Climate Science is Politics – Paris Accord Without the U.S.

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May 26, 2017

emissionstons — Source: Climate Advisors

As U.S. President Trump continues to get lobbied to remain in the Paris Climate Pact by European leaders this past week and by a few among his advisors, some are saying that the new administration, judging by its recent actions, has already virtually left.

Actions speak louder than words. More than 600 million tons in reduced CO2 by 2030 is at stake (figure above)

Do Appearances Matter?

The U.S. has already started to rescind its commitments making it a less worthy member of the Paris accord, argues Joseph Curtin at Climate Change News. Mr. Curtin is a senior fellow for climate policy at the Institute of International and European Affairs and a member of the Irish Government’s Climate Change Advisory Council

“The Paris agreement is not intended as a fig leaf. It is not a branding opportunity, nor is it intended as a platform for lobbying,” Mr. Curtin adds.

“Membership of the Paris agreement is nice, but reducing US emissions is what actually matters. The current debate is really between those who want to leave Paris and totally deny climate change, and those who see Paris as a branding and lobbying opportunity.”

Wrong in a Different Shade

The U.S. Administration has already made the wrong decisions on the Paris Accord, adds Elizabeth Kolbert of the New Yorker. “The only choices that remain are different shades of wrong.”

Ms. Kolbert cites actions such as what the E.P.A. is already doing to revoke a number of Obama-era fuel standards for cars, rules for power plants, and even the removal of climate-change pages from its websites.

In her piece in the New Yorker, she cites former climate negotiator for the European Commission Jorgen Henningsen’s letter to the Financial Times, who also echoes that the U.S. has already “de facto left the agreement.”

“The US has already de facto left the agreement, in so far as President Trump has done everything within his powers not to deliver the policies and actions necessary for the U.S. to be a serious party to it. Ignoring this fact, and accepting that the U.S. remains a partner in the discussions . . . would only underline how weak the Paris agreement is,” writes Jorgen Henningsen.

How the U.S. Electorate Feels

Source: Yale Program on Climate Change Communication

Seven in 10 Americans support the Paris Accord, according to a survey late last year – Climate Change in the American Mind – conducted by the Yale Program on Climate Change Communication and the George Mason University Center for Climate Change Communication.

The accord, agreed by nearly 200 countries in Paris in 2015, seeks to limit planetary warming by cutting emissions of carbon dioxide and other gases from burning fossil fuels. The United States, under former President Barack Obama, had committed to reducing its emissions by between 26% and 28% below 2005 levels by 2025.

The U.S. joins Syria and Nicaragua as the only countries now who have dissented against the Paris Accord. Advocates say that remaining in the climate accord would have added jobs, strengthened U.S. strategic interests as well as its hand for exercising soft power abroad.

https://youtu.be/vUx4H7wazLQ

Sources: Climate Change News, Financial Times, New Yorker, Yale Climate Change Study

Impact Investing in Asia – Fragmented and New, Study Says

By

Gino Baltazar, MS Finance

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May 25, 2017

asiaimpactinvesting — Source: The Palladium Group

While impact investing is maturing fitfully across markets according to GIIN’s latest survey, another study by the Palladium Group focusing on the market in Asia suggests the region maybe is not [compared to other markets like in the U.S. or EU], is fragmented and needs developing.

Palladium is an international advisory and management business focusing on social innovation and impact investing and is based in the U.S. Balanced Scorecard experts Dr. Kaplan and Dr. Norton are among who notably helm the company.

Key Findings – Why This Matters

As a result, large global funds invest only a very small proportion of their portfolios in the region. This makes raising capital more difficult for SMEs and widens the so-called “pioneer gap” – lack of financing for innovative business models.

Fund managers cited challenges finding investable impact SMEs in the region, suggesting weaker networks between investors and SMEs, lack of proven data or better measuring tools, and perceptions of higher risk.

Interestingly, the study also found concessionary returns at an impact fund level – meaning targeted financial returns that are below what private investors would require based on the risks associated with the investment.

To help mitigate risks, a few of the funds surveyed, labeled “Balanced Early” and “Balanced Growth” in the study, engaged donors and philanthropists as investors, but were syndicated with investors seeking market rate returns.

Fund Distribution by Country

Indonesia was found to have the most active impact investors with the highest number of active funds, a more developed SME ecosystem and more local investors investing in seed and early stages. Investing in India remains active.

Sri Lanka, Laos, and Myanmar have the least investment activity, due in part to a less developed ecosystem for SME.

Impact investing dynamics are certain to change if Beijng’s OBOR improves infrastructures in the region. Growing wealth remains a main driver along with opportunities to impact financial inclusion, health care and agriculture.

Palladium’s Data Methodology

Cambodia, Indonesia, Philippines, and Vietnam had the largest number of interviewees located in the region and were selected by Palladium as the countries where the research team would travel to and conduct in-person interviews. Telephone interviews were done for other countries.

“No portfolio, investment, or fund reviews were done in terms of performance. IRRs referenced in this report have been taken as presented and no analysis or reconciliation between Net and Gross IRRs was conducted.”

Among those surveyed were Anthem Asia, India-based Aavishkaar Frontier Fund and the Soros Economic Development Fund (SEDF).

Sources: Palladium Group, GIIN

Impact Investing Deal Report – May 24, 2017

By

Gino Baltazar, MS Finance

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May 24, 2017

France-based JobTeaser, and Seattle-based CreativeLive, both novel startups who are addressing workforce education and career-training gaps, were among this past week’s notable investing deals.

JobTeaser – this week’s spotlight (see video above), a provider of a recruitment platform that directly integrates into higher education institutions in Europe and connects students with more than 1,000 partner companies, has raised raised €15 million in venture capital funding.

Source: JobTeaser, education startup based in France.

Students on its platform can get access to professional career guidance and information through about 2,000 informative videos (corporate videos, videos describing job functions, recruitment process videos and more), as well as a selection of more than 6,000 job and internship opportunities.

The platform currently has over 600,000 registered students and over 200 universities in 11 countries including École Polytechnique, ESSEC Business School, and many others. JobTeaser’s work is significant in increasingly digitally-driven and knowledge-based economies. Based in France.

Anaconda Biomed – has raised nearly $17 million in a Series A round for a device it is developing for neurothrombectomy, the surgical removal of a blood clot from a blood vessel in the brain. Based in Barcelona, Spain.

Bulletproof 360 – artisanal coffee-maker, claiming its coffee is free of a substance called mycotoxins from toxic mold that can make consumers ill over time has raised $19 million. Its founder Dave Asprey says about 75% of other brands are full of these mycotoxins and “are affecting the brains and bodies of America’s leaders.” Based in Bellevue, Washington.

Coexca – Chilean pork producer, has raised $12 million in equity funding from the Danish Agribusiness Fund (DAF), thus indirectly backed by the Danish government, the Investment Fund for Developing Countries (IFU), and two of Denmark’s largest pension funds, PensionDanmark and PKA.

Coexca plans to use the funding to help double its current pork production capacity, establish a new pig farm in the Maule Region of Chile, and expand its business.

CreativeLive, this week’s second spotlight, offering streamed classes taught by experts from a variety of disciplines, has secured a new $25 million funding round. “The future is not really about where you went to a four-year school,” founder Chase Jarvis has said. “The future of employment is what do you know, what have you built, and who did you work with, aka, who did you learn from?”

CreativeLive says more than 10 million students have consumed more than 3 billion minutes of video through its online classes. Based in Seattle, Washington with offices in San Francisco, California in the U.S. (see their video below)

EcoIntense – which makes software for safety and sustainability compliance, has raised €22 million from One Peak Partners and Morgan Stanley Expansion Capital. The new funds will be used for the company’s international growth and further product development for its EcoWebDesk SaaS platform, used by its customers to manage health, safety, and environment (HPE) processes and legal compliance requirements. Based in Germany.

Optimatics – a water and wastewater infrastructure planning software provider, has secured an undisclosed venture capital sum from Suez Ventures to help continue its work assisting companies and cities to manage down the operational and rehabilitation costs of aging pipes and equipment. Here’s how Optimatics helped San Diego, California save $19.7 million. Founded in Australia but now headquartered in the U.S.

OrphoMed – a clinical stage biopharmaceutical company, announced the completion of a $39 million Series A financing. The capital will be used to advance the clinical development of OrphoMed’s lead candidate, ORP-101, for the treatment of irritable bowel syndrome with diarrhea (IBS-D). Based in San Francisco, California.

Robocath has raised $5.2 million (EU €4.7 million) in a new round of funding. Robocath is developing the R-one robotic platform designed to allow the operating physician to remotely control their instruments from a control panel close to the operating table, the company said. The system includes the company’s R-grasp tool for reproducing hand movement and SecurAccess system designed for stability and security. Based in France.

Other Noteworthy Deal News

Syngenta opens Digital Innovation Lab at the University of Illinois Research Park. The new lab allows students in computer science, biology, physical sciences and other related subjects to apply their specialized expertise and cutting-edge technology to address some of agriculture’s most pressing challenges.

Entrepreneur Tandean Rustandy donates $20 million to University of Chicago to fund its social innovation center.

Peanut Butter gets selected to pitch on Google Demo Day. Peanut Butter administers student loans, a big issue with younger consumers, so employers can attract college-educated talent without adding extra overhead.

The Climate Corporation acquires HydroBio – a startup that analyzes weather, soil, and field data via SaaS-driven satellite imagery to assess water usage and crop yields.

Sanderson Farms continues to use antibiotics in poultry production as other major poultry producers like Tyson Foods, Butterball, and Perdue Farms have pledged to cut back.

The Agrichemicals industry is going through a merger phase, as overall customer demand falls and R&D costs are going up. Farmer fear this will mean they will be forced to use pesticides made by the same firm that produces the seeds they buy.

Consumers report feeling overwhelmed by conflicting information on food and nutrition.

Nestle Waters North America invests $6 million with the Closed Loop Impact Fund, a $100 million social impact investment fund committed to finding a national solution to the recycling gap in the U.S.

Sovereign wealth funds are pouring money into technology and ventures in the U.S., among them Temasek Holdings, Khazanah Nacional and Qatar Investment Authority.

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Sources: Crunchbase, TechCrunch, SEC, MobiHealth News, AgFunder, Sovereign Wealth Fund Institute

Be A Change Agent, says Yolande Piazza of Citi Fintech

By

Gino Baltazar, MS Finance

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May 23, 2017

Yolande Piazza who runs Citi’s Fintech unit, and is a Citi veteran, sits down for a short talk with Sam Maule, Head of Digital/Fintech at NTT Data.

“I feel like I’ve come home,” says CEO Piazza of her new role and scope of responsibilities at Citi Fintech.

At Citi, Ms. Piazza, citing grounded research in an article she wrote in American Banker, also runs a mentoring program called FUTURE | Women in I.T., an apprenticeship that gives high school students opportunities to gain hands on experience with local technology companies.

Background

Ms. Piazza has been with Citi for 30 years. She was announced as Citi Fintech’s permanent head earlier in March this year. She had been serving in that role on an interim basis since August last year, when the previous chief executive of Citi FinTech, Heather Cox, left for a role with USAA.

She says her long tenure with Citi was never deliberate, and that she was constantly given more opportunities to change things, deliberately test boundaries, and create more meaningful experiences for customers externally and internally.

The Change Agent, Episode 73, Fintech 5

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Source: Fintech 5

Decentralized Renewable Electricity Cheapest in Africa, Dutch Report Says

By

Gino Baltazar, MS Finance

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May 23, 2017

africaelectricity — Source: PBL, Netherlands. Electricity access strategy in Africa by expected consumption demand.

Investors and development efforts may be overlooking the most economical ways to make electricity more accessible in rural Africa, a report by PBL Environmental Assessment Agency says. PBL is an autonomous research institute in the fields of environment, nature and spatial planning based in the Netherlands.

Why This Matters

Improving access to electricity is a vital infrastructure component in a region where two out of every three people, more than 600 million (nearly twice the population of the U.S. by comparison), currently do not have access to electricity. 90% of that population live in rural parts of Africa (see video below).

Achieving universal access to electricity in the region means greater ability to use other critical technologies like irrigation, modern health services, schools and access to the Internet.

Demand is also increasing, driven largely by economic growth in many rural parts of Africa. A population of 530 million to 600 million additional people is anticipated by 2030, tripling total expected household electricity requirements as a result.

To meet projected demand, investments to increase access to electricity will require between $9 billion and $33 billion each year through 2030, the report says, both through public and private financing.

Follow The Money

Additionally, most of today’s energy investments in the region are focused on the maintenance and operation of existing energy infrastructures and of larger-scale projects. Continuing this trend risks leaving large areas of Africa without electricity behind.

While attaining universal electricity means significant investments in electricity generation and transmission capacity, access is also about extending distribution to meet the needs of households at the edge of energy grids in the region.

This means extending access so customers in rural areas will have the ability to charge their mobile devices, turn on lights at night or run household appliances – mundane needs that are taken for granted by large projects today.

However extending high-voltage transmission lines can be expensive – up to $28,000 per kilometer. One approach to close the gap could be to use renewable energy in remote rural areas where demand is low. Sparse populations might be better off with wind, solar or a mini-hydro plant in conjunction perhaps with their own mini or standalone grids.

Government’s Role

Energy projects that do focus on renewable energy are faced with challenges that will not be resolved by more creative finance alone.

The region’s governments ought to be able to help by supporting the market development of mini-grid and stand-alone systems, and by enabling innovative policies to make electricity more affordable for the poorest households.

Governments are also responsible for identifying development priorities and allocating resources, the report cites (UN-OHRLLS, 2014). “The role of the public sector is essential in enabling the right environment, creating effective regulatory frameworks, and developing implementation strategies.”

https://youtu.be/8_aRqEgbgY4

Source: PBL Report on Universal Electrification for Africa

Impact Fund Investments Are Paying Off, WHEB Report Says

By

Gino Baltazar, MS Finance

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May 22, 2017

whebimpact — Source: WHEB Group. Performance of Impact Metrics.

An asset management fund in the UK called FP WHEB Sustainability Fund says its impact investments have been paying off. It cites new data it says evidences that its way of investing can really improve society and the environment, while delivering respectable financial returns.

What Its Data Says

In its annual impact report, the firm says that for each $1.3 million it has invested in its portfolio of 62 impacting enterprises, it has helped avoid 1,600 tons of greenhouse gas carbon dioxide from entering the atmosphere, recycle 140 tons of waste, generate 1,200 MWh of renewable energy, provide 30 million liters of drinking water and treat 1.6 million liters of waste water.

In addition, during 2016, the investment fund may have also contributed to job-creation. Firms in its portfolio on average increased their workforce by 8%, hiring approximately 1.7 million more people by the end of last year, a year-over-year increase of more than 142 thousand.

Returns of its A share class have produced 6.03% year-to-date, while returns of its C share class, a lower cost vehicle, have produced 6.29% year-to-date. The MSCI World Total Return, by benchmark comparison, has returned 3.10% year-to-date. Returns last year approached or surpassed 20% (see figure).

Its assets under management (AUM) rose 51%, reaching $161 million. As of the end of April 2017, AUM surpassed $200 million, WHEB said in a statement last week.

Its portfolio includes Intertek, a UK-based global quality assurance partner to renewable energy companies, Orpea, a French-based operator of nursing and elderly care and Shimano, the bicycle component maker based in Japan.

The fund, classed as a “global growth” fund by the UK’s Investment Management Association, holds firms in its portfolio for an average of three to five years.

“Share” of Impact

The WHEB sustainability fund does acknowledge the challenges of measuring its true impact because the proportion of shares it owns is small compared to those owned by other investors. It bases its calculations of impact on the proportions of assets it owns among firms in its portfolio.

It also says that because the area of measurement impact is very new, methodologies are still in flux and counting may be imperfect. A range of potential measurement challenges include “double-counting” of impact data, inconsistent reporting of data over a longer time period and accurately measuring product and service level impacts themselves.

Still, the fund is among the first in the world to have included climate change impact data in financial reporting.

“Investors of all types are increasingly interested in the purpose and impact their investments have on the world. We would encourage all investors, from the largest pension fund to the individual investor, to ask their advisors and asset managers for information on the impact of their investments,” George Latham, its managing partner and chief investment officer, said.

Sources: WHEB Report, Wealth Briefing

The Right ESG Metrics Can Help Beat Benchmarks, says Goldman Sachs Analyst

By

Gino Baltazar, MS Finance

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May 19, 2017

goldmanbinghamesg — Source: Goldman Sachs Exchanges

“Environmental, social and governance (ESG) metrics have matured to the point where they can help mainstream investors beat their benchmarks,” says Derek Bingham, Head of Goldman Sachs SUSTAIN Americas.

Derek Bingham, Head of Goldman Sachs SUSTAIN Americas

Mr. Bingham and his GS SUSTAIN team study which sustainability measures most closely align with returns over time, seeking which diversity, emissions, governance or other suitable sustainable indicators position firms for long-term success.

He shares his team’s findings in the following Goldman Exchanges podcast, explaining why he sees ESG research as a long-term trend that isn’t going away.

“Metrics that Matter: A ‘Mainstream’ Approach to ESG” (Released May 8, 2017)

Notable Podcast Quotes

“There is enough data now that we can start looking over long periods of time, 3-5 years of time, multi-year periods, and look for some relationships with the stock price …if environmental and social performance do have an impact, it ought to show up in their operations and influence their stock prices. That’s what we found in our studies.”

“We increasingly think mainstream investors have to realize that this is more information, again, that they didn’t have already.”

“The roots of ESG investing came from ESG specialists. Folks that wanted to invest behind a certain set of values, wanted to focus on the ESG aspects of their companies. As a result of that emphasis, rightly or wrongly, ESG got a reputation perhaps of underperformance.”

“Low emitters based on total greenhouse gas and scope 1 emissions generally outperformed across our framework, logging 3.1% alpha in relevant sectors, though results were mixed for manufacturing sectors.”

“Employee turnover showed relatively strong and consistent performance across sectors.”

“Companies with higher levels of female employees have seen average annual alpha of 3.3% across all sub-sectors within our framework.”

“Does a company have a target? It tells you that a company has a goal of improvement, implies measurement, accountability. Examples include emissions reduction, resource efficiency, diversity.”

“Business ethics improvement tools [in firms] leads to alpha.”

“It’s challenging to do ESG in passives effectively. ESG is more an ideal category for active management – because it encourages customization and because data is imperfect.”

About GS SUSTAIN

GS SUSTAIN is a Goldman Sachs-branded equity strategy that seeks portfolio alpha through a comprehensive analysis of firms’ strategy, business model and ESG performance. The strategy was launched 10 years ago in 2007 at the UN Global Compact Leaders Summit.

Their team’s GS SUSTAIN research product is designed for and marketed to portfolio managers who seek sustainable superior returns on capital over a long-term horizon, while managing sources of risk faced by modern firms today.

Source: Exchanges at Goldman Sachs

Impact Investors Feel Satisfied, says GIIN

By

Gino Baltazar, MS Finance

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May 18, 2017

giinsatisfaction — Source: Global Impact Investing Network (GIIN) 2017 Report

A large majority of impact investors report feeling satisfied with how their investments have been performing. Their investments have either met or exceeded their expectations for both impact (98%) and financial performance (91%).

Additionally, GIIN reports that the size of the impact investing market has grown to $114 billion from $35.5 billion in 2015 and $25.4 billion in 2013, however the number of respondents in the latest GIIN survey has also grown to 209 from 62 in past years.

These are among the key findings that the Global Impact Investing Network or GIIN has shared in its latest investor survey.

Other Key Takeaways

Larger and more well-known asset managers and financial firms are joining the space. Respondents feel this may help bring more credibility but also acknowledge the risks associated with herd effect and mission drift. It might be too early to tell.

A larger body of market research and data on products and performance is now available (89%) as well as talent (90%).

Respondents are increasingly committed to the United Nations Sustainable Development Goals (26%). About another third (34%) plan to also commit in the future (figure below).

Not surprisingly, almost all respondents measure the performance of their investments, both financial and social, using a variety of ways, some proprietary, others more qualitative.

Sustainable housing, climate, energy, and microfinance were the top impact areas invested in.

Many recognize the opportunity of below-market-rate capital. Roughly 80% of respondents believe below-market-rate can mitigate investment risk, attract new investors, and act as a transitionary bridge between philanthropy and market-rate capital.

Additionally, below-market-rate investors allocate a greater share of their assets toward seed- and venture-stage companies than do investors primarily targeting market-rate returns (see figure above). More than 50% of respondents say a lack of appropriate capital across the risk/return spectrum remains a significant challenge.

It will be interesting to see how this develops in the future via say, policy prescriptions. For example, angel tax credits and development tax credits can be used to improve capital flows to venture stage funding to incent against risk.

“This year’s annual survey details an impact investing industry that is becoming increasingly established and professionalized, but also a market that is complex and diverse,” said Amit Bouri, GIIN Cofounder and CEO.

“The findings allow us to dig deeper into the topics the industry will need to concentrate on to further develop the market and achieve the broad global impact we seek.”

Source: GIIN

Impact Investing Deal Report – May 17, 2017

By

Gino Baltazar, MS Finance

-

May 17, 2017

Cue – this week’s spotlight, raised $15.5 million in venture capital funding to continue its work building out molecular-level, self-tracking, preventative health care devices.

Cue works via a system to take in saliva, blood or nasal swabs, which it then analyzes in real-time, and provide health recommendations based on other data like activity and fitness level. Inflammation, vitamin D, fertility, influenza, and testosterone are the 5 key indicators Cue promises to track. Based in San Diego, California in the U.S.

Aira Tech – develops wearable assistive products for visually impaired and low-vision consumers through sensors and wearables that enhance auditory (or hearing) inputs. $12 million in Series B funding to total $15.34 million from 7 investors. Based in La Jolla, California in the U.S.

Clover Health – continuous, real-time monitoring using data, machine learning and predictive analytics to help avoid hospital admissions, reduce health care spending, and improve health outcomes. $130 million in Series D funding to now total $425 million from 18 investors. Based in San Francisco, California in the U.S.

Dodla Dairy – covered last Friday, Dodla is a milk production company that sources sustainable milk across thousands of smallholder farms in India. Raised $50 million via the $2 billion Rise Fund, the social impact fund from private equity giant TPG’s Growth platform. Based in Hyderabad, India.

Farmnote – makes a unique livestock-wearable device called the Farmnote Color, which is attached to an animal’s head and gathers information about each animal’s activity in real time. Through a companion analytical platform, Farmnote then sends farmers alerts to their mobile phones such as when cattle are unwell, ovulating, or are giving birth. The wearable can be worn by dairy cows or beef cattle. Raised ¥500 million ($4.6 million) in funding through the public/private VC Innovation Network Corporation of Japan, the National Federation of Agricultural Cooperative Associations, the Norinchukin Bank and Sumitomo Corporation. Based in Obihiro, Japan.

Guardant Health – next-generation sequencing and rare-cell diagnostics to fight cancer, through liquid biopsies, a way of finding DNA in the blood that has been shed by tumor cells. Raised $360 million in Series E to total $550 million from 18 investors. Based in Redwood City, California.

Invenia – develops a machine learning platform to improve energy intelligence, optimize power grids and reduce emissions. Raised $5 million in Series A. Based in Winnipeg, Manitoba, Canada.

Neighborly – aims to democratize and modernize the $1 billion per day municipal bond market through an online platform to help fund community projects like parks, libraries, roads, schools or, in the future, neighborhood energy microgrids. Raised $25 million to total $30 million from 15 investors. Based in San Francisco, California in the U.S.

OpenInvest – a robo-advisor, “social impact investing platform for retail investors” has raised $3.25 million in seed funding. Based in San Francisco, California in the U.S.

Propel – a startup that helps food stamp recipients manage their benefits, has raised $4 million in seed funding. The U.S. food stamp system is a $70 billion program that reaches 45 million Americans today. Based in Brooklyn, New York in the U.S.

Smart Earth Seeds – a vertical, plant breeding company that develops high-omega meal and oil products derived from its proprietary camelina genetics platform. Has raised $300 thousand, and expects another $2 million from other investors. Based in Saskatchewan, Canada.

Other Deals of Interest

Damon Runyon Cancer Research Foundation hosted a benefit performance of the Broadway musical Hamilton on Tuesday, May 16, 2017, at the SHN Orpheum Theatre in San Francisco and raised almost $1 million for innovative cancer research. The event attracted notable attendees including: Steve Chen, co-founder of YouTube; Chamath Palihapitiya of Social Capital LP, who is also a part-owner of the Golden State Warriors NBA team and an original member of the Facebook management team. The foundation has invested over $327 million and funded nearly 3,600 young scientists, including 12 Nobel Prize winners.

Prospect Silicon Valley, along with the Santa Clara Valley Transportation Authority (VTA) were awarded $2 million by The California Energy Commission to research, develop and demonstrate an advanced energy management and grid services system for electric transit bus fleets.

ADM Capital, a London-based private equity and investment firm, has completed a $100 million first close of its new global agribusiness investment vehicle, the Cibus Fund. The new fund will focus on mid-market investment opportunities in sustainable food processing and production companies in Europe and Australasia. It is targeting a $500 million final close in 2018.

Rockit Global, a New Zealand company that holds the global rights to the patented mini Rockit apple variety, has sold over 50% of the company to two private equity firms for around N$25 million ($17 million).

AgTech/FoodTech Startup Events

FoodBytes announced its ten finalists for its New York event in June (via AgFunder).

AgVoice – food and agricultural insight through voice.
Burlap & Barrel Spices – e-commerce site to source artisan-made spices.
Flashfood Inc – discounted food surplus app to trim grocery and restaurant food waste.
Gebni – on demand meal pricing to reduce the cost of restaurant takeout.
Impact Vision – hyperspectral tech to provide insights on food quality.
Nom Noms World Food – ready-made, family-friendly meals and hot wraps.
Real Oyster Cult – app to source sustainably farm-raised oysters via overnight delivery.
Seal the Seasons – source frozen in-season produce at peak ripeness from local farmers.
Verdical.io – automated indoor gardening system seed-to-harvest.
Wanderfuel – curated health food and wellness content.

Future Food Asia also announced its contenders for startup prize funding on May 26 in Singapore.

Agrint – tech to fight the Red Palm Weevil, the most harmful and undetectable pest in Palm and Coconut trees (Israel).
Bethesda Scientific – micro-encapsulation tech to protect rice seedlings from pests (Taiwan).
Biolight – medical devices to enhance the immunity of livestock (Korea).
Doux Matok – flavor delivery tech that enhances sweetness or saltiness in food (Israel).
Eruvaka – aquaculture IoT tech company (India).
Farm Friend – Uber of agricultural drone services (China).
Smart Animal Husbandry Care – tech to improve tracking of pig livestock (Singapore).
String Bio – tech to convert methane gas to single cell protein for animal feed (India).

Inspiration

AngelList founder and CEO Naval Ravikant took the stage at TechCrunch Disrupt New York on Wednesday May 17th and talked about increasing access for and to investors via “Angel Funds,” which is essentially an expansion of its popular “Syndicates” product.

Sources: Crunchbase, TechCrunch, MobiHealth News, AgFunder

China’s $1T One Belt One Road Vision

By

Gino Baltazar, MS Finance

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May 16, 2017

chinasilkroad — China One Belt One Road Initiative. Source: Reuters.

China’s One Belt One Road Initiative or “OBOR” is set to draw increased investments, facilitate future trade and position China as an emerging economic power that will rival that of the U.S., experts say.

The program, conceived four years ago, is said to exceed the scope and size of the Marshall plan that was used to rebuild Europe after World War II.

Nearly $1 trillion of projects have been or are in the process of being funded. Construction of ports, tunnels and railways have begun in the region, as well as reclamation of small islands in maritime waters, most controversially those off the South China Sea that are shared with the Philippines and Vietnam.

What OBOR Is and Is Not

As the map above suggests, OBOR is a blueprint that calls for modernizing trading routes and creating supply delivery channels between Eastern and Central Asia, and Eastern and Western Europe.

The program’s key vision is to build new future trading infrastructures – ports, roads, pipes, airports, railways – in the sea and over land, in ways that promote Beijing’s economic and strategic interests.

Six economic corridors are envisioned across sixty countries: one connecting China, Mongolia and Russia; a new Eurasian “Land Bridge”; another from China to Central Asia and Western Asia; a new China-Indochina peninsula corridor; a China-Pakistan economic corridor; and a modern Bangladesh-China-India-Myanmar economic corridor.

At this point in time, it is not, as many have suggested, a free trade agreement. But it is a system for diversifying China’s export markets as it faces anti-globalization headwinds in regions like in the U.S.

It is also a means to address China’s production overcapacity in several sectors in its economy. The overcapacity, owed in past decades to the booms in construction and offshoring manufacturing, is contributing to China’s slowdown.

There is a large amount of capital and exchange reserves in the country as well, and OBOR presents opportunities to diversify investments overseas.

OBOR is not an expansion of China’s military capability, despite characterization already being made in Western media. Still, in order to protect OBOR’s economic interests, China will need to expand the number of its military bases as it has already assertively shown in the South China Sea.

Finally, it is a means to express China’s “soft power,” its advocates say and as Chinese Premiere Xi Jinping suggested in 2014. “We should increase China’s soft power, give a good Chinese narrative, and better communicate China’s message to the world.”

It aims to increase its influence and goodwill in the region and with OBOR partner countries by exporting its approach to development, which has lifted hundreds of millions of its own people and rural farmers out of poverty.

Funding OBOR’s Ambition

Pockets are deep. In 2014, China launched two new financial institutions, the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund (SRF), to respond to the substantial financing gap for infrastructure investment in Asia.

AIIB was launched with an initial capital of $84 billion, with China providing $26 billion and other countries supplying the rest – 25 have been recruited in Europe, South America and Africa.

SRF was launched with an initial capital of $33 billion in December 2014. China pledged billions more in additional funding during the summit.

Its Impact – Will OBOR Payoff?

It’s too soon to tell. Already, there are reports of serious protests and of roughshod treatment by the Chinese of indigenous land and of minorities.

It is unclear whether a portion of the billions in funding will be used to address population, environmental and livelihood displacements that are certain to occur. “Farmers are balking at giving up their land. Some are raising questions about property rights.”

In the long run, markets in developing countries along OBOR’s routes will be more diverse. There will be fewer trade barriers and access to investments opportunities will increase, as will exports of Chinese goods and services.

According to the IMF, only seven of the 64 countries in the OBOR initiative are advanced economies. So the potential for growth in the developing and emerging economies, where real GDP is forecast to rise by 6.7% annually over the next 15 years because of OBOR, is high.

Real payoffs won’t occur until after 50 years, acknowledges Wharton emeritus professor Franklin Allen, who also is a professor of finance and economics at Imperial College in London. OBOR’s impact will be significant and “it is quite likely that China will succeed in this initiative, though it may take a half-century,” Professor Allen says.

Sources: Wharton, New York Times, CBBC, Financial Times, The Economist, Reuters

Gino Baltazar, MS Finance

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