The Brief: Africa’s crypto boom, electrifying commercial fleets, equitable economic growth, new climate funds, rising carbon markets

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Greetings, Agents of Impact! 

The Call: The tech disruption of small business financing. Traditional financial institutions see informal and small businesses in emerging markets as too expensive or risky. Tech entrepreneurs and investors see small and growing businesses as a big and growing market. Join Daniel Kimotho of crypto platform Celo (see below); Hilda Moraa of Pezesha, an alt-credit fintech in Nairobi; Luyanda Jafta of The People’s Fund in South Africa; Daniel Goldfarb of Lendable; and other pioneers of a revolution in small business financing, Tuesday, Nov. 16, at 8am PT / 11am ET / 7pm Nairobi. RSVP today.

Featured: Crypto Craze 

African startups develop crypto tools for inclusive prosperity. Nelly Chatue-Diop was a teenager in 1994 when her family lost much of their savings overnight with the devaluation of the currency used in Cameroon and other francophone West African countries. “What could be done for people to be more empowered?” she wondered. Chatue-Diop launched the crypto investment platform Ejara to give Africans broad-based access to cryptocurrencies like Bitcoin. The crypto investment boom seizing the African continent has caused assets to skyrocket 1,200% in the past year to $105.6 billion. Crypto platforms that enable households and businesses “to facilitate fast and low-cost payments, to save in a more stable currency, and to generate a return are an interesting application when it comes to financial inclusion,” says Dan Block of Mercy Corps Ventures, an Ejara investor. 

  • Use cases. In Kenya, Kotani Pay is testing crypto-based payments of as little as $1 for gig workers in Africa, while addressing a key barrier to crypto adoption with an “off-ramp” that transfers crypto payments into mobile money accounts, like M-Pesa. Kotani Pay is also testing a universal basic income scheme. Mercy Corps Ventures worked with crypto platform Celo on a micro-tasking pilot. Celo has partnered with JPMorgan Chase on a COVID relief program for women entrepreneurs in the Philippines. Ejara sees opportunities to bridge micro-business financing gaps for rural populations.
  • Responsible crypto. Dozens of organizations, including Ejara and Mercy Corps, are part of the Alliance for Prosperity, a global network of crypto players committed to responsible, inclusive and wealth-building blockchain applications. “The general mission is to build a financial system that creates the conditions for prosperity for everyone,” says Umar Sebyala of Celo, which launched the network. Nigeria hit numerous speedbumps rolling out its stable coin, the eNaira. Consumers have lost millions in hacks and scams.
  • Keep reading, “African startups develop crypto tools for inclusive prosperity,” by Jessica Pothering.

Dealflow: Electrify Everything

Inspiration secures $200 million from ArcLight to help commercial fleets go electric. Washington, D.C.-based Inspiration launched this year to provide financing, leasing and charging infrastructure services for companies looking to electrify and decarbonize their commercial fleet vehicles. Its first partner is Brooklyn-based Revel, which tapped Inspiration for its fleet of ride-share Teslas. Inspiration intends to expand across North America. “We will continually be raising capital to target segments that may be more difficult to electrify, like ride-share drivers and low-to-middle-income consumers,” Inspiration’s Josh Green told ImpactAlpha.

  • Decarbonizing transportation. Boston-based ArcLight made the investment via its seventh ArcLight Energy Partners Fund. Electric bus fleet company Proterra went public earlier this year via a merger with a SPAC, or special purpose acquisition company, backed by ArcLight.
  • Dig in.

Equitable economic growth tops agenda at U.S. Commerce Department convening. Top officials in the Biden administration committed to advancing economic equity for communities of color and underrepresented groups at the first Interagency Convening on Equitable Economic Growth, co-hosted by the Ford Foundation. Discussions at the daylong gathering covered community investing, quality jobs, workforce training, small businesses, corporate diversity, and the power of data and disclosure to advance racial and gender equity. “It was motivating to have the energy and interplay of public and private sector actors who care about the same issues but have different tools in their toolkits,” Ford’s Margot Brandenburg told ImpactAlpha. Among the commitments: 

  • Private-markets ESG. A consortium of investors including Ford, S&P Global, Hamilton Lane and Omidyar Network invested $21 million in Novata, a new platform to help private companies measure, collect and benchmark environmental, social and governance data (see, “Consortium launches Novata to drive ESG reporting in private markets”). Private equity firms Vistria Group, Clearlake Capital and Kohlberg & Co. also participated in Series A financing round, one of the largest for a public-benefit corporation.
  • Quality jobs. The Families and Workers Fund committed $25 million to champion high-quality jobs for those in lower-paying, precarious or rapidly-changing jobs, especially people of color, young people, women and caregivers (see, and listen to, “Solving for both unemployment and labor shortages with high-quality jobs”). A “good jobs champions” group will be convened by Aspen Institute.
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European Investment Bank and Allianz Global target €500 million for climate fund. Allianz Global, the €633 billion ($733.9 billion) asset management arm of German financial services company Allianz, teamed up with the European Investment Bank to invest in climate impact funds and projects in Africa, Asia, Latin America and the Middle East. “Supporting climate projects in emerging and developing countries is the key to meeting the Paris climate goals,” said EIB’s Ambroise Fayolle. Investors, including the German and Luxembourg governments, the Nordic Development Fund and Swedish insurer Folksam, have already committed most of the capital. Allianz Global will manage the fund; EIB will be responsible for sourcing investments.

  • New climate funds. Chef José Andrés’ nonprofit World Central Kitchen launched a $1 billion fund to provide disaster relief for communities impacted by extreme weather. Firstime Ventures raised the first $50 million for a climate tech fund to “help build Israeli unicorns that will assist in dealing with the climate crisis,” Firstime’s Jonathan Benartzi said.
  • Check it out

Dealflow overflow. Other investment news crossing our desks:

  • rePlant Hemp is looking to raise $500 million to back ventures in hemp-based food, construction materials, textiles, bioplastics and more. One acre of sustainably grown hemp can absorb about 10 tons of carbon.
  • Stockholm and Nairobi-based Opibus raises $7.5 million in equity and grants to convert African busses to electric vehicles.
  • Seasoned scores $19 million in Series A funding to expand its hiring platform for hourly food service workers.

Signals: Carbon Markets

Price of carbon rises along with sea levels, as market mechanisms emerge. Negotiators at COP26 are hammering out rules this week for a global climate market that would turn carbon offsets and allowances into fungible assets that can be traded across geographies the way barrels of oil or bushels of wheat are today. Thorny issues: how to prevent double-counting of emissions reductions; whether offsets issued under older, less stringent systems can be carried forward; and how transaction fees might channel money to vulnerable countries struggling to adapt to climate change. 

  • Flashpoint. Climate activists, including Greta Thunberg, dismissed carbon credits and trading schemes as greenwashing. Offsetting emissions is no substitute for cutting them. But a price of $100 or $150 per ton of carbon averted or removed would send a market signal that would ripple through the global economy. “Pricing carbon is perhaps the single most effective thing we can do,” said Emergent’s Eron Bloomgarden.
  • Methane market. Averting a ton of methane, a potent greenhouse gas, is worth many times the avoidance of a ton of carbon (see, “The sky-high value of cutting methane emissions is attracting policymakers – and investors”). Equilibrium Capital is generating revenues of about $25 million per year with credits under California’s Low-Carbon Fuel Standards and federal renewable fuel standards via dairy-waste biogas plants that produce renewable natural gas. “We may sell our methane for $5, and our environmental credits associated with that could be $80,” Equilibrium’s Dave Chen tells ImpactAlpha.
  • Keep reading “Price of carbon rises along with sea levels, as market mechanisms emerge,” by Amy Cortese on ImpactAlpha.

Agents of Impact: Follow the Talent

Brandon Zeigler, ex- of the Walton Family Foundation, joins Global Endowment Management as a director on its impact investment team… Rethink Capital Partners hires Amy Nelson, ex- of Venture for America, as chief strategy officer and Alison Smith, ex- of Cornerstone Capital, as a partner focused on growth. Ingrid Michalski, ex- of Waycrosse, joins North Sky Capital as a fund operations analyst.

Common Future is hiring a manager of capital strategy in New York… IREX is hosting a virtual Impact Fellowships Summit, a forum for leaders of fellowship programs, Nov. 16-18… The Social Science Research Council is accepting applications for the inaugural cohort of its Just Tech Fellowship.

Thank you for your impact.

–Nov 10, 2021