The Brief | June 3, 2021

The Brief: Electric mobility in emerging markets, better weather forecasts, corporate community investors, insurgents at Exxon, coastal climate adaptation

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Greetings, Agents of Impact! 

Featured: ImpactAlpha Original

Shift to electric rickshaws and motorcycles is drawing investors to emerging markets’ e-mobility opportunity. The streets of Delhi, Kigali, Nairobi and other emerging market cities are clogged with traffic, including “boda boda” motorcycle taxis and “tuk tuk” auto-rickshaws. But a fast-growing number of those vehicles are now electric. The e-mobility shift in India, Southeast Asia and Africa is drawing lenders and impact investors to the manufacturing and financing of the two- and three-wheel vehicles that form the backbone of public transportation for billions of people worldwide. Such investments can improve livelihoods for drivers and reduce air pollution and greenhouse gas emissions at the same time. There are an estimated 270 million motorcycles in use in the world and millions more auto-rickshaws, most of which are still gas or diesel-powered. In all, the two- and three-wheel electric vehicle market is an estimated $150 billion opportunity. “In most developing countries, a primary form of transportation is motorcycles and motorized rickshaws, so there’s just a gigantic market for electrifying those,” says Ecosystem Integrity Fund’s James Everett, who led a $3.5 million investment in Rwandan e-motorcycle manufacturer Ampersand.

Driving demand: competition among ride-hailing services, government subsidies and other incentives, and an increasing number of commercial, development-finance and asset-backed lenders helping drivers and delivery workers buy their own vehicles. Ride hailing services like Uber, Ola and others are key players in the electric vehicle transition. In Gurgaon, near Delhi, the all-electric Oye Rickshaw has developed a three-wheel ride-hailing platform for short trips, and raised $3.3 million in April to expand from five to 20 cities by year end. SmartE, also based near Delhi, raised $20 million to manufacture its own e-rickshaws for delivery and commuting. In Uganda, motorcycle finance provider Tugende is piloting e-bike financing with the manufacturer Zembo, which is also building solar-powered battery charging stations. Nairobi-based Ecobodaa is manufacturing electric motorcycles and developing a network of battery swapping stations. “There needs to be a huge investment in this space as this is essentially what will make the riders’ switch as smooth as possible,” says Ecobodaa’s Kimosop Chepkoit.

Keep reading, “Shift to electric rickshaws and motorcycles is drawing investors to emerging markets’ e-mobility opportunity,” by Jessica Pothering on ImpactAlpha.

  • E-buses in Latin America. At least 10 deals for approximately 2,000 e-buses have been completed in Santiago, Bogota, Medellin, Mexico City and other cities in recent months. Dalberg’s Fabiola Salmán and Sylvia Warren say investors would back many more such transactions with partners to stock the project pipeline and connect investors to opportunities. Read the full post.

Dealflow: Climate Tech

The Rise Fund puts $100 million into Climavision to improve weather forecasting. Climate change is making weather patterns increasingly unpredictable and volatile. Climavision is a radar and satellite startup helps agriculture, government, insurance, renewable energy and transportation customers make more accurate weather forecasts. The Louisville, Ky.-based company’s weather forecasting tech can help “save lives, limit business disruptions, and improve the lives of people and communities across the country,” said Climavision’s Chris Goode.

  • Impact capital. The $100 million investment from The Rise Fund, TPG’s global impact investing arm, will help the company improve the accuracy of its weather forecasting. TPG’s Edward Beckley, Steven Mandel and Mariana Popa will join Climavision’s board of directors. Climavision is a spinout of Enterprise Electronics Corp., a commercial supplier of weather radar systems.
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Guild Education secures $150 million to upskill frontline workers. Denver-based Guild helps wage workers complete degree programs with tuition-assistance programs it has developed for Chipotle, Discover, Walmart, Disney and other corporations (see, “Reskilling frontline workers, Guild Education becomes a B Corp unicorn”). Guild is tackling today’s massive shortage of frontline workers and the need for more tech-skilled workers in the future.

  • Unicorn status. The company’s Series E round valued Guild at nearly $3.8 billion. It was backed by Bessemer Venture Partners, Emerson Collective, General Catalyst, GSV, Salesforce Ventures and others.
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Dealflow overflow. Other investment news crossing our desks:

  • Singapore’s Heritas Capital raises $60 million for its third growth fund to invest in Asia-based impact startups driving an inclusive post-COVID economy.
  • Energy Access Ventures backs SolarX Africa to accelerate solar projects with commercial and industrial partners in Mali and Burkina Faso.
  • Finland’s eMabler secures €630,000 to help energy companies and electric vehicle operators integrate EV charging services.
  • Delhi-based Egreens sets up a $2 million investment vehicle to back early-stage agritech startups in India.
  • Access Ventures’ Render Capital launches First Dollar Program to provide small grants to underrepresented businesses in Louisville, Ky. and Southern Indiana. 

Signals: Ahead of the Curve

Corporates emerge as a source of capital for community investment. With the closing of its $250 million Black Economic Development Fund, LISC showed off the opportunity to tap corporations as a source of capital for community development finance institutions, or CDFIs, and minority depository institutions. The LISC fund alone included investments from PayPal, Aflac, Costco, DICK’s Sporting Goods, HubSpot, Netflix and Square. PayPal announced this week another $135 million in deposits in Hope Credit Union,   OneUnited Bank, Self-Help Federal Credit Union,  CNote’s Wisdom Fund and other institutions through a CNote Promise Account. The new entrants join community investing pioneers like Prudential Financial, which has built a $1 billion impact investing portfolio; Goldman Sachs’ Urban Investment Group, which deploys more than $1 billion annually in community investments; and UnitedHealth Group, which has reached $500 million in new affordable housing investments. “These initiatives illuminate a pathway for other corporate actors to engage in community investing efforts,” writes the U.S. Impact Investing Alliance in Impact in Place, which surveyed the landscape for the Federal Reserve Bank of New York.

  • Capital structures. Structures of the commitments have varied from cash deposits to bond issuances. Google last August issued $5.8 billion in sustainability bonds for clean energy, affordable housing and support for small businesses through CDFI lending. Advocates have urged corporations to go beyond deposits and make equity investments and grants to strengthen the capital structures of the CDFIs themselves (see, “Corporate deposits in CDFIs are good. Equity investments would be even better”).
  • Bold bets. Corporate strategies to date suggest little appetite for risk. “The majority favored safer, more secure investments with a focus on capital preservation,” according to the report. Family offices such as Ceniarth, along with financial firms such as Prudential and Goldman have tended to be more flexible, with offers of concessionary returns (see, “An 80/20 rule helps an institutional investor manage its risks, returns and impact”). The researchers say there remains “significant demand for investors to take bold and early bets to send a positive signal to the rest of the market, and for investors to take increasingly riskier positions in the capital structure.”
  • Go deeper. The U.S. Impact Investing Alliance and the Federal Reserve Bank of New York are hosting “Capital Quest: Connecting capital to communities.” Amir Kirkwood of the Opportunity Finance Network, PayPal’s Rosita Najmi and CapShift’s Liz Sessler join the Alliance’s Fran Seegull and the NY Fed’s Otho Kerr, today at 1pm ET.
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A third insurgent joins Exxon’s board. ExxonMobil chairman and CEO Darren Woods will face even more restive directors. The oil company said preliminary results showed Andy Karsner, an energy expert and self-described “passionate conservationist” will join two other successful candidates proposed by the hedge fund Engine No. 1 (see, “Victory for insurgents stuns Exxon as shareholders vote for a low-carbon future”). One re-elected board director, Ursula Burns, called the shareholder revolt “a tidal wave.” Woods ranked a humbling eighth in the election for the 12-member board.

  • Shareholder power. Exxon investors approved a resolution demanding a report on Exxon’s climate lobbying, and fell just short of a majority on another seeking a report on its risks in a net-zero scenario. Fresh off of its win, Engine No. 1 is planning a “Transform 500” ETF that aims to “encourage transformational change at the public companies” via proxy-voting strategies.
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Impact Voices: Adaptation Solutions

For climate adaptation solutions, think smaller, local and experimental. In the long-term, climate adaptation requires many more billion-dollar infrastructure projects. “The short-term answer is to think smaller and experiment,” write Paul Robinson and Katerina Oskarsson of RISE, a nonprofit economic development organization in Norfolk, Va. RISE’s Coastal Community Challenge backs solutions to coastal community climate challenges. This year’s finalists include Amherst, N.Y.-based Smart Walls Construction, which develops telescopic walls to protect coastal cities from floods and storm surges; Seattle-based StormSensor, which tracks flooding and overflows within storm, sewer and coastal systems; and Bogotá-based Zilper Trenchless, whose trenchless pipe-laying technology reduces the costs of laying water pipes. Keep reading

Agents of Impact: Follow the Talent

CapShift is looking for an investment data and operations professional in Boston… Also in Boston, SustainCERT has openings for climate and sustainability analysts, and Arctaris Impact Investors seeks a director of investor relations… In New York, ISS Corporate Solutions is hiring a sustainability advisor, and Impact Capital Managers is looking for an analyst… Eight Associates is recruiting a carbon and sustainability consultant in London… Also in London, Principles for Responsible Investment seeks a steering committee coordinator for Climate Action 100+…. The Investment Integration Project is hosting two deep dives on system-level investing on June 8 and June 29.

Thank you for your impact.

June 3, 2021