Greetings, Agents of Impact!
Featured: Returns on Inclusion
Emerging impact fund managers tap ‘community rounds’ to overcome fundraising barriers. A new, more democratic approach to fundraising is putting wind in the sails of new impact fund managers. “Community-led investing rounds have the potential to enable true ‘impact alpha,’ with new solutions to old problems,” writes Havell Rodrigues of New Majority Capital, which is fundraising on the crowdfunding site Wefunder. Community rounds, an updated term for “equity crowdfunding,” help turn customers into investors. New, emerging and diverse fund managers are using the method to overcome barriers like lack of an investment track record or operating capital to get off the ground. “Community-driven investing offers a way to elevate the best ideas,” writes Rodrigues, and lets new fund managers “tap into their network and community of stakeholders to creatively contribute to the solutions.”
- Backstage Capital. Last year, Arlan Hamilton’s Backstage Capital raised the maximum $5 million on Republic as retail investors jumped to help her invest in “under-estimated” entrepreneurs. Hamilton, herself a Black, gay woman, has since struggled to raise funds, and laid off most of her staff in June. “It’s been a depressing, deflating time,” she said in a June podcast. Last week, Backstage scored a much-needed commitment from Bank of America. Backstage’s Opportunity Fund has raised more than $6 million, including a recent $1 million check from Comcast, toward a targeted $30 million. “I think we’re in a purgatory kind of position, because some people think that we have everything we need,” Hamilton said. More on the BofA deal.
- Innovative finance. Investment management firms like Earnest Capital (now Calm Capital) and Chisos have raised community rounds to provide flexible capital for startups and entrepreneurs that may not be a good fit for traditional venture capital. Rodrigues’ New Majority Capital, which supports women and small business owners of color, has allowed donor-advised fund investors on the ImpactAssets platform to bring catalytic capital to community rounds. RSF Social Finance is leading New Majority’s own fundraising round.
- Keep reading, “Emerging impact fund managers tap ‘community rounds’ to overcome fundraising barriers,” by New Majority Capital’s Havell Rodrigues on ImpactAlpha.
Dealflow: Inclusive Fintech
Nigeria’s TeamApt scores backing from QED for digital banking in rural Africa. The Lagos-based fintech venture is tackling financial access by enabling anyone with a mobile phone and point-of-sales machine to become a local bank branch. TeamApt has created more than 160,000 jobs and provided working capital, business expansion loans and business management tools to more than 400,000 micro and small businesses in Nigeria. U.S.-based fintech investor QED Ventures backed TeamApt, its first investment in Africa, from a new $1 billion fund. The size of the investment was not disclosed.
- Ecosystem growth. Also on TeamApt’s investor roster: impact investor Novastar Ventures, which led the company’s Series B round last year, U.K. development bank British International Investment, and Nigeria-based early-stage VC fund Oui Capital. Oui was among TeamApt’s earliest investors (see, “Olu Oyinsan, Oui Capital: Investing in Africa’s mass market”). TeamApt founder Tosin Eniolorunda is now an investor in Oui Capital’s second fund, which recently notched an $11 million first close. Oui’s Olu Oyinsan told ImpactAlpha that TeamApt and Eniolorunda are an example of “how wealth that’s been created stays in the ecosystem and creates more of these successful companies that touch more people.”
- Check it out.
Deere & Co. takes minority stake in Nigerian tractor leasing service Hello Tractor. Nigeria’s Hello Tractor once manufactured its own smart tractors for Africa’s smallholder farmers. It quickly pivoted to an Uber-like farm equipment leasing service. The company provides pay-as-you-go financing to farmers and small agri-business owners wanting to buy a tractor; tractor owners can contract out their services on Hello Tractor’s app. U.S. tractor maker Deere & Co. has taken a minority stake in the startup as part of its strategy to boost sales in Africa.
- Expanded partnerships. Hello Tractor was a participant in Deere & Co.’s 2019 Startup Collaborator program. Deere & Co. partnered with the startup in 2020 and outfitted its John Deere tractors with smart devices compatible with Hello Tractor’s app. Last year, Hello Tractor launched pay-as-you-go financing in partnership with Heifer International to boost tractor ownership and participation on its platform, particularly among women and youth. Heifer reupped earlier this year with a $1 million investment to expand Hello Tractor’s financing program.
- Dig in.
Dealflow overflow. Other investment news crossing our desks:
- Latinx-focused early-stage venture fund L’Attitute Ventures secured $100 million from a roster of big-name banks and financial institutions, including JPMorgan Chase, Bank of America, MassMutual and Barclays.
- Berkeley, Calif.-based Vespene Energy raised $4.3 million to convert landfill methane gas emissions into electricity for Bitcoin mining.
- Lowercarbon Capital and Toyota Ventures backed an $11 million Series A round for Bangalore-based electric scooter manufacturer River.
- Cambridge, Mass.-based Nanopath raised $10 million for its rapid diagnostics testing designed for women’s healthcare providers.
Signals: Policy Corner
From permitting to pipelines, mobilization for climate justice targets ‘poison pills’ in the Inflation Reduction Act. As part of his deal to support the sweeping climate legislation just passed by the U.S. Congress, Senator Joe Manchin secured an agreement to get a vote on separate legislation to speed permitting of energy projects, including oil and gas infrastructure. “Permitting reform” is considered essential to one of Manchin’s pet projects: the 300-mile Mountain Valley Pipeline, which is intended to carry fracked natural gas from West Virginia to Virginia. Such support for fossil fuels means environmental and climate-justice advocates will follow up celebrations of the bill’s signing this week with campaigns to forestall or undo provisions that harm local communities or broader climate goals. “While we understand high stakes deal-making, we reject compromises that continue to put fossil fuel development at the center of our nation’s economy,” wrote nearly three dozen members of the Green Leadership Trust to President Joe Biden. The network’s members are Black, Indigenous, Latinx and other people of color serving on the boards of environmental and climate finance organizations.
- National Environmental Policy Act. Manchin may not have the votes to enact his preferred changes. “Progressive members have no reason to hold themselves to Manchin’s deal, and are free to assess whether permitting reform makes sense on the merits. It does not,” David Dayen wrote in The American Prospect. The bill also changes part of the Clean Water Act to make it harder to stop pipeline projects. The Sierra Club said it would fight the changes. “And we will always work to stop polluting projects, including the Mountain Valley Pipeline. That will never change,” the organization said in a statement.
- Oil and gas leasing. The act requires the federal government to open parts of the Gulf of Mexico and Alaska’s Cook Inlet for oil and gas development. It also requires the government to auction millions of acres of oil and gas leases before it auctions sites for wind and solar projects. Climate activists hope both politics and economics will make it untenable for oil and gas companies to pursue such leases.
- Carbon capture. Technologies that pull greenhouse gasses from industrial waste streams will be able to count on prices of $85 per ton of captured carbon. Carbon from direct-air capture projects will fetch $180 a ton. There is growing agreement that carbon removal will be needed to reach global climate goals (for context, see, “How climate investors are getting ready for the carbon removal boom”). The Green Leadership Trust called on Biden to ensure that carbon-capture “neither extends the life of plants that should be mothballed ASAP, nor extends the toxic pollution risks that fence-line communities already face.”
- Line of sight. “There is reason to be upset at the prospect of perhaps increased oil and gas leases on federal land. That’s not good,” FullCycle’s Stephan Nicoleau said on ImpactAlpha’s Impact Briefing podcast. “But we have to think of this as the laying of a foundation, a really strong one, that gives us some line of sight into the ways that private enterprise, citizens and investors of all stripes can now participate in the kind of low-carbon transition that is secure.”
- Keep reading, “From permitting to pipelines, mobilization for climate justice targets ‘poison pills’ in the Inflation Reduction Act,” by David Bank in ImpactAlpha.
Agents of Impact: Follow the Talent
Eric Van Nostrand, former managing director and head of research for sustainable investments at BlackRock, will join the U.S. Treasury Department as a senior adviser on economic issues tied to Russia and Ukraine… Mark Carney, vice chairman at Brookfield and U.N. special climate envoy, will be promoted to chair the firm’s asset management arm when it lists on the Toronto and New York exchanges in November.
Arabella Advisors appoints Rick Cruz, who has been leading day-to-day operations and strategy at the firm, as president and CEO… Kavita Vijayan, ex- of Reinvestment Fund, joins ImpactAssets as director of strategic marketing communications… Agent of Impact Lucas Turner-Owens, ex- of Boston Ujima Project, joins TMV as a principal… Simon Stiell, former environment minister of Grenada, will head the United Nations Framework Convention on Climate Change.
The Families & Workers Fund seeks a program associate and a communications and philanthropy associate… Capricorn Investment Group is hiring an investor relations analyst in New York… Majority Action is looking for a remote director of communications… Reactive is recruiting a remote community solar product manager… UNDP seeks a sustainable finance advisor in New York.
Amazon’s AWS Impact Accelerator is accepting applications through Friday, Aug. 26, for a cohort of underrepresented women founders… South African fintech venture Igugu Global launches the Green Finance Marketplace to benchmark climate risk and climate-related investment opportunities in Africa.
Thank you for your impact!
– Aug. 15, 2022