightsmith’s Sanjay Wagle told ImpactAlpha.
- Africa’s pipeline. A partnership between African Guarantee Fund and Ecobank will provide $2.6 million in loans for small businesses in the green economy, mainly those led by women… FSD Africa will invest $3.3 million in a four-year initiative with BFA Global to back high-growth startups fostering resilience in climate-vulnerable communities in Africa… Washington, D.C.-based C-Quest Capital secured a $10 million line of credit from FMO and BIX Capital to distribute clean cooking stoves to seven million households in 15 African countries by 2026.
Financial inclusion. Line secured $25 million in equity and debt funding to provide financial services, such as instant cash for emergencies, for underserved Americans… Open secured $50 million for small business services in India… Xepelin raked in $111 million for financial services for small businesses in Latin America… BlueOrchard’s InsuResilience Investment Fund will acquire a minority stake in Phnom Penh-based Forte Insurance Group… African trade tech startup Norebase scored $1 million in pre-seed financing to help businesses expand in Africa… ModusBox scored $7.5 million to build fintech infrastructure to help community financial institutions better reach customers.
Clean energy. Dutch solar developer SolarDuck snagged €4 million to build offshore solar farms that float on water… Encore Renewable Energy snagged a $20 million senior loan to expand its distributed solar and storage business… KKR launched Aster Renewable Energy to develop and operate solar, wind and energy storage projects in Asian markets… Sealed snagged $30 million for energy retrofits for homeowners… Sense raised $105 million to help homeowners reduce energy costs… Shell agreed to purchase Indian renewable energy producer Sprng Energy from Actis for $1.5 billion.
Inclusive economy. BUILD fund raised $60 million for small and growing businesses in Africa… Indian edtech venture iDreamCareer raised $1.6 million to help underprivileged students launch careers… RideTandem scored $2.2 million to alleviate ‘transport poverty’ for blue-collar workers in the U.K.
Climate finance. Carbon Collective, an online advisory firm for investing in climate change, raised $2.2 million in a seed financing round… $55 million is poured in for Brimstone to decarbonize cement.
Electric vehicles. Pyka raised $37 million to build zero-carbon and electric autonomous aircraft… Stellantis will spend $2.8 billion to increase production of electric vehicles in Canada.
Gender alpha. Tanzania’s NMB Bank floated a “gender bond” on the Dar es Salaam Stock Exchange, the first-ever to list on an African exchange.
Investing in health. Ruth Health raises $2.4 million to scale its pre- and postnatal telehealth platform… WILE, a hormonal wellness brand for women, raised $3 million in a round backed by Serena Ventures.
The Week’s Talent
ImpactAlpha’s David Bank celebrates his birthday this weekend (Happy birthday, David!)… Venture capitalist John Doerr and his wife Ann are giving $1.1 billion to establish the Stanford Doerr School of Sustainability… Hillbilly Elegy author and former Rise of the Rest investor J.D. Vance won Tuesday’s Republican primary for Ohio’s U.S. Senate seat (see, “JD Vance, the impact fund manager his partners would rather forget“)… Lavonya Jones of Morehouse College is named director of the Georgia Social Impact Collaborative.
Christian Okoye, ex- of Sidewalk Infrastructure Partners, joins Generate as an investor in emerging technologies… Brooke Tomasetti joins Carbon Collective as director of financial education and community… Bridgespan partner Chris Addy, who advised TPG’s Rise Fund, relocates to Singapore to oversee the firm’s Asia-Pacific work… Gender and racial equity investment advisor Muthoni Wachira joins MarketForce as chief of staff… Alex Nisichenko, ex- of Blackstone, joins TowerBrook Capital as managing director to build the firm’s impact investing activities in North America.
The Week’s Jobs
Croatan Institute is hiring a remote analyst and associate… The Predistribution Initiative seeks a development consultant… Sorenson Impact is looking for a senior associate for impact measurement and evaluation in Salt Lake City… Acumen America is hiring an investment manager in San Francisco… Nuveen seeks a vice president of ESG compliance in New York… New Markets Support Company is hiring a fund modeler and analyst to join its fund management team.
The Ford Foundation is looking for a program assistant in Beijing… KPMG seeks an associate director and editor for environmental, social and governance in the U.S… ISS ESG is looking for a global head of alternative research and ESG thought leadership in New York… CapShift is hiring an impact investment associate in the Boston area… BerlinRosen is on the hunt for a social impact financial communications account director in Los Angeles.
That’s a wrap. Have a wonderful weekend.
– May 6, 2022