The Brief | November 7, 2019

The Brief: Climate-financing wake up call, robotics in Baltimore, Palestinan youth development bond, European venture philanthropy

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Investor wake-up call: Global climate financing fell 11% last year. At a time the world needs to radically ramp up financing for the low-carbon transition, investment is dropping instead. Global climate financing fell to $546 billion in 2018, a decline of 11% from $612 billion in 2017, according to the Climate Policy Initiative’s annual tally of climate-related primary investment. By aggregating investment in two-year cycles, the report tried to put a brighter spin on the numbers, which averaged $579 billion in 2017-18, up 25% from 2015-16, and above a half-trillion dollars for the first time. Even so, the investments in low-carbon energy generation and other climate-smart infrastructure don’t begin to approach the $1.6 trillion to $3.8 trillion per year that is needed through 2050. “This is simply not enough, especially as investments in polluting industries continue to effectively cancel out these efforts to address climate change,” said Climate Policy Initiative’s Barbara Buchner. “Leaders should be focused on total economic transformation.”

The sluggish climate-finance numbers come as more than 11,000 scientists issued a fresh alarm, declaring “unequivocally that planet Earth is facing a climate emergency.” Separately, rising sea levels will threaten 40 million more people over the next 30 years, triple previous estimates, according to research in Nature. The markets are not yet responding to the urgency of the situation. Or rather, they are responding to contrary signals that global climate action is stalled. This week, the Trump administration officially started the one-year countdown to pull out of the Paris climate agreement. Capgemini’s World Energy Markets Observatory reports that India, the U.S and China accounted for some of the biggest increases in greenhouse gas emissions last year due to booming energy consumption dominated by fossil fuels.

Keep reading, “Investor wake-up call: Global climate financing fell 11% last year,” by Amy Cortese and David Bank on ImpactAlpha.

Dealflow: Follow the Money

Verte Opportunity Fund backs Galen Robotics in Baltimore Opportunity Zone. The maker of a less-invasive surgical robot was lured from Silicon Valley to Pigtown, west of downtown Baltimore, by city and state incentives to attract companies to Opportunity Zones. The firm is the first transplant to Baltimore to secure an equity investment from a qualified Opportunity Fund, reports the Baltimore Sun. Galen has raised $7 million to date, including the undisclosed investment from Verte, a College Park, MD-based Opportunity Fund that invests in early-stage companies in technology, life sciences, food and health. Ben Seigel of Baltimore Development Corp., the city’s economic development arm, helped identify the investment, Verte’s Leonard Mill told The Sun. The deal is Verte’s second; its first investment went to Native American Ventures, which develops economic infrastructure in tribal nations. Galen plans to hire 100 engineers and other professionals. More.

  • Legislative push. Congressional Democrats are pushing for fixes to the Opportunity Zone tax break. Oregon Sen. Ron Wyden would bolster reporting and transparency requirements, prohibit self-storage facilities and luxury housing from qualifying for the incentive, make it harder for projects already underway to qualify and eliminate roughly 200 higher-income Opportunity Zones. Economic Innovation Group’s John Lettieri says the bill would have unintended consequences, including limiting the ability to use Opportunity Zones to address housing needs and making it more difficult for operating businesses to qualify for investment. “If there is an end of year tax package, I expect (Opportunity Zones) to be a major piece of it,” tweeted Lettieri.
  • Virginia marketplace. Locus Impact Investing launched Opportunity Virginia, a marketplace connecting Opportunity Zone investors with projects to revitalize underserved Virginia communities. “Whether it’s developing affordable housing in the beautiful Blue Ridge Mountains or funding a small business on a strengthening Main Street, we’re here to support Opportunity Zone stakeholders as they create a better quality of life in underserved Virginia communities,” writes the Locus team.

Four investors back development impact bond for Palestinian youth. The Palestinian Employment Development Impact Bond aims to help more young Palestinians, particularly women, matched to skilled jobs. The first “DIB” in Palestine will work with 1,500 participants. Dutch development finance institution FMO, the Palestine Investment Fund, the European Bank for Reconstruction and Development and Invest Palestine fronted $1.8 million. They’ll earn up to $5 million from the World Bank’s West Bank and Gaza Trust Fund if the program succeeds.

Kenzie Academy secures $100 million to boost Americans’ access to tech training. The online and in-person “college alternative” is the latest to raise funding to help un- and low-skilled workers obtain affordable tech training. Kenzie learners pay $100 upfront and begin repaying after they earn a job with a salary of $40,000 or more. San Francisco-based impact investor Community Investment Management provided the loan capital (see, “Financing the financiers expanding small-business lending in America).

Edtech publication EdSurge acquired by ISTE. For-profit news company EdSurge launched in 2011 to serve as an independent source on technology’s impact on education. Non-profit International Society for Technology in Education is acquiring the publication. EdSurge’s Betsy Corcoran said the site will continue to produce independent news, but will swap its venture-backed model for a non-profit one. “The nonprofit structure has major advantages in helping us work with foundations and serve the edtech community as effectively as possible,” she said.

Soil data firm AgriTask raises $8.5 million with backing from InsuResilience. Tel Aviv-based AgriTask uses a network of connected devices to arm farmers and insurers with better data and recommendations for improving soil and crop health. It has raised an additional $2.5 million in funding, after securing $6 million in May from the InsuResilience Investment Fund, which invests in companies enabling access to climate insurance.

Signals: Ahead of the Curve

Impact storytelling at the European Venture Philanthropy Association. Representatives from philanthropy, government, venture capital, asset management and yes, startups huddled for small-group discussions at the European Venture Philanthropy Association’s meeting in The Hague, in partnership with ImpactCity. “It’s all about the stories,” said Jussi Nykänen of Finland’s FIM Impact Investing. “I’m here to hear about the lessons others are learning.” A few that stood out:

  • Catalytic capital. Europe can learn from the U.S. on financial engineering and catalytic capital, said Nykänen who has mapped out a venture capital fund for investing in food tech. “Venture capital doesn’t work for land,” he says. Farmers need help to regenerate land and restore soil, so Nykänen is on the hunt for models like U.S.-based Iroquois Valley Farmland REIT (see, “Iroquois Valley Farmland’s direct public offering lets smaller investors get a share of ‘soil wealth’).
  • B Corps. “As an entrepreneur, I hate the idea of certification,” said World Startup Factory’s Mathijs Koper. The founder of a Hague-based impact accelerator found unexpected benefits in the painstaking B Corp. certification process for Outside Inc., an impact advisory firm. World Startup Factory, which has equity stakes in 40 ventures, this week became the first European B Corp-certified startup accelerator.
  • Capoeira impact. Four hundred-year-old dance and martial arts Capoeira, developed by enslaved Afro-Brazilians, is part of a business curriculum for Brazil’s sustainability professionals. “We study capoeira to learn about dialogue,” said Amanda Burlamaqui, a business student at Fundação Getulio Vargas. “We need impact investing,” she said. “But we also need these other [large, established] companies.”
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Agents of Impact: Follow the Talent

Former Australian Prime Minister Julia Gillard, Singtel’s Simon Israel, and Ayala Corp.’s Jaime A Zobel de Ayala join the global leadership council of LeapFrog Investments Tariq Khokhar steps down as managing director and chief data scientist at Rockefeller Foundation… Omidyar Network is looking for a head of people operations, and principals in beneficial tech in Redwood City… Credit Suisse is hiring an analyst in its impact advisory department in London… The Launch Lane PHL accelerator is recruiting startups led by underestimated founders in the Philadelphia region… Zebras Unite wants to understand the different “stripes” of businesses built for purpose and profit. Take the survey.

Thank you for reading. 

– Nov. 7, 2019