Greetings, Agents of Impact!
Featured: ImpactAlpha Original
‘Tis the season… for impact reports from fund managers and wealth advisors. For all the clamor for greater disclosure and transparency in impact investing, few investors are likely to digest all of the year-end impact reports from fund managers and wealth advisors dropping into their inboxes. Not to worry! ImpactAlpha read through the latest pile of impact reports. Our takeaway: Impact reporting has improved, but methodologies vary widely and data gaps remain (see, “Veris presses its managers to report on impact and diversity”). The impact verification firm BlueMark, part of Tideline, says the best impact reports are clear about progress, incorporate multiple dimensions of impact, put things in context, and acknowledge failures and risks (disclosure: BlueMark is a sponsor of ImpactAlpha). As more asset managers improve their reporting and verification, says BlueMark’s Sarah Gelfand, “the data in impact reports will be increasingly useful in facilitating analysis of and driving towards improved impact performance.”
- Low-carbon transition: Energy Impact Partners. The New York-based firm focuses on later-stage technologies that its 30 strategic investors can adopt right away to increase their energy efficiency and reduce their carbon footprints. “We want to use our coalition as a slingshot to accelerate deployment by first scaling within our coalition, then into the marketplace as a whole,” EIP’s Peter Foxpenner tells ImpactAlpha.
- Impact game-changers: Capricorn Investment Group. The firm began as the impact-oriented family office of eBay billionaire Jeff Skoll and now manages $10 billion in assets, including at least $8 billion in outside capital. Capricorn’s report, “Levers of Impact,” details its in-house Sustainable Investors Fund, which has taken stakes in eight managers, including Lafayette Square, Osmosis Investment Management, Ecofin and Sustainable Development Acquisition Corp., a SPAC. The new impact report digs deeper into Aristata Capital, Respira International and Community Investment Management.
- World-positive investing: Obvious Ventures. Obvious founder Ev Williams once eschewed impact measurement for the firm’s portfolio companies. The San Francisco-based B Corp, which has raised nearly $600 million across three funds, has changed its tune, but its second annual “world positive” report is heavier on goals than performance.
- Place-based progress: Coastal Enterprises Inc. A reopened ski resort that restarted a community’s economy. A business lab to help immigrants from Angola and Somalia open child care centers. A loan to help a biochar company purchase equipment. In the past year, the Brunswick, Maine-based community development financial institution reports that it has distributed some $36 million in loans and equity financing to 95 New England businesses, which have helped create or preserve 427 jobs.
- Dig into the details in, “‘Tis the season… for impact reports from fund managers and wealth advisors,” by Amy Cortese and Dennis Price on ImpactAlpha. Report your impact and we’ll try to round it up as well.
Dealflow: Inclusive Economy
TradeDepot raises $110 million to provide capital for Nigeria’s informal merchants. ImpactAlpha has been watching all year as enterprise technology providers raise capital to bring micro and small businesses in emerging markets into the digital era. TradeDepot’s big round of debt and equity put an exclamation point on the emergence of enterprise tech as a gateway to financial inclusion (for background see, “How technology is disrupting small-business financing in emerging markets – in a good way.”) The Nigeria-based company started in 2015 to help informal and mostly women-led merchants source inventory from consumer goods companies like Unilever and Nestle. The debt portion of its latest funding round will help TradeDepot expand buy-now pay-later financing for merchants, which it launched last year. Arcadia Funds led the debt round. International Finance Corp. led the $42 million equity round, with participation from Novastar Ventures, CDC Group, Sahel Capital and others.
- Fintech breakout. Informal retailers and shopkeepers sell upwards of 80% of consumer goods in emerging markets, but lack access to financing to grow their businesses. Like TradeDepot, Sokowatch in Kenya offers buy-now pay-later credit for informal and small retailers. Nigeria and Kenya-based Field Intelligence provides inventory and inventory financing for small pharmacies. Kenyan fintech Pezesha facilitates small business financing for enterprise and logistics tech companies (see the recap of ImpactAlpha’s Call No. 34 and “Agent of Impact, Hilda Moraa”).
- Trend-spotting. TradeDepot’s Ignatius Akpabio said investors were largely unaware of the economic inclusion opportunity for micro and small businesses when TradeDepot launched. TradeDepot’s big financing round, he added, indicates that “more investors and serious entrepreneurs are being awakened to the opportunity and getting involved to work on this huge and critical problem in one of the most critical sectors of any economy.”
- Dive in.
Third Derivative launches carbon removal partnership and accelerator cohort. Third Derivative selected 16 startups for its accelerator, dubbed Cohort 419 for this year’s peak atmospheric CO2 concentration (419 parts per million, up from last year’s 417 ppm). They include Kenya’s BasiGo, which finances electric bus purchases in Africa; Project Vesta in San Francisco, which harnesses the mineral olivine to sequester carbon in oceans; and New Hampshire-based Enchi, which uses bacteria to produce less costly biofuels. Third Derivative was launched last year by the Rocky Mountain Institute and New Energy Nexus (for background, see, “Third Derivative aims to accelerate climate tech”).
- Carbon removal. Third Derivative also formed First Gigaton Captured with Grantham Environmental Trust to scale promising direct air capture carbon-removal startups. The four-year partnership will fund proof-of-concepts, pilots, and first-of-a-kind commercial facilities to “push forward climate technology and commercialize carbon capture faster,” said Jeremy Grantham (for more from Grantham, see, “Hold fossil fuel companies to account and make them pariahs”).
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Circulate Capital backs three U.S. biotech and recycling startups. The Singapore-based manager’s Disrupt fund made its first investments in Arzeda, a Seattle-based biotech company that develops healthy and sustainable products; Virginia-based Circ, whose recycling technology returns clothes to raw materials; and Phase Change Solutions, a North Carolina-based biotech company developing smart materials that can store and release thermal energy.
- Second close. The Disrupt fund has raised $25 million from investors including Builders Vision, Eden Impact, Huang Chen Foundation, Minderoo Foundation and Benjamin Duncan Group. The fund complements Circular’s $106 million Capital Ocean Fund by targeting “upstream” innovations in materials, packaging and delivery methods that cut plastic waste.
- Circular packaging. Separately, women-led Dispatch Goods, which partners with restaurants, delivery companies and other packaging businesses to use reusable, sustainable packaging, raised $3.7 million in a seed financing round. The San Francisco-based company said it has helped partners, such as DoorDash and Imperfect Foods, keep more than 250,000 single-use plastics from the waste stream in 2021.
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Dealflow overflow. Other investment news crossing our desks:
- BlackRock Global Impact Fund secures a $152 million allocation from Danish pension fund Danica Pension.
- Enterprise Community Partners raises $365 million for a pair of Low-Income Tax Credit funds to create and preserve more than 3,500 homes in 17 states.
- Nairobi-based Pariti scores $2.9 million, led by Harlem Capital, to help founders in emerging markets raise capital and hire talent.
- Clubbi snags $4.5 million to support small food retailers in Brazil.
Impact Voices: The Reconstruction
An investor framework for advancing racial equity. Shifting power, redefining risk and advancing justice are at least three considerations investors can use to integrate racial equity in their investment strategies. “In order to address systemic inequities, all investments need to have equitable impacts,” write the GIIN’s Amit Bouri, CapEQ’s Tynesia Boyea-Robinson, and PolicyLink’s Michael McAfee, whose organizations created the framework. “We can no longer afford the harmful compounding effects of systemic bias from the continued economic exclusion of populations due to race and/or ethnicity.” Go deeper.
Signals: Policy Corner
Inclusive federal procurement. The U.S. government buys more goods and services than any other purchaser in the world. President Biden has directed federal agencies to increase their spending targets with underserved small businesses, including Black, Latino and other minority-owned businesses, from 5% to 11%. The administration will also release, for the first time, federal contracting data disaggregated by suppliers’ race and ethnicity to promote transparency. The move will help the administration increase the share of contracts going to small disadvantaged businesses by 50% by 2025 – a goal Biden announced in Tulsa in June. Share this post.
Agents of Impact: Follow the Talent
Annie Chor Joyce, ex- of MSCI, joins Amundi US as head of ESG… Allison Binns, ex- of Morgan Stanley, joins Angelo Gordon as head of ESG… Mirabelle Moreaux of Injaro Investments joins the board of directors of Ghana’s National Advisory Board for Impact Investing… Alice Rhee of the American Journalism Project joins Nathan Cummings Foundation as an independent board trustee… Christina Orsi, ex- of the University at Buffalo, is named president of the John R. Oishei Foundation.
ImpactAssets is recruiting an investment strategist and investments officer or director… Lumina Impact Ventures is hiring an impact investing officer… Village Capital seeks a senior manager of investments… Applications are open for Village Capital and Lightsmith Group’s Adaptation SME Accelerator in Africa and Asia… Media Development Investment Fund is looking for an impact assistant… Environmental consultancy CEA Consulting is hiring a senior associate.
Thank you for your impact.
– Dec. 8, 2021