The Brief | March 16, 2021

The Brief: Amazon’s pension pressure, greenhouse sukuk, impact tech in India, solar cars, crowdfunding frenzy, Macro’s Oscar bid

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Greetings, Agents of Impact! 

Featured: Institutional Impact 

Why pension funds and other Amazon investors are backing the workers in union battle. The online retailer, which has fought long and hard to keep unions out of its business, is facing its largest-ever labor organizing challenge. The setting: Bessemer, Alabama, where the Retail, Wholesale and Department Store Union is seeking to organize 5,800 Amazon warehouse workers. The vote, which ends March 29, is being closely watched as a bellwether not only for Amazon’s future but for a broader labor resurgence. President Biden last month took the unusual step of posting a video in support of unionizing efforts, including in Alabama. Amazon already starts wages at $15 an hour and supports broader demands for a minimum-wage hike, but has fought union efforts for decades as bad for business, bad for shareholders, and even bad for workers. 

Some shareholders disagree. Better treatment of workers, they say, backed up by collective bargaining, can mean better long-term outcomes for investors as well. Last month, institutional investors who collectively control more than $20 billion in Amazon shares urged the company to stay neutral. The investors included New York State Comptroller Thomas DiNapoli, who oversees the state’s $250 billion Common Retirement Fund, and New York City Comptroller Scott Stringer, who plays the same role for the $240 billion New York City pension system, along with BMO Global Asset Management, the Church of England Pensions Board and Swedish insurer and investment manager Folksam and Ohman Fonder. “Defined benefit pension plans have become increasingly vocal when it comes defending the rights of workers of companies in which they are invested,” writes contributing editor Imogen Rose-Smith to kick off her Institutional Impact column on ImpactAlpha. Plan trustees, after all, are investing union money for union retirees. Their next target: Private-equity funds. “If public and private union pension plans start demanding greater worker protections in the portfolio companies of the private equity firms in which they are invested,” says Rose-Smith writes, “the trickle-down effects on executives and employees could be profound.”

Read, “Why pension funds and other Amazon investors are backing the workers in union battle,” by Imogen Rose-Smith on ImpactAlpha.

  • Institutional Impact. In her bi-weekly column, Rose-Smith, a longtime senior writer for Institutional Investor, will focus on the policies, practices and strategies of the largest asset allocators, including pensions, foundations, and endowments. As Imogen says, she’ll be “tracking what investors do, not just what they say.” Send her some hot tips.  

Dealflow: Follow the Money

Pure Harvest secures a $50 million sukuk for Middle East greenhouse expansion. Abu Dhabi-based Pure Harvest Smart Farms launched in 2016 to provide locally-grown, sustainable food in the United Arab Emirates, which imports 80% of its food. The company raised $50 million in growth financing that was structured as an Islamic finance-compliant “sukuk” by SHUAA Capital. Pure Harvest will use the funding, along with a $10 million equity round led by Sancta Capital, to expand to Saudi Arabia and Kuwait.

  • Islamic finance. Global Islamic finance reached nearly $3 trillion in assets last year in predominantly Muslim countries in Africa and Asia. Islamic law, or Shariah, requires financial risk to be shared by creditor and debtor, and for lending to be backed by real assets. Sometimes called Shariah-compliant bonds, sukuks grant the holder a share in a tangible asset. An early socially-responsible sukuk in Malaysia funded the roll-out of 20 schools through the nonprofit Yayasan AMIR trust (see, “What can Islamic finance teach impact investors?”). 
  • Dig in

Ankur Capital tops up early-stage impact tech fund in India. Mumbai-based Ankur backs early-stage, high-impact tech companies in healthcare, financial services, education, agriculture and food. “There are two types of impact we can create: one is directly to people,” Ankur’s Ritu Verma told ImpactAlpha. “The other is structural—in solving issues in markets that allow the next billion people to participate more effectively and efficiently.” Ankur secured backing from India’s Biotechnology Industry Research Assistance Council and the National Bank for Agriculture and Rural Development to bring its second fund to 3.3 billion rupees ($45.5 million) of a targeted $50 million. The commitments follow an investment from the MacArthur Foundation in January, and a $33 million first close last year.

Dutch solar electric car startup Lightyear raises $48 million. The Netherlands-based company is going to market with Lightyear One, a self-charging electric vehicle with built-in solar cells that was featured at this year’s Consumer Electronics Show. Lightyear One can reach about 440 miles on a fully charged battery, according to the company. The financing round, led by Swiss investment fund Zero Point Holding, “will help us accelerate towards the first deliveries at the end of the year,” said Lightyear’s Lex Hoefsloot.

  • Price parity. Electric vehicles are nearing (or already past) competitive pricing with comparable internal-combustion cars. That is spurring investor interest in charging networks, fleet management and battery tech (see, “EV charging-infrastructure finance emerges”). Envoy secured $11 million in November to improve access to electric vehicles in California. Motive snagged $15 million to convert trucks to electric vehicles.
  • More.

Dealflow overflow. Other investment news crossing our desks:

  • U.K. pension fund Nest Corp. is investing £250 million ($347 million) in renewables in Europe and the U.K. via a partnership with Octopus Renewables.
  • Wefarm secured $11 million to grow its SMS-based network into an online platform for global smallholder farmers. 
  • Digital lender Indifi scored $5 million in debt funding to help India’s small businesses recover from the impacts of COVID-19.
  • New Zealand-based Community Finance raised $51 million to finance affordable housing via organizations like The Salvation Army and Habitat for Humanity.
  • USAID backed the Ilu Women’s Empowerment Fund from Deetken Impact and Pro Mujer to promote gender equality in Latin America and the Caribbean.

Signals: Ahead of the Curve

Retail investors demonstrate the power of the crowd. Small investors rushed in on the first day that new rules increased to $5 million the amount startups can raise via “regulation crowdfunding.” Wefunder’s Jonny Price said the platform had its biggest day ever (see, “Rule changes could spur $1 billion in crowdfunded investment”). Gumroad, an e-commerce platform for writers, animators and other online creators, was poised to become the first company to hit the new limit, quickly raising more than $4 million from nearly 6,000 investors, including the VC firm First Round Capital, on the crowdfunding portal Republic. Gumroad last year turned a profit on $5 million in revenues and $144 million in sales. Backstage Capital, which last month quickly reached the old limit of $1.07 million, relaunched its campaign and more than doubled its raise. Backstage’s Arlan Hamilton has heard from other fund managers since her first fundraise sold out in a day. “When these trailblazing fund managers have the resources they need, the whole startup ecosystem benefits,” she told ImpactAlpha

  • Waiting in the wings. Companies seeking to raise $5 million must conduct a full financial audit, which can take a few weeks. Crowdfunding site StartEngine has a number of companies with investor waitlists “that will have a dramatic increase similar to Backstage Capital once they launch,” says the site’s Max Crawford
  • Fuzzy math. By reopening its fundraising and quintupling the amount it can take in, Backstage appeared to effectively dilute investors in its first round last month. The Republic investors receive non-voting shares that entitle them to a 10% interest in a Backstage holding company, including carried interest and management fees. Some investors grumbled the valuation of the holding company looks very different with a $5 million raise than it did at $1.07 million. Hamilton says the S.E.C. prohibited her from talking about the larger forthcoming raise before it went live – and noted that investors have five days to withdraw their commitment. She said Backstage “has a fighting chance of being successful” and “we’re thrilled we can share some of that upside with the crowd.” 
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Agents of Impact: Follow the Talent

Film company Macro’s Judas and the Black Messiah garners six Academy Award nominations (see, “Agent of Impact: Charles King”)Hideki Takada is named principal counsellor of Japan’s newly established Climate Change Office… Impact Entrepreneur’s Laurie Lane-Zucker hosts “Discovering the Purpose of Capital,” with Jed Emerson, Sara Minard and Bonny Moellenbrock, Thursday, Mar. 18 at 12pm ET… The African Private Equity and Venture Capital Association hosts its annual conference April 20-23. 

Thank you for your impact.

–Mar. 16, 2021