Greetings, Agents of Impact!
Call No. 32: Black tech, green solutions. We’re partnering with Sherrell Dorsey and The Plug to showcase entrepreneurs and investors gaining an edge with scalable and community-based climate solutions. Join Taj Eldridge of Include Ventures, SaLisa Berrien of COI Energy, Kameale Terry of ChargerHelp, Donnel Baird of BlocPower and other Agents of Impact, Tuesday, Oct. 12 at 10am PT / 1pm ET / 6pm London. RSVP today.
Featured: ImpactAlpha Original
Elemental Excelerator’s climate-tech unicorns develop locally, deploy solutions globally. Dawn Lippert wanted to help Hawaii go green and wean it from dependence on fossil fuels. But the clean tech solutions she was seeing did not address the islands’ community needs. Lippert co-founded what has become Elemental Excelerator to fill the gap. In the decade since, the Honolulu and Bay Area-based nonprofit accelerator has quietly invested nearly $50 million in 136 climate tech companies in mobility, water, food and agriculture, and energy, including BlocPower, ChargerHelp, Solstice and Dollaride. That makes Elemental’s one of the largest climate-tech portfolios around, by volume. Even more distinctive: a laser focus on community relevance, deployment and scalability. “It makes us more responsive to community needs, but also better investors,” Lippert told ImpactAlpha. Elemental has raised close to $100 million from corporate partners, the U.S. Navy, the Department of Energy, state governments and philanthropic organizations, including Emerson Collective, which Elemental joined in 2017.
Hawaii provides an excellent testbed. Elemental helped Stem work with the state to reinforce its shaky electricity grid with distributed batteries. The company learned to overcome regulatory hurdles; with Southern California Edison, Stem has scaled its solution 100-fold. Elemental companies have gone on to raise more than $4 billion. In just the past year, concentrated solar firm Heliogen, electric bus companies Proterra and Xos Trucks, along with Stem, have all gone public through mergers with special purpose acquisition companies, or SPACs. Elemental’s latest cohort includes San Francisco-based WeaveGrid, which helps utilities manage electric vehicle charging; New York-based bus rideshare company Rally; e-waste recycling startup WEE Centre in Nairobi; and Lagos-based SHYFT, which helps energy companies manage distributed power systems. Addressing social inequities and climate change are intertwined, Lippert says. “As we’re flipping to a decarbonized infrastructure, they have to be addressed together.”
- Community finance. Philanthropist Laurene Powell Jobs, through her Waverly Street Foundation, will invest $3.5 billion over the next decade in housing, transportation, food security and health for underserved communities most impacted by climate change.
- Keep reading, “Elemental Excelerator’s climate-tech unicorns develop locally, deploy solutions globally,” by Dennis Price on ImpactAlpha.
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At Scale Podcast: The humanitarian cost of plastic waste. The best solutions to the plastic waste problem help the communities most affected by it. Listen now.
Dealflow: Follow the Money
SoftBank funding helps make Konfio and Andela emerging market impact unicorns. Mexico-based fintech Konfio and New York-based Andela both got their start seven to eight years ago with a message of economic inclusion for underserved people and businesses. Impact investors bought in. The two companies have both reached billion-dollar valuations with Series E rounds backed by SoftBank’s Vision Fund and other commercial and impact investors.
- Small business lending. Konfio started in 2013 to fill a small business financing gap with alternative credit scoring and quick loan approvals. “We see technology as a great enabler to level a playing field that for a long time has been uneven,” said founder David Arana. The company expanded small business lending during the pandemic while many banks scaled back (for background, see “How to invest in an inclusive business recovery in Latin America”). Softbank participated in Konfio’s $235 million Series E round, which was led by LGT’s impact-focused Lightrock, Tarsadia Capital and QED Investors, valuing the company at $1.3 billion. Early Konfio backers include Accion Venture Lab and Quona Capital.
- Upskilling workers. Andela launched in 2014 in Lagos with the promise of making Africa the next tech-skills hub for global companies. After its 2019 fundraise, the company fired its junior engineers and abruptly pivoted away from training entry and junior-level tech workers. Andela now calls itself “a marketplace for remote technical talent,” connecting skilled tech workers to jobs worldwide. With remote hiring during the pandemic, the company says it’s “growing faster than we ever have before.” Softbank led Andela’s $200 million Series E round, with participation from Whale Rock and existing investors Generation Investment Management, Chan Zuckerberg Initiative and Spark Capital. Andela’s roster of early impact investors includes Omidyar Network, Social Impact Capital, DBL Partners and TLcom.
- Dive in.
Innovative mechanisms aim to crack the tough nuts of climate finance. At this point, solar power, electric vehicles and optimization software are low-hanging fruit. More difficult: funding sustainable infrastructure and climate adaptation and resilience in emerging markets. A half-dozen new financing mechanisms selected for the Global Innovation Lab for Climate Finance use off-take agreements, artificial intelligence, blended capital and other mechanisms to de-risk opportunities and attract private capital to sustainable projects in Africa and Brazil. “There are plenty of investor-ready solutions to address the climate crisis,” said Barbara Buchner of the Climate Policy Initiative, which runs the lab. “We need investors to embrace these ambitious climate impact opportunities and bring them to market.” At least some institutional investors appear to be ready. Climate solutions are “going to be an alpha generator for the next 30 or 40 years,” Christopher Ailman of the $318 billion California State Teachers’ Retirement System, or CalSTRS, said at a CNBC conference.
- Fresh ideas. The Amazonia Sustainable Supply Chains Mechanism, developed by Brazilian cosmetics giant Natura and Mauá Capital, leverages receivables payments, off-take agreements and community support to boost producers of rainforest-compatible products. In Africa, One Acre Fund is financing small and mid-sized supermarkets, exporters, processors and input providers to strengthen the value chain for smallholder farmers. Other lab cohort members include The ACT Fund, which is using a blended-currency fund to facilitate large-scale sustainable infrastructure investment in West Africa; the Guarantee Fund for Biogas, which provides short-term collateral to unlock loans to small biogas project developers; Data-Driven Energy Access for Africa, which employs artificial intelligence to assess customer repayment risk; and the Peace Renewable Energy Credit Aggregation Fund, which creates new revenue streams for renewable energy projects in fragile states.
- It’s the climate, mate. Sydney-based early-stage investor Investible is launching a $100 million climate tech fund for seed funding of Australian and other companies developing climate solutions in energy, transport, industry, buildings and cities, food and agriculture, and forests and land use. Investible also is launching Greenhouse, a climate tech startup hub, with the city of Sydney.
- Climate overflow. Chicago-based Energize Ventures raised $330 million for its second energy transition fund to invest in digital tech companies in renewable energy, mobility, cybersecurity, battery storage, critical infrastructure and climate resiliency… Clean Energy Systems secured $15 million in a Series A round led by Carbon Direct Capital to develop a carbon-negative waste-to-power plant in California… Generation Investment Management is buying a $600 million stake in U.K.-based renewable energy supplier Octopus Energy Group.
Syndio scores $50 million to help companies address gender and racial pay disparities. Building a more inclusive workforce requires more equitable practices in the workplace. Seattle-based Syndio’s software analytics platform is used by more than 200 companies, including Nerdwallet, Nordstrom, Salesforce and General Mills, to monitor and close racial and gender pay gaps. The Series C round was led by Emerson Collective and Bessemer Venture Partners, with Voyager Capital.
- Good jobs. Before the murder of George Floyd, only half of Syndio’s partner companies analyzed race. Today, almost all of them analyze both gender and race. The company says its software helps companies reduce legal risks and recruit and retain talent, as well as boost morale and productivity.
- Raise the bar.
Dealflow overflow. Other investment news crossing our desks:
- Women-led fintech Oraan raises $3 million to encourage financial inclusion for women in Pakistan through digital savings circles.
- Ummeed Housing Finance secures $37 million to provide affordable housing loans for low-income families in India.
- SuperZop scores $4 million in Series A funding from Incofin’s India-focused fund to scale its agtech commerce business.
Impact Voices: Beyond ESG
Four steps investors can take to move beyond ESG greenwashing. Staff at the consulting firm Dalberg recently debated the motion: “We should support clients to adopt ESG strategies as an effective means to solve global development challenges.” The against team won. “While we fundamentally agree ESG is important and a step forward, we also feel that it is not enough,” says Dalberg’s Kusi Hornberger. In a guest post on ImpactAlpha, Hornberger and colleagues Kristina Kelhofer and Christelle Umubyeyi lay out four steps investors can take to move beyond ESG greenwashing and drive real impact. Among them:
- Link impact with financial performance. Hybrid indicators like earnings per unit of carbon intensity for energy and earnings per agricultural yield can make explicit the material connection between impact and financial performance. Hybrid metrics, the consultants write, “allow for easier analysis of performance that rewards companies that perform best in both social and financial dimensions.”
- Keep reading, “Four steps investors can take to move beyond ESG greenwashing and drive real impact,” by Dalberg’s Kusi Hornberger, Kristina Kelhofer and Christelle Umubyeyi.
Agents of Impact: Follow the Talent
BlackRock is hiring a senior investment researcher for its sustainable investing group in New York… Co-Impact is looking for a program manager in São Paulo or Rio de Janeiro… Mercy Corps Ventures seeks an investment principal of fintech and crypto in Washington, D.C… MSCI is hosting a webinar to “shine a light on climate leaders and laggards,” Tuesday, Oct. 26.
Thank you for your impact.
– Sept. 30, 2021