The Brief | August 25, 2021

The Brief: Climate-science talent grab, agtech in India, digitizing Nigeria’s informal businesses, infrastructure upgrades, democratizing farmland investing

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Greetings, Agents of Impact! 

Featured: Science-Based Investing

Is your fund serious about climate? Show me your scientists. Money is pouring into climate tech funds. Separating the serious players from fund managers only toying around the edges of climate solutions: scientific bona fides. Climate scientists are helping climate-focused fund managers at Breakthrough Energy Ventures, Generation Investment Management, Fifty Years and Lowercarbon Capital, among others. BlackRock hired a climate scientist in May. The European Central Bank is recruiting an environmental scientist for its sustainable finance team. David Victor, a professor at UC San Diego, said he and his colleagues “are getting all kinds of calls from people.” Climate-focused funds “are coming to the realization that this is a mega-scale problem that requires deep understanding of the science behind it,” says Stephan Nicoleau of FullCycle Capital Partners, which says it draws on a network of hundreds of scientists, technologists and engineers.

Scientific expertise can help venture funds swim in the deep end of the tech pool. Most investors “are clustering around lower-impact, consumer-facing technologies like basic reuse and recycling because they don’t yet have the skillset for deeper tech,” Lowercarbon’s Chris Sacca told Axios. For climate scientists frustrated at the slow pace of public policy change, finance can offer a faster track to real-world change. “The world of finance is going to learn a lot about climate and it’s going to do a better job, as opposed to the world of climate suddenly becoming high-end financiers,” says Victor. Adds senior scientist William Riley at the Lawrence Berkeley National Laboratory, “Having more understanding of climate risks in long-term investments might do more to force the government to deal with climate change than having a bunch of scientists honing points we’ve already made over and over for the past four decades.”

Keep reading, “Is your fund serious about climate? Show me your scientists,” by Amy Cortese on ImpactAlpha.

Dealflow: Agrifood Tech

AgNext scores $21 million for sensors for Indian farmers. AgNext supports a network of sensors that monitors crop conditions to boost productivity and reduce losses (for context see, “Digitization of smallholder farming draws investors to Indian agtech startups”). The five-year-old company supports grain, spice, tea, dairy and feed producers across India. Quality-related losses lower profit margins for farmers and raise prices for consumers, the company says.

  • Agri-exit. The Series A round was led by Alpha Wave Incubation, with existing investors Omnivore, an agri-focused impact fund, and Kalaari Capital. The financing gave seed-stage investor, the Association for Innovation and Development of Entrepreneurship in Agriculture, or a-IDEA, a 5X exit.
  • Dig in

Nigeria’s Alerzo raises $10.5 million to digitize informal businesses. The digitization trend that’s taken off in the pandemic has focused on helping put small businesses online. Alerzo is among a subset of enterprise tech startups supporting even smaller businesses: the informal and women-led micro-business sector. Based in Ibadan, Nigeria’s third-largest city, Alerzo aims to “empower the millions of women who are the backbone of consumer commerce in Nigeria’s $100 billion informal retail sector.” Alerzo’s Series A round was backed by Nosara Capital in London, FJ Labs and several family offices.

  • Operational upgrade. Alerzo’s platform helps retailers streamline inventory sourcing, adopt cashless payments, and introduce new services to customers, like selling mobile airtime and handling money transfers and bill payments. TradeDepot, also in Nigeria, and MarketForce in Kenya offer similar services for informal and mom-and-pop retailers.
  • Read on

Urbint secures $60 million to prevent critical infrastructure failures. Investing in the improvement and climate-resilience of America’s aging infrastructure is a hot opportunity for the private sector, particularly in light of the government’s $1 trillion infrastructure bill (for background, see “Business leaders rally to U.S. infrastructure bill to mobilize capital for climate solutions”). New York-based Urbint makes software that helps utilities and operators identify where those investments are needed, by forecasting damages and failures due to age and climate incidents. Customers include utility companies National Grid and Southern Company.

  • Climate investors. The company claims its software last year prevented emissions of methane, a potent greenhouse gas, equivalent to 60,000 metric tons of CO2. Urbint’s Series C round was led by Energize Ventures with participation from American Electric Power, OGCI Climate Investments, Energy Impact Partners, National Grid Partners, Blue Bear Capital and Salesforce Ventures.
  • Plug in.

Dealflow overflow. Other investment news crossing our desks:

  • Massachusetts-based CapShift clinches $5 million to help philanthropic and financial institutions direct donor-advised funds toward impact investing opportunities.
  • Sustainable agri-feed venture Beta Hatch in St. Louis scores $10 million, with backing from Lewis & Clark AgriFood, to expand insect farming.
  • Bangalore-based Ultrahuman scores $17.5 million for a wearable monitor to help diabetes patients manage the disease.
  • RACEnergy in Hyderabad secures $1.3 million to develop electric vehicle battery swapping stations for smaller cities.

Impact Voices: Climate-Smart Agriculture

Investing in climate-smart farms to accelerate the net-zero transition. Funding is on a tear for synthetic fertilizers, plant-based foods and other solutions for reducing greenhouse gas emissions from agriculture. Next up: investments in farms themselves to help farmers get climate-smart. New investment platforms are democratizing access to the $3 trillion farmland market, long restricted to institutional investors and the ultra-rich. “Farmland investors are uniquely positioned to offer immediate support to farmers by providing creative capital to fund the transition to climate-smart agriculture,” Artem Milinchuk of FarmTogether writes in a guest post on ImpactAlpha.

  • Sustainable harvest. FarmTogether helps accredited investors make direct investments in U.S. farmland that is certified for sustainable harvesting practices. Each 1% of commodity cropland in the U.S. that adopts cover-cropping, minimal tillage, crop rotations and other regenerative practices, delivers $226 million annually in social and economic benefits, according to The Nature Conservancy. It could cost up to $115 billion to implement these practices globally. “When farms are more efficient, farmers can reduce their costs and increase their profits, meaning better returns for themselves and investors,” Milinchuk writes. Read his full post.
  • Retail crowdfunding. Retail investors are filling the gap in short-term loans for sustainably-run farms, ranches, fisheries and producers. Steward, a farm-funding platform launched by Dan Miller in 2017, raised $1.3 million from more than 200 lenders for a new bridge loan offering that has made loans to farms such as sun-grown CBD producer East Fork Cultivars and Studio Hill Farm in Shaftsbury, Vt. Miller, one of the brothers behind the real estate crowdfunding platform Fundrise, debuted Steward Regenerative Capital a week ago to provide short-term bridge loans to farmers, alongside longer-term crowdfunded loans. Go deeper.

Agents of Impact: Follow the Talent

Camelback Ventures seeks a chief operating officer and a senior lead of conscious tech… Paul Ramsay Foundation is recruiting an impact investing lead in Sydney… Candide Group is hiring a portfolio analytics manager in Oakland… Also in Oakland, PolicyLink is hiring a manager for the office of the founder-in-residence… Mission Driven Finance is looking for a data systems coordinator.

BlueMark seeks a senior associate of impact investing research in New York… North Sky Capital is recruiting a secondaries investment professional of private equity in Minneapolis… UN Women is looking for an innovative finance, ESG and second-party opinion consultant in New York… Also in New York, the U.N. Development Programme is hiring a program manager of capital markets for development.

Thank you for your impact.

– Aug. 25, 2021