The Brief | April 15, 2024

The Brief: Catalyzing climate resilience for small farmers

ImpactAlpha
The team at

ImpactAlpha

Greetings Agents of Impact!

In today’s Brief:

  • Climate adaptation for smallholder farmers
  • New York Life’s diverse fund managers 
  • Raising the norms for impact reporting

For these tech startups and investors, the next big thing is climate adaptation for smallholder farmers. In India, Mati Carbon is providing smallholder farmers with crop inputs that fertilize plants and sequester carbon. In Kenya, SunCulture is helping farmers access solar irrigation systems to mitigate unpredictable rain patterns. And in Myanmar, Proximity is working to give rice farmers an alternative to the toxic practice of field burning. Climate-smart innovations are helping some of the world’s 500 million smallholder farmers adapt to climate changes and improve their livelihoods; they are needed by many more. “There is a wealth of ways that agrifood tech can assist with climate adaptation,” says Louisa Burwood-Taylor of AgFunder, author of a new report, “Financing adaptation pathways,” with ISF Advisors. “Even investors who haven’t typically engaged in agriculture and food can find opportunities that are a fit.” 

  • Catalyzing resilience. Technology will be a key driver in delivering and scaling climate adaptive agricultural practices. SunCulture got pilot funding last year from Shell Foundation and British International Investment for a carbon markets strategy for its solar irrigation pump sales. A grant from Heifer International helped Hello Tractor unlock $7 million in private capital to expand its tractor-for-hire booking service in Nigeria, Kenya and Uganda. BFA Global’s Catalyst Fund, one of about a dozen adaptation-focused investment funds, notes that patient and concessional capital is especially crucial for African climate tech startups, which need three years of “soft capital” on average before raising pre-seed equity rounds.
  • Carbon capital. A backlash against the voluntary carbon markets isn’t deterring social entrepreneurs from engineering new ways to help farmers capitalize from corporate emission offsets. Mati Carbon is supplementing farmers’ income with revenue from carbon credits generated from the use of its basalt-based soil additive, which can permanently sequester carbon. A two-year pilot with farmers in India yielded the first 50 tons of carbon removals for buyers in the Frontier network. Ashish Kumar, a climate investor and strategic advisor to Mati Carbon, writes that the pilot “demonstrated that it is possible to deliver durable carbon removal to corporate buyers while providing a scalable platform for boosting income, climate resilience and food security for smallholder farmers.” Get Kumar’s full take.
  • Keep reading, “The next big thing is climate adaptation for smallholder farmers,” by Jessica Pothering on ImpactAlpha. 

Dealflow: Returns on Inclusion

New York Life acquires stake in minority-owned Fairview Capital. Fairview Capital, a minority-owned investment management firm that backs diverse and emerging fund managers, has invested over $10 billion on behalf of public and private pension plans, foundations, endowments and other institutional investors since 1994. The investment from New York Life Insurance Co. “will create even more opportunities for Fairview,” said Larry Morse, who co-founded Connecticut-based Fairview with JoAnn Price. “This includes accelerating our growth and expanding our investing with the industry’s foremost venture capital firms, along with the leading diverse and emerging fund managers,” Morse said. Price and Morse will retain majority ownership of Fairview, alongside partners Kola Olofinboba, Alan Mattamana, Aakar Vachhani and Kwesi Quaye. 

  • Institutional impact. Diverse managers, who manage less than 1% of the trillions of US assets under management, are more likely to build diverse teams and invest in diverse founders. Ford Foundation enlisted Morse in 2019 to establish a fund-of-funds to channel endowment capital to high-performing managers (read and listen to our podcast, “Fairview Capital’s emerging wisdom about emerging and diverse fund managers”). “Standing ovation to New York Life for its leadership in advancing the common good through its strategic deployment of market rate investment capital,” Ford’s Roy Swan wrote on LinkedIn. The insurer, he added, “has set a new standard for corporations seeking to achieve market rate returns while generating positive economic impact.”
  • Racial equity lens. Since 2021, New York Life has tasked Fairview with $200 million in mandates as part of the life insurer’s $1 billion impact commitment to invest in underserved and undercapitalized communities to bridge the racial wealth gap. Through Fairview, New York Life has backed Momentus Capital to make small business loans tailored to entrepreneurs from underserved communities; Enterprise Community Partners’ Community Loan Fund to improve access to affordable housing for low-income families; and IMPACT Community Capital to preserve US affordable housing. Fairview’s Morse sits on New York Life’s impact advisory board.
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Unwritten snags $3.5 million to offer investors ‘transition risk intelligence.’ Unwritten (formerly Dovetail Finance) was launched in 2022 to help private equity firms, asset managers, banks and other financial institutions translate climate-related risk and opportunities into useful financial data. The London-based company’s analytics can be used for due diligence, cash flow modeling and climate risk assessment and reporting. The software can help banks, for example, integrate climate transition risks into lending decisions and pricing. “Unwritten makes financial sense of the climate transition — not to predict the future, but so our clients can make the capital allocation decisions to build it, ”said Unwritten’s Amos Wittenberg.

  • Rethinking risk. Investors in Unwritten’s seed investment round include Connect Ventures, Planet A Ventures and others. “We believe every capital allocator will utilize transition risk intelligence in the same way they do with audited financial statements today,” said Connect’s Rory Stirling.
  • Check it out.

Dealflow overflow. Investment news crossing our desks:

  • Toyota Ventures raised two $150 million early stage venture capital funds to invest in sectors including AI and robotics, green mobility, energy storage and batteries and decarbonization. Toyota will accept online pitches. (Toyota)
  • Windrose Technology, an electric heavy-duty truck maker, raked in $110 million in a Series B round. HSBC provided debt via its HSBC New Economy Fund. (Windrose)
  • Arcadia secured $50 million from Energy Impact Partners, G2 Venture Partners and other investors, and a $30 million line of credit from JP Morgan, for a community solar program. (Arcadia)
  • Recykal raised $13 million in its digital marketplace for waste management and recycling in India. (Entrepreneur India)

Impact Voices: Impact Management

Elevating impact reporting to raise the performance of impact fund managers. “One million lives touched.” “800 jobs created.” “50,000 acres of land restored.” Punchy headlines populate the impact reports that fund managers provide to their investors and capital allocators. How do the reports impact investment decisions? Impact Frontiers, with support from the Rockefeller Foundation, consulted for a year with some 350 impact fund managers, capital providers and third-party groups. Key question: How could impact performance reports be more decision-useful? The synthesis, “Impact Reporting Norms,” offers guidance on what to include in an impact performance report, how and to whom to report it, and why. With impact investing now representing more than $1 trillion in assets, the effort aims to channel capital “more efficiently and effectively to achieve integrated financial, social and environmental goals,” Impact Frontiers’ Rathi Ramasamy, Nao Sudo and Mike McCreless write in a guest post on ImpactAlpha.

Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

  • April 22-26: African Private Capital Association’s annual conference (Johannesburg) – RSVP
  • May 1-2: Total Impact Summit (Philadelphia) – Use IMPACTALPHA for 50% off
  • May 7-8: Feminist Finance Forum (Bangkok) – Register
  • May 7-9: Mission Investors Exchange (LA) – RSVP
  • May 13-15: Canadian Employee Ownership Conference – RSVP

Woochong Um of the Asian Development Bank will become the new CEO of the Global Energy Alliance for People and Planet… Owl Ventures names Jessie Woolley-Wilson, former CEO of its portfolio company DreamBox Learning, as operating partner… The Rockefeller Foundation names Eason Jordan, formerly of NowThis and the Malala Fund, as senior vice president for connected leaders… Marlene Hormes, formerly of Annycent Capital, joins WaterEquity as chief investment officer. 

World Resources Institute is recruiting a climate finance associate in Washington, DC or Bonn, Germany… The California Endowment seeks an impact manager in Oakland… Climate Policy Initiative is looking for a senior program associate for its Cities Climate Finance Leadership Alliance in Brazil… Ten impact startups will pitch at the virtual SuperCrowd24 event taking place April 17-18. 

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

Thank you for your impact!

– April 15, 2024