The Brief | May 6, 2021

The Brief: Community collaboration in Minnesota, EnCap goes green, racial justice collaborative, Solve’s innovation future, mangroves carbon

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Greetings, Agents of Impact! 

Featured: ImpactAlpha Original

Helping communities acquire assets and rebuild small businesses in Minnesota. The conviction of former officer Derek Chauvin for the murder of George Floyd sent a signal to residents of Minneapolis that their voices were heard and that Black lives matter. Two new real estate and small business funds aim to do the same – by strengthening the role of community development financial institutions. CDFIs are a key channel for deploying capital to Black and Brown-owned businesses, as well as to affordable housing and other social infrastructure in low-income neighborhoods. “Capital in the system is outstripping the capacity to spend it in strategic, quick and effective ways,” say Bruce Katz and Colin Higgins of Nowak Metro Finance Lab, who have advocated for such local funds. “Local leaders must focus on building strong and capable intermediaries with community standing that can have positive impact in the near-term and persist after the immediate recovery period to drive equitable growth for years to come.”

The funds grew out of the Minnesota Council on Foundations’ Integrated Capital Initiative, a COVID-era mobilization of foundation program-related investments and grants to support the state’s CDFIs. The Community Asset Transition Fund, managed by LISC Twin Cities, has raised $30 million to acquire properties in the area’s cultural corridors and transfer them to neighborhood trusts or community cooperatives. Separately, the Minnesota Inclusive Growth Fund, managed by Minneapolis-based Community Reinvestment Fund, has commitments for $10 million to deploy to a half-dozen organizations serving Black and Brown-owned businesses. The McKnight Foundation provided low-interest loans of $5 million to each fund. “CDFIs are really an important tool and instrument to garner capital and provide access to markets that are not working,” says McKnight’s Eric Muschler.

Keep reading, “Helping communities acquire assets and rebuild small businesses in Minnesota,” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

EnCap Investments raises $1.2 billion energy transition fund. The Houston-based oil and gas private equity firm has raised 22 institutional investment funds totaling roughly $38 billion over three decades. Its first fund dedicated to clean energy production brought in $1.2 billion for wind, solar and energy storage enterprises. The fund has backed five companies in the battery storage, distributed power, and utility-scale solar and wind sectors, including Broad Reach Power, Catalyze, Jupiter Power, Solar Proponent and Triple Oak Power. “Their early progress is exceeding our expectations,” said EnCap’s Jim Hughes.

  • Institutional shift. The fund attracted pension and sovereign wealth funds, family offices, endowments, foundations and high-net-worth individuals. “There’s definitely a movement among institutional investors into ESG of all kinds, including in the energy space,” EnCap Investments’ Jason DeLorenzo told Reuters.
  • Alternatives. Separately, Minneapolis-based CarVal Investors raised a $490 million clean energy fund to deploy into solar farms and battery storage in North America.
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RSF Social Finance deploys capital from the Racial Justice Collaborative. The vehicle aims to provide debt, equity and grant funding, as well as technical support, to U.S.-based social organizations led and owned by Black, Indigenous and other people of color. The collaborative is supporting Oakland’s East Bay Permanent Real Estate Cooperative to break ground on a mixed-use complex that includes a community cultural arts center for Black artists, housing and retail for Black businesses (see, “Reviving a Black cultural corridor in West Oakland – as a community-led cooperative”). RSF has raised $350,000 from the Schmidt Family Foundation toward its goal of $5 million.

  • Catalytic capital. The collaborative also is supporting the nonprofit Downtown Crenshaw Rising, which is leading a community project to redevelop a Los Angeles mall; Higher Purpose Co. in Clarksdale, Miss., which is building a hub for Black entrepreneurs, farmers and artists in the Mississippi Delta; and the CA BIPOC Farmer & Land Steward Relief Fund Collaborative, to create a foundation for resilient local economies and food systems.
  • Agents of Impact. Advisors to the Racial Justice Collaborative include Kataly Foundation’s Nwamaka Ago, Chordata Capital’s Kate Poole and Tiffany Brown, and Rodney Foxworth of Common Future (listen in to The Reconstruction podcast, “Rodney Foxworth on reparative investing for shared power in a common future”).
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MIT’s Solve Innovation Future fund makes four early-stage investments. The investment arm of MIT Solve has committed $1 million to eight companies that were finalists in the open-innovation challenges. New investments include Israel-based agrifood venture eggXYt, U.K.-based personalized learning platform CENTURY Tech, Chile-based circular economy startup Algramo, and Mexico-based Someone Somewhere, which helps artisans access bigger markets for their creations.

Dealflow overflow. Other investment news crossing our desks:

  • U.S. Bank’s Access Fund is committing $25 million in grants and investments to the African American Alliance of Black CDFI CEOs, Grameen America and Local Initiatives Support Corp. to support 30,000 women of color-owned micro-businesses.
  • Raleigh, N.C.-based startup Ndustrial raised $6 million in a round led by ENGIE and Clean Energy Ventures to improve energy efficiency in buildings.
  • The Dutch Good Growth Fund and Jordan’s Innovative Startups and SMEs Fund invest $3 million in women-led Amam Ventures to invest in small businesses in the Middle East (see, “Mapping the climate edge for gender investors – and vice versa“).
  • Accion Venture Lab leads woman-led Lami Technologies’ $1.8 million seed round to boost low-income Kenyans’ access to insurance products.

Signals: Ahead of the Curve

Conservation of mangrove forests could get a boost from carbon credits. Farmers in Iowa and Illinois are getting $20 per ton for sequestering soil carbon. Tropical forests can collect $10 per ton for storing forest carbon. Communities on the northern coast of Colombia this week will test the market for mangrove carbon under a new standard for verifying carbon stored both above and below the water. “Verified carbon units” for an 11,000-hectare mangrove forest in Cispatá are coming to market, via Verra, after a two-year effort by Conservation International and local partners, funded by Apple, that included scientists wading into knee-deep mud to collect samples for analysis. Mangroves store up to 10 times the carbon of terrestrial forests and provide local communities with food, livelihoods and protection from storms. “Mangrove ecosystems are the Protective Mother for communities,” Doña Ignacia, a community leader, said in a statement.

  • Blue carbon. Previous credits accounted only for carbon stored above water in roots, trunks and foliage; the new credit accounts for carbon stored in wetlands soil as well, which can more than double the carbon credited and thus the revenues. “The full value of nature-based solutions is not being calculated into the price, and nature is having to compete with other sources of carbon credits that have much fewer co-benefits,” Conservation International’s Jennifer Howard told ImpactAlpha.
  • Verification flap. Unearthed, an arm of the environmental group Greenpeace, working with The Guardian, has challenged Verra’s method for accounting for carbon credits generated by Amazon conservation efforts. Climate activists have been divided over the emergence of “offset” markets, which can allow companies to delay their own decarbonization efforts. Conservation International says it supports rigorous accounting but was “disappointed” by the reports. Humanity must “protect nature on a massive scale — and we’re on a short deadline,” the organization said in a statement. “One of the most critical tools for protecting nature is forest-carbon investments.”
  • Keep reading.

Agents of Impact: Follow the Talent

Marcin Lewczuk, ex- of Mobius Capital Partners, joins GIB Asset Management as emerging market equity portfolio manager… Andreas Nilsson and Nina Freudenberg, co-founders of Sonanz Capital, join Golding Capital Partners as head of impact and director respectively… Accion appoints Nazanine Scheuer, ex- of Save the Children’s Social Enterprise and Impact Ventures, as chief development and partnerships officer… Tulaine Montgomery becomes co-CEO of New Profit alongside founder and current CEO Vanessa Kirsch… Former Philadelphia Mayor Michael Nutter joins Ride To Work as an advisory board member.

Bill Williams, ex- of Proterra, joins Endera as executive vice president of business development… JOG Capital, which manages more than $1.3 billion in energy investments, rebrands as Carbon Infrastructure PartnersBackstage Capital is partnering with FarmTogether to increase investor access to farmland investments (see, “Arlan Hamilton opens Backstage Capital to retail investors”)Kapor Capital seeks a portfolio services director in Oakland… RPCK Rastegar Panchal is hiring a senior attorney… Common Future is recruiting an executive assistant and board liaison.

Thank you for your impact.

– May 6, 2021