The Brief | March 3, 2022

The Brief: Age of adaptation, Serena’s ventures, forest-based carbon, e-delivery in Latin America, social bonds for racial equity

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Greetings, Agents of Impact!

Agents of Impact Call: Operationalizing impact and ESG inside the enterprise. Want to protect your enterprise from accusations of greenwashing? Interested in managing for impact without burdening your team? Looking to substantiate your public pledges and commitments? On the next Call, Cathy Clark of Duke’s Fuqua School of Business will help Agents of Impact operationalize ESG and impact inside corporations and other enterprises. Clark will walk through the four-step process with Brendan Morrissey of Walmart, who is leading Project Gigaton, the retail giant’s effort to reduce greenhouse gas emissions from its supply chain.

  • Join The Call, Tuesday, Mar. 8, at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Climate Adaptation

From ‘Atlas of human suffering’ to ‘Roadmap for climate resilience.’ Climate change is here. Deal with it. That sums up this week’s grim report from the authoritative Intergovernmental Panel on Climate Change. The “atlas of human suffering,” as the U.N.’s António Guterres called the nearly 4,000-page report, signals a shift in focus from the mitigation of future warming to the urgent necessity to adapt to devastating changes already underway. Nearly half of the world’s population is highly vulnerable to climate change, but the effects are and will be highly unequal. Hardest hit are island nations and developing countries in Africa and Asia that had little hand in creating the climate crisis. Wealthier nations and individuals are better able to adapt. Climate adaptation has long received less attention – and less capital – than climate mitigation. The challenges facing both rich and poor countries present significant opportunities for investors and entrepreneurs. 

“The IPCC report is a roadmap to demand for technology to adapt and build climate resilience,” says Lightsmith’s Jay Koh. The Lightsmith Climate Resilience Fund, one of the first adaptation-focused venture funds, last month raised $186 million to invest in water management, resilient food systems, agricultural and supply chain analytics, satellites and sensors, and catastrophe risk modeling. For different geographies, he says, “you can begin to imagine and find technologies that can address those specific challenges in those specific regions,” Koh told ImpactAlpha. BFA Global’s Catalyst Fund this week selected a half-dozen fintech startups designing solutions with a climate-resilience lens. The Africa Adaptation Acceleration Program, a joint initiative of the Global Center on Adaptation and the African Development Bank, aims to mobilize $25 billion by 2025 for adaptation in Africa. “There’s a lot that we can do that’s actually profitable,” says Lightsmith’s Sanjay Wagle. “It’s about deploying technology that exists today to adapt in smart ways.”

Dealflow: Returns on Inclusion

Serena Ventures raises $111 million to back diverse founders building inclusive solutions. The early-stage venture firm of entrepreneur (and 23-time Grand Slam tennis champion) Serena Williams, Serena Ventures, has built a portfolio of 60 angel investments, including 13 that are now unicorns, and realized six exits (see, “Agent of Impact: Serena Williams”). “Launching a fund was the logical next step,” Williams tweeted. Based in San Francisco, Serena Ventures’ first fund will “support the founders who are overlooked by engrained systems woefully unaware of their biases,” she said. Serena Ventures will make investments from the pre-seed stage to Series A in founders “with diverse points of view.” who are building solutions for financial inclusion, health equity and other challenges.

  • Diverse portfolio. Serena Ventures says about three-quarters of its founders are people of color and women. Portfolio companies include Mahmee, a woman-led maternal health startup for new mothers; HUED, a Black woman-led company that matches Black and Latinx patients with providers of culturally-sensitive healthcare; and Black-led Esusu, which is helping low to middle-income minority and immigrant renters in the U.S. save money and build credit. Serena Ventures received commitments from Norwest, Liontree, Kapor Foundation and CapitalG, Alphabet’s independent growth fund.
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NCX secures $50 million to expand its market for forest-based carbon offsets. The firm, formerly known as SilviaTerra, connects landowners who commit to not cutting down their trees with corporations looking to buy carbon offsets. The San Francisco-based company last year raised $20 million from investors, including the Microsoft Climate Innovation Fund, Marc Benioff’s TIME Ventures and Shell Environmental Products, to create a 1.2 million-acre forest carbon project across 10 U.S. states. NCX will use the new financing to expand outside of the U.S., and build new natural capital markets for the voluntary carbon market. “If we’re going to make a significant impact on climate goals, it’s going to take more than just U.S. forests,” said NCX’s Zack Parisa.

  • Carbon markets. Prices for nature-based carbon removal have lagged in the voluntary markets, which are fragmented and opaque, according to Paul Gambill of Nori, which raised $7 million last month for a blockchain-based carbon marketplace. Moss.Earth, which specializes in Amazon forest conservation projects, raised a $10 million Series A round. Last year, Hartree Partners and Wildlife Works teamed up to finance forest protection via the voluntary carbon markets. Parisa says NCX leverages data and AI-driven remote sensors “to build markets that create the forests society wants and needs.”
  • New funding. The company’s Series B round was led by Energize Ventures, with participation from J.P. Morgan Asset Management and Clearvision Ventures. TIME Ventures reupped in the round. Energize’s Katie McClain will join NCX’s board of directors.
  • Check it out

99minutos raises $82 million to offer e-delivery to online vendors in Latin America. Retail e-commerce in Latin America is projected to nearly double from last year’s $85 billion by 2025. Mexico City-based 99minutos, through its fleet of electric delivery vehicles, helps online vendors in Mexico, Colombia, Chile and Peru transport goods and inventory. The company, which aims to provide delivery in 99 minutes or less, plans to expand in Latin America and add more electric vehicles. 99minutos says more than one-quarter of its deliveries have a zero-carbon footprint.

  • Growth markets. 99minutos has raised $129 million since it launched in 2014. Oak HC/FT led the company’s Series C round. Colombia’s Melonn last month raised $20 million to help small businesses in Latin America sell and deliver goods to customers.
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Dealflow overflow. Other investment news crossing our desks:

  • Blue Horizon backs California Cultured to make chocolate using plant-cell cultures, an alternative to the use of bacteria or animal cells.
  • H2U Technologies raises $11 million in Series A financing to produce low-cost green hydrogen.
  • Palmetto rakes in $375 million, led by Social Capital, to democratize solar energy access for homeowners.

Impact Voices: Community Finance

To target the ‘S’ in ESG, social bonds direct proceeds to racial equity. The disproportionate impacts of the pandemic and the U.S. racial reckoning boosted social bonds that direct proceeds to basic infrastructure, essential services, affordable housing, employment generation, food security and other social aims. Social bond issuances grew from $20 billion in 2019 to $199 billion in 2021. The definition of “social” is shifting. “More investors are actively pursuing opportunities to support justice, equity and inclusion, directing capital to projects and initiatives that respond to community needs,” write Annie Donovan and Anna Smukowski of Local Initiatives Support Corp., or LISC. Community development finance institutions, like LISC, are expanding the use of social bonds beyond pandemic-related needs, the authors say. LISC issued debt alongside other financing tools to support its Project 10X initiative, which invests in community organizations, businesses and developers working in rural and urban communities across the U.S.

  • Racial equity. US Bank and Enterprise Community Partners issued the market’s first racial equity bond last summer to provide targeted investments to underserved communities of color. Last month, the Public Finance Initiative and the National League of Cities launched an effort to help issuers center racial equity and track the social determinants of equity over time. Mission-driven issuers, Donovan and Smukowski say, “will offer investors more opportunities to live up to their stated values, not just within their companies, but in the communities where they live and work as well.”
  • Keep reading, “Social bonds direct proceeds to racial equity as the ‘S’ gains prominence in ESG,” by Annie Donovan and Anna Smukowski.

Agents of Impact: Follow the Talent

Shawn Dove, who founded Campaign for Black Male Achievement, joins New Profit as a managing partner… Leslie Labruto, ex- of Acumen, joins the Marshall Impact Accelerator as director… Lauren Levine departs the Solstice Initiative, which is recruiting a new executive director… Azolla Ventures is recruiting summer interns… Arthur Wood of Total Impact Capital will present “It’s Time for a New Finance Paradigm in Development,” in conversation with TBLI’s Robert Rubinstein, today, Mar. 3 (read Wood’s “Memo to the Impact Task Force,” on ImpactAlpha). ImpactAlpha subscribers can join for free with code TBLICircle.

Thank you for your impact.

– Mar. 3, 2022