Greetings, Agents of Impact!
Featured: Follow the Money
Where impact funds are looking to deploy $73 billion in dry powder. Real assets. Emerging markets. Early stage impact tech. The financial data provider Pitchbook picked out nearly 700 active impact investment funds and found $73 billion in unallocated capital – so-called ‘dry powder’ – along with $213 billion in investments outstanding. To understand where that capital is flowing, Pitchbook tagged the funds with impact categories such as agriculture, education and water, using the IRIS+ framework, as well as by asset classes and geographies. The takeaways: Europeans impact funds like energy. North American funds, healthcare. The largest impact category for the rest of the world: Financial services. Education investment funds trended higher outside of North America and Europe. Other highlights:
- Real impact. Real assets like infrastructure and real estate can absorb institutional-sized chunks of capital. Real assets – think hospitals, schools, rural waste systems, energy projects and broadband expansion, along with agriculture and real estate – represented 28.5% of all capital allocated to impact funds. That’s more than double the share of capital raised by real assets funds in private markets more broadly.
- Emerging markets. African funds raised 7.5% of the capital raised by impact funds since 2006. If that sounds like a pittance, consider that it’s more than six times Africa’s 1.2% share of all private funds. Impact funds represent a quarter of all funds in Africa, versus just 3.5% of all private market funds globally.
- White spaces. Dozens of impact fund managers have targeted energy, financial services, health and real estate funds. But in many years, no new funds at all have focused on biodiversity, ecosystems or air. Oceans, pollution and employment are also underweighted. Climbing the attention scale: agriculture, climate and diversity and inclusion.
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Dealflow: Waste to Value
Tipa raises $70 million for compostable plastic packaging. The global market for waste management could reach more than $700 billion by 2030. Helping get the ball rolling is Tipa, an Israeli circular economy startup that aims to reduce plastic waste using biodegradable plastic packaging. Tipa says its plastic is as strong as regular plastic, but decomposes in 180 days via composting. The company raised $70 million in a Series C round led by Millenium Food-Tech and Meitav Dash, bringing its total raised since it launched in 2010 to $130 million. In the U.S., Keter Environmental Services, which provides recycling and waste management services for more than 500 corporate clients, is acquiring M-PASS, an Atlanta-based waste recycling company.
- Food waste. Sweden-based Motatos secured €24 million ($27.1 million) to sell excess and soon-to-expire goods that would otherwise end up in landfills. The funding round was led by U.K.-based Blume Equity, a women-led growth equity impact fund. Commercial and catalytic investors poured $5 billion into food waste solutions last year (for context, see, “Food-waste solutions are a big business – and a big opportunity to stem climate change”).
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TPG Rise sells its stake in EverFi to Blackbaud. The Washington, D.C.-based educational software company, which sells subscription packages to schools and companies for training on sexual assault and harassment prevention, social and emotional learning and career readiness and other topics, was the Rise Fund’s first investment in 2017 (see, “TPG’s Rise Fund comes out of the gates with a big edtech investment in EverFi”). At the time, TPG Rise committed $120 million, with another $30 million from TPG itself, for a majority stake. Blackbaud acquired EverFi for approximately $750 million, suggesting that TPG Rise more than doubled its initial investment. Share.
Slang secures $14 million to upskill English-language skills for Latam workers. In Latin America and elsewhere, proficient English speakers are more likely to secure a job. Boston, Mass.-based Slang provides online courses tailored to help workers improve vocabulary in specific fields. “Slang has the ability to remove the barriers preventing many low- moderate-income workers from accessing career opportunities,” wrote Ander Iruretagoyena and Tasha Seitz of Impact Engine, which joined the Series A round led by Dila Capital and Acumen Latam Impact Ventures. The Inter-American Development Bank also participated. Slang will expand in Columbia, Brazil and Mexico. Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Alliance Finance secures $5 million from Swiss impact fund EMF Microfinance Fund to support COVID-impacted small businesses in Sri Lanka.
- Lafaza Trading scores $1.5 million from Incofin to buy vanilla and spices from smallholder farmers in Madagascar at fair-trade prices.
- India’s Annapurna Finance rakes in $35 million from Oikocredit, Accion and Encourage Capital to provide clean energy financing to rural borrowers.
Signals: Climate Glossary
Shareholder activists are scoping out ‘Scope 3’ emissions as climate campaigns heat up. Most of the carbon emissions from gasoline comes not from drilling or refineries but when it is burned by vehicles. That has insulated oil companies from a full accounting of their climate impact. In September, Houston-based Phillips 66 became the first U.S. oil major to promise to reduce its so-called “Scope 3” emissions, such as those emitted from the tailpipes of cars. Oil and gas producers have fiercely resisted accounting for the indirect emissions generated by the end-uses of its products. That has allowed, for example, the Canadian pipeline operator Enbridge to claim the mantle of environmental leadership while its Line3 pipeline transports Alberta’s dirty tar-sands oil to Wisconsin (see, “Target Enbridge, not Exxon, to prevent the lock-in of high-carbon infrastructure”). Phillips 66’s about-face comes after a majority of shareholders voted last year to prod the company to set Scope 3 emissions-reduction targets. “Despite a historic resistance to setting any sort of Scope 3 target,” Andrew Logan of Ceres writes in a guest post, “the industry can be moved.”
- Climate watchwords. If 2021 was the year of net-zero pledges, 2022 could be the year of Scope 3 accounting for companies’ supply chains as well as end-use emissions. The fuller accounting gives investors a better picture of risks, such as regulations on high-emission products and shifts in consumer demand. Beware: Fossil fuel companies like to stress “carbon intensity,” a measure of efficiency, rather than absolute emissions reductions. ImpactAlpha’s glossary of key climate terms can help you keep your scopes straight and make sense of the jargon.
- Keep reading, “Investors press oil majors to address emissions from products” by Ceres’ Andrew Logan.
Agents of Impact: Follow the Talent
Ben Ratner, ex- of the Environmental Defense Fund, joins JPMorgan Chase as executive director of sustainability… Dana Barsky, former global head of sustainable finance at Credit Suisse, becomes president of Growth for Good Acquisition Corp., an “inclusive and sustainable” SPAC that last month raised $253 million… MSCI’s Linda-Eling Lee and Kimberly Gluck of Boston Trust Walden join the board of US SIF… BlocPower is hiring a project manager in New York… Upstart Co-Lab is looking for an associate in New York or Los Angeles…
Ford Foundationseeks a portfolio operations manager… Spring Lane Capital is recruiting a vice president, associate and senior analyst… Thomson Reuters Foundation is hiring a senior manager of inclusive economies in London… Rights CoLabseeks a part-time sustainability standards consultant and a full-time development manager (remote)… Impact Engine is hiring a senior associate of economic opportunity.
Thank you for your impact.
– Jan. 4, 2022