The Brief | October 6, 2022

The Brief: Blockchain’s eco-warriors, Bluestar’s green energy fund, low-carbon utilities, solar mini-grids in Rwanda and the DRC, VCs ♥️ ESG

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Greetings, Agents of Impact! 

Featured: Crypto for Good

Building and musing about the future of blockchain-based regenerative finance in Medellin. Blockchain eco-warriors descended on Medellin, Colombia last week to stake a claim for the role the technology can play in regenerating the planet. The Cosmoverse conference seemed a world away from the “crypto winter” that has deflated some of the utopian hype around the alternative currencies. Pioneers of regenerative finance, or “ReFi,” aim to use blockchain and crypto to direct capital via carbon credits to projects restoring ecosystems on the ground, from urban forest restoration in the U.S., to regeneration of rainforest and wetland ecosystems in the Congo Basin. “Blockchain holds so much wild potential, and beneath the hype of token price speculation are projects using this technology to make the world a better place,” said Gregory Landua of Regen Network, a leader of the ReFi movement. Landua was in Medellin, along with hundreds of developers using the open source Cosmos blockchain, and ImpactAlpha’s Dan Keeler, to present the firm’s new carbon trading platform, which will enable nature-based developers to list projects directly without intermediaries (for context, see “Positive externalities: Carrots as well as sticks for the carbon era”). 

The platform could “radically shift the economics of carbon project development,” Landua tells ImpactAlpha. Marketplaces may channel as little as a quarter of a project’s asset value back to their developers. Regen aims to send an average 85% of carbon credits’ sale value to project developers. Demand for carbon offsets is exploding, driven by corporations scrambling to make good on their net-zero pledges. The offsets don’t replace the hard work of emissions reductions, but they do channel money from wealthy corporations to local stewards working to protect and restore natural habitats that sequester carbon. Concerns about the quality and integrity of the offsets, each of which represent a ton of carbon removed or avoided, has held back the market. Regen isn’t alone in trying to improve the carbon markets: the International Finance Corp. is using Chia’s blockchain for a new offset registry, and software maker Salesforce announced a carbon trading marketplace last month. In Medellin, a late night discussion with Landua veered in a more philosophical direction, conjuring a vision of a future where crimes against ecology could become, well, a thing, and countries would be valued not on the basis of their GDP but on their importance to the health of the planet. The role that on-chain carbon credits might play in that future is still a work in progress, but the “Regenerati,” as he calls them, have no doubt it will be pivotal.

Dealflow: Clean Energy

Bluestar Energy Capital launches with $100 million for renewable energy development. Bluestar Energy is a new renewable energy investment firm launched by Declan Flanigan, the former head of Danish power company Orsted’s onshore wind business. The Chicago-based firm will provide early-stage development finance and operating capital for wind, solar and energy storage projects in Europe. S2G Ventures and Great Bay Renewables backed the firm. Bluestar plans to launch subsidiaries to invest in projects in North America (Nova Clean Energy) and Australia (Bluestar Energy Australia).

  • Green experience. Flanigan will lead Bluestar as CEO. He previously headed wind and solar developer Lincoln Clean Energy, which sold to Orsted in 2018. At the time, Orstead was in the midst of a major strategic shift away from fossil fuels-based energy. The company now uses 100% renewable energy.
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LineVision raises $33 million to help utilities decarbonize. The Somerville, Mass.-based company is among the wave of startups using hardware and software solutions to help utilities optimize performance to reduce their carbon footprints. LineVision’s sensors help utilities collect data and monitor transmission lines in real time, which enables better integration of clean energy sources. Access to adequate transmission capacity is “the single biggest barrier the U.S. and many other major electricity markets face in their near to medium-term decarbonization goals,” says Francis O’Sullivan of S2G Ventures, which led LineVision’s Series C round. Microsoft Climate Innovation Fund, Clean Energy Ventures, Zoma Capital, National Grid Partners and others participated.

  • Global demand. LineVision’s customers include National Grid, Xcel Energy and the New York Power Authority. The company says it has helped customers integrate 540 megawatts of clean energy and avoided 1.3 million tons of CO2 emissions.
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Dealflow overflow. Other investment news crossing our desks:

  • Nigeria’s Spleet scored $2.6 million in seed financing to facilitate flexible rent payments for low- to middle-income renters.
  • Merck made a $20 million commitment to CNote to support businesses in underserved communities in the U.S. (for context, see, “CNote raises nearly $7.3 million to tap corporate cash for community development”).
  • A partnership between InfraCo Africa and Equatorial Power will invest $1.7 million to develop solar mini-grids in Rwanda and the Democratic Republic of the Congo.
  • Arctaris Impact Investors reupped its investment in Up to Date Laundry, a laundry service provider for healthcare institutions, through its $25 million Arctaris’ Baltimore Opportunity Zone initiative. 

Signals: Impact Management

VCs ♥️ ESG. Red-state politicians are fanning the flames of an anti-ESG backlash. Venture capitalists, meanwhile, are embracing environmental, social and governance practices to strengthen their portfolios. More than three-quarters of VCs claim to fully or partly adopt sustainable principles, according to PitchBook’s Sustainable Investment Survey.” Driving the adoption: an influx of capital to climate tech and new disclosure regulations in Europe and the U.S., says Tracy Barba, the founder of ESG4VC, which helps venture firms fast-track their ESG policies and practices. VCs from HarbourVest, Softbank, Bay Bridge Partners and Sapphire Ventures last month turned out to “ESG Meets Silicon Valley VC,” an event co-hosted by ESG4VC. “Funding technologies without consideration of unintended consequences on society or the environment, backing founders that are accountable to no one, and their poor performance when it comes to diversity needs to change,” said Barba. “The time is now.”

  • What to measure… and when. VCs are grappling with what ESG metrics to track at each stage of growth. “The language of Venture ESG is still being written,” said James Joaquin of Obvious Ventures, which has introduced an “ESG term sheet.” Obvious works with portfolio companies to develop appropriate ESG goals and policies. New York-based Energy Impact Partners uses ten-year forecasts of sales to estimate long-term emissions savings in early-stage portfolio companies that don’t yet have sales data (for more, see, “How one climate tech fund counts – and reports – the impact of its portfolio”). Series A-stage companies are typically in hiring mode and should track diversity. “We see a major opportunity for the investor community to lead the way by setting standards to measure and quantify sustainable impact,” said Lauren Densham of Energize Ventures, which released the firm’s first ESG and impact report in August.
  • Investment case. “Good businesses – and good VCs – are increasingly aware of both the monetary benefits and the intangible optics of paying attention to ESG,” writes Mike Packer of QED Investors, a $4.8 billion fintech venture capital firm that has embraced the practice. In a guest post on ImpactAlpha, Packer spotlights sustainability leaders from QED’s portfolio, including Solfácil, a Brazilian fintech venture focused on solar energy, and Resolve and Summer, two B Corp.-certified ventures helping consumers control their debt. Read Packer’s full post.
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Agents of Impact: Follow the Talent

Shell Ventures’ Phoebe Wang, Solar One’s Angelica Ramdhari, and Apple’s Lisa Jackson are among nine women selected by the U.S. Department of Energy’s for 2022 Clean Energy Education and Empowerment Awards… Farmers Business Network seeks a remote managing director of equity investments… Bluestar Energy Capital seeks a senior director of business development in Dublin and a director of business development in Chicago (see Dealflow, above).

Christopher Whitney is recruiting a chief operating officer to lead its impact investing team… ASU Enterprise Partners is hiring an ESG investing student assistant in Tempe, Ariz… The U.N. Food and Agriculture Organization will host a virtual science and innovation forum, Oct. 17-21 in Rome… Google’s half-day Sustainability Summit will take place, Tuesday, Oct. 11 in Brussels.

Thank you for your impact!

– Oct. 6, 2022