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The Brief: 10x’ing green infrastructure investments, alt-breast milk, priming climate tech, Cornerstone’s Erika Karp walks the talk, merging DFID



Greetings, Agents of Impact!

RSVP for The Call: 10x’ing investments in green infrastructure. Climate Policy Initiative’s Barbara Buchner will share signals of the gathering market disruption (see below). Greenbacker Capital’s David Sher, Equilibrium Capital’s Dave Chen and Caprock Group’s Matthew Weatherley-White will explore how to ramp up investments in clean energy and green infrastructure on ImpactAlpha‘s Agents of Impact Call No. 19, Thursday, June 18 at 10am PT / 1pm ET / 6pm London. RSVP today.

Signals: Ahead of the Curve

Shutdowns have not shut down renewable energy and green infrastructure investments. Falling prices for oil are accelerating the industry’s long-term decline (see, Write-downs of stranded fossil fuel assets are here – and getting bigger). Falling costs for solar and wind power, in contrast, are accelerating the rise of renewables, which in turn is attracting continued interest from investors. The latest data point: strong demand from pension funds and other institutional investors for Copenhagen Infrastructure Partners’ latest renewable energy fund, which reached a first close of €1.5 billion ($1.7 billion) toward its €5 billion to €7 billion target for investments in wind, solar, storage and waste-to-energy projects. Even as COVID-related shutdowns slowed installations – and cratered the residential solar market – Wood Mackenzie analysts expect total U.S. solar installations to grow 33% this year to 18 gigawatts (though down from an earlier forecast of 20 gigawatts). ImpactAlpha’s Agents of Impact Call No. 19 this week will explore strategies for investments in clean energy and green infrastructure to accelerate the low-carbon transition, and generate long-term, steady yields. The CliffsNotes:

  • Renewables power up, coal powers down. Electricity generation from coal fell by 21.6% in March compared to the previous year, according to the International Energy Agency. Renewable electricity generation grew by 7%. Key point: Renewable energy capacity is being tapped first because of its lower marginal costs; more costly coal is being pushed out. “Take or pay” renewables contracts require utilities and other customers to buy every kilowatt-hour produced for an agreed price, say Charles Wheeler and David Sher of Greenbacker Capital, which is sponsoring The Call.
  • Stimulus spending. There are few green projects in the Trump administration’s early plans for a $1 trillion infrastructure package of COVID recovery stimulus spending. That could change in Congress, where wind and solar power enjoy bipartisan support (see, Climate makes a comeback in coronavirus recovery plans (just don’t call it climate action)). A team of economists that analyzed 700 past stimulus policies concluded that “green projects create more jobs, deliver higher short-term returns per dollar spent, and lead to increased long-term cost savings” compared to traditional stimulus plans.
  • Beyond solar. By 2025, energy storage will be included in one-third of new residential and one-quarter of new non-residential solar systems, Wood Mackenzie forecasts. Electric vehicle sales are expected to be flat in 2020, at about 2.1 million vehicles, bucking the global sales decline of 15% for passenger cars, according to the IEA. Charging systems and infrastructure are growing rapidly, as companies from Amazon to UPS, along with transit agencies and cities, electrify their fleets (see, Electrification of vehicle fleets sparks disruption of energy and transportation). In the U.S., market penetration of biodigesters that turn dairy cow manure and other waste into natural gas lags far behind Europe. “You can do a hundred of these, a thousand of these,” said Equilibrium Capital’s Dave Chen, who will also join The Call (see, Tapping the municipal bond market for distributed green infrastructure).
  • Capital call. Positive trends have yet to drive the massive increase in investments in low-carbon infrastructure that experts say is necessary to forestall the worst impacts of climate change. Last year’s figures have not yet been tallied, but in 2018, global climate financing actually fell by 11% to $546 billion, from $612 billion in 2017, according to the Climate Policy Initiative. “This is simply not enough, especially as investments in polluting industries continue to effectively cancel out these efforts to address climate change,” CPI’s Barbara Buchner, who will be featured on The Call, said last year. “Leaders should be focused on total economic transformation.”
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Dealflow: Follow the Money

BIOMILQ secures $3.5 million for “alt-breast milk,” grown in a lab. The Durham, N.C.-based startup began tampering with the idea of a lab-grown baby formula alternative back in 2013, when “cellular” foods, like lab grown meat, were in their infancy. The company raised its first institutional funding round to replicate human breast milk using mammary cells and eventually market the product as a more nutritious alternative to cow-milk-based formulas. Breakthrough Energy Ventures, Blue Horizon Ventures, Purple Orange Venture and Shazi Visram, founder of organic baby food company Happy Family, backed the round. The company will use part of the funding to expand its team. Lots more.

Prime Impact Fund raises $52 million to jumpstart the climate tech pipeline. The nonprofit venture fund of Cambridge, Mass.-based Prime Coalition closed its first fund with $52 million in mission and program-related investments, recoverable grants and traditional grants. Among the investors are Sierra Club Foundation and Packard Foundation, which announced its investment last October. MacArthur Foundation, a long-time Prime Coalition funder, is the fund’s latest backer with a program-related investment through the Catalytic Capital Consortium. Prime Coalition has rallied more than 150 philanthropic investors to early climate tech investments. The full story.

More climate tech:

  • Pale Blue Dot raises €53 million for climate-focused startups. More than half the capital came from Swedish investors, including venture firm Saminvest. The fund has made three investments, including in London-based Phytoform, which breeds resilient crops, San-Francisco-based Patch’s carbon-offsetting platform, and Amsterdam-based 20tree.ai, which uses machine learning to reduce forest-fire risk.
  • Clean-energy incubator Greentown Labs expands to Houston. Said founder CEO Emily Reichert, who started the incubator in Somerville, Mass.: “Houston has the opportunity to be the energy transition capital of the world.”

Rockefeller Foundation pledges $10 million for inclusive growth in 10 cities. The Opportunity Collective will make grants in Atlanta, Boston, Chicago, El Paso, Miami Dade, Houston, Louisville, Newark, Norfolk and Oakland to protect communities from displacement and to eliminate barriers to capital and credit among low-wage workers and small businesses with women, Black and Latinx owners.

Series: Walking the Talk

Erika Karp: How I have invested in the road less traveled. From investment banker to day trader to sustainable investor and entrepreneur, Cornerstone Capital’s founder and CEO has carved an alternative path through capital markets. In the latest installment in ImpactAlpha’s Walking the Talk series, which features investors bringing impact and sustainable investing strategies to their personal portfolios, Karp lays out her personal investment philosophy (see also, “Beth Bafford”, “Matthew Weatherley-White” and “Brent Kessel). As is her wont, Karp integrates material environmental, social and governance, or ESG, factors into her analysis of revenues, costs and risk. She fuses the macro with the micro, the sectoral with the structural, the strategic with the tactical, the thematic with the pragmatic. “I see good governance as a proxy for quality, for innovation, for productivity, and for resilience.” Key for Karp: seeking out expert managers, especially women-led firms and funds.

  • Female fund managers. Karp maintains a significant allocation to the Cornerstone Capital Access Impact Fund, a long-only global equity mutual fund (listen in to, Cornerstone Capital seeks to prove active managers can deliver impact in public equities (podcast)). She has invested in Alicia Robb’s Next Wave Impact Fund, which focuses on diversity and inclusion in the entrepreneurial ecosystem, and Shally Shanker’s AiiM Partners Fund, which has a focus on oceans. She’s also invested in Linda Zheng’s Purview InvestmentsJalak Jobanputra’s Future Perfect Ventures, and with Ark Investment Management’s Cathie Wood, “the rare portfolio manager to whom I will hand my assets and get a good night’s sleep.”
  • Road less traveled. Karp doesn’t view her home as an investment. “I see it as my home.” She doesn’t see college for her children as an expense. “I see it as an investment.” For Karp, day trades are bets, not investments, and gold is just a store of value. “While I may not be the average investor, I do have my discipline,” she says. “And I often take the road less traveled.”
  • Keep reading, “How I have invested in the road less traveled,” by Erika Karp on ImpactAlpha (thanks to Confluence Philanthropy).

Agents of Impact: Follow the Talent

U.K. Prime Minister Boris Johnson plans to merge the Department for International Development and the Foreign and Commonwealth Office, “confirming the U.K. development sector’s widely-held fear that he would do away with a standalone development department,” reports Devex.

Billionaires MacKenzie Bezos and Melinda Gates (via Pivotal Ventures) launch a $30 million funding program for organizations advancing women’s empowerment and influence… ImpactAssets and Stop the Spread team up to fund COVID healthcare and personal protective equipment needs for communities of color… Michelle Kathryn Essomé steps down as CEO of the African Private Equity and Venture Capital Association… Boston Ujima Project names Johnny Charles, ex- of Dorchester Bay Economic Development Corp., as managing director of the Ujima Fund and James Vamboi, ex- of Health Leads, as chief of staff, community and culture… Sonya Childress becomes a senior fellow at Perspective Fund, an impact-focused film fund in New York.

Boston Impact Initiative is hiring an investment director in Boston… Veris Wealth Partners is looking for a research analyst in New York… Harlem Capital Partners has openings for part-time interns starting in September… Tech company Tribe has a plug-in to help Amazon shoppers find small businesses to buy from… Oweesta is hosting “2020 Native CDFI Capital Access Convening” from June 23-25… The Refugee Investment Network’s Tim Docking will present RIN’s COVID-19 Refugee Investment Ecosystem Survey on June 18.

Thank you for reading. 

–June 17, 2020

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