fisheries | March 22, 2018

Wild fisheries investing, Jay Z’s alternative to bail, community capital magnets and opportunity…

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Greetings, ImpactAlpha readers!

#Featured: ImpactAlpha Original

Managing wild fisheries sustainably can mean bigger, not smaller, catches of tasty seafood. That creates an opportunity for long-term investors willing to invest through the transition period required for depleted fisheries to recover. Three fund managers who are early adopters of such a strategy, along with the Environmental Defense Fund, have developed “Principles for Investment in Sustainable Wild-Caught Fisheries.” The principles require fisheries to meet national and international fishing laws, analyze environmental risks, and be transparent in their sourcing.

An estimated $200 billion is needed to finance the restoration of fisheries globally. Closing the capital gap requires more of everything: more capital invested by more funds in more investment-ready deals. Among the few sustainable seafood funds of significant size, Encourage Capital, a New York-based impact investment firm that manages Pescador Holdings, has made two investments. Rare, a Virginia-based nonprofit, runs the Meloy Fund, which has raised $17 million of a $20 million target. Althelia Ecosphere, based in London, expects a $50 million first close of its Sustainable Ocean Fund by the end of June. “There’s a lot of interest, but there are also concerns that are holding people back from deploying capital at scale in these markets in a sustainable way,” says Encourage Capital’s Jason Scott. “That’s the gap we hope these principles will close.”

Read “Three seafood funds seek to establish an investment trend in sustainable fisheries,” by Carol J. Clouse on ImpactAlpha.

Three seafood funds seek to establish an investment trend in sustainable fisheries

#Dealflow: Follow the Money

Jay Z and Kapor Capital join $3 million financing “de-carceration” startup Promise. On any given day more than 450,000 people, innocent until proven guilty, are in jail awaiting trial in the US. Those that face nonviolent charges but can’t afford bail are disproportionately black and Latino. Promise, based in Oakland, California, offers an alternative to the current bail system. It is in talks with local government to use its platform, which works with defendants to be sure they appear at court dates, undergo drug testing and treatments, get to classes and meet other obligations. “We can’t fix our broken criminal justice system until we take on the exploitative bail industry,” writes musician and producer Jay Z, whose Roc Nation joined First Round Capital, Kapor Capital, and 8VC to invest in the Y Combinator startup. Promise charges towns and counties as little as $17 per person per day, compared to $85 or more per day for jail time. Other startups, including Pigeonly and Edovo, are tackling family connectivity and education for incarcerated individuals.

NYU and Techstars launch social enterprise competition for education access. Change-minded investors have been slow to back solutions to overcome barriers to higher education in the US, despite soaring student debt and race- and income-based disparities in attaining degrees. The Algorithm for Change competition, hosted by NYU and Techstars, is offering $1.5 million to startups using artificial intelligence, machine learning, and virtual and augmented reality to improve access and achievement for low income, minority and first-generation students. The Gates Foundation is backing the competition, which is open to for-profits, nonprofits and governmental organizations.

Treasury Department awards $120 million to community ‘capital magnets.’ The Trump administration is (again) seeking to ax funding for more than 1,000 community development financial institutions. Meanwhile, the Treasury Department’s Capital Magnet Fund continues to support CDFIs and housing nonprofits that attract capital to distressed communities. The latest round of funding went to 40 housing and community development organizations. The Local Initiatives Support Corporation, or LISC, which was awarded $7.5 million, aims to spur $150 million in community investment. LISC’s past $10 million in Capital Magnet Fund grants have led to $445 million in development funding. The Reinvestment Fund got $4.5 million. The Philadelphia-based CDFI has launched a successful public bond offering and a pay-for-success fund. For each dollar of public funding deployed by The Capital Magnet Fund, more than $10 dollars of private money has been mobilized. The full roster of Capital Magnet Fund recipients is available here.

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

#Featured Event: Total Impact Conference in Philadelphia, April 26–27

Philly’s Circle of Aunts and Uncles makes low-interest loans to local businesses. Activist and entrepreneur Judy Wicks founded a network of three-dozen people to connect aspiring entrepreneurs in under-resourced areas with the capital and experience of retired baby boomers. Designers, chefs, butchers and other local service-providers can now tap the circle for know-how, as well as loans of around $10,000. These business owners need mentoring and connections to customers and suppliers as much as they need money, write Wicks and Katherine Rapin in ImpactPHL Perspectives, a series exploring Philly’s impact economy.

Join ImpactAlpha in Philadelphia, April 26–27, for the Total Impact Conference from Good Capital Project and ImpactPHL. The event will feature tools and opportunities for advisors, families and investors. Register here for a $300 discount with code TI_ImpactAlpha.

#Signals: Ahead of the Curve

States have identified their Opportunity Zones. Now what? Today’s deadline for identifying such zones under a provision of last year’s Tax Cuts and Jobs Act forced tough choices. States were able to choose no more than one-quarter of their low-income neighborhoods for investments that will let investors defer and reduce capital gains taxes. An even tougher challenge is ensuring local residents aren’t displaced by gentrification. In a post on CNN, Kresge Foundation’s Rip Rapson and LISC’s Maurice Jones argue for community plans that support jobs, entrepreneurship, education, health and safety in the same place at the same time. “Each investment reinforces the others,” they write. “Family incomes rise. Businesses flourish. People live better.” Rapson and Jones cite Boston’s Brockton Neighborhood Health Center, which teamed with a family-owned grocery store to build both a clinic and a market on an abandoned corner. Kresge and LISC, along with Morgan Stanley, leveraged New Markets Tax Credits to help finance the project. “Today, that once dark corner is a hub of activity.”
Go deeper:

  • Transform Finance will host a webinar Thursday, March 29 (1:00 pm EDT), with Fran Seegull and John Cochrane of the US Impact Investing Alliance, to discuss how impact investors can shape the tax law opportunity. Register here.
  • Meet John Lettieri and Steve Glickman, architects of the Investing in Opportunities Act. Read, “Turning capital gains into community investments,” in ImpactAlpha’s New Revivalists series.

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