Impact Finance Bulletin: GIIN launches R3 Coalition, L’Oréal creates ‘unprecedented’ solidarity fund

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Our regular impact finance bulletin brings you the latest funds, deals and programmes in the world of investing for good. Read on for some of the past month's headlines, and scroll down for more detail.

Impact Finance Bulletin

 

Global: GIIN and partners form Response, Recovery, and Resilience (R3) Investment Coalition 

The Global Impact Investing Network announced a new initiative that aims to mobilise and coordinate impact investors to quickly fill financing gaps in tackling the coronavirus crisis.

The R3 Coalition was driven by calls from GIIN members wanting to see a “market-wide” response to the crisis, which is “already having a disproportionate impact on the most vulnerable populations” and is expected to worsen existing inequalities, said CEO Amit Bouri.

The new initiative aims to share market intelligence in what’s “an incredibly dynamic situation”, Bouri told Pioneers Post, and to address financing gaps, so that those with capital to invest can be easily connected with and learn from those with on-the-ground knowledge of the market. With travel and face-to-face meetings limited or impossible, “we need to collaborate bigger and better”, he said. An example: exploring ways of sharing due diligence (and increasing confidence to do so) among investors who can’t meet potential investees face to face. There’s also an outreach function: bringing insights to “people who can amplify action” – including other investor groups, donor agencies and philanthropists.

The new coalition, expected to run for at least two years, is backed for the first six-month period by foundations including David and Lucile Packard Foundation, Ford Foundation, John D. and Catherine T. MacArthur Foundation, Open Society Foundations, The Rockefeller Foundation, and Sorenson Impact Foundation.

 

Global: Gates Foundation-backed Covid-19 Young Leaders Fund makes first grants

The first grantees have been announced from a new fund – a partnership of One Young World, the Bill and Melinda Gates foundation and United Way – that aims to help young leaders fighting the effects of Covid-19.

An initial $175,000 has gone to five young people addressing problems in local communities, in Malaysia, Fiji, Cameroon, the UK and India.

One Young World research among more than 1,000 young people globally found that two thirds don’t believe their government has adequately addressed their concerns regarding the coronavirus. Seventy-two percent said they had volunteered some of their time to help others.

Jayathma Wickramanayake, the UN Special Envoy for Youth said: “The Covid-19 Young Leaders Fund is exactly the bold action that is required to champion young people who are so bravely combatting the coronavirus on the frontlines.”

Ella Robertson, managing director of One Young World, said: “Young leaders are part of the most connected, informed and resourceful generation in human history. They have proved this time and time again, with their capacity for innovation, understanding of digital tools and high levels of social responsibility. We now need to ensure they have the funds needed to tackle some of the largest issues created by Covid-19.”

The fund aims to make hundreds of thousands of dollars available. Applications are open on the One Young World website.

 

 

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Global: L’Oréal creates €50m endowment fund for women and €100m green investment fund

Beauty giant L’Oreal – which owns 36 brands and whose sales totalled €30bn last year – announced what it called an “unprecedented” social and environmental solidarity programme.

L’Oréal for the Future consists of a €50m endowment fund to back organisations that support highly vulnerable women – including those suffering the results of Covid-19 – and a €100m environmental impact investing fund. The latter will be split equally between regeneration of damaged natural ecosystems, and efforts to prevent climate change (linked to the circular economy, with a particular focus on recycling and management of plastic waste).

Jean-Paul Agon, chairman and CEO of the 100-year-old firm, said: “Over the coming months, our societies will face social crises giving rise to situations of great human suffering, particularly for the most vulnerable. At the same time, we are fully aware that environmental challenges are increasingly pressing. It is essential not to step back from the sustainable transformation that the world needs. We therefore wish to reaffirm our commitment to the environment and to the preservation of biodiversity, and to help mitigate the social crisis for women. These two causes reflect the values and the historic commitment of L’Oréal.”
 

Global/Asia: ANDE awards $1.2m to eight projects helping women-led businesses

The Aspen Network of Development Entrepreneurs – with partners USAID and Visa Foundation – has announced the first eight grantees of its Advancing Women’s Empowerment Fund.

The fund aims to address the significant gap in access to finance for women-led small and growing businesses, currently estimated by the International Finance Corporation at nearly $320bn in developing countries. ANDE’s research has found that women-led businesses are less likely to apply to acceleration programmes, and those that do receive this growth-oriented support are still less likely than male counterparts to secure equity financing.

Each winner will receive up to $150,000 over one year to test models that catalyse investment into women-led small and growing businesses, over two years, in south and southeast Asia. Details of grantees here.

 

Africa: Open Society Foundations commit $15m to two women-led gender equality funds

Open Society impact investing arm, the Soros Economic Development Fund, has committed $15m to two investment funds that advance economic and gender equity.

The investments – $10m in Alitheia IDF and $5m in Women’s World Banking Capital Partners II, managed by the nonprofit Women’s World Banking – aim to amplify women’s voices while contributing to their economic empowerment. The transactions are two of a batch of social impact investments totalling $33m that SEDF has made since March, across gender, climate adaptation, and human rights.

Alitheia IDF, a Nigerian/South-African private equity fund, will invest between $1m and $5m into small and medium-sized enterprises in southern and western Africa that boost gender equality. New York-headquartered Women’s World Banking Capital Partners II will invest $5m-$10m in financial services companies in emerging markets, aiming to advance women’s financial inclusion. Both funds are also women-led themselves. 
 

Kenya/Nigeria: Novastar Ventures raises $108m for African startups serving low-income customers

Nairobi and Lagos-based investment firm Novastar Ventures closed its second Africa fund at $108m, Disrupt Africa reports. Its first fund of $80m, together with a $12.5m co-investment facility, backed 15 companies. 

The firm primarily invests in education, healthcare, agri-businesses, food, and water sectors which target low-income communities. CDC Group, European Investment Bank, Dutch Good Growth Fund, FMO, Proparco, Norfund and SIFEM helped to capitalise the new fund. The second fund sees it expanding to cover west as well as east Africa.

On the launch of the Africa Fund II in 2018, Novastar co-founder and managing partner Steve Beck said the vision was “ to see sub-Saharan Africa populated with a growing number of high-capacity entrepreneurs building innovative businesses that serve the common good.”

He added: “We aim to demonstrate that commercial venture investing can generate both large-scale social benefits for the mass market and attractive financial returns for investors, thereby unlocking more capital to fuel entrepreneurship in the region.”

 

Ethiopia: RENEW makes follow-on investment in Deliver Addis food delivery firm

The US/Ethiopia-based impact investment firm RENEW has made a third investment in Roadrunner Technology Solutions, a partner of food delivery firm Deliver Addis, in Addis Ababa.

Since the initial investment by RENEW’s Impact Angel Network, Deliver Addis’ daily deliveries have grown 630%. In response to increased demand caused by the Covid-19 outbreak, it has expanded services, and now provides food from over 100 restaurants, plus groceries, flowers and other consumer products.

This third investment in Roadrunner and Deliver Addis will increase the companies’ capacity, enable them to reduce prices and increase efficiency to expand market share and offer new products and services. 

Matthew Davis, RENEW CEO, said: “Not only is the need for such services of national importance to control the spread of Covid-19, but it is also keeping hundreds of people employed through Deliver Addis and the small businesses they support.”

RENEW’s work in Ethiopia was piloted with USAID, and is now financially supported by the government of Canada. The partnership aims to promote sustainable job creation for low-skilled workers by supporting SMEs in Ethiopia.

 

Netherlands/Africa: Dutch Good Growth Fund invests €120,000 in ‘impact sourcing’ tech firm

Tunga, a tech company with a network of more than 400 software developers in Egypt, Nigeria and Uganda, has received a loan from the Dutch Good Growth Fund to build further capacity.

The investment of €120,000 will help Tunga to consolidate its African operations – including sourcing new talent to grow its pool to 1,000+ developers – and to grow its client base in Europe. Tunga is investing a further €100,000 itself in the expansion.

Tunga was founded in 2015 with the support of Dioraphte, Oxfam, the DOEN Foundation, Edukans and Triodos Bank.

The DGGF targets Dutch entrepreneurs that do business abroad and intermediary funds that invest in local SMEs. 

 

UK: DEFRA, Esmée Fairbairn back green projects in bid to boost private sector investment in environment 

Four projects that will protect and restore valuable habitats have been selected to receive funding, as part of a pilot scheme to encourage private sector investment in the natural environment.

Projects will get grant funding from the Department for Environment, Food and Rural Affairs, the Environment Agency and Esmée Fairbairn Foundation to support their development, complete business plans to attract private sector investment, and deliver long-term environmental and financial returns. The fourth partner, Triodos Bank UK, sourced and evaluated successful projects.  

The four grantees are involved in restoration of the Caen wetlands; natural flood management in the Wyre catchment in Lancashire; reducing nitrate pollution in Poole Harbour; and restoration and conservation of peatlands in the Pennines. 

The government has committed £10m to help natural environment projects to attract private sector investment. Environment minister Rebecca Pow said the country was “taking a leading role” in tackling climate change and biodiversity loss, but that the scale of the challenge made it “crucial that environmental projects have the tools they need to attract private sector investment alongside our government support”. She added: “Ensuring we have a green recovery from coronavirus will be especially important at this time, and this collaboration provides vital financial expertise and support to create funding models which can be used by other projects up and down the country.”  

Caroline Mason, CEO of Esmée Fairbairn Foundation, said “bold action” – and more money – were needed. “With these grants we hope to explore both the potential and the limits for generating revenue to deliver environmental outcomes. If we understand the models that can make money and can be funded through private capital, we can raise additional money for nature and make sure that public and philanthropic funding goes where it’s most needed.” 

 

UK: CAF Venturesome raises £4m for community-led housing

CAF Venturesome has raised around £4m, from both existing funders and new individual philanthropists, for its newly-launched five-year Community Led Housing Fund.

The social investor has been lending to community-led housing projects for more than a decade. 

Anne-Helene Sinha, senior investment manager, said: “We believe that this fund will be a vital source of funding, especially since the closure of the Government’s Community Housing Fund, and look forward to working with the sector for many more years.” 

The fund opened for applications in February and has received 30 enquiries to date. Two social investments have been approved, with loans totalling £89,000 matched by grants from Power to Change. 

 

UK: Northstar Ventures backs Gateshead counselling service to expand and pivot online

The North East Social Investment Fund, from venture capital firm Northstar Ventures, has made a second investment in North East Counselling Service.

The £130,000 will help the community interest company to continue a planned expansion as well as supporting its response to the Coronavirus pandemic, which includes pivoting service delivery to offer counselling services online. The investment includes a repayment holiday. 

Since its foundation North East Counselling Services has provided counselling and therapy to over 10,000 clients in Gateshead and South Tyneside. Alison Collins, investment manager at Northstar Ventures, said: “We’ve been impressed with NECS growth and vision for some time, and are pleased to be supporting this pivot in their offer which means that they can continue to run their vital services, and even more people can benefit from them when they are very much needed.”

The North East Social  Investment  Fund invests £100k to £1m in social enterprises and is backed by Big Society Capital, Northern Rock Foundation, Esmée Fairbairn Foundation, Joseph Rowntree Foundation and the Northstar Foundation.
 

UK: Bristol’s £10m City Fund makes first impact investment in money advice service

Bristol City Funds, a £10m investment fund that aims to tackle the causes and effects of inequality in the city, has made its first investment.

Talking Money, a financial advice service, secured £150,000, which will provide working capital to develop a long-term “systems thinking approach”, expected to lead to better service for clients and attract new funding streams for the organisation.

Marvin Rees, the Mayor of Bristol, said the investment would be “a real lifeline for families in Bristol”, particularly given the economic effects of Covid-19. He added: “City Funds, and frontline charities like Talking Money, are key to Bristol rebuilding a sustainable and inclusive economy, using the UN Sustainable Development Goals and the Bristol One City Plan as a framework.”

Bristol City Funds aims to bring local businesses, communities, funders and the public sector together to share resources and expertise, and to raise money locally and attract national finance to the city.

 

Cambodia: Nexus for Development lends $220,000 to sanitation venture in rural Cambodia

Singapore-based Nexus for Development approved a $220,000 loan to TapEffect, to construct and operate a new piped water station and pipeline in Banteay Meanchey province in rural Cambodia. The loan will support the project’s capital expenditure and working capital needs.

TapEffect aims to increase access to affordable, clean and drinkable tap water for households by ensuring piped water networks are designed, built and operated sustainably.

The investment comes from Nexus’ Pioneer Facility, a  fund that provides scale-up capital, via working capital or capex loans, to enterprises that offer sustainable energy and clean water solutions to underserved populations in Southeast Asia.

Nick Boerema, TapEffect CEO, said: “The Nexus Pioneer Facility loan has been instrumental in bridging capital requirements for TapEffect to bring piped water to an area of 14,000 people including 10 schools and two rural health centres. This is important for the business as we scale our solution for access to clean tap water across Cambodia.”

 

Peru: Acumen reinvests in “innovative” online learning platform Crehana Education 

Acumen Latam Capital Partners has made a follow-on investment in Crehana Education, an online learning platform that helps students to develop creative and digital skills.

ALCP acted as the leading investor in an undisclosed round, with participation of existing investors (Dila Capital and Mountain Nazca Mexico) plus a new investor, Edventures – the venture arm of Hochschild Group.

Crehana Education has trained more than 2 million students in 25+ Spanish-speaking countries, enabling students to take courses that match current market needs and to access qualified jobs. 

The proceeds of this round will support Crehana’s plans to grow its market reach in the region, as well as to grow its recently launched B2B channel, which provides training in digitalisation to Latin American companies.

Santiago Álvarez, managing partner of ALCP, said that innovative online learning models like Crehana’s would be “catalytic” to allow people to continue studying while maintaining social distancing, and in high demand in the coming years “as students seek more affordable and pertinent education models that help them access better employment opportunities”.

 

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Header image credit: L'Oreal

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