The Brief: Backing female founders to find climate solutions in Latin America

Greetings, Agents of Impact! 

September’s edition of ImpactAlpha Latin America drops later today. As an ImpactAlpha subscriber, you get the top stories first (see below). For the full LatAm experience, opt-in to the speciality newsletter, at no additional cost. ¡Disfruta! – David Bank

In today’s Brief:

• Latina climate entrepreneurs
• High-efficiency transmission wires
• Recycling plastic in Brazil
• Dispatches from Climate Week NYC

Featured: Climate + Gender in Latin America

Female founders power climate entrepreneurship in Latin America. Biodegradable plastics made from invasive sargassum. Seaweed-based biofibers to decarbonize global fashion. Water-insulated panels. Nature-based construction materials. Women-led companies from Mexico to Chile to Brazil are leveraging Latin America’s natural resources – and scientific know-how – to decarbonize supply chains for textiles, plastics, construction and other industries. “We intend to revolutionize the plastics industry,” says Andrea Bonilla, the Mérida, Mexico-based founder of BioPlaster Research, which converts sargassum seaweed into biodegradable packaging. The invasive algae along the Caribbean’s coasts “is also an amazing biomass,” Bonilla, an Oxford PhD, tells ImpactAlpha. “We can do so much with it. And that’s what we are doing.” The innovation landed Bonilla this year’s Lotus Award for Latina climate entrepreneurs from Mexico City-based climate venture firm Savia Ventures.

• Stocking the pipeline. The region’s growing number of women-led climate startups remain vastly underfunded. Women-led companies receive just one-fifth of venture capital dollars deployed across Latin America. That’s slowing the development of needed climate solutions and leaving investors with a pipeline of climate startups mostly run by men. “Latin America is an underserved market. There’s an overabundance of talent. And that extends even further to female entrepreneurs,” Savia’s Andres Baehr tells ImpactAlpha. Of the upstart VC’s five investments so far, none have been in women-led companies. The 10 finalists from among 65 applicants for the Lotus Award yielded at least five prospective investments. “We need portfolio diversity to get the best results,” he says. “If you want the best climate innovation, you need diversity.”
  
• Resilience edge. The prize runners-up include Thamires Pontes of São Paulo-based Phycolabs, Loretxu Garcia of Santiago-based Nido Contech, Isabel Pulido of Nanofreeze in Bogotá, and Maria Isabel Gaviria of Medellín-based Fungi Life. All are leaning into some mix of biotech, science and manufacturing. Latina climate entrepreneurs face an added layer of complexity in working with VCs that may not understand climate tech’s capital-intensive nature. Being an outsider can offer an edge, says Garcia of Nido, a producer of nature-based construction materials. She entered the male-dominated construction industry at a young age. “I think I overcame the barriers, precisely thanks to coming from the outside and having perspective on the problem.”

• Climate + gender investing. The growing number of Latina climate founders is matched by a growing pool of Latina climate investors and fund managers. For 25 years, women-led fund manager EcoEnterprises Fund, in Bógota and Washington, DC, has demonstrated that economic opportunity, livelihood security and care for the natural world are not only compatible, they’re good investments. It’s upping the ante with its $150 million fourth fund. Pro Mujer has increased its financial and technical support for smallholder female farmers practicing regenerative farming. Sao Paulo-based Positive Ventures, led by Andrea Kestenbaum, invests in “planet positive” solutions supporting the low-carbon transition. Mexico City-based Regenera Ventures, led by Stevie Smyth and Laura Ortiz, is providing equity to regenerate land and strengthen the communities that depend on it. 

• Keep reading, “Female founders power climate entrepreneurship in Latin America,” by Dennis Price on ImpactAlpha. Jessica Pothering contributed reporting.

Dealflow: Circular Economy

Circulate Capital backs Cirklo to expand plastic recycling in Brazil. Singapore-based circular economy investor Circulate Capital inked its second deal in Latin America by investing in Brazil’s Cirklo. Cirklo was formed by the merger of Green PCR and Global PET, two Brazilian recycling companies owned by Sao Paulo-based private equity firm eB Capital. “Our focus is to seize growth opportunities in the recycled plastics market in Brazil and pave the way for sustainable development and innovation in the sector,” said eB’s Luciana Antonini Ribeiro. The company has plants in Sao Paulo and Paraiba, in northeastern Brazil, that recycle a combined four billion plastic bottles per year.

• LatAm pipeline. Two dozen Latin American countries have plastic waste recycling laws in place. Circulate says four of those countries – Chile, Colombia, Mexico and Brazil – are positioned to rapidly move toward a circular plastics economy. The investor has mapped a pipeline of 100 companies in the region that require at least $240 million in growth funding (see, “Circulate Capital brings growth capital to plastics recycling in Latin America”). Circulate’s investment in Cirklo comes from its new Latin America and Caribbean strategy, backed by IDB Lab, Lukas Walton’s Builders Vision, Mondelez International, Unilever and other corporate backers. Its first investment in the region was in Colombia-based recycling company Polyrec.
  
• Check it out.

MetOx lands $25 million for high-efficiency transmission wire. The Texas-based company makes high-temperature superconducting wire, or HTS, that reduces energy loss in transmission and could speed the integration of new energy sources into the grid. HTS is also a critical technology for potential grid-connected fusion energy. MetOx secured the funding for its Series B equity round to manufacture its HTS wire, which it calls Xeus. Family office Centaurus Capital and New System Ventures invested. “Xeus wire stands to be a force multiplier in clean energy generation and high-power transmission and distribution, enabling load growth and the deployment of power-dense data centers,” said NSV’s Ian Samuels.

• Energy industry. MetOx is also backed by the US Department of Energy’s Advanced Research Projects Agency and Koch Disruptive Technologies, a subsidiary of Koch Industries, one of the largest privately held businesses in the US and a major player in the oil and gas industry. MetOx’s newest investor, Centaurus Capital, is the family office of John Arnold, who started the energy commodity trading hedge fund, Centaurus Energy, and now sits on the board of Breakthrough Energy Ventures.

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Dealflow overflow. Investment news crossing our desks:

• Macquarie Asset Management will take a $1.7 billion stake in DE Shaw Renewable Investments, a developer, operator and owner of utility-scale solar, wind and battery projects in the US. (Macquarie)
  
• Colombia’s Banco Finandina raised $39.3 million from IDB Invest and other investors for its first sustainable bond issuance, which will invest in micro electric mobility and EV adoption. (IDB Invest)
  
• Koltin, a Mexican insurance tech venture providing affordable private health insurance to seniors, raised $7.3 million in a round led by New York-based Left Lane Capital. (LatamList)
  
• New York-based Ecovative secured $28 million in growth equity to expand its fungi-based bacon alternative and vegan leather alternatives. (Green Queen)
  
• IDB Lab extended a $3.2 million loan to help Colombian recycling company GAIA Vitare expand its facilities and upgrade its machinery. (IDB Lab)
  
• Santiago, Chile-based startup accelerator Imagine made the first three investments of its first fund, which is investing in Latin American startups focused on the future of work and future of finance. (Startups Latam)

Signals: Climate Week NYC

Talk of the town. Dispatches from the ImpactAlpha team in New York:

• Water works. No magic technology bullet is going to solve the challenges of providing a safe and available water supply, nor the challenges of investing in it. “There is no Google solution, there is no network solution,” said John Rigas of Sciens Capital Management, which hosted Rethinking Water at Columbia Climate School as part of Climate Week NYC. “The key is to find a company that makes money and solves a problem.” Sciens has invested nearly $1 billion in water companies since 2018 through its Water Opportunities Fund. Sciens’ portfolio includes Central States Water Resources, which purchases small water utilities and brings them into compliance with environmental and regulatory standards. In all, Sciens has acquired some 200 local utilities. “We tiptoed in fear that it would be seen as Wall Street abusing Main Street,” Sciens’ Tom Rooney acknowledged in one session. White House climate advisor Ali Zaidi said private operators have to be just as accountable to communities as publicly-owned utilities. Venture capital investment in water totaled only $1.2 billion last year, down from $1.8 billion the year before. Many smart people are working to bridge the gap in innovation and investment, Zaidi said. “I just don’t think they’ve jumped into the deep end.” – David Bank
  
• Challenges for green lending. Building trust and engagement in local communities can take years. Community development financial institutions, banks, credit unions and nonprofit organizations are worried that a lack of coordination could undermine the deployment of the $27 billion Greenhouse Gas Reduction Fund. “The timelines of the GGRF do not match with an ethically responsible community engagement strategy,” said one participant in a briefing at NYU. – Lynnley Browning
  
• IRA 2.0. Climate investors are pulling for Kamala Harris to continue the momentum of the green infrastructure buildout (for background, see “Climate investors rally behind Kamala Harris to protect green policies – and portfolios”). “If we have another administration, we’re going to put the pedal to the metal to make the $2 trillion worth of private and public sector investments take root deeper,” said Karen Skelton, an advisor to Secretary of Energy Jennifer Granholm. Topping the wish list for an extension of the Inflation Reduction Act: “Permit reform and grid modernization,” Skelton said at an event organized by Overture, a venture capital firm that helps startups navigate the policy and power corridors of Washington, DC. A fundraiser for Harris in Brooklyn Monday night hosted by Climate for Kamala, an effort spearheaded by Overture’s Shomik Dutta, raised $1.8 million, short of its $5 million goal. – Amy Cortese
  
• Carbon offsets. Carbon markets are rife with greenwashing. Federal investigations of those markets could emerge “before too long,” Mike Fisher of the US EPA’s Office of Criminal Enforcement, said on a panel on “Building a sustainable economy.” The agency is not currently conducting any such investigations, he said. – Lynnley Browning
  
• Identifying climate solutions to unlock finance for low-carbon growth. The good news: The companies and solutions needed for low-carbon growth currently exist. The challenge: Scaling those solutions, and fast. The Exponential Roadmap Initiative and Oxford Net Zero have developed a framework to identify climate positive solutions and companies. “In order for climate solutions to scale, business leaders, investors and policymakers need to know whether companies’ products and services are climate solutions or not,” write ERI’s Johan Falk and Claire Wigg, and Venture Climate Alliance’s Daniel Firger in a guest post on ImpactAlpha (ERI will discuss the framework today at “Putting climate solutions on the agenda”). Earlier frameworks, from Race to Zero, 2030 Breakthroughs, Project Drawdown and One Earth, cover technologies needed to solve the climate crisis. In contrast, ERI’s “goes to the level of the company-specific products and services that are examples of these technologies,” they write. Read their full post.
  
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Agents of Impact: Follow the Talent

Jack Wixcson, previously with PwC, joins Impact Charitable as a senior accountant… Climatize adds Jim Goldmann, formerly with SolRiver Capital, as finance director… Bree Jones of Parity Homes becomes an Obama Foundation fellow.  

The ImPact is looking for an operations director in New York… CrossBoundary Group seeks a head of investor relations… BlackRock has an opening for a head of sustainable real estate investing in London… The United Nations Environment Programme is recruiting a sustainable blue economy consultant.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Sept. 25, 2024