Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Grassroots platforms are not waiting for Washington to invest in a green new deal. Stimulus measures pushed by Joe Biden and other Democrats could channel billions, or even trillions, into clean energy, green infrastructure and jobs – a Green New Deal in all but name. But new investment crowdfunding platforms are not waiting for the outcome of this fall’s bruising U.S. election, or the gantlet of partisan politics that is sure to follow. Raise Green, WaterWorks and other new investment marketplaces are enabling even small investors with as little as $100 to finance renewable energy and clean water in their own communities. “We have a bias towards action,” Raise Green’s Franz Hochstrasser told ImpactAlpha. “We want to push everyone to act now as opposed to waiting for some of those bills to pass, because we don’t have time to wait.” The two platforms launched this month under a securities law exemption that enables crowdfunding portals to raise just over $1 million from everyday investors, alongside unlimited amounts from high-net-worth individuals and other “accredited” investors.
The new platforms help bridge a financing gap for small and mid-sized green infrastructure projects and ventures. Such ventures can make a big difference in communities, yet are typically too small for institutional investors. Raise Green, which grew out of a Yale University project to finance a community solar project, is building a library of templates to help community members launch projects, including EV charging, microgrids and affordable housing, without specialized legal and financial knowledge. WaterWorks, born out of the Flint, Mich., water crisis, connects investors with water-related infrastructure projects and startups. WaterWorks cofounder Julianna Smoot was Barack Obama’s national finance director and deputy campaign manager. Just as small donors now fuel political campaigns, she says, so can thousands of small investors finance sustainable projects and enterprises. “And it’s something that can’t be undone every election.”
Keep reading, “Grassroots platforms are not waiting for Washington to invest in a green new deal,” by Amy Cortese on ImpactAlpha.
Dealflow: Follow the Money
Cambridge Crops rebrands as Mori and raises $12 million for food preservation tech. The Cambridge, Mass.-based company makes an edible, silk-based coating that keeps food fresher and curbs food waste. The company’s new name comes from the Bombyx mori moth, from which its silk is derived. The Series A funding was led by Acre Venture Partners. The Engine and Closed Loop Partners reupped alongside Refactor Capital, Blindspot Ventures and the Fink Family Foundation. New backers include Prelude Ventures and the Jeremy and Hannelore Grantham Environmental Trust. Share this post.
E-commerce startup TradeDepot adds financial services for small shops. The Lagos-based company launched in 2016 with a mobile app and Whatsapp service that helps the mostly women owners of small kiosks and corner shops source inventory from companies like Unilever and Danone. With $10 million in funding from Partech, International Finance Corp., Women Entrepreneurs Finance Initiative and MSA Capital, Trade Depot will help retailers finance inventory purchases and grow their businesses.
- Small business finance. Pharmacy-focused Field Intelligence offers small business financing along with its drug inventory forecasting service. Fresh foods-focused East Africa Fruits is looking to add financial services to its logistics service to promote smallholder farmers’ financial inclusion.
- Check it out.
DILA Capital looks to underserved Latin American markets with fourth fund. The Mexico City-based venture capital firm, which doesn’t call itself an impact investor, has backed social enterprises like biogas tech venture Sistema.bio and Peruvian skills development startup Crehana. With its fourth fund, the firm is eying Ecuador, Bolivia, Paraguay and other underserved markets in Latin America, where little venture funding is available to startups. IDB Lab, the Inter-American Development Bank’s early-stage impact initiative, anchored the fund with an undisclosed amount of capital. More.
Alt-dessert: Noops’ dairy-free pudding draws investors and Coconut Bliss attracts an acquirer. Two more deals in the booming animal-free food space: HumanCo, a holding company started by New York’s Hu Kitchen founder Jason Karp, acquired plant-based ice cream maker Coconut Bliss. And dairy-free pudding maker Noops raised $2 million from 25Madison, Unovis/New Crop Capital and Siddhi Capital.
Zambia’s Lupiya raises $1 million for digital micro-lending. The female-led company focuses on women-owned micro businesses, working capital finance, and collateral-backed personal loans. U.S.-based Enygma Ventures backed the company.
Signals: Ahead of the Curve
Will impact investors welcome the arrival of mechanisms to redress community grievances? A conservation project in Myanmar’s Tanintharyi region aimed to limit unsustainable palm oil and rubber plantations and overfishing. Indigenous Karen and other communities, however, objected that the project cut them off from livelihoods and prevented the return of people forced from their land by conflict. Conservation investors paused the project after communities used the United Nations Development Program’s “grievance redress mechanism”; since then, the Karen have proposed an alternative design dubbed “Landscape of Life.” Grievance mechanisms to give an effective voice to local communities and other stakeholders are now part of the UNDP’s proposed guidelines for private equity funds and bond issuers associating themselves with the U.N.’s Sustainable Development Goals (see “Developing community feedback tools to help investors manage positive – and negative – impact”). If adopted more widely, the guidelines would catch impact investing up to the best practices of development finance – and give investors greater visibility into unintended consequences and other potential downsides. “Standards are meaningless without good governance, and a key tool of good governance is hearing from the very communities who are impacted by investments,” Accountability Counsel’s Margaux Day told ImpactAlpha.
- Comment period. The proposals from the UNDP’s SDG Impact Team come as companies and countries issue a growing number of pandemic and social bonds. The UNDP plans to establish an assurance system for bond issuers and investors, along with an “SDG Impact Seal.” The “Operating Principles” for impact investing developed by the International Finance Corp. do not include a redress mechanism, “a serious mistake from our perspective,” Day said (see, ‘Operating principles’ help investors hold asset managers accountable for impact). The deadline for comments on the UNDP’s draft guidelines is July 31.
- Shared or standalone? Many development finance institutions already utilize community grievance mechanisms. Officials review complaints and can bring in mediators or other dispute-resolution services. “The mechanism needs sufficient independence from the financial institution, typically reporting to the president or board, to provide a forum that communities trust and feel is effective,” says Day. Some asset managers may design their own redress mechanisms, she said; others might want to share such a service. “Designing or adopting an effective grievance mechanism is an exciting opportunity for impact investors.”
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Agents of Impact: Follow the Talent
Planet Tracker names John Willis, ex-Sustainable Insight Capital Management, as director of research. Matthew McLuckie becomes Planet Tracker’s director of investor relations… Transform Finance is hiring a program coordinator for its Capital Strategies Program in New York… Nonprofit architecture and real estate firm Designing Justice + Designing Spaces is recruiting a director of real estate development in Oakland… Mercy Corps is looking for a climate change research consultant… private bank Quintet is hiring a CSR and sustainable investing strategist in Zurich.
Thank you for reading.
–July 21, 2020