May 1, 2023 | The Brief

The Brief: Creative economy investment pipeline, coffee and climate, waste-to-fuel in California, employee ownership ecosystem, decarb bros take on the doomers

The team at

ImpactAlpha

Greetings, Agents of Impact!

👋 Connect with us. Say hello to ImpactAlpha’s Amy Cortese this week at the Milken Global Conference in Los Angeles and Roodgally Senatus at ImpactPHL in Philadelphia.

Featured: Overheard at Upstart Co-Lab

Cultural institutions are learning how to invest for an inclusive creative economy. An art museum investing in a portfolio designed to prove out the viability – and impact – of investments in the creative economy: the Toledo Museum of Art’s $1 million allocation to Upstart Co-Lab’s Inclusive Creative Economy Strategy is just the kind of full-circle commitment Upstart’s Laura Callanan has been looking for. A handful of museums have made modest commitments to socially responsible and impact investments, but cultural institutions have lagged behind even foundations and university endowments in aligning their financial assets with their philanthropic missions. Collectively, cultural institutions are sitting on endowments of at least $64 billion. “Over the past few years we’ve really validated the range, the number, the variety of opportunities that impact investors can find in the creative economy,” Callanan told ImpactAlpha at Upstart’s gathering last week at the Rockefeller Foundation in New York. “We’ve also been validating the type of impact that can be achieved, with a real emphasis on people.” 

The Toledo museum is the first museum to allocate capital to Upstart’s investment strategy, which has raised $12 million to date, including from Souls Grown Deep Foundation, the Andy Warhol Foundation for the Visual Arts, and the Marguerite Casey, Rockefeller, Ford and Skoll foundations (for background, see, “Upstart Co-Lab’s pipeline of creative economy deals is now an investable impact strategy“). “This opportunity allows us to generate returns in a way that aligns with our values,” said Toledo’s Adam Levine. “By supporting entrepreneurs whose artful products will find their way into people’s lives, it aligns with the museum’s mission to integrate art into the lives of people.”

  • Creative pipeline. Cellist Yo-Yo Ma performed at the daylong gathering of artists, entrepreneurs and fund managers (see, “Yo-Yo Ma: Culture connects us”). Together, the more than 300 creative funds and businesses in Upstart’s pipeline are seeking to raise $2 billion over the next two years. The funds include Los Angeles-based Supply Change Capital, which invests at the intersection of food, culture and technology. “We believe that culture and climate are the two defining forces of our time,” Supply Change’s Noramay Cadena said at the event. Resources for Every Creator last year secured $2 million from Sean “Diddy” Combs to bring its studio space for independent creators to Miami. Paskho, a Black-owned eco-friendly apparel company, secured a $600,000 convertible note from Souls Grown Deep in 2021 to open a makerspace in Boykin, Ala., as part of its strategy to move its manufacturing to underserved communities. Paskho is looking to raise capital for three more spaces this year.
  • Keep reading, “Overheard at Upstart Co-Lab: Cultural institutions are learning how to invest for an inclusive creative economy,” by Roodgally Senatus on ImpactAlpha.

Dealflow: Impact-Linked Finance

Beneficial Returns backs Elisur Organic to help Peru’s coffee farmers diversify their crops. The world’s coffee supply—and the farmers that grow it—is threatened by climate change. Some coffee specialists are trying to popularize widely shamed robusta coffee and other climate-resilient species. Startups like Atomo and Minus are recreating coffee in the lab. Elisur Organic is focused on the farmers. The women-led business is working to help Peru’s coffee farmers weather volatile growing seasons and prices by branching into other high-value crops, like tumeric and ginger. The company works with more than 80 farming families that produce 6,000 tons of produce each year. Elisur cleans and processes the crops and exports them to the US and Canada. A loan from impact lender Beneficial Returns will upgrade the company’s processing equipment to capture additional value by drying and grinding low-grade crops into spices. “This new line of business means more job creation in the factory, higher payments to the farmers, and bigger profit margins for Elisur,” the lender said.

  • Linked to impact. Farmers are “an audience that has been ignored for too long by the agro-export industry,” said Elisur’s Kristel Camargo. Elisur offers online training for its farmers, who earn three times Peru’s minimum wage, the company says. Beneficial Returns forgoes its final loan payment if its social enterprise borrowers hit or surpass impact targets (revisit, “Beneficial Returns launches with loan to Interrupcion Fair Trade”).
  • Local investors. Beneficial Returns has provided nearly $5 million in equipment financing loans to 19 social enterprises in Latin America and Asia. The lender recently scored backing from its first Latin America-based investor, Oficina Mazapil—the family office of the founders of Grupo Bimbo, a global baked-goods corporation (for context, see, “In an institutional shift, Grupo Bimbo anchors an impact fund of funds in Latin America”).
  • Check it out. 

Green muni bond in California provides $63 million to waste-to-fuel provider Divert. Massachusetts-based Divert culls food waste from US-based retailers and converts it to natural gas through anaerobic digestion. A bond issued by the California Public Finance Authority will enable the company to build a food-to-fuel plant in Turlock, Calif., Axios reports. The plant will process 100,000 tons of waste a year. Oil giant BP committed to buying the gas. The bond comes on the heels of Divert’s $1.1 billion equity and project finance round backed by Ara Partners and Canadian oil company Enbridge that closed in March. Check out all of ImpactAlpha’s Muni Impact coverage, sponsored by the Robert Wood Johnson Foundation. Share this post. 

Dealflow overflow. Other investment news crossing our desks:

  • Private equity giant Apollo is adding to the growing roster of billion-dollar climate funds with a $4 billion strategy that will invest in clean energy, industrial decarbonization, sustainable resource use, and other low-carbon transition opportunities. (ESG Today)
  • San Francisco-based Span raised an additional $97 million in Series B funding for its smart electric circuit breaker panels that are helping consumers electrify their homes. (Span)
  • Three Black resident entrepreneurs of the Jobs for the Future incubator are merging their edtech ventures to provide learners with game-based workforce development and career navigation. (Stemuli) 

Six Short Signals: What We’re Reading

👷Ecosystem for employee ownership. Funds from Apis & Heritage, Start.Coop, Obra and other managers signal a growing employee-ownership industry. More catalytic investment is needed to de-risk the capital ecosystem that meets the needs of low-income employee-owners and entrepreneurs. (Asset Funders Network)

🫡 Today’s Black leaders. Agent of Impact Kizzmekia Corbett of the National Institutes of Health is among 50 Black tech innovators and changemakers honored on this year’s AfroTech Future 50 list. (AfroTech)

👶 Parenting in corporate America. Six in 10 of America’s largest companies (Russell 1000) now disclose a paid parental leave policy, up from 47% last year the year before. Only 40% disclose the number of weeks of paid leave for primary and secondary caregivers. (Just Capital)

🌱 Funding climate justice. The Pisces, Schmidt and Kresge foundations have met the Climate Funders Justice Pledge to commit at least 30% of climate funding to Black, Indigenous and people of color-led organizations. Donors of Color Network has mobilized $120 million from 33 philanthropic institutions. (Kresge Foundation) 

🧱 Greening US industry. It’s not just batteries and electric vehicles that are now being built in the U.S. Danish toy maker LEGO has laid the first bricks for its $1 billion “carbon neutral” factory in Virginia. (Footprint Coalition)

🤙 ‘Decarb bros’. The loose affiliation of researchers, climate tech workers and policymakers is flipping the term usually associated with toxic masculinity on its head to make the case that the best way to combat climate change is to “ditch the gloom of earlier environmentalism and focus on what new technology can do.” (The New York Times)

Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

Lara Pierpoint, ex- of Actuate Climate, joins Prime Coalition as director of an early climate infrastructure program. Emily Lewis O’Brien, also ex- of Actuate Climate, joins Prime as the program’s senior lead… Cambridge Associates is looking for a sustainability and impact investing analyst in Boston and New York… Fidelity Investments seeks an ESG research lead in Bangalore… Finance in Motion has an opening for a sustainable finance senior officer in Frankfurt… VentureESG is hiring a program director in London.

Thank you for your impact.

– May 1, 2023