#Featured: ImpactAlpha Original
Earth Finance: Bridging the private capital gap in conservation finance. For your Earth Day consideration: The $400 billion in private capital that is needed annually for large-scale conservation is eight times even generous estimates of total conservation financing.
A gathering of conservation practitioners and investment experts at Credit Suisse’s New York headquarters last month sought to bridge that gap. Among the ideas: Ride the growth of green bonds. Mitigate risks with transparency and reporting. Bring tech and mobile providers to the table. Align with the U.N.’s 2030 Sustainable Development Goals to foster partnerships and collaboration. And make even innovative opportunities “boring” enough to fit into standard asset portfolio strategies.
Read more from Santiago Cortes and Jérôme Tagger at ImpactAlpha:
Weekend bonus: How do we reach sustainable energy for all? Take this week’s Brief Quiz #11:
#Dealflow: Follow the Money
Matt Damon’s Water.org secures $5 million from B of A for third impact fund. Water.org’s WaterEquity subsidiary is raising its third impact fund to invest in microfinance institutions that lend to households for in-home toilets and water connections. That’s a $12 billion market globally, according to a Gates Foundation report. WaterEquity has secured $5 million in zero-interest debt from Bank of America for the planned $50 million WaterCredit Investment Fund 3 (WCIF3). The $11 million WCIF1, raised in 2014, was fully disbursed as of November last year, enabling more than 21,000 microloans through seven microfinance institutions in India. WaterEquity announced WCIF3 in 2015, but did not raise funds last year, according to Water.org’s 2016 financial audit. WCIF3 is offering investors a 3.5 percent return. Water.org, founded by actor Matt Damon and entrepreneur Gary White (who were interviewed by NPR here), launched its WaterCredit initiative in 2005 and has partnered with 65 microfinance institutions in nine countries.
Aavishkaar’s Bharat Fund attracts $15.5 million investment from India’s Hero Enterprises. Hero, a leading industrial business group in India, is investing $15.5 million in Aavishkaar’s sixth fund as part of its foray into startup investing. “It is clear that for the entire country [of India] to develop, rural areas and underprivileged citizens must become part of the economic miracle, not through charity, but through real opportunities,” said Hero’s Sunil Kant Munjal. Aavishkaar is looking to raise about $300 million for the fund, which was announced a year ago, to invest in agriculture, financial services, healthcare, sanitation, renewable energy and logistics for underserved populations. Aavishkaar has made more than 50 total investments since 2002, and recently launched overseas funds focused on Asia and Africa.
Two more startups raise seed capital to tackle food waste. Full Harvest, in San Francisco, has raised $2 million to support online sales of “ugly” produce — the goods grocers consider unfit for supermarket sales. The funding round was led by Wireframe Ventures and backed by BBG Ventures, Early Impact Ventures, Impact Engine, VC Radicle, and several angel investors. Founder Christine Mosley, formerly with fresh juice company Organic Avenue, had been searching for low-cost, high-quality produce. At an organic lettuce farm she visited, “The farmers were throwing out all these crunchy, green leaves because they were looking for just the perfect heads of lettuce for the stores,” she said. Meanwhile, Wasteless raised $400,000 to fight food waste in grocery stores. Based in Israel, Wasteless helps retailers track their inventory and flag products most likely to be thrown away. “Today, supermarkets don’t know how many products they have on the shelf unless someone does a manual check,” said founder Ben Biron. The funds were committed by a group of early-stage venture capital firms and accelerators including SOSV, Food Angels, and Winston Ltd. Other startups targeting the food waste challenge include Inspirafarms in east Africa and Central America and Yume in Australia.
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
Food for thought: What makes Juiciero more than juice in a bag? Tech bloggers have had a field day at Juicero’s expense since Bloomberg reported on Wednesday its reporters didn’t need the $400 juicer to squeeze the company’s juice packs. Their own hands were nearly as effective. Juicero’s new CEO Jeff Dunn took to Medium to defend the experience created by Juicero’s system, which includes not only the press and $5 to $8 produce packs, but a scanner, microprocessor, wireless chip and antenna and an app that tracks expiration dates and manages recalls. “The value of Juicero is more than a glass of cold-pressed juice. Much more,” Dunn writes. Among the investors who have put $120 million into Juicero is DBL Partners, an impact investor whose founder, Nancy Pfund discussed the company in an interview with ImpactAlpha’s David Bank last month. In an email exchange, Pfund says her view of Juicero has not changed. “I don’t care if you can squeeze them by hand: that’s not why you buy the product. You buy it for health, good taste and convenience,” Pfund says. “Let’s move on!”
Cities shouldn’t try to imitate Silicon Valley to support startups. “They should be the best version of themselves,” writes Ross Baird, founder of Village Capital. Village Capital has dissected 26 local startup accelerator programs that adopted VilCap’s peer-review model to understand “what works in entrepreneur support.” Colorado, for example, is home to four of the top 10 entrepreneurship hubs in the country because each community embraces its own strengths and unique qualities. The study, conducted in partnership with the DOEN, Kauffman and Sorenson Impact foundations, found accelerators with programs were more likely to succeed when they focused on local sectors like agriculture or water. All of the programs VilCap reviewed needed philanthropic support to stay afloat. Foundations, policymakers and the support programs themselves, Baird said, need to recognize that “entrepreneur support organizations are infrastructure, not businesses.”
Oil-rich Nigeria moves to boost renewables to 30 percent by 2030. From Norway to the United Arab Emirates and Saudi Arabia, big oil producers are becoming big backers of renewable-energy. Now, Nigeria has signed two agreements with solar developers to guarantee the payment risks for 50-megawatt and 70-megawatt solar farms.
The oil and gas sector makes up 35 percent of Nigeria’s GDP and 90 percent of its exports. But unlike the population of the other oil producers, Nigeria’s 192 million people remain energy-poor. Nearly half the country lacks access to electricity (in comparison, Saudia Arabia and the UAE have 100 percent electrification rates). Nigeria’s total installed capacity is about 13-gigawatts, but less than one-third of that is actually functional. To accelerate Nigeria’s pace of development, one study estimates that 60-gigawatts of renewable capacity is needed.
Nigeria’s so-called “put-call option agreements” are designed to spur solar development in the sun-rich country by placing payment risk for new power agreements onto Nigeria’s Ministry of Finance. Such guarantees are considered the key to unlocking solar projects worldwide. Now that costs have fallen dramatically, investors are worried that counterparties, such as utilities, won’t pay. The World Bank and others are experimenting with risk-reduction mechanisms that can make solar projects institutional grade (see, “Clean Energy Revolution Trumps Climate Skepticism at Global Climate Talks”). Late last year, Michael Eckhart, Citigroup’s global head of environmental finance and sustainability, told ImpactAlpha such guarantees “would unlock the global market instantly. Even Citi could loan.”
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