The Brief | September 29, 2021

The Brief: Diverse climate-fund managers, Caprock’s new owners, Africa’s food supply chains, European impact tech, science based targets

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

Greetings, Agents of Impact! 

Featured: Climate Justice

How climate tech investments can create health and wealth in Black and Brown communities. Investors able to spot scalable and community-based solutions will have an advantage as climate justice takes center stage in global climate talks and the U.S. infrastructure rebuild. Communities of color that too often bear the negative impacts of climate change also are uniquely positioned to identify and scale solutions. Climate-resilient infrastructure and low-carbon retrofits offer a generational opportunity for health and wealth. In partnership with The Plug, ImpactAlpha’s next Agents of Impact Call will showcase entrepreneurs and investors gaining an edge with scalable and community-based solutions. Guests include Taj Eldridge of Include Ventures, SaLisa Berrien of COI Energy, Kameale Terry of ChargerHelp, and Donnel Baird of BlocPower. To address the full range climate challenges, “we need to have founders and investors who have relationships with the communities that will have the greatest impact of climate change,” says Eldridge.

Despite the potential, people of color remain significantly underrepresented among fund managers deploying climate-tech capital. With VC Include’s Bahiyah Robinson, Eldridge is spearheading a new Climate Justice Initiative to recruit and support historically underrepresented and diverse climate fund managers in the U.S. and Europe. The initiative, backed by the Hewlett Foundation, is focusing on emerging managers raising their first, second or third fund. The bet: Increased diversity in climate-tech fund management will drive more climate solutions, green business ownership and workforce opportunities in climate-impacted Black and Brown communities. “This is a market signal,” says Robinson. The initiative aims to create a pipeline of historically underrepresented fund managers that “bring an understanding of communities most affected by climate change and an understanding of founders that are creating solutions that address those challenges.” 

Keep reading, “How climate-tech investments can create health and wealth in Black and Brown communities,” by Dennis Price on ImpactAlpha.

Sponsored by Morgan Stanley

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: Impact M&A

Caprock to be acquired by TA Associates as consolidation trend accelerates. The Boise-based multi-family office has been a leader in impact investing, placing more than $1.5 billion of client assets in 50 impact-oriented funds, such as Lendable, Reach Capital and Althelia’s Sustainable Ocean Fund. TA Associates, a Boston-based private equity firm with nearly $50 billion in assets under management, agreed to pay an undisclosed price for a majority stake in Caprock, which advises on more than $7.5 billion in assets and has a strong focus on private markets. The private-equity deal differs from recent acquisitions of impact advisory firms by other wealth managers; Caprock will continue to operate as an independent company, Caprock’s Nick Flores and Mark Berryman told ImpactAlpha. “This will allow us to put more money into impact,” Flores said. TA’s Clara Jackson and Roy Burns will join Caprock’s board. 

  • Rollup. Earlier this year, Pathstone, a $25 billion multi-family office, agreed to buy Cornerstone Capital Group, which manages $1.3 billion in assets. Last year, BlackRock agreed to pay more than $1 billion for Aperio, and Morgan Stanley paid $7 billion for Eaton Vance; both Aperio and Eaton Vance’s Parametric unit enable the creation of customized indexed accounts focused on sustainability and ESG indicators. Trillium Asset Management, with $2.8 billion in assets under management, was acquired by Perpetual Limited, an Australian financial services firm.
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Africa Eats crowdfunds capital to strengthen Africa’s food supply chains. Impact accelerator program Fledge last year launched the holding company to back promising startups in Africa that are strengthening the continent’s food system and farmers’ livelihoods. Africa Eats has raised nearly $2 million and invested in 27 Fledge graduates. Fledge’s Luni Libes describes Africa Eats’ model as “a mashup of venture capital, a growth-stage business accelerator, and Berkshire Hathaway.” Libes is now looking to help the portfolio companies tackle persistent challenges like access to equipment leasing, rainy day funds and insurance. Africa Eats has secured indications of interest for more than $330,000 through a “testing the waters” campaign on WeFunder. “The more that one works to help African companies grow, the more holes one finds in the infrastructure of business in general, especially financial services,” Libes told ImpactAlpha.

  • Portfolio profile. Most of Africa Eats’ portfolio companies are food aggregators, processors and distributors, like Tanzanian logistics company East Africa Fruits and Kenya’s Chicken Basket, which supports small poultry farmers with chicks, feed, training and processing. Obamastove turns agri-waste into cooking fuel. Ziweto provides farmers with livestock vaccines and veterinary products. ColdHubs provides solar-powered cold storage to reduce food waste. The fund says the portfolio has achieved more than 60% annual revenue growth, and projects more than 40% over the next five years.
  • Plugging holes. If the crowdfunding test is successful, Africa Eats aims to file for a $500,000 Reg CF offering next month. The capital will support startups’ cash flow management, vendor payments, online accounting and other financial management services. It will also cover solar equipment and truck leases for reliable energy and transport access, as well as a shared credit and savings pool and mutual insurance for both the companies and the farmers they support.
  • Check it out.

Ananda Impact Ventures raises €65 million for European impact tech. The Munich-based firm is raising its fourth fund to invest in European impact tech companies in digital health, education and sustainability. It has backed 29 companies, including wildfire detection and monitoring platform OroraTech and affordable private healthcare company Doktor24. The companies have “impact inherently baked into their business models,” said Ananda’s Florian Erber. “So, the simple formula that more turnover equals more impact holds and works for all of us.” The firm’s fourth fund will make investments of up to €3 million in 20 companies. The first close saw commitments from returning investors European Investment Fund and Big Society Capital (for context, see “Munich-based Ananda raises €50 million to back European impact startups”). Ananda’s first three funds raised about €80 million ($93 million). Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • Brazil’s Tembici secures a 29 million reais ($5.3 million) impact-linked line of credit from Santander Bank to launch a bike sharing service in the city of Brasilia.
  • Flat6Labs closes $10 million for its Anava Seed Fund, which will invest in early-stage Tunisian startups.
  • Sweden’s Cake raises a $60 million Series B round to expand its electric motorcycle manufacturing in Europe, North America and Asia. 

Signals: Science-Based Targets

Investors push companies to set science-based targets and obey the ‘carbon law.’ Global financial institutions holding nearly $30 trillion in assets are pushing Boeing, Alaska Air, Fedex, Duke Energy, Tata Steel and hundreds of other carbon-intensive companies to set emissions targets that align with 1.5-degree-Celsius warming scenarios. The Science Based Targets initiative aims to set goals that ripple through portfolios and supply chains and keep the goals of the Paris climate agreement within reach. Companies with science-based targets – absolute emission-reduction goals that don’t rely on offsets – have cut greenhouse gas emissions by an average of 6.4% per year since 2015, even as global emissions rose an average 0.85% annually.

  • Carbon law. The “law,” based on the computer industry’s Moore’s Law, is aimed at halving emissions every decade, or 7% each year. “If we can get every company to set a science-based target, we may actually be able to prevent climate change,” said Simon Fischweicher of CDP, which is coordinating the target-setting campaign. More than 1,000 companies have set, or committed to set, such targets.
  • Universal owners. Dozens of new investors joined the campaign this year as a way to mitigate systemic risk from climate change and green their portfolios. “Every company will be impacted by climate change one way or another,” Frederick Isleib of ManuLife, a global asset manager with more than $400 billion under management, told ImpactAlpha. More than two dozen large corporate buyers responsible for $500 billion in annual procurement, including L’Oréal, Renault Group, Bayer and HP, also are pressing their suppliers for science-based targets.
  • Aiming higher. The 1,600 targeted companies make up more than a third of the MSCI World Index and emit as much in greenhouse gasses as the U.S. and E.U combined. Last year, 154 companies joined the Science Based Targets initiative, a partnership between CDP, the U.N. Global Compact, World Resources Institute and the World Wide Fund for Nature. Investors are hoping to press an even greater number of companies this year and drive even more emissions reductions.
  • More.

Agents of Impact: Follow the Talent

The U.S. International Development Finance Corp. is looking for an investment attorney in Washington, D.C… LACI has openings for a program administrative manager for its incubation team and an equity innovation manager for startups in Los Angeles… The Institute for Sustainable Communities is hiring a (remote) senior program officer.

The Clean Cooking Alliance is hiring a U.S.-based consultant for its results-based financing accelerator… Sobrato Organization is looking for a senior investment associate in Mountain View, Calif… RMI seeks a (remote) program director for its energy transition academy… 3Degrees Group is recruiting a senior manager of business partnerships for renewable energy and climate.

Thank you for your impact.

– Sept. 29, 2021