Greetings, Agents of Impact!
Agents of Impact Call No. 38: Policies to catalyze private capital for public good. The principles of impact investing have long captured bipartisan interest. Impact investors must continue to push for policies that catalyze private capital for public good. Fran Seegull of the U.S. Impact Investing Alliance, Cambria Allen Ratzlaff of the UAW Retiree Medical Benefits Trust, and Satyam Khanna, former ESG advisor at both the SEC and EPA, will talk disclosure, accountability and engagement, Tuesday, Feb. 22 at 10am PT / 1pm ET. RSVP today.
- ICYMI. “Progress on a dozen policies to mobilize private capital for public good,” by Fran Seegull on ImpactAlpha.
Featured: Impact Voices
Building beyond an ESG baseline to invest with an impact lens. Just as “ESG” has arrived, it is taking a beating. Whistleblowers like Tariq Fancy and Desiree Fixler have assailed the practice of environmental, social and governance analysis and decision making as a half-measure at best, if not a farce or a scam. A Bloomberg report in December made the self-evident (if not fully appreciated) point that ESG is simply the next stage of conventional risk management. ESG ratings approaches don’t measure a company’s impact on Earth and society, the article said. “In fact, they gauge the opposite: the potential impact of the world on the company and its shareholders.” Now comes Amit Bouri of the Global Impact Investing Network, who calls ESG a baseline for sound investment practice but says “it’s not enough to get the world out of trouble.”
In a guest post, Bouri describes how investors from big institutions to individual retirees are going beyond baseline-ESG to demonstrate how to successfully invest for impact. “They are not just focused on the impact of the world on their portfolio, but on how their portfolios can be invested to create an inclusive, sustainable world that will support a healthy economy over the long-term,” he writes (see, for example, “Eight ways investors are going beyond ESG risk-mitigation to drive real-world impact“). The recent G7 Impact Taskforce report, “Time to Deliver,” calls for reporting standards that “cover all impact data, not just data related to enterprise value,” to help investors better understand and compare the real-world outcomes of their investments. Bouri says investors need to ensure not only that their portfolios perform in a turbulent and rapidly changing world, but also that they are “investing now for a sustainable, regenerative future economy that serves all of society and the planet.” Taken together, he says, a set of transformative changes “can help rebuild badly eroded trust and push finance towards a ‘race to the top’ for investing in a better future.”
- Keep reading, “Building beyond an ESG baseline to investing with an impact lens,” by Amit Bouri on ImpactAlpha.
Dealflow: Farmer Finance
Sistema.bio secures $15.6 million for modular biodigesters for smallholder farmers. The Mexico City-based company launched in 2010 to sell farmers low-cost biodigesters to convert farm waste into clean energy and biofertilizer. Sistema.bio says sales were up nearly 70% last year to more than 14,000 biodigesters. The company is reaching more than 200,000 farmers in 30 countries and has manufacturing facilities in India, Mexico, Colombia and Kenya. “The time is now for ambitious climate projects, and we intend to lead the charge for smallholder farmers,” said Sistema.bio’s Alex Eaton (who shared Sistema.bio’s origin story with ImpactAlpha on this 2016 podcast).
- Climate finance. Eaton says Sistemo.bio can now bring more smallholder farmers into the energy transition “while driving significant methane and CO2 reductions on farms.” The Series B round, led by AXA IM Impact Fund and KawiSafi Ventures, includes a mix of equity, debt and non-dilutive capital. Existing investors including Chroma Impact and EU ElectriFI reupped in the round. Sistema.bio’s roster of investors also includes Kiva, OpenRoad Alliance, Beneficial Returns, Endeavor Catalyst Fund and Shell Foundation.
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Softbank leads ElasticRun’s $300 million raise for small business digitalization in India. Pune-based ElasticRun manages an e-commerce platform that helps rural neighborhood stores, known as kiranas, make inventory purchases and gain access to working capital to run their businesses. The company collects data on the stores for global brands like Amazon, Coca-Cola and PepsiCo. SoftBank’s Vision Fund 2 led the Series E investment round, joined by participating investors Goldman Sachs and Prosus Ventures. The round brings ElasticRun’s total raised to more than $430 million and its valuation to $1.5 billion.
- Enterprise tech. Small business digitalization deals in emerging markets are getting bigger. Recently, Brazil’s Nuvemshop raised $500 million, Colombia’s Tul raised $181 million, Nigeria’s TradeDepot raised $110 million, and India’s Khatabook secured $100 million.
- Check it out.
Utilidata raises nearly $27 million to digitize and decarbonize the electric grid. As electric grids encompass distributed sources of renewable energy, from solar to storage to electric vehicles, optimizing their performance has become more complex. Providence, R.I.-based Utilidata, which works with National Grid, American Electric Power and other utilities, uses real-time data, machine learning and smart sensors to build resiliency in a decentralized, decarbonized grid.
- Clean tech. “We need digital technologies to make the grid more sophisticated, optimized and efficient, especially as we see increased renewable and distributed energy resources,” said Mark Kroese of Microsoft, which invested in Utilidata through its Climate Innovation Fund. Moore Strategic Ventures, NVIDIA and others joined the round.
- Plug in.
Dealflow overflow. Other investment news crossing our desks:
- FinDev Canada commits $8 million to the fourth Central American Small Enterprise Investment Fund, a gender-focused fund supporting small businesses in Central America, Colombia and the Dominican Republic.
- Sustainable food investor Blue Horizon backs Argentinian alt-protein producer Tomorrow Foods, its first investment in Latin America.
- Software developer Watershed raises $70 million to help companies like Airbnb and Warby Parker work toward net-zero carbon emissions.
- FourthRev secures $8 million, led by Educapital, to develop career accelerator programs in sectors facing skills gaps, like cybersecurity.
- Estonian agriculture software developer eAgronom raises $7.4 million to develop a farming-based carbon credits platform.
Impact Voices: Blended Finance
Want to launch a deal matchmaking platform? Read this first. Many organizations have tried their hand at investor matchmaking with high-impact investment opportunities. With more than 150 listed deals and $4 billion in commitments, blended-finance network Convergence’s platform is among a small few still standing. The organization has built credibility with its data aggregation, capacity building, grant making and market building, writes Convergence’s Safia Gulamani in a guest post. “No single organization alone can build and create a well-functioning market,” she says. “We must all become more transparent, willing to collaborate with new players, and be open minded about new ways to do business and identify opportunities.” Among her tips:
- High touch. Successful platforms require either large volumes of data and activity, or they require human intervention and a deep grasp of users’ needs and interests. “Investors can’t be expected to just log on and find each other.” And business model matters. Convergence uses a hybrid funding approach paired with a tightly curated deal platform. Charging members a fee forces Convergence to be responsive to the needs of the field while donor funding supports its overall business model.
- Keep reading, “Want to launch a deal matchmaking platform? Read this first,” by Safia Gulamani on ImpactAlpha.
Agents of Impact: Follow the Talent
Justin Adams, ex- of the World Economic Forum, joins Generation Investment Management’s Just Climate as head of partnerships… Gillian Marcelle of Resilience Capital Ventures joins the founding advisory board of New Majority Capital… Esela, Benefit Company Bar Association and Red Latinoamericana de Abogados de Impacto form the Global Alliance of Impact Lawyers. William Clark Jr. is president of GAIL. The North American chapter president will be Allen Bromberger.
RBC Capital Markets is recruiting a vice president of its sustainable finance group in New York… Social Finance is hiring a vice president of workforce partnerships in Boston, San Francisco, Austin or Washington, D.C… Sandbox Industries seeks a summer associate at Sandbox Sustainability Ventures… Fair Food Network is looking for a senior director of impact investing in Ann Arbor, Mich.
The grant-making team of the Catalytic Capital Consortium is seeking proposals to fund tools, projects and programs that make the deployment of catalytic capital easier, more efficient and more effective… Mission Investors Exchange, Grantmakers in the Arts and Upstart Co-Lab are hosting the “Mission Investing Institute: Arts and the Creative Economy,” Apr. 7-8.
Thank you for your impact.
– Feb. 10, 2022