Asia | September 1, 2017

Women rising in Southeast Asia, impact IRAs, financing water infrastructure, smarter Singapore

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Greetings, ImpactAlpha readers!

#Featured: Open Mic

Closing the gender capital gap in Southeast Asia. Investing in women pays economic dividends. Yet seven in 10 women-led small and medium-sized enterprises in global growth markets are unserved or underserved by financial institutions. The annual financing gap of nearly $70 billion in East Asia and the Pacific alone is an opportunity for impact investment funds like Patamar Capital, which has launched a fund and accelerator for companies led by women in Vietnam, Indonesia and the Philippines, and the Small Enterprise Assistance Fund, which this year established the Women’s Opportunity Fund to make investments of up to $2.5 million in the three countries. Both are partners of Investing in Women, an initiative of the Australian government launched last year to establish new investment vehicles and help de-risk investments in early-stage women-led businesses.

Investing in Women’s B. James Soukamneuth lays out the case in “Investing in Women: Closing the Gender Capital Gap in Southeast Asia,” on ImpactAlpha.

ImpactAlpha is proud to be a partner of the 3rd Sankalp Southeast Asia Summit 2017, Sept 19–20 at Jakarta, Indonesia. Register here.

#Dealflow: Follow the Money

Prodigy Finance raises $240 million for international student loans. As students go back to school, universities are keenly aware that international students studying in the U.S. contributed $32 billion to the economy last academic year. London-based fintech startup Prodigy Finance is trying to make it easier for students in emerging markets to pay for top international degrees. Since 2006, Prodigy has helped 7,100 students in 118 countries get $325 million in student loans. Four out of five of Prodigy’s users are from emerging markets. Prodigy’s credit risk model focuses on students’ earning potential, not their savings (see, “Investing in HENRYs to boost the supply of tomorrow’s leaders”). The latest financing round includes $40 million in Series C equity funding, led by Index Ventures, Balderton Capital, and AlphaCode, an African tech accelerator. The round includes a $200 million line of credit from an unnamed bank.

Aliada’s job platform for Mexico’s domestic workers attracts new financing. The tech startup launched in 2015 to connect households and businesses with professional cleaners and improve working conditions for Mexico’s domestic workers. Aliada offers workers using its site above-market wages and access to financial services, a first for many of them. It also allocates 5% of profits to an education fund for workers’ children. The undisclosed funding round was led by Mexican impact investor Promotora Social Mexico, with participation from VARIV Capital, Capital Invent, Dila Capital, and Gentera Group. Aliada’s Rodolfo Corcuera says more than 2,000 workers have used the service, tripling their average income.

Swell adds “impact IRAs” to digital investment platform. Swell, a subsidiary of Pacific Life insurance firm, that calls itself a “rules-based investment platform,” not a robo-advisor, is offering an impact-focused Individual Retirement Account for tax-advantaged retirement savings. “This was definitely one of the most demanded products,” Swell’s Dave Fanger told ImpactAlpha. Customers can open a Swell IRA for as little as $50 and roll over existing IRAs and other retirement plans. Seventy percent of it retirement account-holders are 25 to 44 years old. Swell launched in May, offering U.N. Sustainable Development Goal-aligned investment portfolios for people with as little as $500 to invest. The average account balance is about $4,000 across its investment portfolios.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

Cities seek investment capital for $9.5 billion in water infrastructure projects. We didn’t need World Water Week to remind us that too little and too much water can both be problems for fast-growing cities. Cities like Chennai in China, which in December 2015 experienced its worst rainfall in 100 years, are now building out urban water infrastructure to boost resilience through conservation education, new stormwater management systems and other green infrastructure. Quito, Ecuador, is looking for $800 million to build three hydropower stations and address contamination in rivers. Eighty cities are currently seeking $9.5 billion for 89 water management projects, according to a new report from international non-profit CDP with infrastructure firm AECOM and backed by Bloomberg Philanthropies. Latin America is a center of urban water project finance, with cities seeking $6.7 billion. Projects in North America cities seek $2.7 billion (even before Hurricane Harvey). Morgan Gillespy, head of CDP’s water program, says cities and companies are facing up to the threat of flooding, “putting the tipping point for a sustainable economy in reach.” The McKinsey Global Institute estimates $7.5 trillion of water-related investment will be needed globally in the next 15 years.

#2030: Long-termism

Smart Singapore is getting even smarter about education. We spill a lot of digital ink on ImpactAlpha about tech startups solving educational challenges and financing innovation to fill education funding gaps. But education is still mostly a public responsibility. Singapore, widely viewed as having one of the world’s best public school systems, is doubling down. “The world is experiencing global uncertainties, technological disruptions, and contestations of values, all at an increasing rate of change,” says Singaporean academic and author Pak Tee Ng. Although Singapore’s education system is robust, Ng told C. M. Rubin of the Global Search for Education, “it is changing to ensure that students have what it takes to meet the challenges of such a context and future.”

Singapore stands atop the OECD’s Pisa rankings, a global study of quality, equity and efficiency in school systems. Nearly every adult in Singapore can read. Known for its structured and efficient classrooms, Singapore now wants to make learning more joyful, says Ng, “So that students develop an intrinsic desire for lifelong learning” and are better prepared to deal with a complex future. The country is also introducing more experiential learning, like sports, outdoor adventures, uniformed groups, and art to help students develop values, resilience and entrepreneurial skills.

Singapore spends roughly 20% of its national budget on education (the U.S. as a comparison spends about 6%), the upper bound of what the UN calls for to fulfill SDG №4 (“Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all”). The system tracks with national level priorities to produce young adults that are economically productive and civically-minded. Ng, an associate dean at Singapore’s National Institute of Education, is the author of Learning from Singapore: The Power of Paradoxes, which tracks Singapore’s journey to educational excellence. “What if teachers are seen as nation builders and that the country is committed to recruit and develop good teachers and school leaders?” she asks. “[Singapore’s} experience… shows the importance of national commitment to educational excellence — resource investment, long-term planning, judicious implementation, continuous professional development and teacher empowerment.”

Onward! Please send any news and comments to [email protected].