The Brief | October 18, 2021

The Brief: Character-based lending, green infrastructure, local fungi, remote women’s healthcare, disrupting gender-based violence

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Greetings, Agents of Impact! 

The Call: Catalytic climate capital. Global investment in the low-carbon transition looks likely to cross the $1 trillion mark this year, but three to four times that much is needed to keep climate goals in range. Agents of Impact Call No. 33 will bring together entrepreneurs and investors using catalytic capital in early-stage innovation, full-scale commercialization, climate justice and other persistent capital gaps. Learn about the tools of catalytic climate capital, including credit enhancements, off-take agreements, project equity and blended finance, with Prime Coalition, Breakthrough Energy, The LEAF Coalition, Convergence and others, Tuesday, October 26th at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: The Reconstruction

The Indigenous wisdom of lending based on character, not collateral (podcast). Current systems of credit are not working. Indigenous wisdom points to more promising approaches: deep local engagement and character-based lending. “Just because you’re unbanked, or not banked at the moment, doesn’t mean you’re actually high risk. It just means the system hasn’t worked for you,” Vanessa Roanhorse of Roanhorse Consulting and co-founder of Native Women Lead says on the latest episode of The Reconstruction podcast. Roanhorse worked with Nusenda Credit Union to launch Co-op Capital in 2018 to make micro and small loans of $500 to $10,000 and shift decision-making to organizations with deep relationships in the regions that potential borrowers live. Co-op doesn’t require collateral or automatically penalize people for lower credit scores. Instead, local community organizations in Co-op’s network determine who is ready to borrow. Drawing on proven practices of character-based lending, Co-op has loaned over $1 million through 200 loans with a default rate of only 2.5%.

Through her consulting practice, Roanhorse works with social enterprises to co-design wealth-building and entrepreneurship strategies in communities that have been systematically excluded from traditional capital systems. “We have to bring Indigenous thinking back into the circle,” she says. “I think once we’re willing to do that, which is a whole lot of power shifting, we can actually start to think creatively and collectively about how we move.” Native Women Lead with New Mexico Community Capital was awarded $10 million from the Equality Can’t Wait Challenge, backed by MacKenzie Scott and other philanthropists, to help Indigenous women founders scale up their enterprises. “Until we can get into the seat of decision-making around how capital products are designed and how that capital is going to flow,“ says Roanhorse, “we will continue to be marginalized in what is the right fit and also in being able to showcase why.”

Dealflow: Green Infrastructure 

Actis’ sustainable energy infrastructure fund raises $4.7 billion. London-based Actis has raised $19 billion since 2004 for private equity, energy and real estate investments. The new fund will, with co-investors, deploy $6 billion to create access to power in India, Africa and Latin America; at least $850 million will be invested in India over five years. A sample investment: a large-scale wind project under construction in Senegal by Lekela Power, one of the firm’s portfolio companies. The 159-megawatt project has potential to help offset six million tons of carbon dioxide and create 600 construction jobs, Actis says. Actis’ fifth energy fund received commitments from global pension funds, insurance companies, endowments, sovereign wealth funds and others.

  • Energy access. San Francisco-based Leap, whose software helps decarbonize electric grids, scored $33.5 million equity and debt financing to meet growing demand in North America and other international markets.
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Smallhold secures $25 million to grow organic mushrooms in local warehouses. Consumers are demanding locally-grown and climate-friendly food options. Brooklyn-based Smallhold is growing organic mushrooms in local warehouses for nearby restaurants and grocery stores, to demonstrate fungi’s potential to feed the world. Investors in the Series A round include Astanor Ventures, Energy Impact Partners, Almanac Insights, Wheatsheaf Group and AlleyCorp. Smallhold manages warehouses in Brooklyn and Texas and is looking to launch in Los Angeles next year.

  • Alt-foods. The market for plant-based meat alternatives is projected to reach $74 billion by 2030, up from $4.2 billion today. Companies growing mushrooms and other fungi, currently a small fraction of alternative proteins, are expected to become a larger part of the market due to consumer demand.
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Dealflow overflow. Other investment news crossing our desks:

  • Women-led Alloy raises $3.3 million from Kairos HQ and PACE Healthcare Capital to provide remote health services for menopausal and post-menopausal women.
  • Media venture Black Ballad, which focuses on Black women in the U.K., secures £335,000 ($454,000) in angel, venture and crowd-funded capital.
  • Netherlands-based Agreena raises $4.7 million to verify and sell carbon credits from regenerative farms.

Impact Voices: Gender Smart

Gender-lens investors begin to take action against workplace violence and sexual harassment. Dozens of investment funds use a gender lens in their investment decision-making. Some invest in women-led or owned ventures; others consider impacts for women all along the economic value chain. As few as nine funds are taking intentional action on gender-based violence and sexual harassment in the workplace. “We believe this is a missed opportunity for impact investors to impact the safety and success of women in the workforce, both through the provision of financing and gender expertise,” Ayesha Khanna, Virginia Schippers and Minh Nguyen-Hiltunen of Care Enterprises write in a guest post. The CARE-SheTrades Impact Fund, a debt fund created with Bamboo Capital and SheTrades Initiative, works with growing companies in South and Southeast Asia to create safe workplaces through the elimination of gender-based violence and harassment. The fund is raising $10 million in catalytic, first-loss capital.

  • Gender expertise. To create more gender-just companies, Care Enterprises draws on the expertise of its parent CARE. The global nonprofit humanitarian agency helps portfolio companies design and deliver on safe workplace policies, training for managers and employees in gender- safe workplaces and an implementation guide. Such support, the authors say “results in direct benefits for management, workers, and the company’s business growth.”

Agents of Impact: Follow the Talent

ImpactAlpha partner events: SOCAP21 kicks off today (through Wednesday); opening day is free. On today’s agenda: “Narrative for Change,” with Macro’s Poppy Hanks, Marcy Ventures’ Larry Marcus and Kellogg Foundation’s Carla Thompson Payton, moderated by ImpactAlpha’s David Bank, at 1:30pm PT. Use code np_impactalpha for 20% off… Next up in the Next Normal Now series from the Global Impact Investing Network: regeneration. Join John Elkington, Kat Taylor and nearly two dozen special guests to discuss clean air, water, land, humankind and impact investing, Wednesday, Oct. 27. RSVP today

Tides seeks a senior advisor for corporate social impact in San Francisco… Adasina is looking for a business development coordinator in San Francisco… The Puget Sound Partnership is hiring a tribal liaison in Washington State… The Community Center for Education Results seeks a director of research partnerships… Seattle Foundation is looking for a scholarships associate advisor in Seattle… Mercer is searching for a sustainable investment senior associate in Boston… is recruiting a senior impact fund manager.

The Global Innovation Lab for Climate Finance, African distributed solar lender SunFunder, U.K. crowdfunding platform Energise Africa, and Self-reliance and Solar in the West Bank and Gaza are the winners of U.N. awards for “Financing for Climate-Friendly Investment”… Opportunity Finance Network’s virtual conference, from Oct. 19-21, features U.S. Treasury Secretary Janet Yellen, the Small Business Administration’s Isabella Casillas Guzman, and Google’s Ruth PoratConvergence is launching its “State of Blended Finance 2021” report Wednesday, Oct. 27.

Thank you for your impact.

– Oct. 18, 2021