Greetings, Agents of Impact!
Featured: Climate Adaptation
Climate change spurs innovation in finance as smallholder farmers struggle to adapt. The world’s 500 million smallholder farmers face a double crunch in the coming decades: the need to produce more food for growing populations, and climate change, which is already reducing crop yields in Africa and elsewhere. The imperative to help small farmers adapt to climate change is spurring long-overdue innovation in agricultural financing from new tech-enabled agricultural lenders, established agribusiness suppliers, cooperatives and even commercial banks, some of which are underwriting loans to smallholder farmers for the first time.
- Inputs and data. Digital tools are integrating climate information into agricultural decision-making. Kitovu Technology, a Nigerian company that provides credit to small farmers and supplies them with data about soil, crop health and market conditions, is part of the first cohort of the Adaptation SME Accelerator Project hosted by Lightsmith Group and Village Capital. In Kenya, Apollo Agriculture is helping farmers access climate-resilient seeds, crop insurance and new techniques in order to boost their incomes (for context, see “Apollo Agriculture is out to show how financing smallholder farmers can boost production and profits“).
- Supply chains. Agri-businesses and co-ops that buy and aggregate crops from millions of farmers are in a position to support the adoption of climate-smart agriculture. In India, agritech-focused impact investor Omnivore has invested in 40 startups, including Ecozen, which provides smallholder farmers with access to renewably-powered irrigation systems and cold storage. Swiss investment manager responsAbility is supplying long-term expansion debt to small and medium-sized agribusinesses in Asia, Latin America and Africa.
- Banking farmers. Just as farmers need training and technical assistance to adapt to climate change, so do bankers and other lenders. Berlin-based Yapu helps financial institutions in emerging markets digitize their processes, assess risks and underwrite smallholder farmers. In Rwanda and Uganda, Aceli Africa is testing SMS and voice-based training for farmers buying tree seedlings and saplings. Aceli also provides a first-loss cushion of up to 8% to lenders to back high-impact agribusinesses that prioritize gender inclusion, food security and climate resilience.
- Keep reading, “Climate change spurs innovation in finance as smallholder farmers struggle to adapt,” by Jessica Pothering and David Bank on ImpactAlpha.
- Answer The Call: Catalytic capital for climate adaptation and social equity. Join Apollo Agriculture’s Benjamin Njenga, the Lightsmith Group’s Jay Koh and other Agents of Impact Tuesday, Apr. 19 at 10am PT / 1pm ET / 6pm London. RSVP today.
Dealflow: Financial Inclusion
Stripe leads a $925 million ‘advance market commitment’ for carbon removal. If you buy it, they will come. That was how Stanford University’s Alicia Seiger summed up the strategy behind Frontier, a collaborative that also includes Alphabet, Shopify, Meta and McKinsey to speed the commercialization of carbon removal solutions. “We want to send a loud demand signal to entrepreneurs, researchers, and investors that there is a market for permanent carbon removal: build and we will buy,” said Stripe’s Nan Ransohoff. Advanced market commitments, or AMCs, are “a way to guarantee a market for a product, even before it exists.” The collaborative will vet carbon removal solutions via a request for proposals.
- Catalytic capital. Advance purchase commitments, also called off-take agreements, have been used by Hertz, Breakthrough Energy Catalyst, Brazil’s Natura and other companies to create markets for critical early-stage offerings including electric vehicles, sustainable aviation fuel and forest-based products (for context, see “Offtakes, guarantees and blended finance: A lexicon of catalytic climate capital“).
- Removal boom. Carbon removal tech will be necessary to keep warming in check, according to the latest report from the Intergovernmental Panel on Climate Change. Unlike forests, oceans, soil and other natural carbon sinks, carbon removal tech is expensive. Stripe has paid up to $775 per metric ton of CO2 removed by the Swiss company Climeworks, which last week raised a fresh $650 million (see, “How climate investors are getting ready for the carbon removal boom”). Six gigatons of carbon will need to be removed each year by 2050, roughly the equivalent of the U.S.’s annual emissions. Fewer than 10,000 tons of carbon have been removed to date.
- Get on board.
Voyager Innovations raises $210 million for financial services in the Philippines. The Manila-based company owns Maya Bank, a neobank, and PayMaya, a payment app serving 47 million consumers and merchants in the Philippines, where half of the adult population is unbanked. Voyager’s Shailesh Baidwan said there is “pent-up demand for digital financial services” from the country’s young and digital-savvy demographic. PayMaya will add new products such as cryptocurrency, micro-investments and insurance.
- Digitalization. The financing values Voyager at $1.4 billion. The round was backed by KKR and the International Finance Corp. KKR invested $45 million in GrowSari earlier this year to digitize payments for brick-and-mortar convenience stores in the Philippines.
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Terradepth scores $20 million to map the earth’s oceans. Austin-based Terradepth is building a map of the oceans to help governments, businesses and research organizations mitigate climate risk. The company uses autonomous underwater vehicles to collect data as deep as the ocean’s floor for its data visualization platform, Absolute Ocean.
- Ocean risk. “Our vast oceans cover most of our planet and are vital to human life, yet we know very little about them,” said Cameron McLain of Giant Ventures, which co-led the Series A round with Nimble Ventures. Giant Ventures this week backed Waterplan to help companies manage water-related risk.
- Dive in.
Dealflow overflow. Other investment news crossing our desks:
- Berlin-based Grover rakes in $330 million in a Series C round led by Energy Impact Partners to expand tech rentals and reduce electronic waste.
- Choco, also in Berlin, raises $111 million to connect restaurants and suppliers to reduce food waste.
- Egypt’s Pylon scores $19 million in seed funding to build digital infrastructure for water and electric utility companies in emerging markets.
- Lizard Earth secures $550,000 in debt capital from Acumen to source organic cocoa beans from smallholder farmers in Sierra Leone.
Signals: Policy Corner
Keeping an eye on policymaking for impact investing. From Opportunity Zones reform to S.E.C. nominees, it’s been a busy few days on Capitol Hill for policy affecting impact investors. The U.S. Impact Investing Alliance is helping us keep track:
- Optimizing Opportunity Zones. The Opportunity Zones Transparency, Extension and Improvement Act, introduced last week by legislators led by Senators Cory Booker and Tim Scott, includes impact reporting requirements, sunsetting for higher-income census tracts, and $1 billion for capacity-building work in communities.
- Climate risk in insurance. The primary regulator of the U.S. insurance industry approved climate risk reporting standards based on the Task Force on Climate-Related Financial Disclosures. More than a dozen states and Washington, D.C. have agreed to adopt the National Association of Insurance Commissioners’ recommendation, covering 80% of the U.S. market.
- SEC’s bipartisan nominees. Last month, the U.S. Securities and Exchange Commission proposed rules for public companies to disclose climate-related risks. This week, President Biden nominated two new commissioners: Democrat Jaime Lizarraga, an advisor to House Speaker Nancy Pelosi, and Republican Mark Uyeda, an S.E.C. attorney currently working with the Senate Banking Committee.
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Agents of Impact: Follow the Talent
Open Road Alliance promotes Caroline Bressan to CEO; she replaces Maya Winkelstein, who will transition to chair of the Open Road Impact Fund advisory board… Susannah Vickers, former New York City assistant comptroller for pensions, joins Lafayette Square Foundation as executive director… Pamela Alexander, ex-of Ford Motor Co., joins KKR as managing director and head of corporate citizenship… Javier Manzanares, ex- of the Green Climate Fund, is named co-CEO of ClimateCoin.
The Center for Economic Democracy in Boston seeks a senior director of capital strategies… Ajax Strategies is hiring a senior associate… Candide Group seeks a portfolio operations manager in Oakland or remote… Kirchner Fellowship is accepting applications for its impact investment training cohorts for university students in Mexico, the Americas, and at Historically Black Colleges and Universities.
Amani Institute is looking for post-grads to apply for its social innovation management program, which includes three months in Nairobi… Impact Frontiers and Cathy Clark of Duke’s Center for the Advancement of Social Entrepreneurship are offering, “Strengthening Impact Management.” In Asia, the program is offered in partnership with Asia Venture Philanthropy Network.
Thank you for your impact.
– Apr. 13, 2022
