Greetings, Agents of Impact!
Featured: Catalytic Capital
How pre-construction financing is building a pipeline of water projects in Kenya. Commercial capital is available for water and sanitation projects that are ready to go. The gap is in getting them ready. The Kenya Innovative Finance Facility For Water, or KIFFWA, is catalyzing private investment in water infrastructure by co-developing and co-investing in projects at the pre-construction stage. Seeded by €10 million ($11.5 million) from the Dutch Embassy in Nairobi, KIFFWA has built an early portfolio of nine projects, including the network of small water-treatment facilities, as well as kiosks run by the Kenyan company Pure Fresh. KIFFWA is nearing its first exit: a pipeline project near Kenya’s coast that supplies drinking and irrigation water to communities, small farmers and ranchers. “We invest in the project development and planning phase, which is the riskiest part of the project,” KIFFWA’s Joseph Murabula tells ImpactAlpha. “When you have the right permits and licenses and the project’s viability is proven, then you can raise money for construction and operations.”
Water is the fastest-growing sector for impact investors, according to last year’s survey by the Global Impact Investing Network, which found investors’ water allocations growing 33% over five years (though water still accounts for only 6% of all impact investments). Globally, up to $1.5 trillion is needed each year in water and sanitation infrastructure investments. WaterEquity, a subsidiary of actor Matt Damon’s Water.org, has raised $125 million for its third fund to invest in financial institutions providing microloans to water and sanitation projects in underserved communities. Roots of Impact and Aqua for All are testing “social impact incentives” to help water and sanitation companies attract private capital. “Remember, just a few years ago, no one was using private capital in the energy sector either,” Murabula says. “In the next five to 10 years, more people will be used to doing water projects with private capital. It will be slow in coming, but it will certainly come.”
Keep reading, “How pre-construction financing is building a pipeline of water projects in Kenya,” by Jessica Pothering on ImpactAlpha.com.
Dealflow: Climate Finance
Energy Impact Partners raises $200 million to target industrial decarbonization. The New York-based venture capital firm has made a name investing in ready-to-deploy technologies that help its energy and industrial partners lower their carbon footprints. Energy Impact Partners’ new Deep Decarbonization Frontier Fund marks a shift into early-stage, high-impact climate tech ahead of what the firm expects to be a wave of innovation. “We’re taking big swings at big risks,” EIP’s Shayle Kann told ImpactAlpha. Fueling the opportunity: long-term corporate commitments to net-zero. “That means a much more dramatic transformation of industry sectors is going to have to take place.”
- New frontiers. EIP has raised $200 million of its $350 million target. The Frontier Fund has made seven investments, including in Form Energy, which is developing low-cost, long-duration storage; green steel maker Boston Metal; zero-emission fertilizer company Nitricity; and fusion hopeful Zap Energy. The newest fund comes on the heels of a $1 billion fund EIP raised in November for later-stage climate tech.
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Copia Global secures $50 million to deliver goods to rural African consumers. Africa’s economies rely heavily on spending by the continent’s approximately 750 million low to middle-income consumers. Kenya’s Copia Global, founded by Silicon Valley veterans, streamlines the delivery of goods, especially in low-income rural areas. In Kenya and Uganda, 25,000 mostly women shopkeepers or agents take orders that Copia delivers at no cost, typically within 24 to 48 hours. It has completed more than 10 million orders since 2013.
- Returns on inclusion. The Series C round was led by Dutch impact investor and early backer Goodwell Investments, with the U.S. International Development Finance Corp. and LGT Lightrock. “Copia broadens access to affordable household goods for families, regardless of their income level, access to technology or location,” said Goodwell’s Els Boerhof. Copia, which has raised $103 million to date, is expanding to Rwanda and Tanzania.
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Lyra Health raises $235 million to help employers provide mental health benefits. The Burlingame, Calif.-based company works with companies like Uber and Morgan Stanley to provide mental health benefits for 10 million employees and their families. It recently acquired ICAS World, a British company that provides employee health and wellness programs for approximately 1,500 companies. Lyra’s Series F round, which values the company at $5.9 billion, was led by Dragoneer Investment Group, with participation from Salesforce Ventures and Coatue. The company has raised nearly $1 billion.
- Good jobs. Productivity losses due to depression and anxiety cost the global economy $1 trillion each year. “Providing high-quality mental health for diverse employee populations around the world is one of the most critical and challenging issues for employers today,” said Lyra’s David Ebersman.
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Dealflow overflow. Other investment news crossing our desks:
- Swedish climate tech startup Doconomy raises $19 million in equity to help companies, institutions and consumers reduce their carbon footprints.
- Lendable closes its first transaction in Vietnam, a $10 million loan to F88, a lender and insurance provider focused on unbanked and underbanked people and businesses.
- Colossus raises $36 million in Series A funding to help solar service companies digitize installations and business operations.
- Black women-led Rebundle secures $1.4 million in pre-seed financing to make plant-based, biodegradable braiding hair.
Signals: Capitalism Reimagined
‘Deeply scary’: Agents of Impact react to Larry Fink’s letter. The BlackRock chief executive’s latest letter to CEOs elicited “a collective yawn,” we wrote earlier this week. “Fink’s annual letters have gone from leading indicators to conventional wisdom.” That spurred a response from Laura Ortiz of SVX Mexico. We need to shift “the collective yawn to collective accountability,” she wrote. Agents of Impact weighed in. What’s your take?
- Collective accountability. Ortiz called Fink’s post “deeply scary” and “an intentional defense of capitalism at all costs.” Fink presented “decarbonization as the only goal and technology as the one savior,” she wrote. Mentions of “natural capital” such as clean air, clean water, fertile soil and healthy ecosystems are absent from Fink’s letter, notes Ortiz. “So no yawn from me – more like outrage and accountability-demanding rage,” she tweeted.
- Short on substance. The letter was “inconsequential,” wrote Dmitriy Ioselevich of 17 Communications. Fink tried to placate both conservative and progress critics of sustainable investing, which “usually means pissing off everyone equally,” Ioselevich said. The letter was “written in such a way as to make it seem like Fink / BlackRock had something important to say but without having to say anything of substance.”
- Lacking in leadership. If Fink fails to stand up to climate skeptics now, what will happen to BlackRock’s portfolio companies that lag in the low-carbon transition, asks Sunrise Movement’s Casey Harrell. Climate science has to “rise above the political fray,” Harrell says. “Will Larry have the gumption to get up and tell uncomfortable truths to these companies?”
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Agents of Impact: Follow the Talent
Natalie Blyth is named global head of commercial banking sustainability at HSBC. The British bank also appoints Christian Deseglise as group head of sustainable infrastructure and innovation, and Chris Webb, ex- of The Nature Conservancy, as group head of carbon markets… Carmen Correa succeeds Maria Cavalcanti as CEO of Pro Mujer… Rob Tashima, ex- of Village Capital, joins Draper Richards Kaplan Foundation as senior director… The Schmidt Family Foundation is hiring an impact investment portfolio director in Los Angeles of Menlo Park, Calif.
Thank you for your impact.
– Jan. 20, 2022