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In today’s Brief:
- Impact source code for artificial intelligence
- Alternatives to payday loans in Asia
- Climate tech fund of funds
– David Bank
⚡ Plugged In: Tech equity in action. Stock dips and layoffs notwithstanding, tech jobs are a key enabler of economic mobility and worker wealth. Black workers lag behind the US average as a percentage of the tech workforce; that share rose just 1% from 2014 to 2021, according to the Kapor Center and the NAACP. Google-backed Tech Equity Collective aims to double the number of Black developers in tech by 2030. The collective works with community and industry partners to unlock opportunities for Black professionals. Tech Equity Collective’s Rachelle Olden joins host Sherrell Dorsey on the next Plugged In, Wednesday, March 13 at 10am PT / 1pm ET / 5pm London. RSVP today.
Featured: Impact AI
Musk plays savior, Andreessen goes Marxist – and we should all be grateful. How we structure the business of AI, along with the algorithms, could be the most consequential business decision of our – or all – time. “We need an impact source code for AI,” says B Lab’s Andrew Kassoy in a guest post on ImpactAlpha. Last week, Elon Musk sued OpenAI, which he helped launch in 2015 before leaving in 2018, accusing the company of failing to operate in the public interest. OpenAI, in theory, is controlled by a mission-driven nonprofit. Musk’s suit contends that OpenAI’s structure was meant to ensure transparency of its source code for the benefit of humanity, and that its for-profit subsidiary violated this commitment by granting exclusive rights to Microsoft, OpenAI’s key investor. Backing Musk up is venture capitalist Marc Andreessen, who suggested that, given the security risks, OpenAI should be nationalized, before walking back his comments. “That’s right: two of the great libertarian tech whales of our time – sworn enemies of ESG, woke capitalism and impact investing – say they want AI to be controlled for the benefit of humanity, not necessarily for free market capitalist profits,” Kassoy writes.
- Duty of care. Kassoy argues that all AI companies should be required to become “public benefit corporations,” with a duty to consider their impact on all stakeholders, not just shareholders. Adding a purpose trust could provide additional safeguards. “Let’s make ‘Don’t be evil’ an actual enforceable standard duty of care built into the source code of AI, not just some words in a corporate code of conduct,” he writes. And Kassoy sides with Musk on the utility of open-source algorithms. “Without transparency of the code, there will simply be no way to know how general AI platforms can be used and for what.”
- Alt-ownership. Musk has incorporated his own AI startup xAI as a Delaware public benefit corporation, as have founders of OpenAI competitors Anthropic and Inflection. In addition, Anthropic is structured as a “long-term benefit trust,” or purpose trust, that requires trustees to manage the company to the long-term benefit of humanity. “We’re excited to continue to see these models tested in the real world,” Transform Finance’s Julie Menter wrote after the OpenAI board saga last fall. Events have tempered her expectations. Structure is “necessary but not sufficient to protect a company’s mission,” she continued. “Individuals, their beliefs, expertise and influence matters hugely as well.”
- Profit tensions. OpenAI’s unusual governance structure has kindled interest in corporate shape-shifting from nonprofit to for-profit, and vice versa. The Mozilla Foundation in 2005 created the Mozilla Corporation to serve the foundation’s public benefit goals by developing and distributing Mozilla’s web browser and other products. Others have moved in the opposite direction. In 2022, Patagonia “exited to stakeholders” by transferring shares to a perpetual purpose trust. Earlier, sharedholders of for-profit Change.org donated their shares to nonprofit Change.org Foundation.
- Keep reading, “Musk plays savior, Andreessen goes Marxist – and we should all be grateful,” by B Lab’s Andrew Kassoy on ImpactAlpha.
Dealflow: Financial Inclusion
Wagely inks $23 million to help Asia’s workers with cash stability and financial health. Indonesia and Bangladesh have nearly 200 million wage workers. Unexpected expenses force many to resort to expensive payday loans. Jakarta-based Wagely charges employers a membership fee to offer workers access to their earned wages before their normal payday. Last year, the company fronted $25 million in wages to more than 500,000 workers. Companies like Abhi in Pakistan, ImaliPay in Kenya, and Floatpays in South Africa provide similar services to wage workers.
- AI for impact. The company’s latest funding includes a mix of debt and equity. Capria Ventures led the equity portion of the round, citing the potential to replicate the service in other countries in Asia. Capria invested as part of its second Global South Fund, which largely focuses on impactful applications of generative AI as a “talent and language equalizer” in emerging markets. Capria’s Dave Richards noted Wagely’s potential to use generative AI in risk and fraud detection, assessing creditworthiness, and customer service, as well as for conversations in local languages “for workers to make better financial decisions.”
- Check it out.
Carbon Equity raises €100 million for a climate tech fund of funds. Amsterdam-based Carbon Equity launched in 2021 to provide access to venture capital and private equity impact funds for mass affluent investors. The women-led firm’s first Climate Tech Portfolio Fund in 2022 pooled €42 million ($46 million) from more than 200 individual investors, who invested a minimum of €100,000. “Climate change is not only the most urgent problem facing humanity, but solving it is also the most attractive investment opportunity for our generation,” said Carbon Equity’s Jacqueline van den Ende. The second climate tech fund will invest in seven to 10 funds backing solutions such as green hydrogen and zero-carbon cement production, heat pumps and energy efficiency, bioplastics, and sustainable fisheries.
- Democratizing access. Carbon Equity’s first two funds invested in 15 climate funds managed by Breakthrough Energy Ventures, Ara Partners, Lightrock, Astanor Ventures, Energy Impact Partners and other fund managers. The company has launched a campaign for its third Climate Tech Portfolio Fund with a target of €125 million. Carbon Equity is planning to launch a fund with investment minimums of €25,000. “Our goal is that ultimately anyone with a good salary, a pension, a children’s saving plan, or an inheritance can help build a net-zero future with their capital,” said van den Ende.
Dealflow overflow. Investment news crossing our desks:
- German green hydrogen producer Sunfire inked €215 million ($234 million) from investors in Series E equity, as well as €100 million from the European Investment Bank. (European Commission)
- Chilean health tech startup Keirón raised $1.7 million to expand its medical record and “patient journey” digitalization services to healthcare providers in Mexico. (LatamList)
- Online second-hand clothing market Vinted, based in Lithuania, acquired Danish peer Trendsales to encourage more Europeans to “keep fashion and other items in circulation for longer [to] reduce the emissions produced by the fashion industry.” (Vinted)
- Mexican digital microlender Baubap inked $120 million in debt for its AI-based credit underwriting process that aims to expand access to credit and help Mexico’s underbanked avoid informal debt providers. (Startups Latam)
- General Motors and Panasonic backed Canada’s Nouveau Monde Graphite for its green graphite production process. (Nouveau Monde Graphite)
Agents of Impact: Follow the Talent
McKnight Foundation hires Muneer Karcher-Ramos, previously financial empowerment director for the city of St. Paul, Minn., as its program director for vibrant and equitable communities… HSBC is on the hunt for a global head of its energy transition group… ClimateWorks Foundation is hiring a remote senior manager… The Nature Conservancy is recruiting a sustainable debt associate in Arlington, Va.
Impact Charitable has an opening for an English and Spanish speaking economic mobility program coordinator… Project Drawdown is seeking several part-time climate research fellows… New America will host a discussion and launch the Good Jobs Collaborative, a new policy coalition for crafting a new worker-centered approach to workforce development, March 12 in Washington, DC.
Kevin Doyle Jones and his daughter BJ Harden Jones are co-teaching an 11-session course called the “Act Local School” at the Asheville Poverty Initiative in North Carolina, starting on March 20. Topics discussed will be turned into themes for the next Neighborhood Economics convening (see, “Addressing the social determinants of wealth at Neighborhood Economics”).
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– March 6, 2024
