Climate-resilience for Puerto Rico, CNote’s impact savings, ADAP’s real-time deals, future of…



Greetings, ImpactAlpha readers!

#Featured: ImpactAlpha Original

Puerto Rico’s agony makes the case for climate-resilience investing. You don’t have to choose sides between President Trump and Carmen Yulín Cruz Soto, the mayor of San Juan, Puerto Rico, to agree that a massive recovery effort looms for the U.S. territory. And you don’t have to ascribe any particular weather event to climate change to recognize that the frequency, intensity and cost of natural disasters is going up. Whatever the cause, the effects are here.

In Puerto Rico, America could have its very own large-scale testbed for climate-resilient 21st century infrastructure. Distributed renewable energy, protected watersheds, storm-resistant roofs and restored reefs and mangroves could make the island a model for island nations and coastal communities, and an opportunity for impact investors. Perversely, the rising cost of climate-related damage holds the key to financing resilience. Mitigating risks presents new opportunities for financing solutions. The trick is to wrap sometimes-complex underlying projects in the kind of standardized, easy-to-execute and low-cost solutions capital markets want.

Read David Bank’s roundup of climate-resilience financing solutions on ImpactAlpha:

Puerto Rico’s agony makes the case for climate-resilience investing

#Dealflow: Follow the Money

CNote launches to bring impact investing to savings accounts. The Oakland-based startup CNote wants to reward everyday savings-account holders with more than a fraction of a point of interest. Hundreds of billions, or even trillions, is sitting in low- or no-interest savings accounts. “There’s no reason we can’t unlock it for good by putting that money to work in our communities, while driving better returns,” CNote’s Catherine Berman says. The first product is a “high-yield savings product” that pools deposits and invests them in Community Development Financial Institutions, or CDFIs. Unlike banks, which use the cash for credit cards or loans and typically offer depositors less than 1% interest, the CDFIs invest in women and minority-owned businesses or local infrastructure. CNote’s product returns 2.5% to depositors. CNote first attracted $9 million in savings from accredited investors. It is now making the Securities Exchange Commission-qualified product available to everyday savings account holders.

ADAP Capital to make deals in real-time at SOCAP. The company, whose name stands for “a different approach to poverty,” is planning to invest $75,000 each in several social enterprises following pitch presentations at the Social Capital Markets conference Oct. 10–13. “Meet entrepreneurs on Tuesday, invested by Friday. Focusing on what matters. Getting stuff done,” ADAP’s Andy Lower told ImpactAlpha. Lower, who is trying to address the “severe lack of seed funding,” is known for his four-hour due diligence review. In addition to a check, the winners will get legal services from Westaway law firm. “Rather than bemoan the ‘lack of dealflow’ as most impact investors do, ADAP Capital is doing something about it,” says Kyle Westaway. Applications are open P.S. If you dig ImpactAlpha’s weekday brief, you’ll enjoy Westaway’s Weekend Briefing. Sign up here.

Call for women-led clean energy businesses in West Africa. A network of investment, clean energy, and technology groups is calling for proposals from women-led sustainable energy enterprises in West-Africa. The Private Financing Advisory Network, the ECOWAS Center for Renewable Energy and Energy Efficiency and Climate Technology Center and Network will select 10 projects or businesses to receive business coaching and matches with interested investors. Apply by November 20th.

See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to thebrief@impactalpha.com.

#Signals: Ahead of the Curve

Ellen Pao on the (not-so-) subtle discrimination women face in Silicon Valley. Ellen Pao, the venture capitalist who sued Kleiner Perkins for sexism and now leads a tech diversity effort at Kapor Capital, joined Trevor Noah on the Daily Show to discuss the subtle discrimination faced by women in tech. “There was one round where none of the women got promoted. We all had…longer work experience, mostly better educations, and one woman had actually gone through the analysis to show that her investments were doing better on average than the men…and then all the men got promoted,” she said. “It was also the subtle things, like not being included in meetings, not being included in conversations, not being included in email threads.” Watch the eight-minute clip.

Daniel Epstein on the case for being an unreasonable entrepreneur. “Every business in today’s world designs solutions for problem sets. That’s how we all make money,” Unreasonable Group’s Daniel Epstein said on Bloomberg TV. “These entrepreneurs just choose to solve problem sets that most of us think are impossible to solve…For them, the solution to the societal problem is baked into the profit model.” Watch the five-minute clip.

#2030: Long-termism

Decentralized energy production comes of age. The key to renewable energy may not be that it’s clean, but that it’s distributed. By 2030, two-thirds of new electricity capacity will come from distributed production, as the old centralized system recedes, according to a senior executive at Siemens, the global energy equipment giant. Already, “Over half of commercial and industrial consumers of energy are considering becoming self-sufficient,” says Siemens’ John Kovach, though most remain connected to the grid.

Much of the decentralized opportunity, of course, is in developing growth markets, where grid-tied electricity is unreliable or unavailable altogether. Indeed, those markets account for 90 percent of overall growth in electricity consumption. There, microgrids of less than 100 megawatts, and home solar systems, are leapfrogging the centralized electricity grid and helping to meet Sustainable Development Goal №7: “By 2030, ensure universal access to affordable, reliable and modern energy services.”

Recent natural disasters, including Hurricane Maria in Puerto Rico (see above), mean distributed power also is getting attention as a climate-resiliency solution. SDG №11, is a call to “substantially increase the number of cities and human settlements adopting and implementing integrated policies and plans towards inclusion, resource efficiency, mitigation and adaptation to climate change and resilience to disasters.” The Sendai Framework for Disaster Risk Reduction 2015–2030, calls for “holistic disaster risk management at all levels.”

A 2014 report from GE called out the costs of major natural disasters, including damages to power infrastructure, to make the case for an increasingly decentralized power future. Hurricane Sandy, which struck the northeastern U.S. in 2012, caused $65 billion in damage and left 8.5 million grid-connected customers without service for weeks. This year, the damage from two hurricanes — Harvey and Irma — is expected to approach $300 billion. The damage from Maria in Puerto Rico alone could add $50 to $100 billion to that total. The electricity service disruption for the island’s 3.4 million people is likely to last for months.

“As the world grows increasingly interconnected, the infrastructure networks that deliver electricity, gas, and water to our cities have never been more important,” according to the GE report. “They are also more vulnerable to a variety of natural disasters.”

Onward! Please send any news and comments to TheBrief@impactalpha.com.

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