The Brief | January 17, 2023

The Brief: Community climate infrastructure, nature-based carbon, women-led tech in Latin America, Cake’s demographic trifecta, B of A’s stakeholder performance

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Greetings, Agents of Impact!

Featured: Muni Impact

Overheard at the Public Finance Conference: Investment opportunities in Emerging Market America. The computer glitch that snarled air traffic last week presented a fitting backdrop as government and finance leaders gathered at the Milken Institute’s Public Finance Forum to explore ways to shore up the U.S.’s infrastructure and competitive positioning. On the agenda: optimizing the deployment of more than $1 trillion in federal funding for broadband, decarbonized buildings and a skilled workforce as well as clean energy and electric vehicles. The challenge is ensuring the investments reach communities that have the most to gain from the torrent of federal funding but are often least equipped to access it. The forum included the debut of the Milken Institute’s Community Infrastructure Center, which connects community projects with public and private funding, technical assistance and other resources. The Inflation Reduction Act includes incentives for projects sited in lower income and underserved areas. “If we maximize this moment coming out of the pandemic,” said Cleveland Mayor Justin Bibb, mid-sized cities “could write the next chapter of America’s economic growth story.”

  • Emerging Market America. The Milken Institute advocates borrowing blended finance models from international development. Private equity firm Trident invests in small-cap consumer, industrials and health care companies outside of major commercial centers. “Why would you want to be playing in markets where everybody already is?” asks Trident’s Aron Betru. “You need to be coming into the middle of this country, Emerging Market America.” Trident’s American Dreams buyout fund helps portfolio companies hire locally, diversify supply chains, park capital with community banks and source talent from historically Black colleges and universities and other local schools. Foundation Creditprices its infrastructure debt on the long-term resiliency of projects ranging from workforce and affordable housing to wastewater systems, filling a funding gap for local governments. “Finding ways to partner with private capital is a huge difference maker,” said Foundation’s Hector Negroni.
  • Red states, blue cities. The implementation of federal funds requires cooperation between state governments and city and regional leaders. Yet “state and local relationships are highly fraught in certain parts of the country,” observed Brookings Institution’s Amy Liu, especially between “red states and blue cities.” Some Republican-led states have pre-empted or reversed local ballot measures around paid sick leave or other worker protections. The Inflation Reduction Act “puts a premium on the private sector to make the investments where people need work, where they have borne the brunt of industrial power solutions,” said John Podesta, newly appointed by President Biden to oversee implementation of the IRA. “You’re seeing the market react to that. The provisions are likely to change the landscape of where investment is made in this country.”
  • Keep reading, “Overheard at the Public Finance Conference: Investment opportunities in Emerging Market America,” by Amy Cortese on ImpactAlpha. Follow all of our Muni Impact coverage, made possible with support from the Robert Wood Johnson Foundation.

Dealflow: Nature-based Solutions

Anew Climate commits $640 million to Terra Global for nature-based carbon offsets in emerging markets. Oakland-based Anew is the product of TPG Rise’s rollup last year of Element Markets and Bluesource (for background, see “TPG Rise’s $7.3 billion climate plan takes shape”). Anew’s equity investment will anchor Terra Global’s Terra Bella Nature-Based Solutions Carbon Pool, a new fund that will finance nature-based projects in rural communities in exchange for verified carbon credits. Credits will be sold to investors, as well as companies looking to meet their own climate goals. Since 2006, Terra Global has partnered with The Nature ConservancyEnvironmental Defense FundGreen Climate Fund and other organizations on reforestation and agroforestry projects in over 33 countries. “Terra Global has been a pioneer in bringing private finance and markets to the forest and land-use carbon sector,” said Anew’s Randy Lack, while delivering “real, local community co-benefits.”

  • Forest carbon. Women-led Terra Global’s nature-based fund aims to produce climate-mitigation benefits on up to 20 million hectares of forest and other land and attract additional private capital. Anew’s investment represents “catalytic financial support to propel our growth and help deliver meaningful capital to nature-based solutions projects globally,” said Terra Global’s Leslie Durschinger.
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Amplifica Capital raises $11 million to invest in women tech founders in Latin America. The Mexico City-based venture capital fund will make early-stage investments in women founders “using technology to solve the main challenges of the region and who can positively impact the present and future generations,” said Amplifica’s Mariana Jimenez. The fund received commitments from nearly 100 investors, including fund of funds Mexico Ventures, Mexican food company Grupo Herdez and individual investors. Six out of every 10 investors in the fund are women.

  • Impact tech. “We want to be the first place female entrepreneurs think of when they go out to raise capital,” Jimenez said. Amplifica has invested in the pre-seed rounds of 10 agtech, fintech, mobility and healthcare companies led by women. Portfolio companies include Chektahora, an Agentinian personal finance app for women, Mexican affordable insurance startup Clupp and digital bus company Kolors. The fund plans to make 10-15 more investments over two years.
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Dealflow overflow. Other investment news crossing our desks:

  • Norwegian cleantech company Hystar raised $26 million in Series B equity funding to deliver larger green hydrogen projects in new markets.
  • Black woman-led Cake Ventures raised $17 million from investors including Melinda Gates’ Pivotal VenturesBank of America and Arlan Hamilton to invest in tech companies addressing increased longevity, the rise of women and the new “minority majority.”
  • Nairobi-based fintech venture Kwara scored $7 million in seed financing to digitalize credit unions in Kenya.
  • KarmSolar secured $3 million in debt funding from HSBC for a microgrid project it says will extend affordable and reliable solar energy to the inaccessible parts of Egypt.

Six Short Signals: What We’re Reading

📈 Stakeholder performance. Bank of America topped this year’s Just Capital rankings of America’s Most JUST Companies by raising its minimum wage to $22 an hour (and committing to $25 an hour by 2025), investing millions in career development and tuition assistance, offering 16 weeks of paid parental leave, completing a pay equity analysis, and disclosing workforce data by race and gender. (Just Capital)

🏙️ Reshaping city economies. Five new market dynamics – manufacturing, climate, innovation, place, and procurement – are reshaping city and metropolitan economies, writes Bruce Katz of the Nowak Metro Finance Lab. City leaders “must be present at the creation, taking advantage of opportunities as they arise, addressing challenges before they fester,” he says. The good news: “These leaders have access to a dizzying array of federal and (occasionally) state resources.” (The New Localism)

🚨 Risky business. “Cost of living” tops the World Economic Forum’s list of global risks over the next two years as global leaders gather at the forum’s annual meeting in Davos, Switzerland. “Failure to mitigate climate change” is the most severe risk over a 10-year period. Among new entrants to the short and long-term risk rankings: “Large-scale involuntary migration.” (World Economic Forum).

👷 Good green jobs. A shortage of skilled labor could derail efforts to “electrify everything.” Among the career pathways for aspiring electricians: community colleges, union apprenticeship programs and local nonprofits. (Grist)

🌳 Lab-grown wood. Researchers at MIT created customizable wood in their lab from the cells of a flowering plant known as Zinnia elegans, better known as the common zinnia. (Interesting Engineering)

🐶Charging pups. Dogs prefer electric cars to diesel vehicles, found researchers at University of Lincoln, with the smoother ride reducing their heart rate by up to 30%. (Daily Mail)

Agents of Impact: Follow the Talent

Mark Rogers will become New Forests’ CEO. David Brand is stepping down from the role after 17 years… Founders First Capital Partners seeks a remote underwriting associate… CapShift is looking for a director of product in Boston or Washington, D.C… The Fund for Public Interest has an opening for a canvass director in Denver… The Global Impact Investing Network is looking to fill several positions in New York, including climate solutions directorpeer learning associate director and research associate… The University of Utah is recruiting an impact measurement and evaluation director in Salt Lake City.

IDB Bank is hiring a private banking associate in New York… ECMC seeks a remote portfolio and impact acceleration senior associate… Citi is looking for a vice president for ESG stakeholder engagement in New York… ICA is recruiting a director of programs in Oakland… Galvanize Climate Solutions is looking for an acquisition analyst and an asset management associate in New York… The National Minority Supplier Development Council announced the first cohort of its Black Farmers Equity Initiative, a joint venture with Cargill.

Thank you for your impact.

– Jan. 17, 2023