Greetings, Agents of Impact!
Featured: Policy Corner
The US is finally getting a national green bank. Here’s what to expect. Hurry up and wait. Lenders, community groups and consortiums of nonprofits that met this month’s deadline to apply to manage parts of the $27 billion Greenhouse Gas Reduction Fund don’t expect the Environmental Protection Agency to announce awards until next spring. The biggest chunk of that funding, part of last year’s Inflation Reduction Act, is the $14 billion National Clean Investment Fund, colloquially known as a national green bank. “It’s not enough to help us reach our goal of net zero in 2050, but it’s a massive, unprecedented, historic step forward,” says Adam Kent of the Natural Resources Defense Council’s Green Finance Center. Kent spoke with ImpactAlpha contributing editor Andrea Riquier about the program and what to watch for. “Now is when the real race begins,” he says. “That entire ecosystem needs to start communicating and working together now so they can be ready for next summer.”
- Priority projects. The National Clean Investment Fund is more of a national green financing program than a bank. The winning entities will work with the private sector to support the deployment of distributed energy generation and storage, net-zero emission buildings, and zero-emissions transportation. Distributed energy and storage might include things like residential rooftop solar panels, community wind and solar, fuel cells, and stand-alone energy storage. Lower-income and disadvantaged communities are to get 40% of the $14 billion allocation.
- Collaborative advantage. The EPA is expected to award mandates to just two or three entities. Applicants are teaming up. “A lot of people could put their heads together and flesh out good strategies that could be adopted by whoever wins the grants,” says Kent. A coalition called Power Forward Communities includes Rewiring America, Enterprise Community Partners, Local Initiatives Support Corp., and Habitat for Humanity International. Climate United, a consortium led by nonprofit impact lenders Calvert Impact, Community Preservation and Self-Help, has promised collaboration with lenders, technical assistance providers and other community partners.
- Community ties. Sometimes the goals of greenhouse gas reduction, economic outcomes and health improvements, and the prioritization of leverage and private capital complement one another. Sometimes they don’t. “You can’t put in a solar panel or a heat pump if your roof is caving in,” Kent says. It’s imperative that the awardees understand the communities they are serving, he adds. Applicants were required to share details of how they plan to do that, making clear the community and equity benefits that they target and how they plan to engage with residents.
- Keep reading, “The US is finally getting a national green bank. Here’s what to expect,” by Andrea Riquier on ImpactAlpha.
Dealflow: Financial Inclusion
Omidyar Network spinoff Flourish Ventures secures $350 million to invest for a fair financial system. San Francisco-based Flourish plans to double down on fintech, “which has brought significant advancements and opportunities to underserved individuals and businesses around the world,” wrote co-founders Arjuna Costa, Emmalyn Shaw and Tilman Ehrbeck. After several exits, the evergreen fund has a portfolio of 71 fintech investments in the US and emerging markets; seven companies have achieved unicorn status. Flourish says its portfolio companies have helped improve financial wellbeing for more than 250 million people and businesses globally. “We realize there is still plenty more to be done – especially in light of the lingering effects of the Covid pandemic, global conflicts, and climate shocks that are causing alarming increases in household vulnerability,” the founders wrote.
- Financial inclusion. The fresh infusion of capital is in addition to the $300 million secured at the time of Flourish’s spinout from Omidyar Network in 2019, as well as a separate $200 million in portfolio investments. It brings the firm’s total assets under management to $850 million. Flourish’s portfolio companies include small business lenders Indifi Technologies and Dinie, Indonesian affordable insurance provider Qoala, and Atlanta-based gig-worker platform Steady. Last October, Flourish launched Madica, short for “Made In Africa,” to diversify its portfolio in Africa.
- Check it out.
Colombian microfinance lender UNI2 snags $3 million in debt from Triodos. Two local entrepreneurs came together in 2014 to launch UNI2 Microcredito (formerly Finamiga) to expand access to credit, payments, insurance and other financial services in Colombia’s rural and low-income communities. The microfinance institution provides loans of $1,500 on average to smallholder farmers, cargo vehicle drivers and other micro-entrepreneurs.
- Credit onramp. Half of UNI2’s more than 15,000 borrowers are women; 40% are first-time borrowers. The line of credit comes from Triodos Investment Management’s Microfinance and Fair Share funds. UNI2 is also backed by BlueOrchard, Symbiotics and Bamboo Capital Partners.
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Dealflow overflow. Other investment news crossing our desks:
- BluePeak Private Capital closed its flagship fund at $156 million to provide flexible financing to small and mid-sized businesses in Africa. (BluePeak)
- A Camco blended-finance private debt fund secured a $50 million equity commitment from Green Climate Fund for clean energy investments in Africa. (Camco)
- UK-based Myenergi raised £30 million ($36.3 million) from Energy Impact Partners and other investors to build smart-home energy systems. (Tech.eu)
- Dutch climate tech startup Overstory scored $14 million in a Series A round backed by The Nature Conservancy for AI-powered wildfire mitigation and biodiversity. (TFN)
Impact Voices: Catalytic Capital
Creative capital helps entrepreneurs scale impact in a down market. A tranche of first-loss capital helped Tunisia-based tech training academy GoMyCode raise its $7.8 million Series A round. The catalytic funding mechanism, designed by USAID Invest, advisory firm CrossBoundary and Flat6Labs, acts as a repayable grant that startups are using to market to investors as cushion for risk. The risk mitigation “helped make the deal attractive, and it gave much more resilience and credibility to the deal,” recalls GoMyCode’s Yahya Bouhlel. Flat6Labs used first-loss tranches in four other Tunisian portfolio companies, helping them raise a collective $10.3 million in a down market. “Fund managers, capital providers, advisory firms, and start-ups can learn from this approach to fundraising in a challenging market or during an economic downturn,” writes Kristin Kelly Jangraw of USAID Invest in a guest post on ImpactAlpha.
- Accelerating impact. GoMyCode has grown from 12 schools to 45 in less than two years, and trains 6,000 students in the Middle East and Africa in high-demand tech skills, up from 2,000 before its latest raise. Transaction advisory grants covered upfront costs as Tunisian water tech venture Kumulus raised research and development funds for its drinking water units. Catalytic donor funds can be “a lifeline for local businesses,” Jangraw writes. “The right type of concessional support can be especially helpful to impact-minded entrepreneurs in emerging markets now facing decreasing GDP growth, high inflation, and/or liquidity constraints.”
- Keep reading.
Agents of Impact: Follow the Talent
Attendees of this week’s SOCAP conference were dressed for impact. New additions to this year’s best-dressed list include: Riddhi Mittal of kansha.ai (“I always say my aim is to spark joy, so I always wear a yellow jacket”); Hadar Cohen of Malchut (“Beauty is a form of inspiration, and when I take care of my body and dress well, it inspires me to show up for the world that I want to create”); and Saida Abdala of GoodSAM Foods (“Small farmers and Indigenous communities are hardworking people and often the ones that suffer the most. Wearing this blazer, I try to represent their voices”). See who made the scene.
Agrifood tech impact investor Astanor Ventures becomes B Corp certified… NatureVest is recruiting an impact investments director… Capital Impact Partners seeks an investment analyst in Washington, DC… Inclusive Prosperity Capital is hiring a staff accountant in Hartford, Conn… Triodos Bank is looking for an investment portfolio officer in the Netherlands… Founders Factory Africa is on the hunt for an investment manager… The 6th Annual Convening on Impact Investing, hosted by Impact Investors Foundation, will take place next week in Lagos.
Thank you for your impact!
– Oct. 26, 2023