New York, February 14, 2022: An exclusive virtual conference on 'Impact Investing to End Hunger' was hosted on 14 February by Respada, an invitation-only niche platform providing private market opportunities to the ultra-affluent. Daryl Heald, Philanthropist and Global Impact Investor, Pamela Mar, Executive Vice President of Fung Academy, and Ady Beitler, CEO of Nilus were part of the panel. Panelists discussed the case of Nilus, a company incubated at the Harvard Innovation Labs that is applying a market-driven, scalable approach to end hunger.
Beitler kickstarted the discussion by illustrating how poverty eradication has been a key feature of our civilization for many centuries. Despite the intention to eradicate poverty and hunger, "it has been unfeasible to build a sustainable and profitable organization in a sector that seems to be scattered and is initially unattractive as a business model," Beitler explained. However, the development of digital technologies has enabled food deserts to be mapped more accurately, so that the two main problems in food desserts, which are inefficiency in the supply chain and logistics, can be tackled efficiently. "Nilus is the first organization to leverage digital technologies to improve access to the value chain. This is done by connecting neighbors in a community who can group their individual purchases to access wholesale prices, which in turn provides savings to communities with very limited disposable income," Beitler stated. Secondly, he demonstrated how Nilus is tapping into a massive resource which is wasted food. “With the help of digital technologies, we are connecting organizations that are discarding food with those who need it the most, thereby making it possible to lower the cost of access to healthy food for low-income people,” Beitler noted.
As a global impact investor who is serving on the board of Maclellan Foundation and leading its global grant-making strategy, Heald shared that after being a traditional grant-maker for eight years, he was curious about innovations in the impact space that can address major social issues such as poverty. "We have invested in 40 different deals, with about 50 million dollars allocated over the last eight years. Looking at Ady Beitler and his team putting together this idea of using technology to bridge the gap is exciting. Being able to invest in businesses that create sustainability through being profitable makes a huge difference," Heald expressed.
We have invested in 40 different deals, with about 50 million dollars allocated over the last eight years. Looking at Ady Beitler and his team putting together this idea of using technology to bridge the gap is exciting.
Further, Mar helped identify primary drivers that lead to food insecurity. “Access to financing is a primary driver since the financial system in emerging markets is severely underdeveloped. International banks in this region prefer to lend to multinational companies who want to invest in emerging markets, while small and medium-sized enterprises that create the majority of the jobs are the ones who need financing,” Mar stated. Mar appealed to companies focused on impact investing to "invest with a purpose to provide SMEs access to financing since it is not high-risk anymore. Digitalization and technology can help database evaluation of SME assets and digital onboarding which can help drive access and enable SMEs to grow and provide jobs in their communities," Mar suggested. She also emphasized that despite the availability of technology, since most SMEs are engaged in rudimentary operations, they need support to come into the digital economy. "There is a lot that policy and impact investors can do such as financing digital education," Mar remarked.
Further, Beitler spoke about the impact of technology in developing microfinance mechanisms in a way that allows local people and local stores to have more credit. He shared how Nilus is developing technology to evaluate the creditworthiness of its customers based on their purchasing habits. "We are giving credit to low-income families by financing their access to food. Technology allows us to surpass the requirement of being a part of the formal economy and having tax filings to access credit," Beitler revealed. "Additionally, we are connecting with small farmers whose products are rejected by retailers when they are not aesthetically perfect. We are thus providing the farmers with an income from previously discarded products," Beitler added.
Speaking about the role of the retail industry in eradicating hunger, Beitler acknowledged that the retail industry allows space to innovate because they have access to suppliers who either overproduce or miscalculate their sales projections. "For instance, Walmart has a global best practice in donation or distribution to the community, particularly in the US. But in some Latin American countries where donors do not get meaningful fiscal incentives or tax credits to donate, that is harder to achieve," Beitler observed.
As part of audience interaction, Nick Travers, an angel investor, asked, "How can we get the benefits of stronger economies and reduce hunger in weaker economies without creating public health problems like obesity and diabetes?" Mar answered, "Education is key here along with early intervention through primary health clinics. Aside from public education, technology and awareness are part of the answer. Further, multinationals have cleaned their product lines sold in the US and Europe due to pressure from public health authorities. The same product sold in Asia has more sugar, so multinationals need to be responsible in bringing healthy stock to emerging markets." Beitler added, "Many studies indicate there is a positive correlation between food insecurity and obesity derived from the excessive consumption of products rich in sugars, salts or fat. By providing better access to options to low-income people, we at Nilus are facilitating the decrease in obesity levels. In most cases, providing more options to people decreases the level of malnutrition, provided there is information and education."
David Friedman, Chief Ethics Officer of Respada, asked the panelists, "The intuition about food waste was always there, so what was preventing us from dealing with food waste efficiently?" Mar responded, "This question can be answered with better data. Gathering data about supply and demand and using artificial intelligence to predict what is going to sell is possible with the technology available today. Especially, large companies have the data scale which can help eradicate food waste. Secondly, France has instituted a law for food waste which is driving supermarkets to structure their demand planning. I think such legislation should be adopted in other countries." Mar concluded, "Organizations like Nilus are using digital technology to move supply and demand around by connecting the sources of waste to the places where food is needed. This is totally a supply and demand problem; it is not magic to solve but we just need the will to do it. Impact investors are a big part of the equation because they can work on solutions to such collective problems."