Greetings, Agents of Impact!
Featured: Looking Ahead
Impact in emerging markets in 2022: Seizing the digital transformation to drive inclusive and sustainable growth. If the pandemic had a silver lining in emerging markets, it was as a super-spreader of small business digitization. The online trend, which extended to informal businesses and gig workers, is in turn expanding access to working capital, growth financing and other financial services. Traditional sources of capital like banks, development finance institutions and microfinance have largely failed to fill the $5 trillion annual financing gap for informal and small businesses in emerging markets. Enterprise tech startups are using the troves of data they’re collecting to build their own customized small-business financial services (see, “How tech innovation is bridging gaps in small business financing in emerging markets“). Such embedded finance gives customers “who aren’t able to access traditional financial services a way to grow their businesses, protect their livelihoods, and save for their futures,” Accion Venture Lab’s Amee Parbhoo told ImpactAlpha. In 2022, we’ll be on the hunt for tech providers that can prove they’re having a material positive impact on revenues, income and jobs. Other trends to watch:
- Crypto adoption. To say cryptocurrency and investment platforms go mainstream in 2022 “would be short-sighted, as we are already there,” Mercy Corp Ventures’ Dan Block told ImpactAlpha (see, “African startups develop crypto tools for inclusive prosperity”).
- The rise of climate-smart investing. User data is providing fintech service providers real-time insight into the accelerating climate impacts on farmers, rural communities and the urban poor.
- Financing local capital providers. It’s been a difficult fundraising year for in-market and first-time fund managers that invest in small and growing businesses. An exception is Alitheia IDF, which raised $100 million for an Africa-focused gender-lens fund (see below). “Fundraising has largely been a bust for the whole sector,” said Drew von Glahn of the Collaborative for Frontier Finance. “We’re much more optimistic for 2022.”
- Keep reading, “Impact in emerging markets in 2022: Seizing the digital transformation to drive inclusive and sustainable growth,” by Jessica Pothering on ImpactAlpha. Catch up on all of ImpactAlpha’s coverage of frontier and growth markets in 2021.
Dealflow: Climate Infrastructure
Ares raises $2.2 billion for climate infrastructure investments. Ares Climate Infrastructure Partners Fund secured $1.4 billion in commitments to provide equity, preferred equity and structured debt for global renewable energy, energy efficiency, energy storage and vehicle electrification projects and companies. The fund will also deploy an additional $800 million from managed accounts. The climate infrastructure fund “is focused on directly originating essential clean-energy investments that have a positive impact on our communities,” Ares’ Andrew Pike said. The $282 billion global private equity investor said it has deployed $2 billion for climate-friendly infrastructure deals since 2015.
- Impact reporting. Nearly half of the fund has already been invested, mostly in North America and Europe, according to the L.A.-based firm. Impact advisory firm Aligned Climate Capital will help Ares source deals and provide reporting and monitoring services.
- Check it out.
Alitheia IDF secures $100 million for Africa-focused gender-lens fund. The African private equity fund, a joint venture between women-led fund managers Alitheia Capital and IDF Capital, aims to positively impact women consumers, distributors and producers. It will invest in growth-stage, women-led businesses engaged in agriculture, education, health, financial services, technology and logistics throughout Africa. Africa’s “women-owned businesses still struggle to raise funding, although they have proven their performance,” said Thomas Ostros of the European Investment Bank, an investor in the fund. Alitheia IDF has backed five companies, including Nigeria’s ReelFruit, which sources produce from local farmers for dried fruit snacks. Onward.
UBQ Materials raises $170 million to produce thermoplastics from waste. Nearly three-quarters of the more than two billion tons of municipal solid waste produced each year ends up in landfills. Tel Aviv-based B Corp UBQ uses such waste to make climate-friendly versions of thermoplastics like acrylic, polyester, nylon and PVC. TPG’s Rise Fund and Rise Climate, Battery Ventures and M&G’s Catalyst Fund invested to finance the company’s expansion, which includes a production facility in the Netherlands that is set to open next year. “UBQ’s material solution is energy efficient, uses no water and produces no effluents,” said TPG’s Steve Ellis. Share this post.
Dealflow overflow. Other investment news crossing our desks:
- Proof of Impact, a technology company that enables the real-time collection, verification and analysis of impact and ESG data, scores $2.3 million in seed funding (for background, see “Four ways small businesses can manage their greenhouse gases.”)
- Cove.tool secures $30 million from investors including Urban Us and Robert Downey Jr.’s FootPrint Coalition to help decarbonize buildings.
- Germany’s modular indoor farming startup Infarm raises $200 million in Series D financing to expand its vertical farms network globally.
- Full Harvest raises $23 million in Series B funding to help agrifood suppliers find buyers for surplus and imperfect produce online.
Agents of Impact: Follow the Talent
Ryan Popple, Proterra co-founder and clean tech investor at G2 Venture Partners and Kleiner Perkins, passed away at age 43… Former Danone CEO Emmanuel Faber is appointed as chair of the International Sustainability Standards Board… Chris Manning will lead the newly formed Greenbelt Capital Partners at Trilantic North America in Austin… Lavastian Glenn is promoted to vice president of programs at Nathan Cummings Foundation… Arc Institute launches to accelerate scientific breakthroughs in complex diseases in collaboration with Stanford University, UCSF and UC Berkeley.
The African Venture Philanthropy Alliance is recruiting a chief finance operating officer in Nairobi… Sistema Bio is hiring a head of credit and has openings for other roles… Caprock is looking for a client advisor in New York… Mercy Corps Ventures seeks an MBA intern… Unreasonable is looking for a portfolio manager of the U.K., Europe, Middle East and Africa in London, and a senior manager of press and communications… Impak Finance seeks a junior impact analyst in Montreal.
Thank you for your impact.
– Dec. 20, 2021