Greetings, Agents of Impact! Welcome to this week’s ImpactAlpha LP/GP, where we take you inside the real business of impact investing and the dynamic relationships between owners, managers and intermediaries of impact capital.
📞 The Call: Ramping up green lending – even without that $20 billion. The pipeline was robust for the networks of green banks and community lenders that had mobilized to deploy the Greenhouse Gas Reduction Fund. The abrupt shift in federal policy stranded deals representing tens of billions of dollars in community investment that stood to reduce energy costs, improve air quality, create jobs and boost resilience in communities across the US. That makes the moment ripe for opportunistic investors and for a rethink of impact investing more broadly. Join Climate United’s Beth Bafford, Justice Climate Fund’s Amir Kirkwood and other community climate investors who are shaping a new market for green lending – even as they fight on in court, Wednesday, June 11 at 10am PT / 1pm ET / 6pm London. RSVP today.
⚡ Plug in today: How mobility tech is reshaping cities from the ground up. For today’s PluggedIn, mobility investor Raggeria Goddard, formerly with GM Ventures, joins ImpactAlpha’s Sherrell Dorsey to map the mobility landscape, from EV charging and “digital twins,” to advanced sensors and smart corridors. “I see an opportunity to rethink how we use transportation, from peer-to-peer models to shared mobility services that are more efficient and accessible to everyone, not just the wealthy,” says Goddard, founder of Detroit-based Crowned Venture Capital. Plug in today, Tuesday, June 3 at 10am PT / 1pm ET. There’s still time to RSVP.
In this week’s newsletter:
- Climate bargain hunters pick through orphaned assets
- Corporate backers for the AI transformation of industries
- Sustainable aviation fuel in Europe
- Structuring impact-linked carried interest
Featured: Private Equity
For climate fund managers with dry powder, there’s rarely been a better time to invest. Climate tech tailwinds have turned to headwinds. Clean energy incentives are on the chopping block. Fundraising is a slog across the board. The worst of times? More like the best of times for climate investors with capital on hand. That’s the sentiment of some veteran climate tech investors who have been through a cycle or two. “It’s the old adage,” says Colin le Duc, a founding partner of Generation Investment Management, the $30 billion sustainable asset manager whose other co-founders include Al Gore and David Blood. “The best time to invest is the worst time to raise a fund, and the best time to raise a fund is the worst time to invest it.” Le Duc and other specialist investors spot opportunities amid the gloom to scoop up climate tech companies with good management and long-term potential. “The fundamentals of the sustainability transition are very much intact.”
- Choppy waters. The green retreat, by some corporations as well as the US government, is causing casualties among companies dependent on incentives and subsidies. But most companies with robust business models will be fine, once they find other offtakers and sources of capital. Last week, the Department of Energy cancelled some $3.7 billion in funding that had already been awarded to two dozen industrial decarbonization projects, from low-carbon cement and steel to chemical recycling and carbon capture. Sunnova Energy, a residential solar installer, filed for bankruptcy protection this week after struggling with high interest rates and waning state solar incentives. Tax credits and incentives that have spurred some $900 billion in planned private investment may get axed in the Republican budget and tax bill now in the Senate.
- Bargain hunters. Trade wars have rattled markets — and created openings. “Unfamiliar investors can view emerging markets as especially risky, which softens valuations,” David Cogut of Pegasus Capital Advisors, which sees attractive opportunities in Brazil, Mexico and Chile as well as in Indonesia and across Africa. Tom Steyer’s Galvanize Climate Solutions is looking for orphaned projects ripe for private investment. “If there’s a big supplier of capital who has decided, ‘I’m out,’ that’s a good thing,” Steyer told ImpactAlpha. “If you’re sitting there with cash, it’s an unequivocally good thing, because prices are going to be lower, there’s going to be less competition, and you’re going to get better returns.”
- Emerging opportunities. The gloomy mood in the US does not extend overseas, where the energy transition is in full swing. One in five Global South countries already generate a higher share of their electricity from solar and wind than the Global North, according to research firm Ember. “That is not because Kenya or Morocco is more climate-conscious—it’s because they’re less burdened by legacy systems and dogma,” write the firm’s Daan Walter, Sam Butler-Sloss, and Kingsmill Bond. “When you’re seeing the buildup of technology, the buildup of talent, the buildup of capital, even though emissions continue to rise globally, we are laying the rails for a clean economy,” le Duc said. “So there are plenty of things to be very optimistic about.”
- Keep reading, “For climate fund managers with dry powder, there’s rarely been a better time to invest,” by Amy Cortese on ImpactAlpha.
Dealflow: Corporate LPs
Cathay Innovation raises $1 billion to transform industries with AI. The venture capital arm of Paris-based global investment firm Cathay Capital has raised $1 billion for its third fund, nearly matching the same amount Cathay Innovation raised for its first two venture funds combined. Cathay’s corporate partners, including BNP Paribas Cardif, TotalEnergies, Sanofi and other global institutional investors, are looking for early access to AI technologies with potential to reinvent industries like healthcare, financial services, energy and mobility. “Regardless of macroeconomic uncertainties, the AI-driven transformation of industries will go on,” said Cathay’s Mingpo Cai. “Our mission is to support local champions and create ecosystem synergies that benefit all stakeholders while creating lasting economic and societal impact.”
- Global portfolio. Cathay writes checks between $5 million and $100 million to lead or co-lead Series A, B and growth-stage financing grounds. The new fund has backed 14 companies, including California-based Reebelo, which manages a digital marketplace for refurbished devices and other secondhand lifestyle products; and Entalpic, a Paris-based materials discovery company focused on net-zero and energy transitions. Cathay sets up portfolio companies with corporate partnerships and co-investments. The French global pharmaceutical company Sanofi, for example, has partnered with several portfolio companies, including Owkin and AQEMIA, two French startups that are using AI to accelerate drug discovery and precision medicine.
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Macquarie and APG back Dutch sustainable aviation fuel producer SkyNRG. Macquarie Asset Management and Dutch pension fund manager APG, together invested €300 million ($341 million) to help SkyNRG set up production facilities across the Netherlands, Sweden and the US by 2030. ABP, a Dutch pension fund for government employees that is managed by APG, provided €250 million. Macquarie, which had invested €175 million ($199.5 million) in SkyNRG via its Macquarie GIG Energy Transition Solutions Fund in late 2023, added €50 million.
- Sustainable fuel. SkyNRG was co-founded 15 years ago by KLM Royal Dutch Airlines, Spring Associates and circular solutions company EME, to make sustainable aviation fuel from vegetable and waste oils. The company and Swedish power company Skellefteå Kraft entered a partnership last year to develop eSAF, synthetic aviation fuel made from renewable electricity and carbon dioxide from decomposing biomass. SkyNRG’s Maarten van Dijk said the new capital “demonstrates that the SAF market is ready for facilities dedicated solely to the production of SAF.” Such fuels can cut aviation emissions, which account for just over 2% of carbon emissions globally, by up to 80%.
- SAF finance. SAF supply has lagged demand (for background see, “Cloudy Skies: DOE backs sustainable aviation fuel, but airline demand is slow”). The EU and China mandate that jet fuel blends must contain at least 2% SAF by the end of this year. In the US, a key tax break has helped projects pencil out. Earlier this year, alternative fuel producer Montana Renewables secured the first tranche of a $1.44 billion loan guarantee in a rare disbursement from the US Department of Energy, to expand SAF production capacity to 300 million gallons annually.
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Dealflow overflow. Investment news crossing our desks:
- Frontier Infrastructure Holdings, a portfolio company of Dallas-based green infrastructure private equity investor Tailwater Capital, closed a $130 million senior secured loan with Kennedy Lewis Investment Management. The company plans to use the loan to meet demand for “localized, dispatchable power with integrated carbon solutions.” (Frontier)
- International Finance Corp. made a $100 million equity commitment in TPG Rise Climate’s Global South Initiative, which is seeking up $2.5 billion in institutional capital for high-growth climate investments in emerging markets. TPG co-launched the Global South Initiative with the UAE’s Altérra at COP28 in Dubai. (TPG)
- GridFree AI raised $5 million, led by UK-based Giant Ventures, for data centers co-located with grid-independent power, battery storage and cooling infrastructure. The Houston-based company, led by former BP and Microsoft execs, is the latest AI company to emerge from Montauk Climate’s venture studio (see, “Clear Current raises $4 million to manage data in ‘the electron economy’”).
Impact Voices: Fund Management
How to structure impact-linked carried interest and other impact incentives. Show me the incentive, I’ll show you the outcome, as Charlie Munger might have said. To drive outcomes, some impact investors are introducing mechanisms to reward the recipients or managers of capital for achieving impact targets in impact deals. Among them: impact-linked carried interest, outcomes-based finance and impact-linked finance. “An effective impact-linked incentive structure needs to be simple enough that the transaction remains economically viable,” writes Aaron Bourke of law firm RPCK. Bourke and his colleague Chintan Panchal have been skeptics of such structures. Widespread adoption, Bourke says, will require “a willingness to experiment and invest resources to design and implement such structures effectively.”
- Impact carry. With “impact-linked carried interest” structures, limited partners in a fund incentivize tie a portion of the general partner’s carried interest to the achievement of impact outcomes. Emerging best practice: Carrots over sticks. Rather than starting from the 20% carried interest and ratcheting down if impact targets are missed, it’s more effective to bump the fund’s carried interest percentage up if impact targets are achieved. Even better: tying impact targets to a reduction of the manager’s hurdle rate, when carried interest kicks in. Bourke rounded up best practices from his discussion with Leslie Cornell from Social Finance, Erik Nieuwland of the Dutch development bank FMO and Bjoern Struewer from Roots of Impact at the Conference on Legal Issues in Social Entrepreneurship and Impact Investing at the NYU School of Law.
- Keep reading, “How to structure impact-linked carried interest and other impact incentives,” by RPCK’s Aaron Bourke. Follow all of ImpactAlpha’s “Impact Management” coverage.
Agents of Impact: Follow the Talent
Mohadeseh Abdullahi, previously with Molten Ventures, joins Giant Ventures as partner… The Aspen Institute seeks an executive director of education and society programs in Washington, DC… Anthropic is looking for a policy communications lead in New York… Maycomb Capital is on the hunt for an investment associate in Brooklyn… Sage Investment Group is recruiting an investor relations coordinator… PolicyLink is looking for a water equity and climate resilience senior associate… Triodos Bank has an opening for a Latin America-focused investment intern.
CPP Investments has an opening for a sustainable energies associate in Toronto… Also in Toronto, Rally Assets is seeking an impact management senior associate… The Tow Foundation is recruiting a program lead in Connecticut… CalSTRS is hiring a senior investment director for sustainable investing and stewardship strategies… Rabo Foundation is on the hunt for an impact finance consultant in Mexico… One Acre Fund seeks an impact senior associate in Kampala, Uganda… Thistle Communities seeks an impact manager for a resident-owned community.
Milestone: Through its mandate to invest in companies that deliver at least 60% of greenhouse gas emissions reduction, Houston-based Ara Partners has reported 1.7 million metric tons in carbon reduction from its private equity and infrastructure portfolios in 2024, while eliminating 542,000 metric tons of waste (see, “Industrial decarbonization specialist Ara Partners scoops up $800 million as it expands from PE to infrastructure”).
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– June 3, 2025
