Greetings, Agents of Impact!
Featured: Catalytic Climate Capital
Deploying catalytic capital to bridge financing gaps for climate action. Climate finance is on a roll. Climate finance is stuck. Both statements are true. Investors have poured record sums into climate funds and startups in 2021. With falling costs for solar and wind power and a raft of big fund raises, climate financing may top $1 trillion this year. But experts say three or four times that amount is needed each year to keep the goals of the Paris climate agreement in range, and significant gaps remain in key geographies, sectors and stages. “Climate investment should ideally count in the trillions, whereas fossil fuel investments should virtually stop this decade,” said Barbara Buchner of Climate Policy Initiative. “This decade will make or break the transition to a sustainable natural world.” Needed to bridge the gaps: a catalytic capital toolkit that includes blended financing, guaranteed off-take agreements and targeted project financing.
Practitioners are taking up the challenge. Prime Coalition launched in 2014 to fill an “idea-to-impact gap” for capital-intensive climate startups with the potential to decarbonize at scale. The Cambridge, Mass. nonprofit taps philanthropic capital to make equity investments that provide patient capital and additive impact. Now that venture investors are hot on climate tech, Prime looks to provide alternatives to burdensome financing terms and to enable companies to prioritize applications other investors might discourage, says Prime’s Sarah Kearney. Breakthrough Energy Catalyst, the latest initiative of Bill Gates’ Breakthrough Energy, is taking on another critical stage: the first deployment or first project buildout of a climate innovation. The fund has raised more than $1 billion for a “nontraditional traditional blended finance mechanism.” The goal: to help commercialize clean jet fuel, long-duration storage, green hydrogen and direct air capture technologies through mechanisms like off-take agreements that guarantee customers for new products.
Keep reading, “Deploying catalytic capital to bridge financing gaps for climate action,” by Amy Cortese on ImpactAlpha.
- Catalytic capital podcast. Some capital gaps are temporary and can be bridged with credit-enhancement and the development of a track record. Other areas, like affordable housing for very low-income seniors, veterans and people with mental illness, may require permanent subsidies. MacArthur Foundation’s Debra Schwartz, who is spearheading the Catalytic Capital Consortium, walks through the past, present and future of catalytic capital on the latest Agents of Impact podcast. Listen in.
- The Call No. 33. Breakthrough Energy Catalyst’s Jonah Goldman will join Prime Impact’s Amy Duffuor, LEAF Coalition’s Eron Bloomgarden, Convergence’s Joan Larrea and other Agents of Impact to present catalytic capital solutions to persistent gaps in early-stage climate innovation, full-scale commercialization and climate justice, Tuesday, Oct. 26th at 10am PT / 1pm ET / 6pm London. RSVP today.
Dealflow: Climate Tech
CarbonCapture secures $35 million to suck carbon from the atmosphere. Direct air capture technology that can remove billions of tons of carbon from the atmosphere may be critical in keeping global warming below 2 degrees Celsius. L.A.-based CarbonCapture says its modular clean energy-powered machines can be connected in large arrays to suck up carbon using zeolite, a cheap and non-toxic mineral. Companies using direct air capture technology “will capture upwards of five to 10 gigatons of CO2 from the atmosphere each year by 2050,” said Brandon Simmons of Prime Movers Lab, which led the Series A round. Participating investors include Rio Tinto, Idealab Studio, Marc Benioff’s TIME Ventures and several family offices and venture capital firms.
- Capturing carbon. CarbonCapture has raised a total of $43 million in equity. The new financing will let it deploy its systems with U.S. local partners. Adrian Corless, ex- of Canadian carbon-capture company Carbon Engineering, will become CEO.
- Check it out.
Brazil’s Monashees targets $700 million for early and growth-stage impact investments. The São Paulo-based venture capital firm is looking to raise two $350-million funds to invest in Latin American tech companies addressing social issues. One will invest in newly launched startups; the other in later-stage investments. Monashees’ existing portfolio includes Weel, a fintech that provides cashflow loans to Brazilian small businesses; Frubana, which runs an online farmers’ market that links Colombian small farmers to restaurants; and Mandae, a parcel shipping company for Brazil’s small and mid-sized businesses. Mandae has just been acquired by Nuvemshop, a Latin American e-commerce platform for small businesses.
- LatAm venture boom. Startups in Latin America have raised nearly $15 billion so far in 2021, according to CB Insights. The region saw $5.4 billion in venture funding for the entire year of 2020. The substantial increase in venture funding is led by large financing rounds from Nuvemshop, NotCo and others. During the third quarter of 2021, Monashees was the most active of Latin America-based venture firms, with 17 deals.
- Share this post.
Dealflow overflow. Other investment news crossing our desks:
- Gunn Agri Partners secures A$100 million (US$75 million) to help Australia’s small and mid-sized farms transition to regenerative and energy efficient farming practices.
- India’s Niro raises $3.5 million in a round led by Elevar Equity to boost consumers’ access to credit through online shopping and other sites.
- Egyptian enterprise tech venture Cartona raises $4.5 million to help small retailers source inventory from fast-moving consumer goods companies.
- Four venture funds led by women of color – The 22 Fund, WOCstar Fund, Supply Change Capital and 2045 Ventures – form The Ally Capital Collab to coordinate fundraising and investments.
Series: Optimizing for Impact
Assign an ABC goal type to each investment (video). Not all impact investments are the same. The “ABC” classification system from the Impact Management Project helps investors differentiate investment goals: A – investments that avoid harm, B – those that benefit stakeholders, and C – investments that contribute to solutions. This week’s short video from the new Coursera course, “Impact Measurement and Management for the SDGs,” developed by CASE at Duke and the U.N. Development Programme, can help investors assign the ABCs to investments. The classification, says Duke’s Cathy Clark, makes it easier for investors to decide what impact data to ask of investees and to understand if an investment is meeting its targets. “As more investors use the goal levels, impact performance will be easier to communicate up and down the investment value chain.” Learn your ABCs.
- Back to school. Catch up on some of Clark’s other favorite videos from the course: “Where are you on your impact management journey?” and “What are the five dimensions of impact?”
Agents of Impact: Follow the Talent
ImpactAlpha partner event: Join more than a thousand registrants at Next Normal Now from the Global Impact Investing Network to explore the regeneration of human and natural ecosystems, Wednesday, Oct. 27. Vicki Benjamin of Karner Blue Capital, Angelique Brathwaite of Blue Finance, Eric Hallstein of NatureVest, and Sophie Heading of KPMG International will discuss clean water investments to build resilience. RSVP today.
John McKinley, ex- of Dartmouth’s Tuck School of Business, rejoins BlackRock as managing director of governance and sustainability policy… M25 is looking for an analyst in Chicago… Fidelity Foundations is hiring a regional program officer in Boston… PwC seeks an ESG deals director in Austin… Elemental Excelerator is recruiting a policy lab co-director in Hawaii or the San Francisco Bay Area… Praxis Labs is hiring a chief of staff in Brooklyn… Transition Pathway Initiative establishes the TPI Global Climate Transition Centre in London to analyze how 10,000 companies are aligning with a net-zero pathway.
Proof of Impact is hosting “Bottom-up approaches to measuring the environmental and social impact of clean energy investments,” Tuesday, Oct. 26… Preventable Surprises is launching “The Border and Surveillance Industries Stewardship Project,” with Emma Pullman of BC Government Employees Union, Dov Baum of American Friends Service Committee, Rosa van den Beemt of BMO GAM, Morgan Simon of Candide Group, and Jerome Tagger of Preventable Surprises, Thursday, Oct. 28.
Thank you for your impact.
– Oct. 20, 2021