In today's feature, first year WIIP Investment Associates Tala and Steve share what they learned about private equity and impact investing in Africa from their trek to Johannesburg and London with the Wharton PE/VC Club last semester. The trek visited a wide range of highly influential players, each with their own approaches to investing in Africa, including The Abraaj Group, Emerging Capital Partners, Helios, Black Rhino, Phatisa, Actis, CDC Group, DPI, 8 Miles, Ethos, Rockwood Capital, Vantage Capital, The Carlyle Group, and Sango Capital.
Here are the lessons and trends that we believe every investor needs to know.
Private equity in Africa receives comparatively little attention from investors. According to Preqin, Africa accounted for less than 1% of private equity funds raised in 2015 – far less than both the continent's GDP share and the amounts raised for other emerging markets. This has been partially driven by the presence of many widely-held and longstanding negative views that continue to influence investors. Nonetheless, many of these views are only partially true or are misconceptions. Exposure to African investments helps diversify a portfolio and can deliver strong risk-adjusted returns. The growth story seen in many countries, driven by increased urbanization, higher consumer spending, and large capital projects, continues despite short-term macroeconomic headwinds.
Perhaps most importantly, from an impact standpoint, there is an unprecedented opportunity in Africa to effect tangible social impact while generating highly attractive financial returns. As will be explained, dedicated double bottom line investing is prevalent in Africa and even traditional funds put a great deal of focus on positive impact. In most markets, "impact investing" is a small subset of the private equity asset class; in Africa, impact is of critical importance to all private equity investors.
The positive social impact effected by African private equity is substantial. From job creation to ESG (environmental, social, and governance) standards, private equity fund managers are leading the way on both financial return long-run social impact.
A great number of development- and impact-focused fund managers with explicit double bottom line mandates are investing in Africa, from development finance institutions (DFIs) to early-stage impact investors. These fund managers invest in businesses and projects that create jobs, increase incomes, supply energy, help the environment, and build substantial local value chains. DFIs also play a key role as limited partner investors in private funds. As LPs of first time fund managers, they are working to increase the number of private equity funds in Africa, acting as a force multiplier. Finally, DFIs have the added effect of requiring more stringent social, environmental, and governance compliance from their investees' portfolio companies, leading to a focus on such issues unseen perhaps anywhere else in the world.
Fund managers in Africa, even those without an explicit impact focus, spend far more time and money on ESG matters than do their peers in the West. Partially driven by the presence of DFIs and other impact-oriented players (either as LPs or as potential future acquirers of portfolio companies), they strive to ensure that their portfolio companies are limiting negative externalities and are creating positive impact wherever they can. In a similar vein, one of the value creation tools that African private equity fund managers excel at is their ability to bring their portfolio companies (often younger and/or previously family-owned) up to above-market standards of compliance and transparency – since this tangibly increases their value at exit, whether to a strategic acquirer, to a larger financial buyer, or via IPO. Investors can even help influence the political climate by investing in countries with strong rights and governance standards and not investing in those that lack such rights and standards. This was well put by Joseph Bergin, Senior Partner and Investment Director at Phatisa, a Johannesburg-based private equity fund manager focusing on agriculture and housing. Bergin said that Phatisa "simply won't invest in countries that are going in the wrong direction politically – it's bad for our development impact goals and it's risky financially." This sentiment was echoed widely by other fund managers.
In Africa, private sector investment tangibly improves standards of living and development outcomes even when a traditional double bottom line approach is not used. Since, as detailed in Part II, private equity investments almost always act as growth enablers for portfolio companies, this investment helps trigger a virtuous cycle of higher employment, higher incomes, and greater profits for the companies. The marginal societal and macroeconomic value of private equity investment is thus substantially greater in Africa than in the West.
Traditionally, private equity fund managers have created value through a combination of earnings growth, multiple expansion, and financial leverage. In Africa, earnings growth is of paramount importance in any investment.
Financial leverage is available in smaller increments and at a higher cost than in other markets. Often, it is not available at all. Thus, fund managers must and do focus on portfolio company growth above all else to create value. Many have dedicated operations teams that are fully dedicated to growing portfolio companies and improving their profitability.
Given all this, private equity in Africa looks more like growth equity in the West than it does like "private equity" in the West (i.e., leveraged buyouts). Fund managers live and die by their ability to pick strong companies and help them grow.
Western private equity is often transactional. A deal will be sourced through an investment bank, the highest bidder will buy the company, and the prior owner will cash out. Deep relationships are less important than a willingness to pay.
In Africa, this is far from the case. Most private equity deals, except in South Africa, never come through an intermediary like an investment bank; they come to the fund manager through a network or are actively sought out by the fund manager. As noted in Part II, most transactions are not buyouts, so existing owners will hesitate to do a deal with an unfamiliar player they see as a capital provider rather than a partner. With imperfect information, the business operations of portfolio companies are facilitated by having a strong local network – particularly, in certain countries, where government is active in the private sector.
Finding the right management team is a major challenge for African fund managers; most of those we visited cited portfolio company management talent and depth as the single largest inhibitor to growth. Finding and assessing teams is therefore vital.
Without a deep local network of intermediaries, businesses, and government officials, a fund manager will struggle to source deals, expand portfolio companies, hire quality management teams, and exit deals.
More people live in China than in Africa, yet Africa has 54 countries and covers a vast land area three times that of China. It should not be surprising, therefore, that talking in simplistic terms about the African market as a whole is misguided. Countries, industries, and companies vary immensely in their nature and in their level of attractiveness for private equity investors. It is a far different reality than trite stereotypes would assert.
Many in the West talk of investing in or expanding into South Africa and Nigeria, Sub-Saharan Africa's two largest economies, in one breath. Yet the economy and infrastructure of South Africa are highly developed while those of Nigeria are not. Likewise, they may assume investors should shun the consumer sector in resource-rich Angola, a country where most citizens have very low purchasing power and 99% of goods are currently imported, in favor of the oil & gas sector. However, many investors on the ground are increasingly looking to Angola's consumer sector, with its strong macro trends and growth opportunities, and avoiding oil & gas, due to the government involvement and corruption surrounding it.
This heterogeneity is not limited to countries and sectors; the private equity fund managers investing in Africa take many different approaches. As noted in Part I, some (such as IFC) pursue investment with an explicit double bottom line mandate, while others have a more traditional profit focus. Some (such as DPI and 8 Miles) have one central office, combining the whole team in one city and limiting cost. Others (such as ECP and Actis) have numerous offices across the continent, facilitating the building of local relationships. South African fund managers like Ethos and Rockwood generally prefer to invest in South African companies and gain exposure to the rest of the continent through these companies' operations. Pan-African players, often based in London, invest in the whole continent – and avoid South Africa due to its well-developed local private equity market.
Given all this, it is clear that there is no one answer to how to be successful in private equity in Africa – no one country to focus on, no one sector to target, and no one investment strategy to employ. What it also makes clear is that a fund manager's focus is imperative; its investment strategy must seamlessly fit with its target sectors, focus countries, and firm structure.
Many companies and investors stay out of Africa altogether because they obsess over the risks – political risk, currency risk, commodity price risk, and capital access risk are four of the favorite bugbears. But this binary view is overly simplistic. As discussed previously, potential investments in different countries and sectors have far different risk profiles. It is fair to say that the average private equity investment in Africa is riskier than that in the West. Some level of risk is unavoidable – as it is, perhaps to a smaller degree, in the West. This risk is, though, accompanied by the potential for higher returns.
The perception of major political risk in Africa is the one of the most widely-held, and damaging, views of the continent. Certainly, major areas of political risk exist. However, this fear is overstated. First, overall political risk has been declining since the immediate postcolonial era. Second, there are many countries with highly stable political environments (such as Zambia, Botswana, and Ghana) – and many of these welcome and encourage private equity investment.
Currency risk is real in Africa. The South African rand has fluctuated significantly, and in the past two years the Nigerian naira has declined by ~50% against the dollar. Hedging on a large scale is prohibitively expensive. Nonetheless, there are strategies to mitigate currency fluctuation risk – such as taking out local currency-denominated debt and having local companies pass through depreciation via price adjustments to end customers. Ultimately, though, fund managers (and, more importantly, their LPs) must recognize that any foreign investment in any region does have currency risk attached to it. It is on the top of minds right now because African currencies have depreciated recently; in the long run, they are just as likely to appreciate.
Commodity price variance (which, more often than not, drives currency fluctuations) has played a major role in some of the macroeconomic headwinds the continent has faced over the past two years. However, most fund managers we spoke with were not overly concerned by this risk. Crucially, most private equity capital is not flowing into extractive industries directly – so commodity price risk, while a factor in that it affects spending power in the overall economy, is not a binary risk in the way that it would be for an investor in, say, a mine or an upstream oil & gas play.
Finally, risk to the return of capital is a factor. Certain countries, such as Ethiopia, make it easy to invest money but hard to pull money out of the country. This risk must be evaluated in every deal – and considered in potential deal and company structures that might mitigate its effect. A wider concern in this area is exits. Exits can be difficult in the continent; there is not a universe of ready, well-capitalized buyers to sell one's portfolio companies to as there is in the West. IPOs are rare – exchanges are not well-developed and are illiquid, except in South Africa, and public capitalization is highly concentrated in companies focus on mining, energy, telecom, and banking (while many fund managers are focused on the emerging consumer class in Africa). Given all this, fund managers must be more proactive in sourcing exits. All this said, exits have become materially more achievable in the past two decades as private equity has become more commonplace. South African and North African corporations are increasingly acquisitive as they pursue regional expansion through M&A. The field of potential multinational acquirers has expanded beyond the traditional players to include Asian and Latin American corporations and family offices seeking growth. Finally, mid-sized private equity fund managers can look to larger fund managers, who are raising ever-larger amounts of capital to deploy. These larger fund managers look favorably on African businesses who have experience with institutional capital (it mitigates risk), creating an opportunity for mid-sized fund managers to serve a crucial role in the growth trajectory of a company – while facilitating an exit.
Overall, there are significant risk factors to private equity investment in Africa – but they are generally overstated, are unevenly felt in different situations, and are compensated for by potential returns higher than those seen in other geographies.
Tala Al Jabri is an investment Associate with WIIP focused on investments in food and nutrition. From Saudi Arabia, she is currently using her MBA studies at the Wharton School and MPA at the Harvard Kennedy School to explore the many intersections between gender-lens impact investing, emerging market private equity and Islamic Finance. Previously, Tala was a strategy consultant specializing in economic development interventions in the Middle East and East Africa.Tala will be interning for an emerging market growth PE fund this summer based out of New York.
Steve Rizoli is an Investment Associate with WIIP focused on investments in the energy, environment, and agriculture sectors, primarily in Sub-Saharan Africa. Before Wharton, he worked in private equity and consulting in North America, Southeast Asia, and Europe. In addition to pursuing his MBA at Wharton, he is a dual degree candidate pursuing an MPA at Harvard's John F. Kennedy School of Government. This summer, he will be working in private equity in Johannesburg, South Africa.
The final series in this year's six part impact sector deep dive focuses on health and wellness. The Health and Wellness team includes first year Investment Associates Allison, Ashley, Boyce, Elena, Ioana, and Jessica and undergrad Investment Analyst Dan Wang.
The $7B USD healthcare sector continues to evolve in response to changing healthcare needs and trends.[i] Three sub-sectors comprise the broader healthcare sector: behavioral health, physical health, and healthcare enablers. New companies have explored ways to address the varying challenges each sub-sector faces with the goals of improving delivery, access, and ultimately health outcomes.
Cost-Effectiveness/Affordability: How much does the offered solution reduce the total cost of healthcare for its target population? How does the offered solution alter payer, patient and provider payment dynamics?
Accessibility: Can the offered solution be made consistently available to the target population through the appropriate distribution channels? Can the offered solution be provided equitably?
Improved Quality: How does the offered solution improve the quality of healthcare delivery, services, or patient outcomes?
Importantly, these three goals are highly interconnected and must all be taken into account when assessing the total impact of any potential solution. Solutions overly focused on a single impact goal may overlook negative consequences in a separate impact area (e.g., extreme focus on improved quality at the expense of affordability). Evaluating solutions with all three goals in mind will help identify any potential tradeoffs of this nature.
The healthcare system breaks down into three overarching sectors: behavioral health, physical health, and healthcare enablers.
Substance Use: Reliance on and addiction to substances like alcohol, marijuana, cocaine, heroin, and prescription opioids.
Prevention: Focused on minimizing the incidences of acute and chronic conditions, prevention includes research and early interventions.
Personnel: Education, deployment, and sustaining of high-quality healthcare professionals.
The following map presents a visual representation of the healthcare system sub-sectors and their alignment with key impact goals.
Behavioral health includes two major segments – mental health and substance use. Mental health encompasses emotional, psychological and social well-being. Common disorders/illnesses associated with mental health include: anxiety disorders (e.g., obsessive compulsive disorder, panic disorders, post-traumatic stress disorders); behavioral disorders (e.g., ADHD); eating disorders (e.g., anorexia, bulimia); mood disorders (e.g., depression, bipolar disorder); and suicidal behavior. Substance use covers the intake of alcohol and other drugs, such as marijuana, cocaine, heroin and prescription opioids. Substance use disorders occur when overuse of alcohol and other drugs lead to clinically and functionally significant impairment, such as health problems, disability, and failure to meet major responsibilities at work, school, or home.
Treatment for behavioral health issues generally occurs through three different channels: (1) self-care and informal health care (e.g., self-monitoring of high-risk behaviors, web-based drug use disorder therapy); (2) primary health care (e.g., screening for behavioral health disorders by doctors, psychological treatment for depression); and (3) specialty health care (e.g., medication-assisted drug treatment, psychiatric therapy).
Behavioral health issues affect millions of individuals within the US and worldwide.
In 2015, 241,000 adults in the US suffered from an alcohol use disorder and 132,000 adults battled an illicit drug use disorder. In addition, over 43 million Americans were diagnosed with a mental illness.
Approximately 240 million individuals worldwide are dependent on alcohol, more than a billion people smoke, and 15 million people use injection drugs.
About 23% of all years lost because of disability is caused by mental and substance use disorders.
Increase in non-medical use of prescription drugs.
Low perceived need for care: Recent studies show that low perceived needs for treatment deter individuals with mental health issues from seeking professional care.
Failure to seek help: While evidence-based treatments and care systems exist to treat individuals with mental health and substance use issues, the majority of affected individuals fail to seek help from professionals due to stigma and discrimination.
Low levels of retention in care: Populations experiencing mental health and substance issues exhibit high drop-out rates from treatment for a variety of reasons (e.g., desire to solve issues themselves, find treatment ineffective, lack access to culturally-appropriate care).
Physical health includes maladies that affect physical well-being, and consists of three segments: acute patient states, chronic patient states, and prevention. Acute conditions appear suddenly and may quickly progress, requiring immediate medical attention and care for short periods of time. Examples of common acute conditions include heart attacks, infections, epidemics, and viruses. In contrast, chronic conditions, defined as lasting three months or more, involve the slow development of symptoms that may worsen with time. Because chronic conditions do not go away with treatment, patients must use medications for extended periods of time for disease maintenance or to slow disease progression. Common chronic disease states include arthritis, heart disease, diabetes, some cancers, and obesity. Without proper treatment, acute states may develop into chronic states or lead to other chronic patient conditions. Lastly, prevention includes activities focused on reducing the incidences of acute or chronic health states through research or early medical and non-medical interventions prior to disease onset.
Faster spread of global epidemics: With increasing globalization, the spread of diseases and epidemics across the world has accelerated. Recent epidemic trends like Zika, Ebola, and more resistant flu variations require quicker containment and treatment to slow their spread.
Growing incidence of chronic disease: Arthritis, cancer, Type 2 diabetes, heart disease, and obesity are the leading causes of death worldwide. Unfortunately, many patients also experience co-morbid chronic conditions, and with advances in medical treatment, people are living longer with these co-morbidities (e.g., aging baby-boomer population).
Growing aging populations: Globally, we face growing elderly populations that require new models of care, moving away from institution-based aging towards community-supported aging. Increased use of technology and analytics (e.g., tele-health, remote monitoring) has allowed elderly populations to maintain independence longer.
Personalized care: There are increased developments of treatments designed specifically for individuals' personal traits, including genetic make-up, especially in cancer. These scientific advances in drugs and devices can be integrated with low-cost diagnostics, disease management programs, and clinical decision support to optimize value for the individual.
Adherence focus: There are increased developments in treatment plans and medications to try and increase adherence.
Patient behavior and mindset: The effectiveness of interventions in treating physical health issues depends heavily on the patient's behavior and mindset to reach the desired outcomes. If patients do not adhere to prescribed treatment plans or do not want to make behavioral changes, then treatments will be less effective.
High drug costs: Increased cost of medications is putting strain on all parties in the health care payment chain. Even as more patients are gaining health insurance coverage, they still face high pharmacy deductibles and rising out-of-pocket costs.
Dependence on government or health organization aid: Primary funding sources for curbing epidemics and disseminating disease treatment in lower income or developing areas tends to be limited to the public sector, rather than drawing on larger private sector resources.
Privacy management: With increased digitization of patients' health information and patient data collection (e.g., personalized genomics), there is higher risk of breaching confidential patient information. Thus, there is increased imperative and difficulty in adhering to the Health Insurance Portability and Accountability Act (HIPAA) that seeks to protect patient privacy.
According to the World Health Organization (WHO), "more than one billion people cannot obtain the health services they need because those services are either inaccessible, unavailable, unaffordable or of poor quality." Challenging economic and political conditions limit governments' ability to devote necessary resources to maintain adequate healthcare infrastructure. Although healthcare is one of the largest sectors in the world (10% of global GDP), healthcare spending varies widely by country. For example, while the US spends 17% of GDP on health, South Sudan spends less than 3%. This discrepancy in healthcare spending translates into major differences in access to and quality of care. In recent years, this challenge has been further exacerbated by rising costs of care and aging populations.
Healthcare enablers can be subdivided into three categories: physical infrastructure, healthcare delivery systems, and personnel. Poor quality or unreliable infrastructure – roads, water systems, and electricity – can have a huge impact on the delivery of care. For example, in the absence of reliable electricity, healthcare providers cannot maintain optimal conditions during transport, storage, and handling of vaccines (i.e., cold chains) and often resort to portable refrigeration systems delivered on foot. Regarding healthcare delivery systems, an insufficient number of hospitals or clinics limits the number of patients with access to care as well as increases patient travel distance. In Nigeria, only 40% of the population lives within a 1-hour walk of a health center and drops to 25% during the wet seasons when flooding impairs roads and bridges. Finally, the lack of sufficient numbers of healthcare personnel – such as doctors, nurses, and midwives – leads to long wait times for patients or improper diagnoses and treatments.
Public-private partnerships (PPPs): A growing number of public infrastructure projects – related to water, sanitation, energy, transport, telecommunications, healthcare and education – are being financed by a consortium of government and private partners.
Aging Populations: Across the world, population aging is accelerating rapidly. By 2019, it is expected that nearly 11% of the total global population will be people ages 65 and over. Among the contributing factors are increased life expectancy, declining infant mortality, improved sanitation, and improved prevention of communicable diseases.
Lack of skilled personnel: According to the Clinton Health Access Initiative, more than four million health workers are needed globally.
[i] BMIResearch, "Global Pharmaceuticals and Healthcare Report," June 2016, p. 10.
 Limited, T. E. (2015). Financing the future Choices and Challenges in Global Health.
 Blanford, J., Kumar, S., Luo, W., & MacEachren, A. (2012). It's a long, long walk: accessibility to hospitals, maternity and integrated health centers in Niger. NCBI.
 Deloitte. (2016). 2016 Global Healthcare Outlook.
 Foundation, T. C. (2016). Clinton Foundation. Retrieved October 15, 2016, from Human Resources for Health: https://www.clintonfoundation.org/our-work/clinton-health-access-initiative/programs/human-resources-health.
This week's impact investing sector focus is financial inclusion. The Financial Inclusion team includes first year Investment Associates Isabel, Amy, Vinayak, Giselle, Alice, and Pramatha, and undergrad Investment Analyst Megan.
Approximately 2 billion adults worldwide do not have a bank account. Financial inclusion seeks to provide all households and businesses with access to effective and affordable financial services. These services include but are not limited to payments, credit, insurance, and savings. Instrumental in helping people start and expand businesses, invest in education and health, and weather unexpected emergencies, financial inclusion is considered by the international community as an enabler for 7 of the 17 Sustainable Development Goals. Recent financial innovation, especially in digital financial technology, has given rise to many companies looking to improve the unbanked and underbanked communities' access to services, increase their frequency of usage, and deliver better quality products.
Over the past decade there has been exponential growth in services targeted at financial inclusion. Today, 62 percent of the world's adult population has a bank account, which is up from 51 percent in 2011.
In the US, the challenges remain less about financial inclusion (only 6 percent of adults do not have access to financial services) and more about integrating the underbanked into the mainstream. Access to formal financial services for the underbanked and unbanked is limited and, when available, tends to be more expensive and on the 'periphery' of the formal financial system. In the US, through using services like money orders, payday loans, and pawn shop loans, families without a checking account pay from $220 up to $1,100 in extra fees compared to banked households who pay an average of $104 annually. This does not account for lost economic gains that households experience due to lack of access to formal financial services.
Technology, and in particular the mobile phone, will be a critical platform for financial inclusion. Technology has reduced the cost of scaling and providing financial services around the world. The mobile phone will be an important platform for this, with 92 percent of the population in the US owning a mobile phone in 2015. While technology-based payment approaches like digital wallets and "peer to peer" payments are expanding services, they often require a customer to link to an existing bank or credit card account. They therefore do not always directly address financial inclusion, but may help increase financial capability.
Alongside technology, transaction data facilitates better monitoring, screening and approval. Financial institutions are now establishing key partnerships with social media companies and credit bureaus to examine data related to customers' preferred service points and technology platforms, credit worthiness, reliability in paying bills, and payment preferences. An exciting new example of this being done at scale is the 'India Stack' which is building a digital infrastructure on the new ID system that allows for conducting financial transactions.
Prepaid is important. Prepaid instruments, particularly the general purpose reloadable (GPR) card, has several characteristics that make it better for the underbanked: lower cost structure, more accessible reload points, less intimidating, easy to open, and lower/more transparent fees. With 1.5 billion people unable to prove their identity globally, prepaid instruments may be an important way of broadening financial inclusion.
Nonbank players are driving innovation. Startups and nonbank players are leading the charge to build businesses targeting the underbanked. In particular, many are taking the lead in introducing new financial products that address key customer pain points, improve the customer experience and focus highly on the user interface.
Financial health alongside financial inclusion. A recent trend in the financial inclusion community has been improving the financial health of the underbanked community. Financial health is defined as the ability of customers to not only access financial products but also use them often and effectively to improve financial outcomes. Due to distrust towards bank representatives, low technology literacy and unfamiliarity with formal financial services, initial digital payments have not always resulted in active accounts or improved outcomes. Furthermore, a wide array of disjointed new financial products has made it difficult for customers to pick and choose what best aligns with their needs and capabilities. The startup community has responded by introducing comprehensive suites of financial products that often transcend specific categories to include, for instance, financial education combined with consumer credit and insurance services.
Access: Does the offered product/service improve access for underserved populations?
Usage: Is the offered product/service relevant and valuable? Is the product/service being used, and how often or to what extent?
Quality: Does the offered product/service meet customers' needs in an effective way?
Is the product/service an improvement compared to alternative existing offerings?
Does the product/service include consumer protection (is it non-predatory)?
By evaluating the sector with these goals in mind, we are better able to gauge the level of impact of the investments sourced.
The Financial Inclusion sector is primarily segmented into five sub-sectors in this report: (i) Payments, (ii) Insurance, (iii) Credit, (iv) Savings, and (v) Financial Capabilities. We recognize that high-potential companies offer products that transcend multiple sub-sectors, but we believe this framework is effective for understanding the financial inclusion landscape.
Remittances: funds that a migrant sends to country of origin via wire, mail, or online transfer.
Check clearing: the deposit bank is where the check has been deposited, and the issuing bank is where the check was issued. When a check is cleared, the deposit bank collects the funds from the issuing banks and transfers them into the account of the entity that deposited the check. For unbanked or underbanked communities, this consists of commissions paid for cashing checks at non-traditional financial institutions.
B2B (Business to Business): payments made from one business entity to another business entity.
Salaries: fixed regular payments, made by an employer to an employee, typically paid on a monthly or biweekly basis but often expressed as an annual sum.
Government benefits: financial assistance provided by the government to certain segments of a population, such as welfare, subsidies, and tax breaks.
Bill payments: funds that are sent by an individual, family or business entity to pay for services or products rendered.
Technology innovation is transforming traditional methods of payment across these verticals. Digital products like digital currencies and mobile money are facilitating low-cost, widespread adoption of new payment systems.
The Payments verticals with the greatest potential to receive impact investments are Remittances, Check Clearing and B2B. Under the current system, Remittances and Check Clearing do not have an adequate alternative for underbanked communities. Remittances are frequently sent via high-cost transfer companies such as Western Union, removing a high percentage of a migrant's funds. Similarly, check clearing companies charge exorbitant rates to cash checks for underbanked communities. Innovation in these two areas is critical to expanding the financials inclusion sector. There are also interesting developments surrounding B2B, particularly regarding enterprises that design products with a heavy emphasis on the "user experience." As mentioned, digital products play a pioneering role in these high-potential verticals.
The Payments verticals with low potential to receive impact investments are Salaries, Government Benefits, and Bill Payments. These verticals are difficult to innovate in given their high transactional nature and bureaucratic stakeholders, such as the government.
Health insurance: pays for medical expenses. It is often riskier and more complex to offer, and can come with high premiums and other associated costs.
Crop/livestock insurance: protects farmers from unexpected events like natural disasters (e.g. floods, droughts). It can also be known as weather insurance, and protects from the declines in prices of agricultural commodities.
Home insurance: a form of property insurance protecting an individual's home against unexpected accidents and often provides liability coverage to the insurer.
Life insurance: provides coverage against the death of an insured person, relieving surviving family members from some financial burden associated with the death.
Business insurance: minimizes financial risks associated with unexpected events like injury of an employee, a lawsuit, or a natural disaster.
Recently, there has been a surge of interest in this sub-sector. While many startups are not equipped to take on insurance risk directly, they are looking to solve different pain points under existing business models in the B2B space, such as claims management and the existing distribution system. Furthermore, increased adoption of the Internet of Things (IoT) provides a unique method for insurance companies to tap into consumer behavior.
Health and Crop insurance are two high potential verticals. They have the potential to create a large impact on low-income households' livelihoods. Recently, there has been immense innovation in building effective solutions for these complex products.
Other forms of insurance are as important, however the scale of their impact on low-income households may not be as high. In addition, local microfinance institutions and other entities have been offering some of these insurance products already (e.g. creditors using their home as collateral and thus getting home insurance).
Business to consumer (B2C): Credit to consumers has expanded beyond traditional financial institutions, with startups and enterprises offering innovative solutions that provide more affordable credit (e.g. accepting alternative forms of collateral, asset-backed lending, gold lending).
Peer to peer (P2P): Through crowd-funding platforms online, improved services over traditional forms of community-based P2P lending.
Business to business (B2B): Digital platforms that allow lending to small businesses.
Government to businesses (G2B): Government-subsidized loans to small businesses with more attractive loan terms.
P2P, B2B and B2C lending are identified as high potential verticals. There has been substantial innovation in these sub-sectors allowing for more transparent transactions, more attractive loan terms and lower costs of servicing. When applied to low-income households, these verticals can create a lot of impact.
As for G2B lending, there may exist a need for improved efficiencies and better services among governmental services offered. However, we believe the potential currently for immediate and large-scale impact is limited.
Deposit taking firms: financial model that pays an established rate of return to the money in the account based on time and/or amount at the time of the deposit.
Pension and retirement funds: savings that are expected to be used in the long term as retirement income and are saved in low-risk assets with flexible interest rates.
Money market funds: a type of low-risk investment with an expected return close to the market average.
Non-money market investment fund: a savings product that invests in a variable return rate and has a broader scope of investment, normally customized to client risk-tolerance.
As underserved communities begin to adopt savings products in greater numbers, there are significant opportunities for innovation in this sector. Furthermore, the market variable interest rate is expected to rise and become more attractive for small account holders looking to save. New savings products are making it easier for customers to align their risk-return expectations without the need for intermediaries.
Another significant, pertinent trend in this sector is educating people to adopt a savings habit. Many enterprises are automating saving patterns, leveraging "big lifetime events" to transmit their message and grow the savings market.
We identify Pension funds and Retirement funds as high potential verticals. The opportunity for impact is high given the potential to ease the burden on younger and/or working family members when older family members retire.
Awareness & Education: developing an awareness and sophistication around financial literacy.
Know your customer (KYC): a business identifies and verifies its clients.
Consumer subscription models: an individual consumer subscribes to a particular financial product or service that enhances financial literacy.
B2B models: a business subscribes to a particular financial product or service that enhances financial literacy.
The Financial Capabilities verticals with the greatest potential to receive impact investments are Awareness & Education and Know Your Customer (KYC). There is a large opportunity to create financial inclusion products that promote financial literacy, and help businesses identify and verify underbanked populations. For the latter, this could also include alternative forms of credit score measurement for underbanked populations.
The financial capabilities verticals with low potential to receive impact investments are consumer subscription models and B2B models. The financial sustainability of companies within these verticals is dubious, assuming that the customer base is low-income communities/businesses that are based in developing countries.
The grid maps out the sectors and subsectors in a heat map. It denotes a first assessment of each sub-sector's current status measured against our three key impact measures. When the sector is under-developed or underserved there are clear opportunities for new comers. However, there can also be interesting opportunities in sectors that are already developed. The opportunities can come from efficiencies, new business models, different way of targeting the clientele, and many more.
Green represents high current development stage / offering, Yellow represents medium, and Red is low or untapped sector.
Example: Remittances has a green box on access = Remittances are relatively well spread among population in terms of availability of services regardless of income or location.
Picking up from last week, we continue to explore education impact investing with a focus on higher education. The Higher Education team includes first year Investment Associates Bianca, Juliet, Jitin, Ambreen, Shaistah, and Alexandre and undergrad Investment Analyst Chuhan.
The postsecondary education industry is a $400 billion industry supported by public and private funding. Investment in the space is also growing. Looking at ed-tech companies only, there was a 503% growth in VC-investment between 2010 and 2014 (including K-12) with $1.4 billion invested in 2014. The post-secondary education industry breaks down into three large sub-sectors: Undergraduate Degrees, Graduate Degrees and Non-Traditional Programs.
Access to and graduation from postsecondary institutions has multiple benefits to individuals and society including higher wages and upward socioeconomic mobility. Both within the US and internationally, however, the postsecondary industry continues to face the challenges of rising costs, unclear educational outcomes and unequal access. These inefficiencies in the sector have given rise to several enterprises that are looking to solve these challenges and improve the access, affordability and quality of the postsecondary education.
Improved Accessibility: Does the offered solution help more students, especially those from underserved communities gain access to a quality post-secondary education?
Improved Affordability: Does the offered solution either bring down the cost of attendance for students, offer lower-cost financing or change the cost structure of the education provider to make education more affordable?
Improved Quality: Does the offered solution increase the number of people who achieve their desired outcome including successful career placement, admission into advanced degree programs or graduation rates within 5 years?
By evaluating the sector with these goals in mind, we can better gauge the level of impact of the investments sourced. The impact matrix below shows how new innovations are helping achieve key impact goals across different higher education sub-sectors.
Based on our initial sector research we see the greatest need and opportunity for impact in the Undergraduate and Vocational Degree sectors of the market and will spend less time covering the Graduate Degree sector.
In fall 2014, there were 17.3 million undergraduate students in the United States. Skill gap and rising cost to the student, in tandem, create two of our three addressable needs in the undergraduate education space: increased affordability and increased quality. The third addressable need is increased accessibility as certain groups (e.g. Hispanics and women) are underrepresented at universities.
Given this, we see three main addressable needs and opportunities in the traditional undergraduate program space. First, there is a growing mismatch between the skills of newly graduated students and the skills necessary in the economy today. Unemployment is two to three times higher among low-skilled professionals than it is among medium- and high-skilled professionals, showing the even greater difficulties facing graduates with only basic skills (BCG Five Trends to Watch in Higher Education).
Second, the cost of the undergraduate education is rising dramatically as sources of funding are being cut. There is currently $1.3 trillion of student loan debt in 2016 and student debt loads have increased 8% annually since the financial crisis (BCG Five Trends to Watch in Higher Education). These two trends - skill gap and rising cost to the student - in tandem, create two of our three addressable needs in the undergraduate education space: increased affordability and increased quality.
The third addressable need is increased accessibility as certain groups are underrepresented at universities. This issue stems from the lack of resources to get these underrepresented groups into college and also the higher than proportionate share of failed completion of an undergraduate degree by these groups. Increasing support in getting these groups in undergraduate programs and ensuring their graduation and success is a large need and we have identified key investment opportunities through these trends.
Funding: There is a need for more funding resources to help students manage the cost. Specifically, many students from low-income backgrounds are unaware of the resources available to them. Thus, many organizations have been started to help students and parents navigate the funding challenge in order to enable initial access and to increase retention.
Enrollment: Postsecondary attendance rates are generally lower for youth from lower socioeconomic backgrounds and those from various racial/ethnic groups when compared to Whites and Asians. In addition to racial/ethnic enrollment differences, there are gaps in postsecondary attainment for males and females.
Graduation: Graduation rates are falling and enrollment growth is weak; causing lower-tier institutions to suffer. As a result, these institutions will face increased competition for students & their longevity is threatened if they face reduced enrollment and a shutdown decision in the medium- to long-term.
Outcomes: There has been a significant focus on measuring and improving students' education outcomes. Rising concern about America's ability to maintain its competitive position in the global economy has also renewed interests in STEM education.
As of the fall of 2014 there were ~3.7 million Graduate students enrolled in the US and ~900,000, degrees conferred. The number of degrees has remained relatively flat over the last 10 years and the forecast going forward is similar. The biggest shifts in the Graduate student populations are around the mix of international vs. domestic students and the way students are accessing education options. These mix shifts are giving rise to two addressable needs in the space.
Firstly, there is a strong need to improve affordability and access to funding in the sub-sector. When looking at the mix shift of international students specifically, there is limited access to federal and US-based private funding for international students. New financial funding models may help alleviate this issue. In addition to improving access to funding, there is a growing affordability issue. Although Graduate students only make up 16% of the student populations they account for 40% of the ~$1 trillion dollars of student debt in the US in 2016. This large debt amount is driven by significantly less state support at the Graduate level (e.g., no Pell grants).
The second addressable need in the market is improving accessibility through additional non-traditional structures. Graduate students are more likely to go to school while working and need additional flexibility. Although there are online or weekend/night classes there is a lack of specific and quality accreditation for several online universities which may make degrees less valuable.
Funding models: There is a growth in innovative funding options for Graduate students that fill the gap of State and Federal funding. These models, that can also be available to international students, are pursuing strategies like connecting individual lenders and students directly, bypassing traditional financial institutions.
Growing use of academic technology: 36% of all Graduate students take at least some online classes while 20% of all Graduate students exclusively take online classes. Additionally, Graduate degree seekers are more likely to take classes on nights or weekends: 34% take some night classes and 12% take some weekend classes.
Lack of Specific Accreditations: Though students are responsible to verify a provider's status but some institutions may mask their lack of specific accreditation(s) in order to attract unsuspecting students.
Vocational and community colleges provide alternative options to one-half of post-high school students, consisting of organized education programs offering a sequence of courses to directly prepare individuals for employment without the requirement of an advanced baccalaureate degree. As of 2008, there were 1,045 community colleges in the United States, enrolling 6.2 million students (35% of all postsecondary students enrolled). As of October 2015, 3.5 million students are enrolled in vocational courses. In addition, adult life-long learning platforms, including online skill certifications and knowledge portfolios, are on the rise.
The key need in this space is to make sure schools are offering a more career-oriented approach to higher education, particularly given sluggish economic recovery, accelerated stimulus spending and a more practical student mindset. Students in vocational and community schools, and even those enrolled in lifelong learning online platforms, are looking for affordable quality education that develops both career specific skills and well-rounded citizens, leading students to short and long-term success.
Workplace Needs Dictate Learning Needs: The workplace requires three sets of skills of most workers: 1) Strong technical achievement, especially in English language arts, mathematics, and science, as well as computer skills; 2) Career specific skills for a chosen career clusters; 3) Virtues such as honesty, responsibility, and integrity. The goal is to prepare students with high-level, broad-based transferable skills and technical skills required for participation in the "new economy," where adaptability is key.
New Teaching Models: New teaching systems are gaining traction, including accelerated three-year degrees, industry accreditations, and certifications programs relevant to vocations.
Highest Demand Vocational Skills: Due to an aging population, demand for workers in the healthcare-related fields is increasing and projected to be the area of highest growth in the next five years, specifically for medical technicians, nurse's aides and dental hygienists.
Enrollment Fluctuations: Enrollment in vocational schools is dependent on the economy: in year 2011, industry revenue jumped by 11.2% due to high unemployment and a slow economy, however, growth is estimated to slow down to be about 0.3% annually due to improvements in the labor market.
Misaligned Focus: While employers rank mathematics, science, and English language as top-rated skill needs, many of the lowest-rated topics remain a central focus of instruction in non-baccalaureate programs.
Decreasing Affordability: Changes in the funding landscape within the Education sector in general - notably the 2010 expiration of the stimulus spending through the doubling of Pell Grants alongside other cuts in taxes being earmarked to pay tuition at for-profit colleges are making even vocational/community college programs less affordable.
Good morning! We continue the WIIP sector features with K-12 Education. The K-12 Education team includes first year Investment Associates Won-Mo, Kavita, Kushal, Nate, Elizabeth, and Jason as well as undergrad Investment Analyst Marina.
Despite growing investment in education– last year saw $1.8B flow into ed-tech in the US alone – there is still much to be done to improve the quality of education. Access to quality education is limited for many children, and that, in turn, widens the socioeconomic gap between the rich and poor. Education systems have not evolved with economies, leaving students unprepared for the demands of a technology-focused job market. Given fundamental gaps in education, the industry is primed for innovation and investment within the student, teacher, and enterprise sub-sectors.
Federal: Includes the Department of Education as well as the Department of Agriculture (school lunch).
Budget notes: Responsible for over $40B (13%) of annual K-12 education funding, over half of which comes in the form of Title I (for low-income students) and IDEA Special Education grants.
State: Includes all 50 state governments (plus Washington D.C. and other US territories) and their state-level education institutions.
Budget notes: Varies from a low of 31% to 86% of all education funding. There is variation in funding both across and within states; e.g., New Jersey recently spent annually $16,271 per student, whereas Utah spent only $6,356.
Districts: There are roughly 13,600 autonomous school districts led by a board and superintendent; in some cases, failing districts have been taken over by mayors and/or states.
Budget notes: Funding often depends on property taxes, leading to major disparities in per-student spending: in Illinois, New Trier Township High School District spent nearly $20,000 per student, while certain other IL districts spent less than $7,000. Figure 1 below illustrates the average spending per district in the US.
Budget notes: Resources are rarely distributed pro rata across schools; lower-needs schools tend to receive comparatively greater resources, suggesting these have greatest ability to pay but likely among the lowest potential for impact. Often, >80% of public school budgets go to personnel and benefits.
Collectively, schools serve approximately 50 million public school students and 10 million private school students. Most students (84%) attend traditional public schools, with a further 3% in public charter schools. The remainder is split roughly evenly among homeschooling and parochial and non-parochial private schools.
Per the National Center for Education Statistics, enrollment in K-12 schools is expected to grow modestly (0.55% annually) across the US between 2010 and 2020. Ten districts account for 8% of all US K-12 students (thus indicating relatively low concentration overall). The largest 2% of districts – with >25,000 students – account for over a third of students, and the largest 6% – with >10,000 students – for more than half.
The K-12 education sector naturally breaks down into three sub-sectors: Students, Teachers, and Schools/Enterprises. Within each sector, we have created categories / subdivisions to further clarify the definition of each sector.
Students are children of K-12 age. In fall of 2016, approximately 50 million students entered public schools in the US while about 10 million entered private schools., The Student subsector captures innovations directly targeted at students and their caregivers.
Unequal access to education is a key challenge. A recent report shows that students in the wealthiest districts are >4 grade levels ahead of those in the poorest districts, and high-income families spend seven times more on education enrichment than low income families.[viii] As the student population is becoming more culturally, racially, and socioeconomically diverse, troubling disparities remain persistent. Although 87% of white students graduate from high school on time, that number falls to 76% for Hispanics and 73% for African Americans. Additionally, the number of homeless students doubled to approximately 1.3 million from 2006-07 to 2013-14. Thus, innovation within this subsector tends to focus on increasing accessibility and enhancing efficacy of education for all students.
Personalized learning: With increasing student diversity and the Department of Education contributing over $500M to research in the field, demand for personalized learning is growing. With the rise of machine learning and predictive analytics, schools are focused on creating classes that adapt to learners' specific needs and provide them with the necessary skills, instruction, and resources to master key concepts.
Technology in school: With 20% of US schools having a device-to-student ratio of 1:1 and with adoption of mobile computing devices forecasted to reach 45% of K-12 students and teachers by the end of 2016, students have greater access to technology in school than ever before.
Computer science: Over the past two years, the number of US states with computer science as a graduation requirement has doubled. As developed economies across the world continue to shift toward a service and technology model and as jobs within the computer and math related fields continue to grow (jobs within these fields are expected to reach 1.3 million positions 2022), computer science education is expected to expand accordingly.
Social-emotional learning techniques through online gaming: The recent federal education law, Every Student Succeeds Act, placed "social-emotional, non-cognitive" needs at the forefront of educator goals, as demonstrated by a California initiative that will begin testing for character this year. Online gaming tools allow students to identify and address their needs in this area. These tools help students build character strengths, including people management, teamwork, critical thinking / problem solving, negotiation, leadership, decision-making, and judgement.
Teachers, numbering approximately 3.5 million in the US as of fall 2016, are the people who facilitate K-12 student learning. This subsector captures products and services that aid the efficiency and quality of teaching.
A 2013 report from the National Council on Teacher Quality found that approximately 70% of teaching programs are not training elementary school candidates with adequate and up-to-date training. Meanwhile, increasing fiscal pressures on municipal and state governments necessitate cost-cutting. Together, these trends have put a squeeze on teachers' attempts to provide higher-quality education and attend to students' individual needs.
Digitization: Over 90% of teachers experience only traditional, workshop-based professional development, even though research shows that this is extremely ineffective. These short, one-shot workshops are not ongoing and do not teach teachers how to implement new approaches. Digital platforms improve access to professional development and tools for teaching, self and peer assessment, classroom management, parent management, and administration.
Collaboration: Technology allows teachers to collaborate more extensively with peers, allowing more effective creation and dissemination of best practices.
Big Data: The ease of collection and analysis of data allows teachers to make more evidence-based decisions regarding a host of issues such as curriculum development and management of each student's engagement in the classroom.
Schools are institutions that provide a learning environment for students.
As use of technology by students, teachers, and government increases, schools face greater expectations for utilizing data to better handle student information, student learning, and administrative tasks.
Micro-schools: With personalized learning and alternative curricula, these for-profit institutions have emerged across the US and abroad, with an especially high concentration in the Bay Area.
Digital infrastructure: Schools are opting for digital systems that handle administrative, financial and operational data. Frequently, these systems are cloud-based and have a variety of benefits, including streamlining operations, improving communication, and reducing staff required. The market is expanding rapidly - by 2017, cloud computing is expected to make up 35% of the IT budget in K-12 education.
The following chart highlights a few limitations that hinder the market from effectively matching consumers (students/parents, teachers, and schools) and sellers.
 McKinsey study on the U.S. education system.
The Food & Nutrition (F&N) team includes first year Investment Associates Ada, Julia E, Julia H, Michie, Smitha, Tala and undergrad Research Fellow Aaron. The team is advised by Amy Yu, who brings experience working across several food and nutrition start-ups. Most recently, Amy helped launch grocery delivery service Instacart in Chicago and now manages their brand partnerships.
The food and nutrition industry is far-reaching and investment channels run deep. Impact investors see tremendous potential in the agriculture space, an industry riddled with gross inefficiencies, daunting climate change challenges, a looming gap in agricultural production, and dire food security in vulnerable populations. The space is a major priority for everyone from the United Nation's Food and Agriculture Association, to the USDA, to many local communities and entrepreneurs.
Major trends in the space include adapting to climate change while minimizing the impact of production on the environment, reaching and educating vulnerable communities, and increasing food safety and security. Although globalization is making continent-spanning supply and distribution chains increasingly possible, there has been a major push in the space to "localize" food and nutrition.
The business opportunities in the F&N sector can be categorized into three sub-sectors: production, distribution, and consumption. Each sub-sector can be further disaggregated into two unique categories. Our team will evaluate business opportunities within each sub-sector and its categories using the key impact goals discussed below.
Access to food: Does the solution increase access to nutritious food? Equally important, does the solution decrease barriers to access for vulnerable populations (e.g., women, children, those below poverty line)? We will prioritize solutions that make food affordable, create new markets for previously unavailable foods, and remove geographic, economic, and agricultural barriers preventing people from receiving the sustenance they need.
Reduction of food waste: We will prioritize solutions that seek to reduce food spoilage or responsibly dispose of or reuse food waste. These solutions increase the efficiency of the sector and overall availability of food.
Across all three impact goals, our team will explore and emphasize the potential for global scalability and integration of innovative technology within the production, distribution, or consumption of food, to ensure long-term improvements. The impact matrix below applies the key impact goals to each sub-sector and its categories.
We now dive into the trends and limitations of each sub-sector.
Production involves the process of employing R&D, farming, ranching and trading of crops and livestock and captures all inputs associated with their production. Inputs include seeds, fertilizers, chemicals, technological inputs, and financing. On the other hand, processing converts crops and livestock into finished goods.
Processing: Primary processors are involved in the preparation of fresh foods for market. Such activities include meat slaughtering and processing and fruit and vegetable preserving. Value added processors work on the production of prepared food products. Such activities include grain and oilseed milling, confectionery, bakery, dairy, and other food product manufacturing.
Technological innovation: Remote satellite technologies are supporting better farming practices that can accommodate different agro-ecologies. In the developed world, there has been increasing emphasis on cost cutting and in providing better projections for crop production. Not only is this being addressed through big data but also in infusing technologies such as drones to support more efficient farming practices.
Food innovation & biotechnology in meat alternatives and GMO: Focused on farming inputs, innovations that have received increased attention include bio-stimulants, meat alternatives, and vertical farming.
Sustainable farming: Agricultural activity emits nearly a fifth of the world's greenhouse gas emissions. Over-harvesting can create biotic and abiotic stresses that result in soil degradation. There has been increasing investment in new innovation to mitigate the negative effects of farming. Several new seed varieties offer greater higher tolerance to drought, heat, and salinity, and early maturation to shorten the growing season, which reduces required inputs and farmers' exposure to risk of extreme weather events.
Risk management: As producers face increasing volatility and risk related to climate change, there is a distinct need to diversify products or secure their livelihood despite this increased risk. As such, we have seen an increase in offerings related to micro insurance products, product diversification, etc.
The structuring of financial products that suit the needs of farmers has seen an increasing rise, particularly in the form of small, short term loans that are tied to seasonality of agricultural output. In the developing world, innovative business models focused on leasing are giving smallholder farmers access to mechanization that help improve yield by acreage.
There has been increasing investment in infrastructure that works to preserve the freshness of food including in infrastructure development (e.g., warehouses and building out a cold chain). In the developed world, social enterprises are attempting to solve the challenge of "ugly foods" by finding a new channel through which to sell these goods.
This report defines distribution as the sub-sectors relating to moving products from food suppliers to buyers to customers. This includes transport, handling, packaging, and warehousing of the products. Major activities within these sub-sectors include developing supplier networks, coordinating between food producers, distributors, and retail sellers, building and maintaining the overall distribution infrastructure, as well as negotiating fair pricing among parties.
Retailers: Retailers showcase the product for the consumer. They are instrumental in connecting consumers with a variety of food and promoting innovative, nutritious and socially beneficial products because they control the allocation of limited shelf space. They include a broad range from large international supermarkets to small local corner shops to vending machines and from brick-and-mortar stores to online businesses.
Access to food, or specific types of food, for underserved communities and vulnerable groups. Nearly 795 million people in the world (1 in 9) do not have enough food to lead a healthy life. Many businesses have emerged to address different aspects of food shortage.
3. Environment: the sector needs to balance future demand and supply sustainability and meet the challenges of a low-emission world while providing food to consumers. Businesses can do the following to regulate its environmental impact.
The sector struggles to fill roles such as operational managers, food scientists and technologists, and sales and retail professionals.
The sector is sometimes constrained by the lack of systems that move local and quality foods into mainstream market.
WIIP Smart is beginning a weekly series of long-form articles that features the work of each impact investment sector team. The sector teams are Energy & Environment, Food & Nutrition, Higher Education, Financial Inclusion, Health & Wellness, and K-12 Education. We begin this six part series with a look at the Energy & Environment team and their research.
The Energy & Environment (EE) team includes first year Investment Associates Claire, Gabe, Kening, Manvi, Peter, and Steve. The team is advised by Joe Lipscomb from Arborview Capital, an impact private equity firm with an energy and environment focus.
Large-scale human use of energy and environmental resources have enabled massive increases in wealth and quality of life. However, sustaining human consumption and industrial production places a colossal burden on the environment. How do we continue providing life-changing access to energy and environmental resources to people, particularly the poorest and most vulnerable, while significantly reducing human impact on the environment? We see both a pressing need and enormous opportunity for innovative business solutions to address these energy and environmental challenges.
The business opportunities in the EE sector can be categorized into five sub-sectors: power, transportation, water, waste, and natural resources. Each sub-sector can be further disaggregated into 2-3 categories. We evaluate business opportunities within each sub-sector and its categories using the key impact goals discussed below.
Access: does the solution enable the growth of energy and environmental solutions and/or increase access to sustainable energy resources for underserved communities in the developing and developed world?
Conservation: does the innovation conserve existing natural resources or reduce the use of natural resources?
Productivity Increase and/or Emission Reduction: Does the company increase resource productivity and efficiency and/or reduce emissions in business and industrial processes?
Remediation: Does the product/service remediate negative impacts placed on environments, ecosystems or natural resources?
The impact matrix below applies the key impact goals to each sub-sector and its categories.
Currently in the United States, our power grid is powered by 66% fossil fuels (coal and natural gas), 20% nuclear, and 13% from renewable energy (mostly wind, solar, hydroelectric). Prices have fallen for onshore wind by 50% since 2009 and solar photovoltaic module costs have dropped 80% since 2008. Current regulatory and cost trends have led to record deployment of clean energy like wind and solar and the development of new software solutions and behind-the-meter innovations.
In the developing world, there are currently over 1.2 billion people without access to electricity, and addressing this market demand with clean electricity is critical to mitigating climate change. The demand for clean energy resources will continue to grow in the developing world in the 21st century, leading to a remarkable opportunity for investors and businesses that pinpoint solutions to these challenges.
Rapidly declining prices for clean energy generation, storage and other products due to deployment of new innovations into the market and the economies of scale from mass production (prices for unsubsidized wind and solar are at record lows at 3-cents-per-kWh and 36-cents-per-kWh respectively).
Innovation in business and financial models to support the deployment of clean energy technologies and assist businesses and consumers in accessing these new technologies. Overall increased investment in the sector with a record $329B invested worldwide in 2015.
Increased demand in the developing world due to cost efficiencies resulted in clean energy investment growth in some of the world's fastest developing countries (88% in Brazil, 32% in China, 14% in India) along with new goals to increase clean energy use (India's goal is to increase solar capacity 33x in 7 years).
New regulations and agreements across the globe (e.g. U.S. Clean Power Plan, U.S. CAFE Standards, Paris Climate Agreement, India Climate Change Plan) that work to incorporate the cost of climate emissions into the cost of power generation and consumption.
The transportation sector alone is responsible for the largest and fastest growing share of global greenhouse gas emissions; 28% of the energy consumed in the US goes towards transporting people and goods. From 1990 to 2000, while CO2 emissions increased by 13%, emissions from road transport and aviation each grew by 25%.
Recent regulatory efforts in the US and China increasingly require vehicle makers to adopt fuel saving technologies. Since heavy-duty vehicles such as trucks and buses comprise 50% of the energy consumed by the transport sector, increased innovation is especially important in "light-weighting" these vehicles or targeting energy efficiency solutions for commercial fleets. However, efforts to increase fuel economy are obfuscated by increases in demand for number of personal vehicles and growing transit infrastructure to keep up with urbanization.
Several approaches can motivate a move toward a more sustainable transportation system. First, we can consider changes in our mobility culture, moving away from car-centric travel which accounts for 85% of daily trips by Americans to more efficient, public forms of transport or car-sharing. Second, we can consider alternative, cleaner types of fuel to power vehicles, most notably electricity, hydrogen fuel cells, or bio-fuels. Lastly, we can consider incremental or marginal improvements in existing transportation technologies that conserve energy use or recycle mechanical motion as energy.
Water is the most vital resource for life on earth, yet, according to the United Nations (UN), a third of the world's population (2.5 billion people) does not have access to water with adequate sanitation. Beyond human consumption, clean water is an integral component of agriculture, energy, and many more industries.
So far, its scarcity and pollution have led to rationing and planning worries in developed countries, including the United States,  and contributed to civil wars in developing countries, such as Yemen. Climate change promises to exacerbate these woes; climate models forecast accelerated drought and desertification, especially in areas where water is already scarce, over the coming century. Similarly, population growth will stress water resources.
Effluent reduction, water cleaning and reuse promise to become increasingly valuable in the global economy. Some of the most expensive environmental scandals in history have involved effluent reduction and water cleaning. For example, the BP oil spill and Exxon Valdez cost $62 billion and $7 billion to clean up, respectively. Improving water usage efficiency and preserving current resources are paramount for maintaining modern living standards.
Energy-Water Nexus: There's increasing awareness of the link between water consumption/pollution and energy usage.
Desalination: In recent years, zero-discharge, solar-powered desalination plants have arisen. As these plants become more cost-efficient, they could revolutionize the water industry.
Recycling wastewater: Israel recycles 86% of its wastewater. The country with the second highest rate is Spain, at 20%. Israel's wastewater recycling processes are replicable elsewhere, and have "huge potential," according to The Economist.
Some technologies help the environment in one way, yet hurt it in others. For example, desalination has traditionally entailed serious environmental drawbacks, even though it's improved water's reusability.
Tragedy of the commons: Rights to many waterbodies are shared internationally, meaning citizens from countries with more relaxed regulations or enforcement capabilities may contaminate global supplies.
The waste management and recycling sectors are expected to grow significantly in the future years. More stringent state and local government regulations will also help boost waste reduction, recycling, and remediation practices.
The adoption of the circular economy principles by many companies will influence their product design, recycling and disposal and involve moving from recycling for recycling's sake to closely examine the entire recycling process and minimizing its impact on the environment while increasing operational efficiency.
A recent trend of increasing consolidation in this sector and the dominance by large companies such as Waste Management made it difficult for new entrants to establish their business.
Most of the waste management start-ups are based in developing markets for more substantial growing opportunities compared to the more mature U.S. market.
The industry is exposed to the risk of commodity price volatility which may affect consumer's willingness to pay for the recycled versus raw materials.
For some waste-to-energy technologies, impact measurement can be challenging given the energy consumption in the process of transformation.
The agricultural sector is a major environmental polluter and requires significant inputs, most notably water and fertilizer. Additionally, with the world's population continuing to grow, productivity must increase. To address this conundrum, we are targeting companies that enable more sustainable agricultural production, that reduce inputs needed, and that reduce waste and environmental externalities.
Other vital resources that must be used more sustainably include forests, minerals, and land. Relatedly, healthy ecosystems and biodiversity are necessary for the well-being of the entire planet, including its human population. We also hope to invest in companies making improvements in these areas.
 Energy Information Administration, United States Department of Energy. "What is U.S. electricity generation by energy source?" https://www.eia.gov/tools/faqs/faq.cfm?id=427&t=3 Accessed November 7, 2016.
 Liebreich, Michael. Bloomberg New Energy Finance, BNEF Summit Keynote. New York City, April 5, 2016. https://about.bnef.com/presentations/liebreich-state-of-the-industry-keynote-bnef-summit-2016/ Accessed October 30, 2016.
 International Energy Agency. "Energy Access Database." http://www.worldenergyoutlook.org/resources/energydevelopment/energyaccessdatabase/ Accessed November 8, 2016.
 Das, Krishna N. "Obama backs India's solar goals, seeks support for climate talks." Reuters, January 25, 2015. http://in.reuters.com/article/india-obama-climatechange-idINKBN0KY0QN20150125 Accessed October 30, 2016.
 "Waste Collection Services in the US." "Waste Treatment & Disposal Services in the US." "Waste-to-Energy Plant Operation." "Recycling Facilities in the US (2016)." IBISWorld Industry Report.
WIIP is a student-led organization housed under the Wharton Graduate Association.
The Wharton School of the University of Pennsylvania does not provide any endorsement, either implied or explicit, in companies that participate with WIIP, WSVF, Locust Walk Impact Partners, or OurCrowd. Neither the University of Pennsylvania, the Wharton School, nor student members of the Wharton Impact Investing Partners are investors in participating companies. Companies run by current students of the University of Pennsylvania are not eligible for review by WIIP.


Meet a variety of animals from the wild featuring 13 different animals from all over the world like amphibians, reptiles and birds of prey. Wild World of Animals teaches families about the importance of nature and wildlife and gives suggestions as to how everyone can help our environment. What is the difference between alligators and crocodiles? Are all scorpions deadly? Why are snakes important? What animal is the closest living relative to the dinosaur? What is a legless lizard? Get answers to these questions and many more with age-appropriate dialogue, a little humor, and seeing each animal up close with demonstrations. All entertainment is FREE with your paid gate admission to the Fair. Meet friends and family at the show, share this event on social media and by email.


The Brush Chipper PDU 200 G-RCB has its own tipping bucket, designed to meet the needs of urban cleaning in a complete way. This brush chipper not only has a powerful gasoline engine and high productivity cutting system, but because it has its own tipping bucket it eliminates the need to tow a separate vehicle for the collection of organic waste in the workplace.
The brush chipper is ideal for cleaning organic residues from pruning and handling of green trees and residues within urban areas, allowing the application of urban waste in organic composting and promoting resource savings and environmental disposal. Thus, the PDU 200 G-RCB brush chipper is a great working tool especially for prefectures and service providers.


For decades, the Federal Bureau of Investigation has collected crime data from all over the country as part of the Uniform Crime Reporting (UCR) program. Starting in August, 2017, the FBI began working with 18F to create a digital tool that provides law enforcement and the general public with improved access to the UCR data.
The UCR information has a huge potential audience including researchers, law enforcement officers, and the general public. 18F and the FBI team from the Criminal Justice Information Services office interviewed different types of users to find out how they use this data and focus the initial features to build before launching the site.
The result is the Crime Data Explorer, a new, interactive website that includes trend data, datasets for download, and an open API so the public can build tools using the data.
The site allows the FBI to reach a far broader audience, promote citizen engagement, improve resource allocation for communities, and will lead to more transparency and accountability within law enforcement agencies.
Agencies like the FBI often have strict security and privacy rules that can make offices hesitant to work and publish in the open. The FBI's Crime Data Explorer not only publishes data in an open format, but the underlying code and team discussions are also public. This helped push the team to better meet the transparency and public service missions of their crime data program.
The process of working with 18F also helped the Criminal Justice Information Services office begin thinking about themselves as a digital organization. Beyond launching their first first open source, cloud-based app, the experience of creating a product with 18F has opened the door to new ways of working that will help modernize how the FBI builds and buys technology.
For more than eight decades, the Federal Bureau of Investigation has collected nationwide crime data under the Uniform Crime Reporting (UCR) Program. While the data has always been publicly available via static reports, the first release of the Crime Data Explorer makes it easier than ever for anyone to access and use the data.


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Leave a Comment / October 21st, 2019 / Tom Brown
Ex-Zodiac | Hands On Impressions
Many modern indie games wear their influences on their sleeves, but one aesthetic that has been rarely emulated is that of the original Star Fox for the Super Nintendo. Being one of the earliest 3D games on a Nintendo platform, it has a very unique look, with chunky polygons and solid colors only vaguelly resembling reality.
The upcoming indie game Ex-Zodiac is set to fill that niche with its own take on the on-rails 3D shooter. To learn more about it, we went hands-on with the game's early demo at EGX 2019.
Naturally the first thing that pops out about Ex-Zodiac is its bold use of those polygons – it doesn't shy away from the simplicity in the slightest. Even the controller options screen is displayed with a gorgeous pan around of a low-poly controller. That isn't to say it feels archaic to play, though, as it runs at a silky frame-rate the SNES could only wish it could achieve.
Yet with great speed comes a much greater challenge compared to the original Star Fox. Where that game was balanced around the sluggish controls, giving you ample time to move out of the way of obstacles and enemy shots, Ex-Zodiac is much more fast paced and I found myself bordering on exploding more than a few times, only to be saved by some lucky Repair item drops. In some ways I can see fans of bullet hells taking a shine to the game, as it could easily become a 3D rendition of that genre, especially if there are multiple difficulty options in the final product.
I'm also quite intrigued as to where the game's story will go. These arcade-y shooters rarely have much of a story to write home about, but the design of the main character already looks unique and indicates it won't retread the same anthropomorphic Thunderbirds-homage ground as its source of inspiration. She also doesn't say "Do a Barrel Roll", which is a level of restraint I can't help but appreciate. Though it was incredibly odd that such an iconic move isn't present at all in the current build.
While Ex-Zodiac has yet to be confirmed for any platforms – it's still a work-in-progress after all – let's hope it heads to its natural home, the Switch, eventually.

redpajama_set_name: RedPajamaCommonCrawl


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Photo of the Day - Friday 31 December 2021
Sandra Mead
'Sky over Mount Arthur in the evening of Christmas Day, 25 December 2021' wrote Sandra.
Photo of the Day - Thursday 30 December 2021
'Shade in the park on a hot Boxing Day! Taken at 18:07 on 26 December 2021 in Tauranga' wrote Josefa.
Photo of the Day - Wednesday 29 December 2021
Albert Aanensen
Albert wrote 'the view to the west of Lake Taupo and the last rays of sun at the end of a good Christmas Day, 25 December 2021 taken 20:26.'
Photo of the Day - Tuesday 28 December 2021
John Spiller
'Hi James, this shot of Mt Ruapehu displaying remnants of winter snow under a moody sky was taken from the Tukino Ski-field road, just off the Desert Road, with my Samsung S9 plus phone on Monday 27 December 2021.'
Photo of the Day - Monday 27 December 2021
Jim Cotter
Jim wrote 'Otepoti/Dunedin, looking south under a Norwest arch that also ran to the northern horizon. Pic just snapped on cellphone at 11:30 on 20 December 2021 on a Samsung Galaxy, F2.2, 1/689 sec.'
Photo of the Day - Sunday 26 December 2021
The shepherds down Meadowland Drive must have all been very delighted this evening as the entire sky had a red glow. Taken on my Samsung Galaxy S20 Ultra Regards Kevin Murphy.
Photo of the Day - Saturday 25 December 2021
'Mackerel cloud, on a calm 21:00, Christmas Eve, 24 December 2021, Tasman District.Taken with Oppo A52' wrote Sandra.


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Q: GLSL's transpose alternative in GLSL ES? I was trying to convert GLSL to GLSL ES and got this problem: transpose function isn't available in GLSL ES.
mat3 yuv = transpose(yuv_matrix);

So how I can use it? Is there any alternative?

A: A 3x3 matrix can be transposed as follows:
mat3 yuv = mat3(
    vec3(yuv_matrix[0].x, yuv_matrix[1].x, yuv_matrix[2].x),
    vec3(yuv_matrix[0].y, yuv_matrix[1].y, yuv_matrix[2].y),
    vec3(yuv_matrix[0].z, yuv_matrix[1].z, yuv_matrix[2].z));

Note, the transposed matrix is a matrix which is flipped over its diagonal.
(a  b  c) T    (a  d  g)
(d  e  f)    = (b  e  h)
(g  h  i)      (c  f  i)

Matrices consist of column vectors. So a matrix can be initialized by vectors, e.g.:
vec3 a, b, c;
mat3 m = mat3(a, b, c);

And the vectors of the matrix can be accessed by the index operator, e.g.:
mat3 m;
vec3 v = m[1];

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I love playing video games, singing 🎤, playing 🎸, playing 🎹, playing 🎻 and not play with your ❤.
Action Adventure RPG is my favorite video game Genre.
Some of my favorite Video Game Series: Zelda, Final Fantasy, Star Ocean, Pokémon, Xenoblade, Mario & Luigi, Tales of, Chrono, Dragon Quest, Shenmue, Yakuza, Metroid, Star Fox, Resident Evil, Donkey Kong and too many more!
I work at home I have my own little office/studio.
I'm definitely looking to be with someone who loves video games and would rather cook together a nice meal then watch an anime or movie or game.
I would love to start going to gaming/anime conventions together!
Looking for someone who reasonable when comes to money and enjoys life but knows our boundaries.