The Brief

The Brief: First-time and emerging managers on The Liist

ImpactAlpha · February 11, 2025

Greetings Agents of Impact!

In today’s Brief:

The Liist shines a light on first-time and emerging managers
Secondhand circularity
Connecting Nigerian farmers to fair markets
Impact’s carried interest conundrum

Featured: LP / GP

The Liist: Emerging managers forge ahead with inclusive and climate investment strategies. It’s a long-running contradiction of impact investing. Emerging fund managers, including those raising their first, second and even third funds, generally outperform more experienced general partners. And investors are keen for new strategies that can help them diversify their portfolios and gain exposure to untapped opportunities with potential for impact and alpha. Yet emerging managers often have the toughest time raising capital, fenced out by perceptions of risk and investment policies that exclude them from even being considered by many asset allocators. The current political and market volatility may be casting even longer shadows on managers without long track records. All that also presents an opportunity for asset owners and allocators with the commitment and flexibility to back fresh talent.

The majority of funds that appear on ImpactAlpha’s monthly Liist of impact funds in the market raising capital are emerging and/or diverse fund managers with an eye on overlooked market opportunities. Last year, the median fund size on the Liist was $50 million. Funds featured on the Liist tend to be more diverse, more niche and more focused on underinvested opportunities. More than half of the funds featured in 2024 have at least one female general partner. The same proportion also have at least one general partner of color. On this month’s Liist: three first-time managers who are in the market with strategies that lean into inclusivity and climate tech to deliver both financial and impact alpha.

Diversity dividends. According to PitchBook, 46 first-time private equity, growth and turnaround funds in the US raised $9.2 billion last year. That was a big drop from 2023, when 121 first-time funds raised $21.5 billion. On this month’s Liist, first-time fund manager Chasing Rainbows is betting on the lived experiences of LGBTQ+ founders to deliver better healthcare and other life-improving services. Atlanta-based Renew VC, another first-time fund manager, has an eye for new climate solutions and companies led by underinvested founders, including women and people of color. “Success in VC is fundamentally about seeing markets that others miss,” Renew VC writes. Variant Investment’s evergreen impact fund directed nearly half of its available capital to diverse founders in the US. It’s once again open and raising new capital from investors.
The Liist 2.0. This month’s Liist comes with a refresh of ImpactAlpha’s Liist database of dozens of impact funds that are actively fundraising. The database is now updated regularly (even between these monthly roundups), so bookmark it and check back for new entries and status. We’ve standardized the categories to make it easier to filter by asset class, geography, investment focus and fundraising targets. And we’ve revamped the entry form, making it easier for both general and limited partners – and their friends – to share strategies on the Liist. Fund managers report that they’ve received cold calls from prospective LPs after being featured on ImpactAlpha. So GPs, put your strategies in front of LPs who are actively cutting checks in search of impact alpha. LPs, amplify the GPs you work with to help them close their funds and put that capital to work – and discover some new managers that can help you meet your goals.

Climate resilience. Two funds on this month’s Liist are supporting Africa’s climate resilience and transition. First-time fund manager Holocene, based in South Africa, is in the market with a planned $3 million to $5 million fund for early stage climate tech ventures. Mercy Corps Ventures is continuing to raise for its Resilient Futures Fund, which backs tech solutions in Africa enabling communities’ climate resilience.

Keep reading, “Emerging managers forge ahead with inclusive and climate investment strategies,” by Jessica Pothering and Lucy Ngige on ImpactAlpha. Check out the improved Liist database and suggest your own new entries.

Sponsored by Tideline

The growth and formalization of impact investing in Asia. When the Japanese government cleared the way last November for its Government Pension Investment Fund, the world’s largest pension fund, to allocate a portion of its funds to impact investments, the move signaled a coming of age for impact investing in Asia. Momentum has been building, led by institutions like Temasek and providers of flexible capital like RS Group and District Capital in Hong Kong, and the Tsao Family Office in Singapore. The market is growing quickly. Investors in East and Southeast Asia account for 7% of the more than $1.5 trillion of impact investments globally, according to the GIIN, and are establishing pillars of formalization like policymaking, events, networks, standards and verification.

Compass Series conversation. In a lively webinar next Monday, Feb. 17, Tideline will dig deeper into the regional dynamics that are driving growth in impact investing in Asia, and those that continue to hamper the market’s development. The specialized consultancy for the impact investing market will host leading investors, intermediaries and market building organizations in this important regional spotlight. RSVP today.

Dealflow: Sustainable Fashion

Archive raises $30 million to help brands boost profits and cut waste with secondhand sales. The growing preference for secondhand clothing and other products, especially among Gen Z consumers, is expected to add approximately $120 billion to the used apparel market in the next three years. San Francisco-based Archive’s software allows retail brands, including New Balance, Dr. Martens and The North Face, determine the condition of secondhand products and compare prices with other online marketplaces to help them implement trade-ins and returns strategies. “Over the past decade, the retail industry has undergone massive, enduring changes driven by generational shifts in consumer preferences towards more sustainable options,” said Eileen Waris of Energize Capital, which led Archive’s Series B round. Waris says Archive is helping brands “own a bigger slice of the resale pie, while supporting profitability and sustainability goals.”

Global footprint. Archive serves more than 50 retail brands in the US, Canada, the UK, France, Spain, the Netherlands and other countries, and is looking to add more apparel, footwear, home goods, toys, electronics and outdoor gear brands. Other investors in Archive’s round, which brought its total raised to $54 million, include Lightspeed Venture Partners, Bain Capital Ventures, G9 Ventures and Capital F. Woodline Partners LP and Frontline Growth also joined.
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Agriarche raises working capital to connect Nigerian farmers to fair markets. Nigeria’s Agriarche is a female-founded agtech startup that offers farmers and produce aggregators storage, inputs, logistics and payments services. Its mobile platform, called Kasuwa, links them to more than a dozen buyers, including food processors and other Nigerian consumer goods brands. Agriarche received a $500,000 working capital loan from the Social Enterprise Fund for Agriculture in Africa, or SEFAA, fund. “The agricultural value chain remains highly fragmented, with farmers located far from economic hubs, leading to the emergence of multiple intermediaries” before their harvest reaches consumers, said Deji Adebusoye of Sahel Capital, which manages SEFAA. The $24 million impact fund launched in 2021 with backing from German development bank, KfW to provide debt for Africa’s small to medium-sized agribusinesses.

Food security. Agriarche was an implementing partner, alongside Mercy Corps, for the five-year, USAID-funded Feed the Future Nigeria Rural Resilience Activity program. The program, which ended last year, aimed to increase incomes in northeast Nigeria, one of the country’s most food insecure regions. Agriarche expanded to a dozen sub-states in the region, training over 12,000 farmers in sustainable food production and providing them with market links to fair commodity prices. Adebusoye said Agriarche had eliminated middlemen, “allowing farmers to receive fairer prices and reinvest larger amounts into subsequent planting cycles.” SEFAA invested more than $6 million in agribusinesses last year, including Ugandan coffee processor and exporter Sukuma Commodities and Kenyan dairy-focused biotech company Geneplus.

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Capricorn Investment Group takes a GP stake in Closed Loop. The asset manager made a growth investment in Closed Loop Capital Management, the asset management business of Closed Loop Partners. It joins existing shareholders, JS Capital, Schusterman Family Investments and Closed Loop’s Ron Gonen, the firm’s majority owner, (for context, see “Asset managers looking for impact are scooping up ‘GP stakes’ in impact fund managers”).

Dealflow overflow. Investment news crossing our desks:

Proparco and Africa-focused private equity firms Amethis and Kibo Capital have exited Merec, a Mozambique-based miller and producer of wheat-based foods. Merec was acquired by Abu Dhabi-based food investor Invictus. (Africa Private Equity News)
Cologne-based startup Planted, whose AI-powered ESG platform helps companies with their carbon accounting and decarbonization efforts, raised €5 million ($5.2 million) in seed funding from Smart Infrastructure Ventures, TechVision Fonds and others. (Tech.eu)

Juvo Ventures and Capria Fund co-led a $2.9 million bridge round for Eduvanz, an Indian non-banking financial company that offers collateral-free loans for education, including college degrees and vocational and online courses. (Viestories)

Bangalore-based The Energy Company, which designs and manufactures batteries for electric two and three-wheelers as well as household use, raised $2 million from equity crowdfunding platform 1Crowd and other investors. (YourStory)

Signals: Policy Corner

Trump’s threat to end the tax break for ‘carried interest’ rattles private equity managers. The US President’s deregulatory policies were supposed to unleash animal spirits for the nation’s deal makers. Some of those animals, it turns out, may bite. Trump’s hyperactive first three weeks, including inflationary tariffs and DOGE’s government wrecking ball, are clouding what had been a bullish business and investment outlook and rattling even some of his wealthy acolytes. “The risk is that the policy mix is tilting (perhaps unintentionally) into a business-unfriendly stance,” Bruce Kasman, JPMorgan Chase’s chief economist, warned clients last week. Perhaps the most unnerving curveball thrown for private equity managers is Trump’s proposal, floated late last week, to eliminate a cherished tax break. The carried interest tax loophole treats private equity “carry” – the 20% share of profits from a fund’s investments that managers keep for themselves – as capital gains, which are taxed at a much lower rate than earned income. Such carried interest makes up the bulk of PE managers’ revenues; their annual management fees, generally 2% of assets under management, are taxed as ordinary income.

Impact funds. Democrats have long urged an end to the carried interest loophole, but Trump’s embrace of the crusade took some managers by surprise. Silicon Valley venture capitalists such as Andreessen Horowitz had rallied around his campaign in part over then-President Biden’s plans to tax billionaires’ unrealized gains. Many of Trump’s inner circle, including Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent and Vice President JD Vance, hail from private equity firms that benefit from the carried interest tax break. While there may be few populist tears for billionaire investors, ending the carried interest tax treatment could hurt impact funds, especially small and emerging managers with lower fee revenues. Impact GPs are divided. Ending the tax break could harm impact investment funds that are generating positive outcomes, and take away a lever to attract more capital to the space. One idea: carving out an exemption for smaller funds, the way small businesses are sometimes spared the full burden of other regulations.

Tax cuts. Private equity managers have mostly been silent on the proposed changes to carried interest since Trump unveiled it as part of his broader tax strategy last week. One reason: the extension of Trump’s 2017 tax cuts and reduced corporate tax rates will help offset some of that loss. They also may be hoping that Trump is just saber rattling and will back down in the face of private lobbying. In his first term, Trump tried to end the loophole but eventually compromised by increasing the holding time, from one to three years, to qualify for long-term capital gains rates. A compliant Congress may be more willing to go along with Trump this time.
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Agents of Impact: Follow the Talent

HSBC selects Julian Wentzel to replace Celine Herweijer as chief sustainability officer… Azolla Ventures promotes Ally Harada to head of finance and operations… SB+CO has an opening for a sustainability analyst in London… FMO is recruiting an evaluations and knowledge management intern… Opportunity Finance Network seeks a head of sustainable markets… Elevate is looking for a Solar for All director, focusing on Illinois… Newtree Impact seeks an impact VC intern.