Greetings, Agents of Impact!
Featured: Low-Carbon Transition
The diverging paths of climate tech in Europe and the U.S. When Joe Manchin torpedoed Democrats’ last best hope for ambitious climate action, he also changed the landscape for private investment. The reversal by the U.S. senator from West Virginia on a scaled-down legislative package to extend tax incentives for electric vehicles, renewable energy and emerging climate tech came on the heels of a Supreme Court ruling sharply limiting the power of environmental regulators to rein in greenhouse gasses. “After this, if you are looking around across the world to see where the opportunities are to invest, you are now going to overlook the U.S.,” Heather Zichal of the American Clean Power Association told The New York Times. Other countries have provided regulatory certainty, she said. “We don’t have that.”
- Brain gain. “Climate policy in the U.S. and E.U. is sharply diverging,” Shaun Abrahamson of venture firm Third Sphere writes in a guest post on ImpactAlpha. European founders who might have moved to the U.S. even a few years ago, he says, are choosing to remain in places like Zurich, Berlin and Copenhagen, where venture ecosystems have grown. Third Sphere has invested in European climate tech startups such as Berlin-based Henry Mobility and Zurich-based Pallon (for background, see “Third Sphere ramps up for ‘better, cheaper, faster’ climate impact”). The firm is looking for additional European opportunities, says Abrahamson – and for ways to help U.S.-based portfolio companies “figure out how to enter E.U. markets as customer demand ramps up.”
- Greenfields. Abrahamson and Third Spere’s Shilpi Kumar recently returned from meetings with dozens of investors and climate tech startups in the U.K., Europe and Israel, including Berlin-based Carbon One, which makes methanol from carbon captured from air. Oxyle, in Zurich, makes water filters that remove microplastics. Earthforce, based in Israel and the U.S., is mitigating wildfire risks. “In the U.S., at the federal level, we’re going backward,” Abrahamson says. “The E.U. will be one of the more strategic regions where climate tech teams will find customers and talent.”
- Keep reading, “The diverging paths of climate tech in Europe and the U.S.,” by Third Sphere’s Shaun Abrahamson on ImpactAlpha.
Dealflow: Blue Economy
Pegasus Capital Advisors raises $170 million for Global Fund for Coral Reefs. Impact investor Pegasus is aiming to raise $625 million in blended financing to protect critically-threatened coral reefs and vulnerable coastal communities. The fund “intends to demonstrate, for the first time, impact investment at a sufficient scale to make a sizable dent in the problem,” said Deliberate Capital’s Dale Galvin, who has been appointed to lead the fund. The Global Fund for Coral Reefs will invest in wild-caught fisheries, aquaculture, hospitality and circular economy initiatives. The multinational Green Climate Fund anchored the coral reef fund with $125 million in junior equity. Impact investor Builders Vision invested $5 million as the fund’s first private investor, along with a $5 million grant. “We have an urgent obligation to intervene and pursue innovations to create a flywheel effect to save these vibrant natural resources,” said Builders Vision’s Lukas Walton, a grandson of Walmart founder Sam Walton. Bloomberg Philanthropies backed the grant portion of the fund with $8 million.
- Life below water. Pegasus’ fund “is by far the largest impact investing initiative for oceans to date,” Galvin told ImpactAlpha. Mirova, Ocean 14, S2G Ventures and SWEN Capital Partners are all raising or investing $100 million-plus ocean funds. 1000 Ocean Startups, a consortium to accelerate ocean solutions and tech, launched at the World Oceans Conference in Lisbon (see, “These young entrepreneurs aren’t giving up on the climate or the oceans”). Pollution and climate change threaten to wipe out 90% of the world’s coral within 30 years, putting coastal communities and biodiversity at risk. SDG No. 14, which targets “life below water,” is the least funded of all the Sustainable Development Goals, receiving only $25.5 billion annually – a $150 billion shortfall.
- Madagascar’s marine life. Separately, the government of Madagascar is seeking project ideas to protect and manage the island’s marine areas and support coastal communities. Up to 20 projects will receive funding via the Global Environment Facility. Proposals are due Aug. 8.
- Dive in.
Achieve Partners notches exit of tech training venture Genuent. Achieve Partners invested in Houston-based Genuent, a tech staffing company, as part of its strategy to accelerate apprenticeship programs in sectors of the U.S. economy grappling with skills shortages (listen in to our podcast interview with Achieve’s Daniel Pianko, “Finding the alpha in apprenticeships“). The New York-based private equity firm sold Genuent to A&M Capital Partners, a private equity firm with $2.9 billion in assets under management. Genuent exemplifies “the role that intermediaries like IT staffing companies can play in pioneering new models of talent development that will reshape the future of work,” said Achieve’s Aanand Radia. The sale will bring together Genuent and TekPartners, another IT staffing company whose parent company is majority-owned by A&M. The merged company is being renamed INSPYR Solutions. Check it out.
Dealflow overflow. Other investment news crossing our desks:
- TPG Rise Climate, along with BlackRock and Temasek-backed Decarbonization Partners, injected $300 million in clean-hydrogen and carbon-black maker Monolith.
- Ukrainian edtech startup Preply raised $50 million in a round led by Owl Ventures to advance online language learning.
- Aqua for All and Family Bank are partnering to finance safe drinking water for low-income households in Kenya. The deal follows Aqua for All’s partnership with Oikocredit last month to improve water access and sanitation in Cambodia and East and West Africa.
- U.A.E.-based Omooma scored $2.5 million for its Arabic-language maternal health content.
Signals: Green Jobs
A $25 million plan to upskill and diversify the climate workforce. The climate ground war will be won block by block, building by building (for context, see “Call No. 32: Black tech, green solutions for the planet and the people”). Needed: A skilled, diverse workforce ready to fill the coming wave of green jobs in every community. A new initiative aims to train and place at least 25,000 individuals in clean energy jobs in the U.S. A partner program will do the same in India. Climate-Resilient Employees for a Sustainable Tomorrow, or CREST, is a partnership between Jobs for the Future and World Resources Institute, backed with $25 million from Ares Charitable Foundation, the corporate philanthropy arm of Ares Management Corporation. “As we’re moving forward and putting investment in climate-focused companies, do we have enough talent, that’s diverse, to work for these companies?” asks Include Ventures’ Taj Eldridge, who will lead the U.S. effort. “We can’t solve the problems of climate in a silo.”
- Talent gaps. Climate-oriented funds and founders flush with cash have struggled to hire talent, and diverse talent in particular, Eldridge says. For successful models, he points to companies like ChargerHelp, the South L.A.-based EV-charger repair company that created an onramp to good green jobs for anyone with a high school degree (see, “Agents of Impact: Evette Ellis and Kameale Terry of ChargerHelp”). L.A. Cleantech Incubator, where Eldridge previously led investments, and the impact fund of Jobs for the Future were early backers of ChargerHelp.
- Climate-job readiness. The five-year effort aims to fill gaps in climate-related skills and training with evidence-based solutions. Eldridge says he’ll work to connect climate workforce platforms such as Clean Energy Leadership Institute, Empowering Diverse Climate Talent and Climatebase to accelerators, investors and small businesses. Elridge plans to engage universities, including historically Black colleges and universities, Hispanic-serving institutions, and community colleges. The goal, Eldrige tells ImpactAlpha: “To get all types of people involved in this sector.”
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Agents of Impact: Where to Meet
Big Path Capital’s Impact Capitalism Summit convenes this week in Nantucket, Mass… The Global Steering Group for Impact Investment gathers for the second part of its virtual Impact Summit Series, “Boosting capital flows in emerging markets,” September 22… The GIIN Investor Forum will convene in The Hague, Netherlands, Oct. 12-13.
SOCAP will return Oct. 17-20 at a new venue, the Yerba Buena Center for the Arts in San Francisco… GenderSmart hosts its global summit, “Traction to transformation,” Oct. 17-19 in London… Enterprise Community Partners will hold its 40th anniversary conference Oct. 19-20 in Washington, D.C.
Thank you for your impact!
– July 18, 2022