Greetings, Agents of Impact!
Call No. 37: Real-world effects of the rising price of carbon. With a ton of carbon fetching nearly $100 in Europe and prices rising in markets around the world, carbon is suddenly driving fund strategies, conservation financing, corporate accounting and crypto speculation. Join Emmanuel Lagarrigue of General Atlantic’s BeyondNetZero, Delton Chen of Global Climate Reward and other Agents of Impact who are leveraging carbon finance for climate action. How are you seeing carbon pricing show up in deals and business plans? Let us know and we’ll call you up on The Call.
- Join The Call, Tuesday, Feb. 8, 10am PT / 1pm ET / 6pm London. RSVP today.
Featured: Reducing Food Waste
Climate and supply-chain disruptions spur investment in food waste solutions. Drivers of food price fluctuations are fueling historic levels of investment in solutions to food waste. Private food waste investments in the U.S. were up 30% to $4.8 billion last year, from $3.7 billion in 2020. Still, $14 billion in financing is needed each year to reach the national goal of cutting food waste in half by 2030, estimates the nonprofit ReFED. “Food waste has established itself as an emerging business category driven by a growing focus on climate change, concerns about supply-chain disruptions, and validation from food-waste success stories,” ReFED’s Alejandro Enamorado writes in a market update for ImpactAlpha. ReFED expects continued investments into food waste solutions, though growth could be dampened by broader market conditions. “We remain excited about the opportunities that 2022 will bring,” says Enamorado. Among the opportunities:
- Hot sub-sectors. The sizable rounds raised by startups distributing imperfect produce and developing edible protective food coatings in the past two years should last them a year or so. This year, ReFED expects early-stage funding for ventures that upcycle food waste into marketable new products. Others promising segments: cold-chain management, alternative sales channels, markdown-alert applications, and insect farming.
- Upcycling. Rebundle raised $1.3 million this month for its banana-fiber hair extensions. Capro-X is converting acid whey into chemicals and biofuel. The development of upcycling should provide momentum for marketplaces that source inputs for upcycling companies. Full Harvest raised $23 million last year.
- Market expansion. Ganaz started as a labor-matching service for agricultural workers, preventing food waste by staffing farms for harvest. It now calls itself a “people management platform,” with training and financial tools. Imperfect Foods and Misfits Market have become online grocers, with food-waste prevention roots. Writes Enamorado, “Food waste organizations may eventually evolve into organizations with broad food mandates that have waste prevention and reduction built into their DNA as best operating practices.”
Keep reading, “Climate and supply-chain disruptions spur investment in food waste solutions,” by ReFED’s Alejandro Enamorado on ImpactAlpha.
Dealflow: Impact M&A
Impact pioneer responsAbility acquired by investment manager M&G. The Swiss firm has invested $11 billion since 2003 in emerging-market enterprises addressing agriculture, access to energy, healthcare and education, and financial and gender inclusion. The impact investor is being fully acquired by U.K.-based M&G, which manages £370 billion ($496 billion) in assets on behalf of five million retail clients and 800 institutional clients. “There is strong and growing demand for impact and sustainable investment products from our clients,” said M&G’s Jack Daniels. M&G’s acquisition includes the stake that ResponsAbility sold to Australian pension fund Christian Super in 2019.
- Energy emphasis. ResponsAbility’s Rochus Mommartz said the acquisition will help meet “the massive unmet demand in developing countries and the need for climate finance.” ResponsAbility’s recent deals have backed clean energy access companies, like commercial and industrial developers GreenYellow in Thailand and CME Solar Investments in Vietnam. In 2020, responsAbility launched a $150 million climate fund, backed by Bank of America, Calvert Impact Capital, the European Investment Bank and Shell Foundation. And last year, it spun-off responsAbility Renewable Energy Holding, which it launched in 2013 to develop and manage renewable energy projects in Africa.
- Read on.
Floatpays raises $4 million to give South African workers access to earned wages. About 100,000 South African workers support themselves through gig-based apps like Uber and PicUP, most of which don’t pay a living wage. Cape Town-based Floatpays gives workers access to wages they’ve earned before they get paid and provides savings and financial literacy tools. Floatpays’ seed round was backed by Global Founders Capital, FINCA Ventures, 4DX Ventures and other investors. Olugbenga Agboola, founder of Nigerian digital payments company Flutterwave, also invested.
- Gig economy. Founder Simon Ward says he started Floatpays in 2020 to “move employees out of bad debt cycles and into savings and long-term financial wellness.” A growing crop of fintech companies are serving gig workers in emerging markets, including Floatpays’ South African peer PayMeNow, Kenya’s ImaliPay and Pakistan’s Abhi, which also gives workers access to their earnings.
- Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Bank of America and the Roy and Patricia Disney Family Foundation invest in L.A.-based The 22 Fund, which backs manufacturing businesses led by women and people of color that focus on underserved communities.
- Fintech venture Esusu raises $130 million to help U.S.-based minorities and immigrants build credit profiles.
- EDFI AgriFI loans East Africa Fruits $1.5 million to connect Tanzania’s small farmers and retailers.
- K-12 education software provider PowerSchool acquires Kinvolved, which helps reduce school absenteeism with school-communication and parent-engagement technology.
Signals: Ahead of the Curve
Vertical farming companies bring in the big bucks despite sustainability issues. The failure of AeroFarms, a U.S. indoor vertical farming business, to go public via a special purpose acquisition company, or SPAC, late last year, gave investors pause about vertical farming tech. The pause appears to be over. Growing produce in vertically-stacked layers in climate-controlled environments has been touted as a way to increase food security and reduce carbon emissions by growing produce closer to urban markets. Startups have been challenged by high operational costs and energy consumption, but scale and technology improvements are beginning to tackle the challenges. Among the latest deals:
- Modular indoor farms. San Francisco-based Plenty raked in $400 million in one of the largest raises for a vertical farming company to date. Investors in the Series E round include Walmart, SoftBank Vision Fund and One Madison Group. Plenty agreed to provide Walmart with pesticide-free leafy greens for the retail giant’s stores in California later this year. Plenty says its modular systems enable it to grow multiple crops in a single farm.
- Locally-grown produce. KKR provided Kearny, N.J.-based Bowery Farming with a $150 million loan facility to expand Bowery’s network of “smart” indoor farms beyond the East Coast. Bowery plans to build indoor farms in Atlanta and Dallas-Fort Worth to provide locally-grown produce to Walmart, Amazon Fresh, Whole Foods and Giant Fresh. Bowery says the farms will create more than 200 jobs and run entirely on clean energy. Backed by investors including Google Ventures, Temasek and General Catalyst, Bowery is valued at more than $2.3 billion.
Agents of Impact: Follow the Talent
General Atlantic hires Cornelia Gomez, ex- of PAI Partners, as head of ESG and sustainability… Rally Assets promotes Kelly Gauthier to president… Sue Lloyd, ex- of the International Accounting Standards Board, is named vice-chair of the International Sustainability Standards Board. Value Reporting Foundation’s Janine Guillot will be a special advisor to ISSB chair Emmanuel Faber.
Sorenson Impact Foundation seeks a managing director in Salt Lake City… Thomson Reuters Foundation is looking for a senior manager of inclusive economies, based in London… The Global Center for Adaptation has numerous openings… Stanford Energy is accepting applications from sustainable energy entrepreneurs for its Global Energy Heroes prize.
Thank you for your impact.
– Jan. 31, 2022