The Brief | March 23, 2022

The Brief: Electrify everything, smart circuit panels, farmer finance in Africa, decarbonization in China, cold chain packaging, impact incentives

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Greetings, Agents of Impact!

Agents of Impact ​​Call No. 40: Political risk and impact investing in a time of conflict. Russia’s invasion of Ukraine scrambled investors’ calculations of political risk. Country risks cross borders, as refugees fleeing Ukraine know. For investors, managing, rather than fleeing, such risks is key to enduring impact in places where civil society and social and environmental progress are needed most. Join Harlan Mandel of Media Development Investment Fund, Open Road Alliance’s Caroline Bressan, and other Agents of Impact to share strategies for investing for impact in challenging environments, Tuesday, Mar. 29 at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Electrify Everything

The Great Upgrade. A few years ago, engineer and inventor Saul Griffith built a diagram of U.S. energy flows that identified at least a billion fuel-burning machines – from trucks and lawnmowers to space heaters and appliances – that need to be replaced with electric devices powered by renewable energy. “These electric purchases need to be the lowest-cost option at every point-of-purchase decision, as soon as possible, in every zip code,” writes Griffith, author of Electrify: An Optimist’s Playbook for Our Clean Energy Future. “You don’t fix the climate unless every household participates and benefits from doing so.” The electrification supercycle is in full swing:  

  • Third Sphere ramps up for ‘better, cheaper, faster’ climate impact. After deploying three funds and backing more than a hundred companies as Urban Us, Shaun Abrahamson and Stonly Blue have rebranded as Third Sphere, inspired by the third planet from the Sun. Its fourth fund is built around what Abrahamson calls “natural innovation upgrades that can happen where you just have something that’s better, faster, cheaper.” The New York-based manager has backed at least three climate unicorns and notched five exits. The firm’s stake in Future Motion, manufacturer of the popular OneWheel electric scooter, has been marked up more than 80x since 2014, according to Third Sphere. “For us, the best climate investments sneak in the benefit,” says Abrahamson. Go deeper.
  • Span raises $90 million to upgrade the lowly circuit panel. An electric vehicle may be the biggest new addition to a family’s electric consumption, but it’s not the natural center of gravity for the all-electric lifestyle. That would be the home, and more specifically, the lowly circuit panel that houses the breakers between the utility service and a home’s wiring. Span raised $90 million for its line of electrification products, including SPAN Panel, a $3,500 smart electric panel that allows homeowners to monitor and control every circuit in their homes, including from their phones. “The electrical panel is ubiquitous,” Span’s Arch Rao told ImpactAlpha. “And that’s the natural center point for controls and communication.” Get wired.
  • Decarbonizing India. Ola Electric, an Indian manufacturer of EVs, is investing in Israel’s StoreDot to bring its ‘extreme fast charging’ EV batteries to India. Also, Mumbai-based EverSource Capital acquired a majority stake in Lithium Urban Technologies, the largest operator of passenger EVs in India. EverSource recently closed a $741 million green infrastructure fund. 

Dealflow: Farmer Finance

ThriveAgric scores $56.4 million in debt to help smallholder farmers build income. Africa is home to approximately 33 million smallholder farmers, who produce nearly 70% of the continent’s locally-grown  food supply. Most of those farmers live on less than $1.90 per day. Abuja, Nigeria-based ThriveAgric, through its more than 450 warehouses, helps farmers store goods before they’re sold at a premium price and provides access to capital and global markets. ThriveAgric says it has helped farmers increase their incomes by 25%. 

  • Pan Africa. Nairobi-based Apollo Agriculture, which delivers advice and inputs to more than 100,000 farmers, raised $40 million to enter new markets in East and West Africa. ThriveAgric is expanding into Ghana, Zambia and Kenya. The company received a co-investment grant from USAID’s West Africa Trade and Investment program, a five-year, $140 million program to catalyze sustainable economic growth and food security.
  • Check it out

TemperPack raises $140 million to insulate cold chains. Richmond, Va.-based TemperPack makes sustainable thermal insulation packaging for perishable goods and medicine. The company’s ClimaCell recyclable thermal liners help companies switch from plastic foam coolers to reduce emissions and divert plastic waste from landfills.

  • Cold chain. The financing round, backed by Goldman Sachs Asset Management and SJF Ventures, will help TemperPack diversify its offering of sustainable, high-performance protective materials, said TemperPack’s Bob Beckler.
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Dealflow overflow. Other investment news crossing our desks:

  • Kayrros snags €40 million ($44 million) to help French public and private organizations with sustainability goals, such as managing climate risks and implementing decarbonization strategies.
  • U.K.-based Palatine Impact Fund acquires Cura Terrae to build an environmental services and consultancy business.
  • NIO Capital raises $400 million to invest in the digitalization and decarbonization of mobility, energy and logistics in China.
  • Denmark’s LastObject scores €2.7 million ($3 million) to create reusable alternatives to single-use items like cotton swabs, tissues and cotton pads.

Impact Voices: Incentivizing Impact

How incentives can steer capital toward impact. About $35 trillion, or a third of all assets under management worldwide, has moved into some type of sustainable or socially-responsible investment. Bjoern Struewer’s vision is for those investments to be structured to actively reward positive social and environmental outcomes. Struewer heads Roots of Impact, which uses financial incentives to foster value-creation and positive impact. His organization has supported Root Capital in expanding its lending portfolio to reach smaller and “riskier” agribusinesses in Latin America, and orchestrated financing to enable Mexico-based Clínicas del Azúcar to extend diabetes services to lower-income patients. In all, Roots of Impact has supported more than 30 “impact-linked finance” transactions that encourage businesses to deepen or scale their impact by building incentives into the terms of their financing. 

Struewer wants to see such mechanisms adopted in financial markets more broadly. “The impact of transforming huge global players such as Nestlé, Coca-Cola or Amazon would be substantial, considering the market position and influence that these ‘tankers’ have,” he writes in a guest post on ImpactAlpha. “Everything is already in place to make it happen.” Tools like impact-linked credit and loans are being used to help Philips, Anheuser-Busch and Italian utility Enel green their business practices and supply chains, improve governance and boost gender equity. Catalytic capital on concessional terms, which underpinned the Root Capital and Clínicas deals, could unlock and mobilize substantially greater flows of commercial capital, says Struewer. “The best companies in the world – in terms of positive impact – would suddenly be able to raise large amounts of low-cost capital to scale,” he writes. “Resources would flow to what matters most to society.”

Agents of Impact: Follow the Talent

Cubico Sustainable Investments promotes David Swindin to CEO… Kauffman Foundation is looking for a director of capital innovation and a program officer for “heartland” strategy in Kansas City, Mo… CrossBoundary is hiring a deputy head of natural capital investment advisory in Washington, D.C., London or Nairobi… The Nature Conservancy seeks a manager of investment fundraising, preferably in New York, San Francisco or London.

Convergence and the Swiss SDG Impact Finance Initiative open a design funding window for solutions that target education, jobs, climate and responsible consumption / production… Impak Finance and Social Value International are hosting the “Beyond ESG” summit on Tuesday, Mar. 29… Impact Engine is holding a Chicago impact investing showcase focused on individuals as impact investors on Tuesday, Apr. 12.

Thank you for your impact.

– Mar. 23, 2022