Greetings, Agents of Impact!
👋 Join Next Week’s Call: Year of the ‘S.’ Human capital. Worker ownership. Community resiliency. Social factors are at the top of this year’s impact policy agenda. Special guests Cambria Allen Ratzlaff of JUST Capital, Jesse Van Tol of the National Community Reinvestment Coalition, and Jack Moriarty of Ownership America join Fran Seegull and David Bank to explore policy strategies and actionable opportunities, Wednesday, Feb. 22 at 10am PT / 1pm ET / 6pm London. RSVP today.
Featured: Catalytic Capital
Beyond the fairy tale: Investment strategies that catalyze real impact. The push to mainstream impact investing has left “many of us still quizzically scratching our heads,” writes Greg Neichin of the family office Ceniarth, “wondering when, if ever, some portion of those declared trillions of impact dollars will ever reach communities in real need.” Ceniarth and other practitioners that are “actively deploying impact-first capital and seeking ways to catalyze more,” have gathered in learning labs supported by the Catalytic Capital Consortium, or C3 (see ImpactAlpha’s Seeding Impact and Scaling Impact series). The initiative “has been a powerful force in distinguishing the very different realities and challenges faced by those of us living in the impact-first corner of the sector’s big tent,” Neichin writes in a guest post on ImpactAlpha. Ceniarth’s portfolio provided its own learnings. Last year, Ceniarth deployed nearly $70 million in 40 transactions across the three catalytic investment strategies – seeding, scaling and sustaining – defined by Tideline’s 2019 report on catalytic capital. What’s working:
- Seed by dialing up risk. Risk needs to be embraced when funding anything new. Ceniarth last year invested $23.5 million in seeding new enterprises, managers and business models. New loans and renewals went to early stage social enterprises such as Farmerline (see, “Agent of Impact: Farmerline’s Alloysius Attah“), Kuli Kuli, iProcure, Kasha and Good Nature Agro. Investments in new fund vehicles included Missio Invest, Spark+ Africa Fund and the Working Power Impact Fund. In some cases, “we are benefitting from subordinate equity or debt provided by others,” says Neichin. “In some of the cases, we are the ones taking that risk.”
- Scale with efficient decision-making. Diligence processes become more streamlined as funds and enterprises move from seeding to scaling. “Collaboration improves as our confidence in advocating for these funds and enterprises with our co-investors increases,” Neichin says. Ceniarth’s $26.7 million in scaling investments last year included more than $6 million in shorter-term facilities for longtime partner Cross Boundary Energy. Ceniarth increased commitments to other longtime partners Community Investment Management, Elevar Equity and Lendable (see, “How Lendable parses risks and returns to mobilize capital for inclusive fintech in emerging markets”).
- Sustain with patience. “In the fairy tale version of catalytic capital, the gap that our money fills is transient,” says Neichin. “It is rare that we have seen it in practice.” Ceniarth has deployed $19.1 million in sustaining capital. Ceniarth backed Black Vision Fund in 2022 to provide lending capital to established community development financial institutions to serve more minority entrepreneurs in the U.S., and processed a rapid $3 million loan to emerging markets enterprise lender MCE Social Capital to plug a short-term capital gap.
- Keep reading, “Beyond the fairy tale: Investment strategies that catalyze real impact,” by Ceniarth’s Greg Neichin. Catch up on all of ImpactAlpha’s Catalytic Capital coverage, supported by the Catalytic Capital Consortium.
Dealflow: Financial Inclusion
InsuranceDekho raises $150 million in debt and equity to expand insurance coverage in India. The pandemic ignited demand in India – and many other places – for health insurance products, making India a fastest-growing insurance market. “What Covid has done for insurance distribution particularly in the health and life side, I don’t think any amount of government spending or marketing would have done,” InsuranceDekho’s Ankit Agrawal said in an interview. InsuranceDekho got its start in 2017 as a complement to CarDekho, an online car shopping site. The company says more than 80% of its policies are sold to customers in small cities and towns.
- Hybrid model. InsuranceDekho reaches underserved populations in more than 1,300 towns through its online portal and by selling policies via mom-and-pop shops and part-time agents. “We realized that in smaller cities you’ll have to go with an assistance model,” Agrawal explained. Goldman Sachs Asset Management and TVS Capital Funds led the equity portion of InsuranceDekho’s round. Impact investor LeapFrog Investments, which invested in CarDekho in 2021, also participated. The company is “protecting families from incidents which could contribute to them falling into poverty,” LeapFrog’s Stewart Langdon said in a statement.
ChargerHelp scores $17.5 million to repair EV chargers and create inclusive green jobs. More electric vehicles on the road means more demand for EV chargers. South L.A.-based ChargerHelp, launched in 2020 by Kameale Terry and Evette Ellis, hires and trains EV charger service technicians. It raised $17.5 million as demand has “rapidly increased with more companies and municipalities recognizing the demand for cleaner, more sustainable and reliable solutions,” said Terry (see, “Agents of Impact: Evette Ellis and Kameale Terry”).
- Skilled workforce. ChargerHelp plans to expand its service offering and grow its workforce development program. The company pays its technicians at least $30 per hour and shares equity in the company. “Since our initial investment, we have seen growing momentum in uptime reliability, and ChargerHelp has directly serviced that market need from day one,” said Vida Asiegbu of Energy Impact Partners, which backed the round alongside Blue Bear Capital, Aligned Climate Capital and other investors.
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Seven blue economy startups secure seed funding to enhance climate resilience in Africa. Community-powered mangrove restoration. Restocking local fish supplies. A marketplace for seaweed farmers. Triggering Exponential Climate Action, or TECA, invested $27,500 each in seven ocean and seafood enterprises in Kenya, Egypt, South Africa, Uganda, Zimbabwe and Tanzania. The partnership between BFA Global and FSD Africa also provides the companies with hands-on support. “We look forward to seeing the impact of their financial and tech-enabled solutions on communities and ecosystems,” said BFA Global’s David del Ser.
- Livelihoods and conservation. AquaTrack makes a water-quality monitor for aquaculture farmers. Mwani Blu is developing a seaweed trading marketplace, focusing on women farmers. Wezesha Aqua Farms is building a community support platform to address dwindling fish stocks in East Africa’s lake region. RegisTree is engaging coastal communities to protect and restore mangroves. Carboni Bank is helping tourists support local climate initiatives. Also in the cohort: ConserVate, a verification platform for conservation initiatives, and Vua Solutions, a fintech venture focused on blue economy workers.
- Blue tech. Separately, London-based Ocean 14 Capital secured €30 million ($32 million) for its ocean impact fund from IKEA’s investment arm, Ingka Investments.
- Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Ford Motor is investing $3.5 billion in an EV battery production facility in Michigan.
- Zurich-based MPower raised equity from investors and via crowdfunding to sell off-grid solar products in Africa.
- EchoVC, which invests in underserved founders and markets, backed Kenyan logistics startup Senga.
- Dutch pension fund Pensioenfonds PGB appointed U.K.-based investment manager Osmosis to direct $4.5 billion into companies having a positive environmental impact.
Signals: Policy Corner
The EPA’s blueprint for a green bank. Tucked in the sprawling Inflation Reduction Act is $27 billion for a “green bank” to catalyze hard-to-finance projects like energy retrofits and small-scale community solar (see, “Green Bank in climate bill to provide catalytic capital for renewable energy and community resilience“). The bank won’t be a single entity, however. Instead, the Environmental Protection Agency will distribute the Greenhouse Gas Reduction Fund through competitive grants. The E.P.A.’s initial guidance for the program’s design suggests it will award $20 billion in competitive grants to nonprofit lenders working in low-income and disadvantaged communities. Another $7 billion will go out via competitive grants to states, municipalities, Tribal governments, and other “eligible recipients” (for background, see, “Will a new EPA fund serve low- and moderate-income people?“).
- Get up to speed. The E.P.A. will discuss the green bank blueprint today at 12:30pm ET.
Agents of Impact: Follow the Talent
Ownership Works is recruiting a director for equity-based plan structuring and implementation in New York… VentureESG seeks a crypto and web3 research fellow and an emerging economies and ESG research fellow… The Coca-Cola Company is hiring an impact investing senior director in Atlanta.
Impact venture capital firm Selby Jennings has an opening for a head of investor relations… The GIIN is looking for an associate director of peer learning in New York… Also in New York, Blue Dot Capital seeks a senior associate or associate for ESG research and integration… Jobs for the Future is hiring a remote senior analyst for JFF Ventures, its impact investing arm.
FUSE Corps is looking for a climate funding executive fellow in San Jose, Calif… Gratitude Railroad is hosting “Evaluating progress, charting the future: A discussion on impact measurement and management,” today, Feb. 15 at 1pm ET… CalSEED will accept grant applications from early-stage clean energy innovators and entrepreneurs in California starting Friday, Feb. 17.
Thank you for your impact.
– Feb. 15, 2023