The GIIRS-rated funds profiled here are four of the 50 Best for the World Funds honored in 2016. The independent nonprofit B Lab created the GIIRS rating system to help fund managers assess and verify the impacts of their portfolio companies. The companies are scored based on their performance on the B Impact Assessment, which is administered by B Lab and incorporates IRIS metrics. Each fund then undergoes a verification process at B Lab to become a GIIRS-rated fund.
These funds are helping to create a system for comparing fund performance that includes environmental and social metrics and, in so doing, are leaders in the effort to empower businesses that do good in the world.
Rethink Education is aimed at supporting technology-based learning and broader access to education. The principals are financial professionals with first-hand experience in higher learning. Managing partner Matt Greenfield was once a college professor, managing partner Rick Segal was a teacher, and partner Michael Walden has been mentoring children through the Big Brothers Big Sisters program for 27 years.
When Rethink Education launched in 2012, it looked to bolster K-12 resources. Now the principals are focusing on education investments that help people become productive citizens. “We see a continuum from early childhood, to K-12, to post-secondary, to adult and corporate learning, and onto continuing education,” says Walden.
The firm has invested in about 30 companies. EverFi is a platform for gaining financial and cyber literacy. NoRedInk is a web-based tool helping kids develop proper grammar and writing skills. Knowledge to Practice is a lifelong learning platform for medical clinicians. Smarterer — recently acquired by a company called Pluralsight — is a platform designed to score individuals on digital, social and technical skills.
Rethink Education draws inspiration from game-changing education models around the globe, including portfolio companies like Bridge International Academies, which merges technology and physical schools to bring quality education to more than 100,000 underserved children in Kenya, Uganda and Nigeria for less than $6, per student, per month.
“I hope that in five to 10 years we’re able to show that audacious projects like Bridge International Academies create access and opportunity for more people globally,” says Walden. “Those are the boundaries we are trying to push.”
Double Impact Fund
Best known as a civil-rights attorney and popular two-term Governor of Massachusetts, Deval Patrick spent most of his career in the private sector, as an attorney and general counsel at companies such as Texaco and Coca-Cola. As he was preparing to leave his governorship in 2015, he became interested in impact investing, believing that socially responsible business is not only the best kind of business but also a new way of building financial value.
Because opportunities in impact investing were sparse and his research suggested the field was more developed outside the United States, he ultimately accepted an executive position at a successful, but conventional, company in New York City. When he informed his old friend Steve Pagliuca, the co-chairman of Bain Capital, about his new job, Pagliuca told Patrick, “Sounds great, but you don’t sound passionate about the position. What are you passionate about?” The conversation turned to impact investing, and Pagliuca leaned back in his chair and said that Bain wanted to be an impact investor. The two friends spent a year surveying the impact-investing landscape, and in 2016 they launched Bain Capital’s Double Impact Fund, focused on sustainability, health and wellness, and building community in North America.
Patrick says he believes philanthropy and government have let business off the hook for too long. “If you look at the big challenges facing societies all over the world, challenges such as climate change, economic mobility and food deserts — philanthropy and government are never going to be able to solve them alone,” he says. “We need business to step up.”
He intends to model how businesses can scale social impact and generate financial returns. “Sooner or later, this is not going to be a special corner of investing,” Patrick says. “It’s going to be what good, true and successful investing is about.”
When Bamboo Capital Partners invested in Greenlight Planet, a solar-energy startup serving customers in off-grid villages, the company had sold several thousand solar lamps in rural India and planned to expand into Africa. Noting the quality of Greenlight’s products and team, Bamboo offered more than funding. It provided strategic expertise, introductions to partners, and access to more investors. Within five years, Greenlight Planet was profitable and had achieved its growth goals, serving more than18 million customers in 30 countries.
Founded in 2007, Bamboo has invested in 33 companies across 20 countries. The Luxembourg-based private-equity firm targets high-growth companies providing services to the “bottom of the pyramid” — the billions of people in poverty around the world underserved by traditional economic models. Bamboo comprises the $240 million Financial Inclusion Funds 1 and 2, and the $53 million, GIIRS-rated Oasis Fund, which invests in housing, health care, energy and education. Bamboo’s funds have delivered accumulated returns of 22 percent locally and 16 percent in U.S. dollars, impacting 29 million lives and 25,000 jobs.
“When we invest, we are intentional about the impact we are promoting. When we talk about people’s bottom line, the direct impact a company has on individual lives, we mean it, we measure it, and we care for it,” says Jean-Philippe de Schrevel, the firm’s founder.
Promotora Social México
There are about 1 million independent mom-and-pop stores in Mexico, from street stands to corner “tiendas,” peddling snacks and grocery staples. Each time a multinational chain opens a convenience store, about five local stores are typically put out of business. The social-impact fund Promotora Social México made its first investment in Mi Tienda, or “My Shop,” in 2009 to help preserve the small stores that employ and sustain families across Mexico. The company delivers products from a centralized warehouse directly to the independent stores, providing cost savings through economies of scale that enable these family-owned businesses to compete with the big chains. Mi Tienda now serves about 6,500 stores across Mexico.
Promotora Social México then turned to education. In Mexico, only 2 percent of qualified applicants can afford to attend a private university. To level the playing field, the fund acquired a stake in Laudex, a company that provides flexible loans for higher education. In health care, Promotora Social México funded Clínicas del Azúcar, a diabetes-treatment center that consolidates all the necessary care for the disease in one venue, reducing the cost of treatment and the amount of time patients spend visiting doctors.
Promotora Social México, one of the the country’s few GIIRS-rated funds, has invested in 15 businesses and five funds, but the principals believe they still have a long ways to go in achieving their goals, particularly in the fields of education and health care. “There are still many needs to be met here in Mexico,” says Rodolfo Dieck, the fund’s investment director.
For more on GIIRS funds, review the full 2016 Best for the World Funds list.
This article was originally published in the Winter 2016/2017 issue of B Magazine. as part of the issue’s Impact Investing Special Section. For more, read the issue’s history of impact investing, which includes links to the rest of that special section’s coverage.