Greetings, Agents of Impact!
Call No. 38: Public policy. Private capital. Public good. The Call will key in on opportunities to engage with the Securities and Exchange Commission around corporate ESG disclosure, climate risk reporting and human capital management – and on responses to the anticipated challenges and backlash. Join Fran Seegull of the U.S. Impact Investing Alliance, Cambria Allen Ratzlaff of the UAW Retiree Medical Benefits Trust, Satyam Khanna, former ESG advisor at both the SEC and EPA, and other Agents of Impact, Tuesday, Feb. 22 at 10am PT / 1pm ET. RSVP today.
- Policy agenda. “Progress on a dozen policies to mobilize private capital for public good,” by Fran Seegull on ImpactAlpha.
Featured: Innovative Finance
‘Impact notes’ help entrepreneurs recoup equity by creating good jobs and community wealth. You may have heard of SAFE notes, “simple agreements for future equity” that reward startup investors with discounts on future shares. Here come “impact notes” that instead reward founders for fulfilling social-impact objectives. Bosco and Maya Kante founded Electrospit in Oakland, Calif., to commercialize an easy-to-use “talkbox” that has been used to electrify voices in musical hits by Bruno Mars and Dua Lipa. The Grammy-winning producer and his wife and co-founder can recoup some of the equity in the company by manufacturing in Oakland and creating good jobs and employee health and wealth. The nonprofit venture capital firm ICA, also based in Oakland, is pioneering the use of impact notes to return equity shares to the Kantes as they hit milestones for local jobs, health benefits and employee ownership. Other targets include recruiting diverse community members for board roles and management positions. “ICA came to us and said, ‘Hey, we’re gonna give you better terms, as long as you just do what you already said you’re going to do,’” Bosco Kante tells ImpactAlpha.
Impact notes are part of a growing roster of impact-linked finance structures that incentivize and reward social or environmental outcomes. “Every financial instrument can be linked to impact,” says Bjoern Struewer of Roots of Impact, which developed social impact incentives, or SIINCs. “You just need to find the variable you can play with.” Silicon Valley startup accelerator Y Combinator introduced the SAFE deal structure in 2013 to quickly get investor money to startup founders. In exchange for fast cash and few terms, investors are rewarded with discounts on future shares or a capped valuation. “We saw what Y Combinator had done with the SAFE note in venture capital,” says ICA’s John Gough. “We thought, why don’t we create something that more embodies our mission and goals?” Instead of rewarding investors, the impact notes return equity to founders. “We’re showing that building a business can be done in a different way,” says Kante. “You can include the community and you can do it at home if you’re strategic and creative.”
- Keep reading, “‘Impact notes’ help entrepreneurs recoup equity by creating good jobs and community wealth,” by Dennis Price on ImpactAlpha.
Dealflow: Returns on Inclusion
University Growth Fund secures $50 million to recruit students of color. The Salt Lake City-based fund recruits college students, helps them get investment experience in venture capital, and connects them with employers after graduation. Of the 30 student associates shown on the fund’s website, 28 are white and none are Black. UGF’s Peter Harris says the fund branched out to Atlanta last year to reach Black and other students of color. “More investors recognize the need to improve diversity and access,” Harris said, and “are coming to the conclusion that greater inclusivity is not only the right thing to do but can also help achieve greater outcomes.”
- Racial equity. Financial services firm Ally Financial, which has backed UGF since 2014, provided a grant for the Atlanta expansion. Investors in the fund include Sallie Mae Bank, Lending Club, Arvest Bank, Continental Bank and ATHOS. Students in the Atlanta office come from historically Black colleges and universities, including Morehouse College and Spelman College.
- Check it out.
Protix raises €50 million to expand insect farming business globally. The Dutch company, launched in 2009, uses organic waste to feed black soldier fly larvae, which are then processed into ingredients for animal feed. The market for sustainable animal feed continues to grow with global demand for protein, and the company is seeing “continued appetite from financial institutions and impact investors,” said Protix’s Kees Aarts.
- Waste-to-value. The equity round was backed by new investors European Circular Bioeconomy Fund, BNP Partners and Monaco Asset Management, which invested on behalf of the Prince Albert II Foundation and The Good Investors. Existing investors Aqua-Spark, Invest-NL and Rabobank’s investments group also participated.
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North Sky Capital exits four green infrastructure investments. The Minneapolis-based fund manager last year sold its stakes in a utility-scale solar field, a commercial rooftop project and other renewable energy assets from its first ($240 million) and second ($325 million) sustainable infrastructure funds. Last month, North Sky closed $200 million for its third infrastructure fund, targeting low-income communities (for background, see “Solar proves a pathway for private capital to flow into low-income communities”). “The market continues to be strong,” North Sky’s Adam Bernstein told ImpactAlpha, with high demand from strategic investors, utilities and long-term owners looking for renewable assets. Share.
Dealflow overflow. Other investment news crossing our desks:
- Soros Fund Management buys 20 million shares of electric vehicle startup Rivian (see, “Rivian rakes in $2.5 billion to commercialize electric pickups and SUVs”).
- Reliance Health raises $40 million in Series B funding, led by General Atlantic, to invest in companies providing affordable and accessible healthcare in emerging markets.
- SDS Support Housing, a private equity impact fund that finances permanent supportive housing for individuals experiencing homelessness, invests $8 million to develop housing in South L.A.
- The Harbor Bank of Maryland and fintech Cerebro Capital will provide $50 million in loans to minority small businesses in the Washington-Baltimore metro area.
Agents of Impact: Follow the Talent
Paige Nicol, ex- of Luminate, joins BlueMark as director for Europe… Sydney Hulebak, ex- of WildArk, is named impact investment manager at the Community Foundation for Greater Atlanta… The City of Boston is recruiting a cabinet-level senior advisor to help implement Boston’s Green New Deal… Palladium Impact Capital is hiring an analyst and an associate director in Washington, D.C. or New York.
Mercy Corps Ventures seeks a U.S.-based venture platform lead and a Blockchain for Refugees team lead in Uganda… Mission Driven Finance seeks a real estate strategist and other positions… The Georgia Social Impact Collaborative is hiring a part-time director in Atlanta… Media Development Investment Fund has a number of openings in Europe, Latin America and Africa… LA28, the organization hosting the 2028 Summer Olympic and Paralympic games, seeks a vice president of impact.
Thank you for your impact.
– Feb. 15, 2022