Greetings, Agents of Impact!
Featured: Earth Day
On this Earth Day, three ways to care for the earth beneath our feet. Many of the pressing issues we face today have their roots in how we treat our land and grow and eat our food. “It’s time that we, investors and consumers, start paying more attention to the ground beneath our feet,” writes Shaun Paul of Ejido Verde, a Mexican regenerative agriculture company implementing a 25-year plan to reforest degraded landscapes and revitalize soils. In a guest post, Paul offers up three ways to reexamine how we deploy grants, loans, and equity with Indigenous communities to improve nature and lives. Here’s one:
- Reimagine term sheets. Popular investment duration terms, framed by modern portfolio theory, are obstacles for many climate solutions, which need to be long-term investments. Initiatives requiring plans for lasting change and which would break-even after a decade miss almost all financing opportunities. Ejido Verde’s capital structure blends equity, mezzanine, debt, donations and subsidies to help investors think in terms of the 20-year timeframe required for trees to provide an attractive profit.
- Keep reading, “On this Earth Day, three ways to care for the earth beneath our feet,” by Ejido Verde’s Shaun Paul on ImpactAlpha.
Investing in the planet by investing in the people who know it best. More than half of the Earth’s land is managed at the community level. One-third of the world’s forests are found on Indigenous land. These communities receive less than 1% of official development assistance for climate change and less than 5% for general environmental protection. Needed: climate finance “that centers on the people who live on and manage the world’s most precious resources,” SVX Mexico’s Stevie Smyth Valdez and Mauricio Martinez Miramontes of La Mano del Mono write in a guest post.
- Closing gaps. Through Sustainable Landscape Ventures, SVX Mexico connected a cooperative of more than 124 families in Oaxaca to lenders for capital investments and short-term working capital, and to donors for technical assistance. For organizations on the ground, a little assistance can have an outsized impact, write Valdez and Miramontes. “Their ability to both support their communities and protect the environment, benefiting us all, may be one of our biggest assets – and one we need to make sure to invest in.”
- Keep reading, “Investing in the planet by investing in the people who know it best,” by Stevie Smyth Valdez and Mauricio Martinez Miramontes.
Sponsored by BlueMark
Key elements of quality impact performance reporting. Defined objectives. Metrics and results. Perspectives and risks. A BlueMark examination of dozens of impact reports published by private-market general partners, and further discussions with industry stakeholders, surfaced broad agreement on the elements a quality impact report should cover. The lack of widely-accepted guidelines for reporting on impact performance has resulted in heterogeneous approaches, says BlueMark’s Christina Leijonhufvud. With “Raising the Bar,” she explains, “we wanted to gain a deeper understanding of best practices in impact reporting and to propose pathways to accelerate their adoption.” Go deeper.
Dealflow: Climate Justice
VC Include backs 10 climate funds led by diverse managers. Black and Brown communities disproportionately impacted by climate change are an important source of talent, ideas and solutions. Unlocking these resources requires a more diverse group of climate fund managers. “If other people are not looking at that opportunity, I know somebody who will,” Taj Eldridge of Include Ventures, the fund-of-funds arm of Include VC, said on an ImpactAlpha Agents of Impact Call last year. Through VC Include’s Climate Justice Initiative, Eldridge and Bahiyah Robinson are distributing $100,000 operational grants to 10 emerging climate fund managers in the U.S. and Europe. Each manager is raising $10 to $150 million for climate-related funds.
- Climate justice. At least half of the general partners at each fund in the portfolio identify as immigrants or members of a minority group. Among the recipients are L.A. and Chicago-based Supply Change Capital, L.A.-based 22 Fund, Hometeam Ventures in San Francisco and Miami, Frankfurt-based Melanin Kapital, and SDS VC in London. The initiative “will create a paradigm shift in the industry and provide non-dilutive capital to funds that are uniquely positioned to invest in climate-solutions companies,” said Marilyn Waite of Hewlett Foundation, which provided the funding.
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Beta Technologies raises $375 million for electric aircraft. Green aviation startups are raising big rounds from big-name investors. Vermont-based Beta is building electric battery-powered planes that take off like a drone and can carry up to 1,500 pounds of cargo, or six people, including the pilot, the company says. With a 30-minute charge, Beta’s planes can fly up to 250 miles, farther than the distance between Washington, D.C. and New York City. Beta is targeting the short-range cargo delivery market, like organ transport and other last-mile deliveries. It has several partnerships, including biotech company United Therapeutics and UPS, which ordered 10 of Beta’s electric aircraft.
- Decarbonizing flight. The Series B round, led by TPG Rise Climate and Fidelity, brings Beta’s total raised to nearly $800 million, including a $368 million Series A round last year. The financing “allows us to complete the construction of our production facilities” said Beta’s Kyle Clark. Beta’s immediate focus is on cargo and logistics, with passenger aircraft to follow.
- Take flight.
Dealflow overflow. Other investment news crossing our desks:
- Glacier raised $4.5 million in seed funding to build waste-sorting robots for recycling facilities in the U.S.
- Colombia’s PayU invested in Treinta to digitalize micro and small merchants in Latin America.
- Backstage Capital secured $1 million from Comcast to invest in early-stage startups led by women, people of color and/or LGBTQ+ founders.
- LISC raised $100 million from the sale of its impact notes to finance investments in affordable housing, small businesses, health, education and jobs.
Impact Voices: System-Level Investing
Where we are and where we’re going in the transition to system-level investing. Traditional risk management approaches can’t cope with systemic risks, like climate change and social unrest that threaten long-term investment returns across all asset classes. In response, a set of players, practices and strategies is charting a transition to system-level investing that goes beyond portfolio construction and security selection to influence global systems and limit undesirable outcomes. “We’re now seeing the outcomes of this ecosystem building in terms of tangible efforts by investors,” write William Burckart and Steve Lydenberg of The Investment Integration Project. Burckart became TIIP’s CEO this month and Lydenberg stepped up to chairman.
- Taking action. Brazil’s Vale and other global mining companies agreed to undertake annual audits of their dams after the Church of England Pensions Board created a coalition of investors to demand global safety standards in the mining industry. In another case, the U.S. Securities and Exchange Commission amended its rules for how public companies disclose workforce information in response to a petition filed by the Human Capital Management Coalition, backed by 32 institutional investors with $6 trillion in assets under management.
- Keep reading, “Where we are and where we’re going in the transition to system-level investing,” by William Burckart and Steve Lydenberg on ImpactAlpha.
Agents of Impact: Follow the Talent
Frederick Jelks, ex- of AlixPartners, joins Brightwood Capital Advisors as a director in the firm’s risk group. Chris Halajian, ex- of Geode Health, joins Brightwood as a director in the firm’s underwriting group… David Grunwald is promoted to managing director at SDS Supportive Housing Fund… HiiL is hiring an impact investment specialist in The Hague… B Lab, Common Future, Global Impact Investing Network, Just Capital and U.S. Impact Investing Alliance are among 60 signatories of a letter from the Coalition on Inclusive Economic Growth expressing support for the S.E.C.’s proposed climate disclosure requirements for corporations.
Thank you for your impact.
– Apr. 21, 2022