Impact Finance Bulletin: Salesforce Ventures launches second $100m Impact Fund

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

FUNDS

DEALS

ACQUISITIONS & TIE-UPS

 

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FUNDS

 

USA: Salesforce Ventures launches second $100m Impact Fund

CRM giant Salesforce announced a second Impact Fund run by Salesforce Ventures, its global investment arm. The new $100m fund will back cloud companies working on access to education and reskilling, climate action, diversity, equity and inclusion, and providing tech for nonprofits.

Salesforce Ventures’ first impact fund, created in 2017, invested a total of $50m into 25 companies, which have served over 3 million students, and opened up access to new financial services for more than 4.8m individuals. The investor is the only one exclusively focused on backing enterprise cloud startups, and draws on its parent company to offer “value beyond just capital, including go-to-market advice and customer introductions”, according to Claudine Emeott, director of impact investing.
 

Netherlands: Social Impact Ventures rebrands and targets doubled fund size

Amsterdam-based Social Impact Ventures – recently rebranded as Rubio Impact Ventures – closed its second fund at €55m thanks to further backing from the European Investment Fund and insurance firm ASR, plus a €10m seed capital loan from RVO, a government enterprise agency.

Rubio invests growth capital of €1-8m in game-changing ventures, mostly in the Netherlands and northern Europe. Its first €40m fund has made 15 impact investments to date; investees include SkinVision, VanderSat, OLIO and Samasource. The firm will continue to fundraise for a final close and aims to reach €140m under management in 2021. 

Paolo Gentiloni, European Commissioner for Economy, said: “Bright new ideas with a social mission need the right funding to get off the ground. With support from the Investment Plan for Europe, Rubio Impact Ventures in the Netherlands now has up to €100m to give social enterprises a much-needed boost. A welcome contribution to building a more sustainable and socially inclusive economic model.”

Bright new ideas with a social mission need the right funding to get off the ground... Rubio Impact Ventures now has up to €100m to give social enterprises a much-needed boost - Paolo Gentiloni, European Commissioner

 

Australia: Country’s first aid NGO-led impact fund opens for business 

Save the Children (Australia)’s impact investment fund, launched earlier this year in a first for an aid organisation in the country, reached a first close of AUD$6m (£3.3m approx). 

Anchor investors are Save the Children Australia, and QBE Insurance Group; other investors include the McLeod Family Foundation and a number of Save the Children’s board and investment committee members.

The fund will provide equity and debt investments to enterprises in Australia and worldwide that address pressing social and humanitarian issues, and will focus on edtech, e-health and fintech innovations improving the lives of disadvantaged children and families.

Save the Children Australia’s CEO Paul Ronalds said this first raise was “just the beginning”.

“We plan to deploy this fund and then raise a much bigger 20 to 30-million-dollar fund in two to three years’ time.”

 

Global: UN’s first outcomes fund as Unicef takes on Education Outcomes Fund

The Education Outcomes Fund, set up in 2018 by the Education Commission and the Global Steering Group for Impact Investment, is to become an independent trust fund hosted by Unicef. 

The fund is also expanding its operations in Africa and the Middle East, and will design new outcomes programmes for education systems around the world, with a focus on girls, rural populations, children with disabilities and refugees.

Funders will pay for measurable results only once they have been achieved. EOF says this increases financial and operational accountability for governments and for education providers, and ensures that funding is only spent on interventions that work.  

Robert Jenkins, Unicef's global chief of education, said: “The pandemic has upended the education of millions of children and made a global learning crisis even worse.” Even pre-Covid, experts predicted that half of the world’s children would still be failing to learn by 2030. At its peak, the pandemic has disrupted the education of 1.6 billion schoolchildren. “Innovative investment in children’s learning now is critical to safeguarding their future and the future of their communities and countries.”

 

UK: UnLtd & Comic Relief partner on £5m matched fund to support social entrepreneurs into recovery

UnLtd, the foundation for social entrepreneurs, has secured £10m from Comic Relief, with half from the Department for Digital, Culture, Media & Sport’s matched funding scheme.

UnLtd will provide £5m in grants to social entrepreneurs over the next six months, plus two years of follow-on support. Over 50% of grants will go to Black, Asian, minority ethnic and/or disabled entrepreneurs, and grantees may include organisations without an asset lock. 

The partnership with Comic Relief is part of £85m in matched funding recently announced through the government’s Community Match Challenge scheme, which is itself part of the £750m support package for charities announced in April.

 

UK: £1m grant funding for charities and social enterprises occupying historic buildings

The Architectural Heritage Fund is offering a total of £1m in grants to help charities and social enterprises occupying historic buildings and at risk of no longer trading viably by next March, to develop new business plans. 

The money comes from DCMS as part of the Cultural Recovery Fund, and will be managed through a partnership with Historic England.

Grants of up to £50,000 per organisation will be awarded to projects that can demonstrate they are significantly threatened by Covid-19. A further round of funding may follow in early 2021. England-based organisations only; the deadline to apply is 9 November. 

 

USA: Mastercard pledges $500m to help close racial wealth and opportunity gap

Mastercard will invest $500m in Black communities over the next five years. The commitment from the payments giant includes products, services, technology and financial support, as well as concentrated investments to help Black-owned businesses and Black people access affordable financial tools and capital. 

Half of black people in America are “excluded” from the financial mainstream, and black-owned SMEs face exclusion from funding opportunities, according to Mastercard.

 

 

USA: Major foundations back Black activists with $36m frontline fund

Twelve foundations have joined forces to provide sustained support to Black activists leading the movement to end systemic racism. 

The Democracy Frontlines Fund will funnel $36m to Black activists addressing racial justice over the course of three years, “disrupting” traditional grantmaking to Black communities by replacing short-term, administratively burdensome giving with unrestricted multi-year support. 

Funding partners include the John D. and Catherine T. MacArthur Foundation, The Schmidt Family Foundation, and William and Flora Hewlett Foundation. The fund was initiated by the Libra Foundation.

 

Africa: Development finance institutions expand gender finance

A fund run by Development Partners International, a UK-based investment manager, has been chosen as the first 2X Flagship Fund, committed to investing with a gender lens.

2X Flagship Funds are part of the 2X Challenge, a multilateral effort of the development finance institutions of the G7 countries, which aims to mobilise $3bn for projects that empower women and increase their economic participation. In June, the 2X Challenge exceeded its target, reaching $4.5bn in assets.

DPI’s fund – the African Development Partners III Fund – will offer a new vehicle for DFIs and private investors to invest in a way that promotes gender equality, while offering an example for other asset managers to follow when launching their own 2X Challenge funds.

Jen Braswel, director of value creation at CDC Group – which anchored ADP III with an $80m commitment – said the first 2X Flagship Fund with DPI was “a key milestone in our work to build the field of gender finance and to empowering women through our investing”.

This is a key milestone in our work to build the field of gender finance - Jen Braswel, CDC Group

 

DEALS 

 

UK: Esmée Fairbairn Foundation hits £1m equity investment in Charity Bank

Charity Bank, which uses its savers' money to lend to charities and social enterprises, has secured £230k in equity investment from the Esmée Fairbairn Foundation. This brings Esmée’s total shareholding in the bank to £1m. 

Having raised nearly £5m in subordinated debt in 2019, Charity Bank is now focused on raising new common equity investment from charities, trusts and foundations, aiming to raise at least £3m in new share capital by the end of 2021.

Approvals of new loans at Charity Bank are experiencing a resurgence following an initial slowdown due to Covid-19, and were ahead of plan through August, according to the bank. For every £1m of capital invested, it can make around £8m of new loans to charities and social enterprises.

 

UK: Social Investment Scotland reports record £10.9m investments in 2019/20

Social Investment Scotland invested a record £10.9m in social enterprises, community organisations and mission-driven businesses between April 2019 and March 2020, according to its latest social impact report.

The latest investment figures from SIS include £4.36m invested in social enterprises and communities, with the remainder invested in supporting community development finance institutions, and in mission-driven businesses through its impact investing arm, SIS Ventures. 

Active loans and investments with SIS during 2019/20 totalled more than £28m among 175 social enterprises. More than 1.4 million people benefited directly or indirectly from the activities of SIS, up from 1.1 million in 2018/19.   

Last month, SIS launched its online Retail Academy to help Scottish social entrepreneurs reach more customers and adapt to the changing commercial landscape, particularly ahead of the peak Christmas period. The programme is a partnership with Asda and supported by the Scottish government.
 

 

Indonesia: Nexus for Development’s Pioneer Facility finances biogas-to-energy development 

The Pioneer Facility, an impact fund managed by Nexus for Development that backs sustainable energy and clean water solutions in southeast Asia, signed its first investment in Indonesia.

The $100,000 loan will help GREE Energy, a biogas-to-energy operator, to develop four new biogas facilities in Indonesia, while reaching completion of its first such project – set to provide electricity for more than 37,000 people, avoiding 65,000 tonnes of CO2 emissions and treating more than 600,000 m3 of industrial wastewater a year.

Nicolas Stirer, founder and CEO of GREE Energy, said the loan would help the company to “get through this difficult Covid-19 period” and allow it to “keep on providing practical solutions” for the climate crisis, rural underdevelopment and industrial waste.

 

More notable deals:

 

ACQUISITIONS & TIE-UPS

 

US/UK: $400m “blank-cheque” company formed to acquire sustainability businesses

New York private equity firm AEA Investors and UK-based impact investment manager Bridges Fund Management debuted a sustainable ‘SPAC’ – a special purpose acquisition company that raises money on stock exchanges to acquire businesses in the future. 

The SPAC, AEA-Bridges Impact Corp, aims to raise $400m, and will be looking for businesses that align with the UN’s Sustainable Development Goals – as well as those with a poor sustainability record, according to the Financial Times, with the goal of overhauling negative aspects of business operations “to generate positive outcomes”.

The SPAC will be co-led by AEA Investors executive chairman John Garcia and Bridges co-CEO Michele Giddens, Reuters reported.

 

Global: Palladium takes minority stake in Bamboo Capital Partners, targets $1bn milestone by 2023 

Consultancy firm Palladium has taken a minority stake in Bamboo Capital Partners, an  impact investing platform headquartered in Luxembourg.

The strategic partnership combines Bamboo’s knowledge of institutional and private sector investors and its track record of impact investing in emerging markets, with Palladium’s global footprint, sector expertise, and substantial pipeline of investible opportunities.

With Bamboo operating as the asset management arm of Palladium’s global business, the two organisations will work to mobilise $1bn in private sector capital by 2023.

Bamboo will operate independently from Palladium Impact Capital (formerly Enclude), which Palladium acquired in 2018. 

Christopher Hirst, CEO at Palladium, said the deal came at “an historic time”.

“Never before has our mission felt more urgent or in need of investment. What Bamboo and Palladium share is this sense of urgency. Coupling that urgency with our complementary capabilities and track records means we can meet these challenges with bolder, bigger, and more effective solutions.”

Never before has our mission felt more urgent or in need of investment - Christopher Hirst, CEO at Palladium

 

UK: SASC acquires Leapfrog Bridge Finance to expand community energy work 

Social investment firm Social and Sustainable Capital has acquired Leapfrog Bridge Finance, the finance arm of London-based charity and low carbon innovator, Pure Leapfrog. 

Over the last five years, Leapfrog Bridge Finance has funded £50m of renewable energy projects, which are projected to deliver £14.75m to local communities to create social and environmental impact.

SASC has financed several UK community energy projects in recent years and worked with providers including Bristol Community Energy, Gawcott Fields Community Energy, Plymouth Energy Community, Resilient Energy Alvington Court Renewables and Resilient Energy Mounteneys Renewables. It will continue to work with all LBF’s current and prospective clients and focus on growing its portfolio of social and sustainable renewable energy projects.

Claire Hanratty, CEO of Pure Leapfrog, said: “We believe that SASC, as a dedicated investment organisation, with its established platform, track record in raising funds and social and environmental values will be able to scale LBF and grow its impact.”

 

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