Entrepreneurship | January 30, 2018

Underestimated entrepreneurs, Tyson’s alt-meat play, Cape Town water, Dutch impact management

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Greetings, ImpactAlpha readers!

#Featured: The New Revivalists

The VC taking cold calls from underestimated entrepreneurs. Arlan Hamilton created Backstage Capital in 2015 to address the implicit — or is it systemic? — bias that prevails in the venture capital industry. Less than one in 10 venture capital deals go to women, people of color, and LGBT founders. But where other VCs see a pipeline problem, Arlan Hamilton sees an investment opportunity, as she explains in the second in our series on the New Revivalists, the people, places and policies reviving entrepreneurship — and the American Dream.

Hamilton — herself gay, female and African American — is an anomaly in venture capital. Rather than rely on the ‘warm introductions’ that may limit who makes it into the deal pipeline, Hamilton allows any entrepreneur to apply for funding online. “I can pick up on things with underestimated founders that show potential, where other people might see challenge,” Hamilton told Amy Cortese for ImpactAlpha.

Backstage Capital’s two funds total just under $5 million. But Hamilton has attracted funding from VC heavyweights like Marc Andreessen and Chris Sacca. She and her team have deployed $3 million in 64 companies, two-thirds of them outside of California. What will it take to close the funding gap for underrepresented entrepreneurs? “We’ll see two or three big exits by women, people of color that will just be in your face,” predicts Hamilton. “That will make other investors do their lemming thing and follow suit. I don’t mind how it happens.”

Read, “Arlan Hamilton: The VC taking cold calls from underestimated entrepreneurs” by Amy Cortese, on ImpactAlpha.

Arlan Hamilton: The VC taking cold calls from underestimated entrepreneurs

New Revivalists, from ImpactAlpha and Village Capital, profiles the people, places and policies reviving entrepreneurship in America. View the ongoing series here.

#Dealflow: Follow the Money

Tyson Foods invests in lab meat company Memphis Meats. Memphis Meats, which produces lab-grown meat from animal cells, already has some big name investors. Bill Gates, Richard Branson and Cargill all backed the company’s $17 million Series A round last year. Now, meat industry giant Tyson Foods joins them with its investment of an undisclosed amount via its venture fund, Tyson Ventures. Memphis Meats is Tyson Ventures’ second investment, and follows its backing of vegetarian meat company Beyond Meat’s $55 million round in December. Another meat industry leader, Cargill,made its first lab-grown meat investment in Israeli startup SuperMeat in January.

Moeda brings blockchain to rural Brazil. Moeda launched last year out of a UN hackathon with the idea of using blockchain to improve efficiency in small business lending. It lends to enterprises contributing to the UN Sustainable Development Goals, including energy access, financial inclusion, sustainable agriculture and food security. Moeda has allocated $1.5 million to invest in rural Brazilian businesses through a partnership with Unicafes, an agricultural cooperative network. In August, Moeda raised $20 million through an initial coin offering and allocated a portion to a revolving social impact fund. Through Unicafes’ network, Moeda plans to invest between $6,000 to $520,000 in 18 small businesses, including a bakery and organic agri-processing factory.

Freeformers raises £1.2 million to support workforce development.Freeformers, a London-based startup, offers training and coaching to help job seekers “increase their chances of being employable, successful and productive in a digital world.” The £1.2 million ($1.7 million) investment was made by impact investment firm Impact Ventures UK. Freeformers partners with large companies like Barclays and Tesco, a supermarket chain. It offers free training to youth and people from disadvantaged backgrounds. Freeformers recently partnered with Facebook for its “Community Boost EU” program, which will teach digital skills to 300,000 people in six European countries.

See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to [email protected].

#Signals: Ahead of the Curve

Cape Town offers an urgent test case for investments in water. Cape Town has just over two months of water reserves left for its four million residents. In the third year of a severe drought, the city has become a global symbol of the imminent threat of climate change, as city officials scramble to prepare for “Day Zero.” Locals complain that clear warnings of a crisis were ignored. Worse, infrastructure improvements that might have helped — new dams, recycling facilities and significant desalination capacity — were not pursued soon enough. Drilling has started in one of the city’s aquifers. Two desalination plants could be up and running in February.

Longer term, Cape Town’s crisis may position it as a leader in water innovation for an increasingly water-constrained world. “We need to shift our thinking from crisis- to opportunity-mode,” says Claire Pengelly, a water analyst at GreenCape, a local advocacy organization. “We need to consider how to best mobilize investment from the private sector: households and businesses.” Yes, that means water prices are likely to go up “Water is an expensive resource to capture, store, transport, treat and manage,” but it is generally underpriced for residents and businesses, she says.

Private investment in small-scale infrastructure and new technology could include brackish or wastewater treatment solutions for farms, smart metering and auditing technologies to track and cut leakage, and “permeable pavements” that capture and store rainwater when it does fall, according to a GreenCape report last year. There are also private investment opportunities in larger infrastructure, like water recycling plants for industrial users. “Awareness is growing that water is vital, and not having adequate supplies of it can have dire consequences,” Pengelly says. “Let’s move away from the tactic of scaring people, and towards responsible citizenship.”

#2030 Finance: Long-termism

Dutch pension fund moves from impact alignment to impact management. How do you turn a supertanker? By degrees. Institutional investors that last year declared their “alignment” with the 2030 Sustainable Development Goals and other impact frameworks are now confronting the hard work of actually managing their investments toward those goals. PGGM, the Dutch pension fund manager with $272 billion under management, took the plunge and mapped its investments with the help of the Impact Management Project, an industry-wide effort to agree on the fundamentals of measuring and managing impact.

“Right now, we’re just accounting for and trying to quantify impact. The next step is trying to use this information to maximize impact,” Piet Klop, PGGM’s senior advisor for responsible investment, told ImpactAlpha. He said the organization is undergoing a culture-shift. “It’s so easy to be cynical about the baby steps were taking, but it’s a pretty special thing for a pension fund to even care about impact. It’s quite something to hold ourselves accountable and pursue measurement, and eventually management, of impact.”

Keep reading “Dutch pension fund moves from impact alignment to impact management,” on ImpactAlpha. And check out all of our SDG and climate finance coverage in 2030 Finance: Investors meet the global goals.

Dutch pension fund moves from impact alignment to impact management

Thank you for reading. Onward! Please send news and comments to [email protected]