Greetings, Agents of Impact!
Agents of Impact Call No. 26: Looking ahead to 2021. New year, new possibilities. With our year-end roundups behind us (see below and all week), we’ll be getting ready for what’s next. Bring a prediction, a plan or even an ask for 2021 (limit: 60 seconds) to share with fellow Agents of Impact on our last Call of the year. You never know with whom you might connect. The ImpactAlpha team will share some stories (off the record!) and preview our own plans. Join us and special guests to raise a toast to the year ahead, Tuesday, Dec. 22, at 10am PT / 1pm ET / 6pm London / 9pm Nairobi / 11:30pm Delhi / 3am Tokyo. RSVP today.
Featured: Looking Ahead
With alarm bells ringing, investors step up to dramatic climate action in 2021 – or else. The COVID pandemic was just a warm-up for the coming catastrophe: climate change. As wrenching as was this year’s disease, death and dislocation, 2020 could be a preview for the accelerating disruption of floods, fires, hurricanes and mass global migration caused by global warming. Oh wait, 2020 had plenty of all that as well, in one of the three hottest years in the hottest decade on record. If the watchword for 2020 was resiliency, our ability to adjust, pivot and marshal solutions will only be more important as the world confronts the climate catastrophe. A big difference: There is no vaccine for global warming. There is, however, the opportunity for a concerted mobilization of public and private resources to dramatically reduce greenhouse gas emissions and stave off the worst effects. If we succeed in that effort, history may show that the inflection point has already arrived – and that progress went exponential in 2021. Generation Management’s David Blood calls the transition to net-zero emissions “the most significant transformation in economic history.”
What we’re watching for: governments, corporations, investors, banks and asset managers to up their climate ambitions – and take definitive action to back up their pledges before the follow-up to the Paris climate agreement, set for Glasgow next November.
- Electrify everything. Distributed, digitized and decarbonized electricity is the future of the economy. Solar offers “some of the lowest-cost electricity ever seen,” the International Energy Agency said recently, crowning solar “the new king of electricity.” The transformation of the electricity grid from a centralized hub-and-spoke to a distributed network recalls the internet-driven transformation of telecommunications, says Schneider Electric’s Emmanuel Lagarrigue.
- The Great Write-off. It didn’t take President-elect Joe Biden’s declaration to affirm that the transition from the oil industry is well underway. In 2020, oil prices briefly went negative, as did investor sentiment for fossil fuels. Hedge funds shorted carbon. Other investors are divesting from fossil fuels altogether. Oil and gas companies were forced to write down more than $50 billion in fossil fuel assets on their books – and that was before Exxon’s $20 billion write-off of natural gas assets this quarter.
- Financing resilience. “Forest resilience bonds” pioneered by the nonprofit Blue Forest Conservation, offer a way to finance proven forest restoration techniques that are increasingly beyond the budget capacities of state and federal agencies. “It’s not just water, it’s not just carbon, it’s not just air quality, it’s community resilience on a broader basis,” Blue Forest’s Zach Knight says in a new Agents of Impact podcast. Listen to “Wildfires bring to the fore financing for forest resilience (podcast).”
- Capital shift. Will 2021 be the year climate finance catches up with reality? “2021 will see an opening of the floodgates of people wanting to put money to work in sustainable solutions,” says Spring Lane Capital’s Rob Day. Growth-stage cleantech and sustainability ventures found a rich source of capital this year in special purpose acquisition vehicles, or SPACs. More than a dozen SPACs focused on sustainability have together raised more than $5 billion this year. Investors are finding opportunities in distributed solar and wind plants, waste-to-energy facilities, wastewater systems and sustainable agriculture, as well as project-based finance to build them.
- Climate stewardship. Once called shareholder engagement, “stewardship” emerged this year as a powerful tool, despite attempts to stifle investors’ voices by the Trump administration. Companies leading the low-carbon transition in their sectors are increasingly collaborating – and pulling ahead. Every company will have to have a net-zero plan, and soon: 2040 is the new 2050.
Read the whole roundup, “With alarm bells ringing, investors step up for dramatic climate action in 2021 – or else,” by Amy Cortese and David Bank on ImpactAlpha.
Dealflow: Follow the Money
Global Ventures narrows focus on global health with investment in Ilara Health. Nairobi-based Ilara, a diagnostics provider for underserved primary care facilities, launched last year and has expanded its services from 15 Kenyan clinics to 200 in 2020. Global Ventures participated in Ilara’s $3.8 million Series A round, which was led by TLcom Capital and backed by DOB Equity and Chandaria Capital. The Dubai-based venture capital firm is focused on leveraging technology to address basic needs in emerging markets: jobs, access to finance and health, and gender equity.
- Healthcare inclusion. Roughly 400 million people lack access to essential health services, while many millions struggle to reach or pay for quality health providers. “We approach health access very much like financial inclusion 10 years ago, when you went from cash to mobile money,” Global Ventures’ Noor Sweid told ImpactAlpha. “Healthcare inclusion is not yet about optimizing care. It’s about how you go from no doctor to teledoctor, from no diagnostics to remote diagnostics.”
- Health tech. Global Ventures has invested in more than 20 companies from its $50 million first fund. Its healthcare portfolio includes Lagos-based electronic records company Helium Health; Dubai-based Altibbi, which offers Arabic-language health information; and London-based Proximie, a software company enabling surgeons to collaborate virtually. The firm is now raising its second fund, half of which will focus on health tech companies. Capria Ventures backed Global Ventures this week.
- Dive in.
ZeroAvia clinches $37.7 million to speed zero-carbon air travel. The aviation industry has become more fuel efficient in recent years, but global demand for air travel before the pandemic had put the sector on pace to be one of the biggest carbon emitters by 2050. ZeroAvia is working on hydrogen-based fuel cells to speed the sector’s green transition when demand rebounds. The Hollister, Calif.-based company says its product can fly a 10 to 20-seat aircraft for 500 miles. British Airways is supporting ZeroAvia’s research and development.
- Climate-critical. “Hydrogen fuel is a critical component in the transition to a sustainable economy – particularly in the airline industry,” said Carmichael Roberts of Breakthrough Energy Ventures, which led the $21.4 million Series A round with Ecosystem Integrity Fund. Follow-on investors Horizons Ventures, Shell Ventures, Summa Equity and Amazon’s Climate Pledge Fund participated. ZeroAvia also scored $16.3 million in grants from the U.K. government.
- Check it out.
ConsejoSano secures $17 million to improve healthcare for vulnerable communities. Black and Latino Americans are hospitalized with COVID-19 at nearly five-times the rate of white Americans. L.A.-based ConsejoSano helps healthcare providers engage underserved and vulnerable populations with culturally-appropriate communication. “Our underserved communities need and deserve greater engagement and access to healthcare designed and delivered with them in mind,” said ConsejoSano’s Abner Mason.
- Eclectic roster. ConsejoSano raised $17 million in Series B financing led by Magnetic Ventures. Other investors include The American Heart Association’s impact fund, DaVita Venture Group, Salesforce Ventures, NBA All-Star Victor Oladipo and Impact Engine,
EV infrastructure startup OBE Power raises $300,000 in Opportunity Zone funding. Lack of charging infrastructure remains one of the biggest obstacles to electric vehicle adoption in the U.S. Miami-based OBE Power is among the startups building networks of electric vehicle charging stations. The company operates more than 200 stations in South Florida and aims to have 2,500 stations nationally by 2023.
- OZ investment. The Latino-led company, based in a Miami Opportunity Zone, raised its $300,000 seed round from Verte, an Opportunity Fund that invests in early-stage tech, life sciences, food and health startups (see, “Verte Opportunity Fund backs Galen Robotics in Baltimore Opportunity Zone”). The capital will support OBE’s expansion into new markets including Texas, North Carolina, South Carolina and Georgia.
- Plug in.
Dealflow overflow. Short takes on some of the deals crossing our desks:
- World Education Services makes two refugee-lens investments. The nonprofit committed $750,000 from its impact-focused WES Mariam Assefa Fund to mobile skills training app Cell-Ed and refugee and immigrant-focused lender RIN-CEO Social Impact Fund. RIN-CEO was launched last week by Refugee Investment Network and the International Rescue Committee’s Center for Economic Opportunity.
- BP takes majority stake in Finite Carbon. Finite Carbon develops sustainable forestry projects to support land revitalization and offset carbon emissions. It has completed 70 projects generating $500 million for landowners. The oil giant is integrating Finite Carbon into its Launchpad accelerator and aims to triple its growth in the next 10 years.
- Giant Ventures debuts early-stage impact tech fund with investment in Airly. The new London-based firm launched a seed fund to cut checks of up to $1 million in impact tech startups like Airly, which is developing air quality sensors. Giant led Airly’s $2 million equity round.
Agents of Impact: Follow the Talent
Capital Factory is accepting applications for its Black in Tech investment challenge… VC Include is recruiting first-time Black, Indigenous and Latinx fund managers for its VCI Fellowship program… Bridges Fund Management has expanded from London to Manchester, U.K… Journalists James and Deborah Fallows are releasing “Our Towns,” a documentary on local community resilience on HBO.
Thank you for reading.
– Dec. 17, 2020