Greetings, Agents of Impact!
Featured: Sustainability Trends
Two dozen charts map the trajectory of sustainable finance, food, energy and mobility. San Francisco and London-based Generation Investment Management, the $36 billion investment firm founded by Al Gore and David Blood, has for five-years previewed the “sustainability revolution” in its annual trends report. “This year the penny dropped,” says Generation’s Lila Preston, as the confluence of crises thrust long-term sustainability trends into the consciousness of consumers and onto the agenda of policymakers. This year’s report charts the capital allocations and commitments, falling cost curves and technological innovation, and customer demand and social awareness driving the shift. Pick your metric: The report notes a “step-change” over the last five years in sustainable finance flows, including a 10-fold increase in flows to ESG funds in Europe and the tripling (from 2% to 6%) of the share of market capitalization companies focused on the green economy now command among global listed equities. “There is a recognition from a lot of different angles that sustainability is an imperative for our economic systems,” Preston says.
The accelerated adoption of alternative proteins, electric mobility, sustainable building materials and other trends long tracked by Generation “are doing what we would have thought they would do,” says Preston. Now on the radar: the impact of net-zero commitments on mineral prices, and the boom in telehealth and mRNA interventions for diseases ranging from cancer to rabies. To be sure, costs and benefits remain wildly unequal, and negative trends may yet overwhelm positive ones. COVID-19 stimulus spending, for example, averaged more than $8,500 per person in rich countries, compared to $25 per person in poor countries. Nature loss threatens more than half of the world’s GDP, or $44 trillion in economic value. ImpactAlpha dug through the 200 sources in this year’s report to pick two dozen trends shaping the sustainability revolution.
Keep reading, “Two dozen charts map the trajectory of sustainable finance, food, energy and mobility,” by Dennis Price on ImpactAlpha.
Dealflow: Returns on Inclusion
Zeal Capital Partners and Female Founders Fund raise funds for inclusive investing. Washington, D.C.-based Zeal Capital raised $62.1 million for its inaugural fund from Truist Ventures, Paypal, Synchrony, Skoll Foundation, Bank of America and others to invest in early-stage tech companies bridging wealth and skills gaps. Zeal is led by Nasir Qadree, a first-time fund manager. First-time and emerging fund managers attracted only 11% of capital last year, despite their strong performance (see, “How women and VCs of color are finding impact alpha with first-time funds”). Zeal’s fund is looking to make up to 30 investments over four years in education, workforce development and financial services.
- Gender-lens investing. New York-based Female Founders Found is out to “demonstrate top-tier returns by investing in a diverse portfolio of female-led companies,” the firm tweeted. It raised $57 million for its third early-stage venture fund to invest exclusively in female founders. More than half of the fund is invested in Black, Indigenous and women of color. Investors include Goldman Sachs, Twitter, Doris Duke Charitable Foundation, Plexo Capital and Melinda Gates’ Pivotal Ventures.
Ecosystem Integrity Fund closes $250 million sustainability tech fund. The San Francisco-based firm raised $100 million for its third fund in 2019 to invest in early- and growth-stage tech companies focused on environmental sustainability. Its fourth fund received commitments from the Tennessee Valley Authority Retirement System, Doris Duke Charitable Foundation, Franz Haniel & Cie, Spring Point Partners and other institutional investors.
- 2030 Finance. The latest fund has already invested in six companies, including Rwanda’s electric motorbike startup Ampersand, California-based eco-packaging venture Vericool, and ZeroAvia, which is aiming to decarbonize air travel with hydrogen-electric airplanes.
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Acumen’s ALIVE backs Chilean edtech company uPlanner. Santiago-based uPlanner has developed artificial intelligence-driven software to help higher education institutions in Latin America build curriculums online. Acumen Latam Impact Ventures, or ALIVE, supported a bridge funding round for the company. ALIVE’s Virgilio Barco cited the “accelerated digitalization that education institutions are facing as a result of the COVID-19 pandemic,” as a reason for its investment. A spokesperson for ALIVE told ImpactAlpha that uPlanner experienced such increased demand during COVID that it needed bridge funding to support expansion but decided to “postpone a large round for when it has achieved further growth and can get better terms.” Terms of the round were not disclosed.
- Education access. uPlanner initially built its software to help universities improve operational efficiency and reduce student attrition. It serves 200 campuses with 2.5 million students, 80% of whom are from low-income and underserved backgrounds.
- Check it out.
Is the spate of SPACs setting the stage for a battery shakeout? Lithium-ion battery developer SES plans to go public via a special purpose acquisition company following a $100 million investment from Hyundai (see, “Race for better lithium batteries accelerates with two big raises“). Colorado-based Solid Power also plans to go public via a SPAC. ESS Tech, QuantumScape, FREYER and Microvast are also part of the battery-tech SPAC trend.
Dealflow overflow. Other investment news crossing our desks:
- U.K.-based Eka Ventures raises £68 million ($95 million) for its first fund, which cuts early-stage checks of up to £3 million for impact tech ventures.
- Germany’s Enpal raises €100 million ($118 million) to expand its solar system leasing and subscription service.
- Brazil’s A de Agro, which uses crop analytics and alt-credit scoring to help small and mid-size farmers secure financing, partners with investment bank BTG Pactual to lend 1.8 billion reais ($348 million) to rural growers.
- California-based Twelve (formerly Opus12) scores $57 million from Capricorn Technology Impact Fund, Carbon Direct Capital Management, Munich Re Ventures, Microsoft Climate Innovation Fund and others to convert CO2 into fuels, textiles and other products.
- Carbon-tracking platform Vaayu secures $1.6 million in pre-seed funding to help the fashion industry manage its carbon footprint.
- Botswana’s Kalahari Honey, Zambia’s Wuchi Wami and Malawi’s EcoGen will use U.N.-backed SEED grants to help smallholder farmers adapt to climate change.
Signals: Place-based Investing
Centering marginalized communities to build back better. The two-track recovery threatens to leave distressed communities even further behind. Consider Philadelphia’s Kensington neighborhood: “A community that was already sort of hanging by a thread is completely falling off the cliff,” says Bill McKinney of the New Kensington Community Development Corp., a community housing developer (see, “Neighborhood trusts are taking on speculators and building community wealth”). McKinney called for “almost a Marshall plan” for community recovery in a policy discussion hosted by the Local Initiatives Support Corp. “Taking a place-based approach to the core economic goals that we have is important,” said White House National Economic Council director Brian Deese. That could mean tearing down freeways that have divided and segregated communities in places like Syracuse, N.Y., he said, and expanding R&D investment through community, technical and historically Black colleges and universities outside of traditional funding streams.
- Targeted universalism. The Biden administration’s policies have the potential to lift not just the least well-off but the entire economy, Deese said. The latest example: the enhanced child tax credit, which will provide monthly payments to families beginning this week. All but the most affluent families will receive benefits, which is expected to cut child poverty by almost half. “Coming out of this pandemic, focusing on the universalistic benefits of making targeted government investments, we’ve got as good a chance as we had at any time in the last generation or two of actually making these arguments stick,” said Deese. (See, “Capitalism reimagined for fair gainsharing and equitable prosperity.”)
- Community developers. The crisis for small businesses and communities is “far from over,” said Ellis Carr of Capital Impact Partners. CIP made its first two loans from a new $20 million lending initiative for real estate developers of color in Washington, D.C. Its Diversity in Development loan fund will make lower-cost, flexible pre-development and acquisition loans for affordable housing projects. The initiative builds on a similar program launched in Detroit last year. CIP, which is merging with CDC Small Business Finance, provided about 6,000 loans totaling $280 million through the federal Paycheck Protection Program.
- Impact in place. “No recovery can be considered just or equitable without the resurgence of Black, Brown, Indigenous, rural and other communities that for too long have been denied adequate access to economic development opportunities,” writes Fran Seegull of the U.S. Impact Investing Alliance in a guest post. “We need continued momentum and collaboration on a much larger scale to meet the needs of these communities.” (See, “Corporates emerge as new source of capital for community investment.”) The Alliance’s “Impact in Place” report explores ways to drive more investment capital into communities. Read Fran Seegull’s full post.
- Go local.
Agents of Impact: Follow the Talent
Former U.K. civil society minister Nick Hurd, Ronald Cohen of the Global Steering Group for Impact Investment, former CEO of Allianz Global Investors Elizabeth Corley, and Douglas Peterson of S&P Global join the Impact Taskforce to push impact investing during the U.K.’s G7 presidency. The GSG and the U.K.’s Impact Investing Institute will lead the taskforce… Mark Friedland, ex- of K Road DG, joins Orion Energy Partners as partner and chief legal and compliance officer. Karen Vejseli, ex- of Carlyle Group, joins Orion as partner and group chief financial officer.
Alan Halfenger, ex- of Bain Capital, joins Arctaris Impact Investors as general counsel and chief compliance officer… Melody Hahm, ex- of Yahoo Finance, joins Harlem Capital as community and platform manager… Kiva is looking for a social enterprise investment manager in Colombia, Kenya or the U.S… Kapor Capital is hiring an investment associate… Climate XChange is hosting “Rooting environmental justice efforts in community,” with Veronica Padilla-Campos of Pacoima Beautiful and Kate McIntosh of Louisiana Bucket Brigade, Wednesday, July 21.
Thank you for your impact.
– July 14, 2021