Greetings Agents of Impact!
In today’s Brief:
- Systems change from inside and out
- Catalyzing early-stage climate solutions
- Temasek’s impact ABCs
- Farmed fish in India
🔌 Plugged In: Training AI in Black and Brown history. Latimer.ai’s John Pasmore will join Plugged In host Sherrell Dorsey to explore how thoughtful design and intentional strategies for training large language models can combat what OpenAI’s Sam Altman calls “shortcomings around bias.”
- Join the conversation on LinkedIn Live, Wednesday, Jan. 31 at 8am PT / 11am ET / 4pm London. RSVP today.
Featured: Disrupting Dysfunction
Working from inside and outside to drive systems change. Systems change is a contact sport for grownups, says Gillian Marcelle. “There will be betrayal. There will be sabotage. There will be resistance. There will be backlash,” Marcelle, founder and CEO of Resilience Capital Ventures, tells Monique Aiken on the Into the Record podcast. “If we engage in this work as a collective, and we are drawing on all of our resources, including art and culture, I think that we will triumph.” In this moment of resistance and backlash, collective successes are crucial for building popular support, delivering tangible positive impact, and mobilizing even greater momentum and resources to meet urgent challenges and drive transformational change.
- Leveraging infrastructure. Take the case of Recidiviz, the criminal justice nonprofit featured in ImpactAlpha’s recent article on Draper Richards Kaplan Foundation’s “leverage-first” funding strategy. Recidiviz initially set out to make data available to outside advocates for reform. They quickly learned that people working inside prisons, including corrections agencies and public agencies, needed the data. “We shifted the strategy to work with the corrections agencies themselves to solve their problems,” Recidiviz’s Serena Chang told ImpactAlpha. Delivering results (Recidiviz has helped accelerate more than 100,000 people out of prison) builds constituencies, in this case among both criminal justice reform advocates and budget-conscious officials. That increases resilience in a polarized political climate, DRK Foundation’s Jim Bildner told ImpactAlpha to explain DRK’s strategy of providing grants to for-profit and nonprofit ventures working within existing infrastructures of health, education and criminal justice, rather than disrupting them.
- Systemic change. DRK’s reflection on social-change strategies, and Marcelle’s critique of it, sparked a vibrant debate on LinkedIn. Among the issues raised: Do systems-improvement strategies represent retreat, or reality? How best can systemic failures like racial, gender and economic injustice be redressed? How might incremental-change approaches and systems-change strategies become complementary, not contradictory? How can we harness the power of capital markets? And what is systems-change, anyway?
- System-level investing. The complexity and interconnectedness of systemic risks, opportunities and impact has led some investors to embrace a range of “system-level” strategies. Bill Burckart of The Investment Integration Project, or TIIP, says both incremental change and disruption play a role in transforming systems (disclosure: podcast host and ImpactAlpha contributing editor Monique Aiken is managing director at TIIP). “Where we come down at TIIP is that it is both,” Burckart tells ImpactAlpha. Some innovative actors, for example, are able to go faster and demonstrate what the new paradigm and that new system could look like. Certain incumbents, he says, have to move slower because of the constraints that they operate within. “Systems change is a team sport,” said Joy Anderson of Criterion Institute. “Impact investors need to do a better job understanding how to use their power to support and engage with political, social, cultural and market systems to find a collective path to transforming unjust systems.”
- Scaling deep. Marcelle’s Triple B Framework, for “bottlenecks, blind spots and blended finance,” emphasizes the role of structures, processes, cultural rules and norms in capital markets. Her definition of blended finance, for example, values other forms of capital (knowledge, social, cultural, relationship, network, and political), in addition to financial. “Systems changers don’t do tweaks,” Marcelle wrote. “We take intentional steps with goals in mind.” Impact investors, including foundations, she says “should be funding ecosystem strengthening and activators with long term programmatic financial capital and other forms of capital.” Also weighing in: Leisa Perch, Mark Greer, Sven Stenvers, Kevin Jones, Emily Anne Gendron, Astrid Schulz, Rachel Sinha, Devin Chesney and Bill Shireman.
- Keep reading, “Working from inside and outside to drive systems change,” by Dennis Price and David Bank on ImpactAlpha.
Dealflow: Climate Finance
QBE North America aims to catalyze early-stage climate solutions via Possibilities Fund. QBE North America, a division of the Australian insurance giant, has launched a fund to offset risks and catalyze capital for early-stage climate solutions. The Possibilities Fund taps philanthropic capital from ImpactAssets’ donor-advised funds. “Collaboration, partnerships and strategic capital allocation are essential to support early-stage climate innovations,” said QBE’s David Mulligan. The impact fund’s first investments include Prime Coalition’s Azolla Ventures. QBE Possibilities Fund also backed ReGen Ventures, an Australian investor in regenerative food, agriculture and materials. “We partner with founders daring to build regenerative technologies that redefine critical systems such as food, agriculture, materials, buildings and nature-based decarbonization,” said ReGen’s Dan Fitzgerald.
- Institutional impact. Insurance companies worldwide manage more than $41 trillion in assets (see, “Blending global insurance assets for impact”). QBE’s Premiums4Good initiative allows customers to invest one-quarter of their insurance premiums in social infrastructure, impact bonds and environmental initiatives. QBE’s venture arm has made several impact investments, including Save the Children’s Impact Fund, which invests in social enterprises addressing humanitarian challenges, and Australian Giant Leap’s second impact fund.
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Temasek’s ABC Impact rakes in $550 million for its second private equity fund. The independently managed private equity impact investment firm owned by Temasek was launched in 2019 to take on climate change, resource scarcity and global inequality. LP commitments to ABC Impact’s second fund include Temasek itself and its impact philanthropic arm Temasek Trust, as well as SeaTown Holdings, MapleTree Investments and an unnamed Southeast Asian sovereign wealth fund. “With a steadfast commitment to disciplined and evidence-based impact investing, we are particularly encouraged by the enthusiasm of new investors joining our mission,” said David Heng of Singapore-based ABC Impact (formerly ABC World Asia).
- Track record. The inaugural ABC Impact Fund raised $300 million and backed 11 companies across the financial and digital inclusion, health and education, climate and water, and sustainable food and agriculture sectors. In the portfolio: India’s CropIn, which helps farmers analyze crop yields and risks with satellites, sensors and weather data, and UK-based Iceotope Technologies, which uses precision immersion cooling technology to reduce the energy and water needed to keep data centers cool.
- Check it out.
India’s AquaExchange nets $6 million to meet demand for farmed seafood. India is the second-largest producer of farmed fish. AquaExchange’s app offers monitoring, procurement, sustainability advice and financial services to help India’s aquaculture farmers meet the global demand surge. The Vijayawada-based company’s $6 million Series A round was led by blue economy impact investor Ocean 14 Capital, or O14C, with participation from existing investors Endiya Partners and Accion Venture Labs.
- Blue economy bucks. UK-based O14C’s Ocean 14 Capital Fund I is backed by Monaco’s sovereign wealth fund, the European Investment Fund and other investors. An allocation from IKEA’s Ingka Investments pushed the fund to $174 million (€160 million) of a €200 million target. Separately, Boston-based Propeller raised $117 million for its early-stage venture fund that will invest at the intersection of ocean and climate solutions (for context, see, “Ocean-based startups ride a wave of funds seeking opportunities in the blue economy”).
- Dive in.
Dealflow overflow. Investment news crossing our screens:
- I Squared Capital will invest up to $400 million in Brazil’s Origo Energia for the construction of over two gigawatts of distributed solar generation projects. The investment gives I Squared a minority stake in Origo. (I Squared)
- NESsT’s Lirio Fund secured a program-related investment from Sorenson Impact Foundation to provide working capital to social enterprises in the Andes-Amazon region of Latin America. (Sorenson)
- Circular Plastics Fund of the Dutch impact investor Infinity Recycling secured €135 million from LPs including European Investment Fund. (Sustainable Plastics)
- San Francisco-based edtech investor Reach Capital led the $1.3 million pre-seed round of woman-led Coral Care to increase access to in-home pediatric developmental care. (Axios)
- The Hispanic Wealth Project, which aims to facilitate equitable homeownership, small business development and financial education, secured a $50,000 grant from Airbnb Community Fund. (HWP)
Impact Voices: Davos Watch
Five #WEF24 nuggets plucked from the snows of Davos. “Everyone at a Davos session is either someone important…” quipped an on-stage journalist to an influential but unassuming CEO, “…or they think they are important.” Jokes aside, “the craziness and serendipity of World Economic Forum week in this otherwise sleepy snowy ski resort town can be quite contagious,” reports Ashish Kumar, a long-time climate investor, in a guest post on ImpactAlpha. Among Kumar’s WEF takeaways:
- Results-based carbon credits can bridge the ‘viability gap’ in adaptation finance. Certain emerging types of high-quality credits can generate significant livelihood income and adaptation resilience. Some ‘novel’ carbon dioxide removal, or CDR, technologies (bioenergy with carbon capture, enhanced rock weathering, biochar, etc.) can fetch more than $100/ton (versus the current average $4-5/ton for carbon avoidance credits).
- Financing the energy transition is a story of capital reallocation. Renewables’ growth doesn’t require a massive surge in capital expenditures – the net growth in capex required each year is just 2%, according to the latest RMI report – lower than the expected 3% global GDP growth.
- GenAI is an opportunity for DEI leadership on reskilling and the future of work. One striking silver-lining was the potential for a significant ‘reskilling,’ aided by AI ‘co-pilots.’ “This reskilling presents a window of opportunity for under-represented groups through inclusive and proactive DEI leadership,” Kumar writes. “It was encouraging to see a rising focus on DEI amongst the public and private sector leaders at the WEF.”
- Keep reading, “Five #WEF24 nuggets plucked from the snows of Davos,” by Ashish Kumar on ImpactAlpha.
Agents of Impact: Follow the Talent
Brooke Latham, previously climate and impact director at Blisce, becomes head of sustainability of the NATO Innovation Fund… Conscious Investment Management promotes Casey Taylor to executive director… George Mosomi, a former operations vice president at Mara, joins Mercy Corp Ventures as a platform associate.
BlueMark is on the hunt for an impact investing manager to focus on Europe… The Nature Conservancy seeks a senior investment manager in Washington, DC… Platinum Pacific Partners is hiring an impact investing associate and director in Sydney… Accion is recruiting a Latin America-focused investment officer.
WeFunder is looking for a founder lead intern in San Francisco… OFN has an opening for a climate and environmental programs senior associate… CalSTRS seeks a portfolio manager for its sustainable investment and stewardship strategies team… CFA UK launches an impact investing certificate program.
👉 View (or post) impact investing jobs on ImpactAlpha’s new Career Hub.
Thank you for your impact!
– Jan. 25, 2024
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