Fundraising is tough going for most private equity fund managers – impact or otherwise. Private credit, on the other hand, is growing.
On this month’s Liist of actively raising impact funds, a quartet of debt-focused fund managers are expanding the reach of private credit by channeling capital into niche and underinvested markets and communities.
In Latin America, Amazonia Impact Ventures, a UK-based fund manager that’s ushering loans to women and Indigenous communities in the Amazon for sustainable agroforestry, forest management and biodiversity preservation (for context, see “These Latin American fund managers are seeking alpha in impact). Nonprofit fund manager New Story Ventures is lending to housing development projects in Mexico that will enable low-income families to acquire their first homes.
In the US, the nonprofit Fibershed is teaming up with Sustainable Agriculture and Food Systems Funders for a flexible grant and debt fund to support early-stage sustainable materials companies, including dedicated funding for Black-led companies. RSF Social Finance is funding community organizations and businesses that traditional banks and lenders deem too small or too risky.
All four are using concessional and catalytic capital from foundations, family offices, donor advised funds and even everyday investors to derisk new technologies and markets and to create more equitable and inclusive communities.
Also on this month’s Liist of impact funds: Pangea Ventures is raising its fifth equity fund to invest in early stage hardware, biotech and advanced materials companies in North America that are supporting climate mitigation and healthcare advancements.
On this month’s Liist:
- Amazonia Impact Ventures Fund I
- New Story Ventures
- Pangea Ventures Fund V
- RSF Social Investment Fund
- SAFSF Fibers Fund
Disclaimer: The Liist and this post are based on available information, sourced by ImpactAlpha. Information has not been further reviewed by the managers nor verified by third parties, is not guaranteed for accuracy or completeness, and should not be relied upon as investment advice or recommendations. Nothing in The Liist, this post or on ImpactAlpha.com shall constitute an offer to sell or the solicitation of an offer to buy securities.
Amazonia Impact Ventures
Amazonia Impact Ventures is addressing a shortage of affordable debt capital in Indigenous communities and for biodiversity and nature conservation in the Amazon. The UK-based impact fund manager makes sustainability-linked loans to cooperatives that protect forestland and support Indigenous livelihoods. It pairs its capital with technical assistance to help businesses grow revenues while deepening their impact.
Amazonia was incubated at the Catalytic Climate Finance Facility, a partnership between blended-finance network Convergence and Climate Policy Institute that aims to build and scale new financial instruments and funds to catalyze capital for climate change in emerging markets.
The firm is in the market with its first fund and a fundraising target of $25 million. It’s looking to raise a $2.5 million catalytic tranche to derisk its senior tranche. The general partners have committed $1 million to the fund.
Amazonia is aiming to use the capital to invest in projects covering 2.5 million acres of forestland and to impact 20,000 livelihoods. By lending through cooperatives, Amazonia’s Aldo Soto says the firm can reach thousands of Indigenous farmers and producers, who are “strategic actors to address climate change and biodiversity loss” (watch ImpactAlpha’s recent interview with Soto).
- Type of investments: Loans of $200,000 to $1 million
- Fund structure: Debt fund; no management fee
- Where fund is domiciled: Delaware, US
- Geographic focus: Amazon region of South America
- Sample investments: $6 million in loans disbursed, including to CeproYanesha, a Peruvian smallholder coffee farmers’ cooperative made up of 108 producers. Its $235,000, five-year term loan has a 15% interest rate (compared to market rates of 25% or more); the rate will be reduced to 12% if impact targets around processing, sustainable land use, and increased farmer incomes are achieved
- Sample impact targets/metrics: Preservation and sustainable management of 2.5 million acres of land; livelihood improvement for 20,000 people
- Contact information: Aldo Soto
New Story Ventures
Atlanta-based nonprofit New Story Ventures is on a mission to support low-income families in Mexico boost their prospects for wealth creation through homeownership. Its starting point is helping them to acquire land. The organization supports land development projects that ready plots with utility and sewage infrastructure and connections, and then sells pieces of the plots to families so they can build a home. Owning the land provides them with collateral banks need to extend a mortgage. New Story’s goal is for 60% of new land-owners to be women.
“We believe that land ownership is critical for families and individuals to secure a path to housing, a core human right and a step out of poverty,” the organization says. “Additionally, purchasing formal land can build meaningful credit history and offer a first asset that these families and individuals can use as collateral to access the affordable housing finance needed for homebuilding.”
New Story Ventures is in the market with a $25 million fund to lend to land development projects. It will invest $500,000 to $1.5 million per deal.
- Type of investments: Debt
- Fund structure: Debt fund, structured as an LLC subsidiary of the nonprofit New Story
- Where fund is domiciled: US
- Geographic focus: Mexico
- Who is eligible to invest: accredited investors (foundations, donor advised funds, high net-worth individuals)
- Sample investments: A site in Ahualulco in the state of Jalisco that will provide ready land by 2025 to 401 families at a cost of 128,000 pesos ($7,500); 54% of the plots are being sold to women. None of the buyers have previously owned a home before.
- Sample impact targets/metrics: poverty reduction, wealth generation, women’s economic empowerment, financial inclusion; commercial capital mobilization for land development projects
- Contact information: Hewsan Pang
Pangea Ventures Fund V
Pangea Ventures has been investing in North American hardware, biotech and advanced materials startups since 2000. Its investment strategy focuses on technologies that positively impact human health, food systems, and increasingly, climate change.
Sixty percent of its investments now have a climate focus. Its portfolio includes CarbonCure, which captures carbon and stores it in concrete to be used for construction projects. Biodel is a regenerative agriculture and soil-based carbon sequestration company. Newleaf Symbiotics is developing a line of biological agriculture stimulants.
The Vancouver-based impact fund manager is in the market with its fifth equity fund and a target of raising $100 million. The firm will cut Series A checks of $3 million to $5 million. It’s eying expansion into fast evolving sectors like green hydrogen, CO2 removal, cooling technologies, and greener metals and mining.
- Type of investments: Series A equity
- Where fund is domiciled: US
- Geographic focus: North America
- Sample investments: Ardent Process Technologies, which makes membranes for point-source carbon capture; Biodel (see above)
- Sample impact targets/metrics: CO2 reduction; increase in food production/reduction in food waste; fresh water treated/produced; and quality-adjusted life years (learn more about QALYs)
- Contact information: Sarah Applebaum
RSF Social Investment Fund
RSF Social Finance has for 40 years been channeling flexible forms of finance to underserved communities and businesses in the US. The nonprofit is looking to raise $30 million this year for its eSocial Investment Fund, an evergreen debt fund.
A new theme: RSF wants to help businesses reduce their carbon footprints and tap federal financing from the US Inflation Reduction Act, Greenhouse Gas Reduction Fund, and bipartisan infrastructure law. RSF recently inked a new $3 million loan to community solar developer Sunwealth, its largest borrower.
Last quarter, it also freed up $1.5 million in a revolving line of credit for 88 Acres, a women-led company that will use the capital to provide zero-waste, health-conscious snack bars to Delta Airlines. It also helped finance a registered investment advisor Natural Investments’ transition to a perpetual purpose trust.
- Type of investments: Debt, $500,000 to $10 million
- Fund structure: Evergreen, senior secured debt fund
- Where fund is domiciled: San Francisco
- Commitments/investors: $11 million of a $30 million target for 2024
- Who is eligible to invest: accredited and non-accredited investors. Non-accredited investors can invest via notes. Notes with quarterly liquidity have a $1,000 investment minimum. One, two and three year notes have $25,000 investment minimums.
- Leadership: Women and diverse-led
- Contact information: Kathleen Paylor
SAFSF’s Fibers Fund
Two-thirds of fabrics are made of fossil fuel-based materials. About 85% of fast fashion products end up in a landfill. Textile jobs are often poorly paid and insecure.
To shift the textile industry to be more environmentally and socially sustainable, Sustainable Agriculture and Food Systems Funders, or SAFSF, has teamed up with nonprofit Fibershed to invest in natural fiber entrepreneurs and small producers in the US. The partners are looking to raise $10 million for their Fibers Fund, which will provide flexible and catalytic capital for the emerging ecosystem of natural fiber producers in the form of grants, forgivable loans, term-loans and other flexible structures as suitable.
Fibers Fund will make grants of up to $25,000 and loans of up to $500,000. The partners also have a dedicated cohort to support Black textile entrepreneurs, the Black Fiber Cohort. “Environmental and cultural equity requires meeting Black entrepreneurs where they are at by recognizing historical and current disenfranchisement, and responding with nuanced support,” the Fibers Fund team says. “Having a dedicated cohort prioritizes access and attention for each of the businesses’ particular needs.”
The fund has secured $1.9 million toward its $10 million goal.
- Type of investments: flexible structures: grants, forgivable loans, term-loans
- Fund structure: Dual structure: Special Purpose Fund registered with Impact Charitable, a Colorado nonprofit, that can accept any form of philanthropic capital; a for-profit LLC, also with Impact Charitable, that can accept invested capital
- Other unique features: Fibers Fund has an Advisory Council made up of female and diverse founders that “represent communities most impacted by the [textile] industry’s extractive practices.” The Advisory Council provides guidance on investments and grants made by the Investment Committee
- Where fund is domiciled: Colorado
- Who is eligible to invest: Accredited investors, including family offices and program-related investment funders
- Leadership: Women and diverse-led
- Sample impact targets/metrics:
- Sample investments/grants: Natural Dyes, a producer of dyes sourced from regenerative farmers; Seed2Shirt, a Black woman-owned apparel company
- Contact information: Sarah Kelley
