The Brief | November 8, 2021

The Brief: Friends of ImpactAlpha, inflation pressures on ESG, fusion profusion, Black-owned fintechs, Belize’s blue bond, managing small-business emissions

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Greetings, Agents of Impact, and thank you, friends of ImpactAlpha! Over the last couple weeks, we have followed a number of you, as you introduced yourself and told others why you tap into ImpactAlpha every day. Share a few words of your own, and let your friends know about this week’s 50% discount for new subscribers. We appreciate you. – David Bank

🌍  Next week’s Call: The disruption in small business financing. The challenges of getting affordable capital to small and growing businesses in emerging markets have stymied development efforts for decades. Then the COVID disruption shut down lending altogether – before spurring a tech-driven disruption in small business financing. Join Celo’s Daniel Kimotho, Pezesha’s Hilda Moraa, The People’s Fund’s Luyanda Jafta, Lendable’s Daniel Goldfarb, and Courageous Capital’s Laurie Spengler on Agents of Impact Call No. 34, Tuesday, Nov. 16 at 8am PT / 11am ET / 7pm Nairobi. RSVP today.

Featured: Institutional Impact 

Oil and inflation challenge green portfolios, as what goes down does come up. With oil and gas commodity prices on the rise, along with global inflation, some green investors are getting caught out. The U.S. Department of Labor will report on October’s price hikes on Wednesday, as inflationary pressures threaten to drive an ESG shakeout. “The next cycle may show which ESG investors are, in fact, sophisticated market participants and which were just taking a punt on oil prices and marketing tailwinds,” ImpactAlpha contributing editor Imogen Rose-Smith writes in her latest Institutional Impact column. What happens to ESG in a rising interest rate environment? “One answer is that ESG investing is just… investing,” she says. “Like all investors, ESG investors have to think through the consequences.”

For the last decade or so, green investing in the public markets “has been oh-so-easy,” Rose-Smith writes. “Avoiding fossil fuels, investing in green energy companies and loading up on low-carbon tech stocks like Facebook, Google and Salesforce was a guaranteed way to make money.” The danger now is that inflation becomes an excuse to push for less impact, not more. But through every investment challenge of the last 25 years, sustainable investment has come back better and stronger. So go ahead and doubt Tesla’s trillion-dollar valuation, for example, but don’t bet against long-term electrification, Rose-Smith says. “Fund flows into ESG will certainly slow and reverse if times get bad, but they’ll almost equally certainly come back. The overall trajectory hasn’t changed.”

Keep reading, “Oil and inflation challenge green portfolios, as what goes down does come up,” by Imogen Rose-Smith on ImpactAlpha. Catch up on all of Imogen’s Institutional Impact columns.

Dealflow: Zero Carbon

Helion Energy rakes in $500 million to (really) generate fusion energy. The half-billion dollar investment, the largest ever investment for a private fusion venture, reflects growing confidence that the clean energy game-changer might really be “just around the corner” this time (for context, see “Long coming but slow to arrive, fusion energy approaches a milestone on path to commercial deployment”). Redmond, Wash.-based Helion, along with Commonwealth Fusion, TAE Technologies and other venture-backed startups, are raising massive war chests to commercialize the holy grail of energy. Helion will use the Series E funding to complete its “pulsed magnetic fusion” prototype on the way to demonstrating positive net-electricity production in 2024. “In just a few years, we will show that the world can count on fusion to be the zero-carbon energy source that we desperately need,” said Helion’s David Kirtley.

  • Fusion unicorn. The Series E round values Helion at $3 billion. Silicon Valley investor Sam Altman, who will become executive chairman, led the round with a $375 million investment – his largest ever. Facebook co-founder Dustin Moskovitz, Mithril Capital and Capricorn Investment Group also joined. An additional $1.7 billion can be unlocked if Helion hits certain milestones. “If Helion is successful, we can avert climate disaster and provide a much better quality of life for people,” Altman said.
  • Feel the heat

Aruwa Capital invests in Pngme to use phone data to improve lending in Africa. The Lagos-based gender-lens fund invests in growth-stage companies in Nigeria and Ghana. Adesuwa Okunbo Rhodes founded the firm in 2018 to back more women founders (see “Agent of Impact, Adesuwa Okunbo Rhodes”). Pngme, a women-led fintech, collects financial data from users’ smartphones to help banks, mobile money operators, credit bureaus and other financial services firms improve lending to consumers in emerging markets. Aruwa also has backed Nigeria’s Wemy Industries, a personal hygiene company, and Lifestores Pharmacy, a pharmacy chain in underserved communities.

  • Financial inclusion. A majority of Nigerian adults don’t have any credit history, making them unable to access loans. Pngme’s software can help financial institutions “effectively match products to end users while minimizing their risk,” said Rhodes.
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Northwestern Mutual accelerator backs five Black founders. The second cohort of the Black Founder Accelerator, launched by the Milwaukee-based financial services giant earlier this year, includes CrossKudi, which manages a money transfer platform for immigrants; Mark Labs, a shareholder engagement software company for sustainable investors; and hiring platform Qualifi. The five startups will each get $100,000 investments and access to Northwestern’s network of insurance and financial experts.

  • Racial equity. The accelerator is run by Gener8tor to help U.S.-based Black founders in fintech, insurance tech, digital health and data analytics. Its first cohort included HUED, a health care startup backed by Serena Williams’ Serena Ventures and Female Founders Fund. Northwestern in June created a $100 million impact fund for Black fund managers.
  • Check it out

Dealflow overflow. Other investment news crossing our desks:

  • National Equity Fund raises $85 million to create access to equity capital for Black, Indigenous and people of color-run housing developers.
  • Morocco’s CIM Sante Group secures a $10 million equity investment from Finnfund’s Global Impact Fund to meet increased demand for healthcare services in the country.
  • Sway scores $2.5 million to replace single-use plastic packaging with seaweed-based, zero-carbon bio plastic.
  • Credit Suisse facilitates $364 million for The Nature Conservancy’s blue bonds program. The bond paves the way for Belize to swap “debt for nature” and channel $200 million in savings towards marine conservation.

Impact Voices: B to Small B

Four ways small businesses can manage their greenhouse gases. Small businesses in advanced economies contribute to up to 70% of total industrial pollution. Yet more than three-quarters of them don’t know how to measure their emissions. Small businesses may be wondering, “Where do I start? And what do I do once I have calculated my emissions?” writes Proof of Impact’s Evan Vahouny in a guest post for ImpactAlpha. Free online calculators, such as the CoolClimate Network Business Calculator, offer an economical starting point. Online tracking spreadsheets, like the Greenhouse Gas Protocol, are a more advanced option. Consultants like South Pole, SLR Consulting and SustainCERT specialize in helping businesses measure and manage their GHG footprint. And integrated digital solutions, like Proof of Impact’s GHG 360, help businesses calculate their specific emissions from their existing operational data. How-to.

Agents of Impact: Follow the Talent

Meryam Omi, formerly with LGIM, will lead Climate Arc, a new climate finance organization… Camille Walker, ex- of NPower, is named executive director of the Local Initiatives Support Corp. Detroit… Phil Kirschman, ex- of Cornerstone Capital Group, will lead Manchester Capital Management’s ESG and impact investing efforts… Ecosphere+ is hiring an operations and sales coordinator for carbon in London.

The Nature Conservancy is looking for an associate director of corporate and foundation relations in New York… ImpactAssets has an opening for an investment officer and an associateCapital Impact Partners is hiring an investment analyst in Arlington, Va… Advantage Capital seeks an investment intern in New York… The Thomson Reuters Foundation is looking for a data equity and digital rights specialist in Nairobi.

Thank you for your impact.

–Nov 8, 2021