The Brief | March 2, 2021

The Brief: Agents of impact inside Apollo, Kapor Capital’s impact fund, Chevron’s low-carbon fund, alt-capital for diverse founders, Cornerstone Capital acquired

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Greetings, Agents of Impact! 

Featured: ImpactAlpha Original

Private equity giant Apollo Global invites agents of impact inside. The experiment inside Apollo and other major private equity firms dipping their toes into impact investing: Will the logic, values and practices of their billion-dollar (or so) impact funds take over the larger firms, or vice versa? At Apollo, impact investing veteran Lisa Hall is bringing in nearly a dozen impact practitioners to help her drive impact investing deeper into the portfolio of the $455 billion asset manager. Hall chairs Apollo’s impact platform, which is raising a $1 billion private equity fund. 

“There is an expectation, more and more, that impact approaches will infiltrate the firm,” she told ImpactAlpha. The new advisory committee, she says, “will help Apollo turn around companies that are generating impact, but could do a better job.”

That could apply to Apollo itself, as well as major private equity firms like TPG, KKR, Bain and Blackstone. Increasingly, the scrutiny that comes with impact investing is being applied to the firms as a whole, holding them accountable for their entire portfolios, not just their impact funds. “There is some skepticism about why Apollo is doing it, and why are they doing it now,” Hall acknowledged. Members of the advisory board will have the opportunity to engage Apollo across funds and asset classes. Maurice Jones, ex- of LISC and now head of the OneTen coalition, is bringing Apollo collaborations and partnership in community development expertise, “not an area the firm as a whole has done very much in,” Hall said. Robert Wood Johnson Foundation’s Kimberlee Cornett is a practitioner of blended finance. “We are not looking to be concessionary in what we do, but there could be opportunities to partner with catalytic capital,” noted Hall. Women of the World Endowment’s Patience Marime-Ball brings development-finance expertise, while Golden Seeds’ Mindy Posoff is expert in public-markets structuring. “The more exposure folks at Apollo get to best-in-class impact approaches, the better we will be at it in our platform,” Hall said. “The more successful our private-equity impact strategy is, the better it’s going to be for demonstrating to other parts of the firm that we can generate impact and make profits.”

Keep reading, “Private equity giant Apollo Global invites agents of impact inside,” by David Bank on ImpactAlpha.

Dealflow: Follow the Money

Newsela raises $100 million to bring daily news to K-12 classrooms. The edtech firm offers 14,000 classroom-ready texts in partnership with over 175 publishing companies, including the Associated Press, National Geographic, The New York Times and USA Today. The company says 37 million students and 2.5 million teachers in 90% of all U.S. schools have registered on its digital platform. The Series D round was led by Franklin Templeton and TCV. Owl Ventures, Tao Capital Partners, Chan Zuckerberg Initiative and Waycross Ventures participated.

Chevron’s venture arm stands up $300 million low-carbon tech fund. Future Energy Fund II is the U.S. oil and gas major’s second fund targeting carbon capture, emerging mobility, energy storage and other low-carbon technologies. The $100 million Future Energy Fund I backed 10 companies, including carbon capture tech firm Blue Planet, electric vehicle charging network ChargePoint, and Spear Power Systems, which manufactures lithium-ion battery storage. Chevron Technology Ventures, Chevron’s venture arm, has launched eight corporate venture funds since 1999.

  • Low-carbon deals. Separately, from its Core Venture Fund, CTV backed Baseload Capital, a geothermal investment company. Breakthrough Energy Ventures and Sweden-based Gullspang Invest participated. Last month, Chevron and BP joined in the $40 million funding of Canadian geothermal company Eavor Technologies. CTV also recently participated in point-source carbon capture firm Svante’s $75 million round.
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Founders First scores $9 million to deploy revenue-based finance to diverse founders. The revenue-based financing investment firm backs underfunded and under-represented small businesses across the U.S. The Series A round was co-led by the Rockefeller Foundation and the Surdna Foundation, with participation from the Kauffman Foundation, Living Cities’ Blended Catalyst Fund, Spring Point Partners, The Impact Seat and Lindmor Foundation. Founders First will use the capital to deploy its $100 million loan from Community Investment Management to 400 companies (see, “Q&A with Founders First’s Kim Folsom: Helping diverse founders grow businesses with revenue-based financing).

  • Track record. Founders First has backed more than 500 service-based businesses to date, including Chicago’s Onshore Technology in October. The firm says 83% of the businesses that participate in its accelerator programs saw an increase in revenues within the first year. 
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Cornerstone Capital acquired by Pathstone as impact advisory consolidation continues. Pathstone, a $25 billion multi-family office based in Englewood, N.J., will bolster its impact investing capabilities by absorbing the advisory firm led by Erika Karp that manages $1.3 billion in assets. “We could not have found a better partner to do impact at scale,” Karp told ImpactAlpha. She said eight members of Cornerstone’s team will join Pathstone, where she will be chief impact officer and a member of the executive and investment committees. Terms were not disclosed.

  • Build or buy. Recent acquisitions include BlackRock’s billion-dollar acquisition of Aperio, along with Morgan Stanley’s $7 billion purchase of Eaton Vance, including Eaton Vance’s Parametric unit, which enables the creation of customized index accounts focused on sustainability and ESG indicators. Trillium Asset Management, with $2.8 billion in assets under management, was acquired last year by Perpetual Limited, an Australian financial services firm.
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Dealflow overflow. Other investment news crossing our desks:

  • Mobility Capital Finance raises $12 million to improve banking in underserved communities. Citi Impact Fund, Mastercard, 1Flourish Capital, Commerce Ventures, and several family offices backed the Black-led mobile banking platform to bring “high-quality, low-cost” banking services to Black and Latino communities in the U.S.
  • South Africa’s Hlayisani Growth Fund secures 350 million rand. The fund, managed by Johannesburg-based Hlayisani Capital, will invest in small and mid-sized businesses in South Africa. The 350 million rand ($23 million) first close was led by Standard Bank and South African family offices. 
  • ImpactAssets and The Clio Fund back The 22 Fund. The 22 Fund, an investment firm led by Tracy Gray, invests in tech-based manufacturing companies led by women and minority founders that are creating good jobs in low and moderate-income communities.  
  • EDF takes equity stake in BBOXX’s Kenya operations. The French energy utility acquired a 23% share of the Africa-focused off-grid solar energy company’s Kenya arm. The two energy providers are also partners via a joint-venture in Togo.

Agents of Impact: Follow the Talent

Inclusive Capital Partners’ Jeffrey Ubben and Michael Angelakis of Atairos join the board of ExxonMobil, which is under pressure from investors to improve its climate and financial performance… New Citigroup CEO Jane Fraser pledged to zero out the bank’s greenhouse gas emissions across its portfolio by 2050… Katharine Haydoe is named chief scientist at The Nature Conservancy… Olivia Rebanal, ex- of Capital Impact Partners, joins Ecotrust as chief impact officer… The Marguerite Casey Foundation is hiring an investment officer in Seattle… Refugee Investment Network is recruiting a senior researcher in Amman, Jordan… 60 Decibels is hiring a marketing intern. 

Apple’s impact accelerator is accepting applications from Black- and Brown-led environmental solutions and service providers… Village Capital and Kroger Zero Hunger Zero Waste Foundation are calling for applications from entrepreneurs with ideas and solutions to prevent food waste… American Sustainable Business Council and Social Venture Circle are hosting “Transforming ownership for social justice,” with Marjorie Kelly of 50×50 and The Democracy Collaborative, Rebecca Kemble of the City of Madison, Wis. and Todd Leverette of Apis & Heritage Capital Partners and Democracy At Work Institute, Wednesday, Mar. 3.

Thank you for your impact.

– Mar. 2, 2021