Greetings! Thank you to the many Agents of Impact who joined The Call yesterday to plumb the past, present and future of The Reconstruction. We’ll have a recap and replay in Friday’s Brief.
Featured: Sustainable Consumption
Food-waste solutions are a big business – and a big opportunity to stem climate change. Commercial and catalytic investors poured $5 billion this year into technology and tools to reduce food waste, and are mobilizing to invest more. The goal: halving food waste by 2030. In the U.S., more than one-third of all food ends up unsold or uneaten. Uneaten food is the number one product entering landfills, where it can produce methane, a greenhouse gas 80 times more potent than carbon dioxide. “The good news is that the problem of food waste is eminently solvable – it’s literally low-hanging fruit,” writes Jesse Fink, co-founder of Priceline and MissionPoint Partners and founder of the food waste nonprofit ReFED, in a guest post on ImpactAlpha. ReFED estimates that $3 billion per year in catalytic capital – grants, impact-first investments, and low or no-interest loans – can crowd in the additional $11 billion needed annually to reduce food waste by 50%.
- Co-benefits. For companies, better management of food waste is a way to cut costs and generate revenue. For communities, it produces better health and good jobs. This year’s investment boom has pushed valuations of imperfect foods distributor Misfits Market and edible food preservation coating company Apeel north of $2 billion. Other hot sectors include cold chains (Lineage Logistics), demand planning (Shelf Engine), recycling and up-cyling (Bioenergy Devco), shelf-life extension (Hazel Technologies), food rescue (Goodr) and markdown apps (Too Good To Go), according to data from ReFED. Average deal size jumped from $30 million to $60 million. “It’s a whole category we’re very excited about,” says Allison Shapiro of Closed Loop Partners, which has made eight food-waste investments.
- Shovel-ready. Food businesses are using advanced technologies like hyperspectral imaging to manage production and distribution. Low-tech solutions, like buying a giant freezer or new delivery truck for a local food bank, can spur immediate results. “Many of them are ‘shovel-ready,’ just needing implementation rather than invention to reap big benefits,” Fink says. ReFED, with Upcycled Food Association, launched the Food Waste Funder Circle to identify dealflow and mobilize capital. Along with Closed Loop, members include Circulate Capital, Trailhead Capital and Green Circle Capital, as well as with Crown Family Philanthropies and The Kroger Co. Zero Hunger | Zero Waste Foundation.
- Keep reading, “Food-waste solutions are a big business – and a big opportunity to stem climate change,” by Dennis Price, and “Food-waste solutions for climate change are ripe for catalytic capital,” by Jesse Fink on ImpactAlpha.
Dealflow: Electrify Everything
Harley-Davidson rides into an electric future with LiveWire spin-off. Another icon of the fossil fuel-era is spinning off a “ReNewCo” to reap the rich valuations and easy access to capital of leaders in the net-zero disruption (the background). Harley-Davidson is taking its LiveWire electric vehicle division public via a special purpose acquisition company, or SPAC, backed by AEA Investors and Bridges Fund Management. Harley-Davidson will own about three-quarters of the new company when the merger closes next year.
- Demand shift. The customer base for Harley-Davidson’s gas-powered “hogs” is aging as a new generation seeks out electric-powered bikes, scooters and motorcycles made by well-funded startups. “LiveWire will be able to operate with the same agility and speed as a startup,” Harley-Davidson’s Jochen Zeitz told The Wall Street Journal. LiveWire will plow the estimated $545 million raised in the spinoff into product development, manufacturing and distribution. It estimates sales of electric models could reach $3 billion by 2030. Harley-Davidson had revenues of $4 billion last year.
- Step on it.
An EV laggard, Toyota commits $35 billion to all-electric vehicles by 2030. Automakers GM and Ford are embracing the all-electric future. Toyota is raising its game more modestly, announcing it will market 30 battery-electric passenger and commercial cars, and aim for annual sales of 3.5 million cars, or about one-third of its total, by 2030. Its Lexus luxury brand will sell all-electric cars by 2035. Toyota, which pioneered hybrid vehicles with the Prius, committed another $35 billion to hybrids and hydrogen-powered vehicles. The world’s largest auto manufacturer last month declined to sign a pledge by GM, Ford and other carmakers to phase out fossil fuel cars by 2040. “If the energy that powers vehicles is not clean, the use of an electrified vehicle, no matter what type it might be, will not result in zero CO2 emissions,” Toyota’s Aiko Toyoda said at a press briefing.
- Taking flight. Hollister, Calif.-based ZeroAvia, which aims to decarbonize air travel with hydrogen-electric airplanes, raised an additional $35 million in a round backed by United Airlines and Alaska Air Group. United will buy up to 100 hydrogen-electric engines from ZeroAvia. Separately, Canada’s eLeapPower, whose engine tech is used to optimize EV battery performance, raised $16.3 million in a Series A round.
- Plug in.
Generate backs Amp Americas to convert dairy waste into renewable natural gas. Chicago-based Amp builds and manages anaerobic digesters to convert dairy waste into renewable natural gas, while reducing emissions of methane and carbon. Through the deal, Amp will acquire from Generate two anaerobic digesters and two gas processing plants in Indiana that capture methane from around 1.5 million gallons of dairy waste daily. Generate tapped Amp in 2012 to develop the projects.
- Renewable portfolios. Amp also acquired three anaerobic digesters in Idaho – along with two gas processing plants and an electric generator – that capture methane from more than 940,000 gallons of dairy waste daily. With the transactions, Amp says it will manage seven of the largest dairy biogas-to-transportation assets in the U.S., producing renewable natural gas from over 100,000 cows. Last month, Annapolis, Md.-based Bioenergy Devco secured $100 million to build anaerobic digesters in the U.S.
- Methane markets. Equilibrium Capital says its dairy-waste biogas plants are generating revenues of about $25 million per year from credits under California’s Low-Carbon Fuel Standards and federal renewable fuel standards (for background see, “The sky-high value of cutting methane emissions is attracting policymakers – and investors”). “We may sell our methane for $5 and our environmental credits associated with that could be $80,” Equilibrium’s Dave Chen told ImpactAlpha. A ton of methane has at least 80 times the warming power of carbon dioxide in its first 20 years.
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Dealflow overflow. Other investment news crossing our desks:
- Shell acquires U.S. solar and energy-storage developer Savion as part of its mandate to reach net-zero emissions by 2050.
- Beneficial Returns makes impact-linked loans to Indonesian coconut-sugar producer Aliet Green and Altitud, a microlender for women-led sewing businesses in Mexico.
- Climate insurance tech startup IBISA scores €1.5 million ($1.7 million) to insure smallholder farmers in India, Niger and the Philippines.
- Bangalore-based Open, a Google-backed neobank for small businesses, acquires Finin, which helps consumers in India save and invest money.
Impact Voices: Investing in Democracy
Turning pandemic profits into ‘democracy dividends.’ Delta? Omicron? The richest Americans have prospered even as the pandemic has dragged on. The cumulative net worth of the 400 wealthiest Americans grew by 40% last year. And the run-up in housing and stock prices boosted the net worth of many more homeowners and stockholders, widening wealth divides. “What good is all that money, though, if we’re at risk of losing our democracy?” Propel Capital’s Sarah Williams and Anna Galland ask in a guest post on ImpactAlpha. Their suggestion: turn part of those robust bank accounts into a “democracy dividend.”
- Paying it forward. Civic and political organizations “that are doing the deep work of defending, renewing and reimagining our democracy” are needed “to give us a shot at solving all the complex problems we face,” they write. On their year-end giving list: Fair Fight, to directly combat attacks on voting; Color Of Change and Care in Action, to educate and engage people in the electoral process; and MoveOn and Indivisible to revitalize participatory democracy. Propel’s Democracy Forward Fund supports these organizations and others.
- Read their full post.
Agents of Impact: Follow the Talent
Ford Foundation is looking for an impact investing fellow in New York… Santa Clara University is hiring a director of corporate and foundation relations in Santa Clara, Calif… Faith Invest seeks an investment solutions officer… Hispanics in Philanthropy is looking for a remote, U.S.-based venture or senior venture associate.
Thank you for your impact.
– Dec. 15, 2021
