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Featured: Impact Voices
Do impact venture capital funds outperform traditional VC? Yes, no and maybe. Not all impact investing is intended to meet market-rate returns. Still, says Scott Saslow of One World Training and Investments, “it is critical for the continued growth of a very important part of the impact investing arena that the question of financial performance is addressed.” To answer the question, Saslow examined data from Cambridge Associates, Pitchbook and the Global Impact Investing Network.
- The data. Market rate, private equity investments realized 16% and 18% annual gross returns for developed and emerging markets, respectively, according to 2020 data from the GIIN. Impact funds showed a median return for developed markets of 8% and 5% for emerging markets, per 2020 data from Cambridge Associates. Pitchbook data shows net median internal rates of return for traditional venture capital funds ranging from 10% to 21% between vintage years 2008 and 2018.
- The upshot. Both of the following statements are true, writes Saslow in a guest post on ImpactAlpha: “PE/ VC Impact funds can perform at market rate to traditional funds,” and “For both impact and traditional PE/VC fund performance, the ranges for returns are quite large, thus achieving market-rate returns is highly dependent on choosing the right managers.”
- Keep reading, “Do impact venture capital funds outperform traditional VC? Yes, no and maybe,” by One World’s Scott Saslow.
Dealflow: Low-Carbon Transition
BlocPower secures $30 million from Microsoft to retrofit old city buildings. The Brooklyn-based company has worked with utilities, government agencies and property owners to retrofit more than 1,200 buildings for low and middle-income residents in 26 U.S. cities since 2014. One of its latest projects: a large-scale, city-wide partnership with the city of Ithaca to electrify and decarbonize its building stock. The investment from Microsoft’s Climate Innovation Fund will support and expand current projects, including in Ithaca. It will also fund BlocPower’s electrification services. “The funding provided will fuel BlocPower’s efforts to make a meaningful impact on climate change and bring environmental and economic justice to frontline communities across America that need it most,” BlocPower’s Donnel Baird said (see “Donnel Baird, BlocPower”).
- Climate justice. Baird credits the financing to Goldman Sachs Asset Management, which provided underwriting services, for closing the Microsoft deal and other recent deals. “Low-income neighborhoods bear the brunt of climate change impacts and yet lack sufficient resources to combat them,” said Goldman Sachs’ Margaret Anadu. “Creating more resilient neighborhoods requires unprecedented levels of innovation and collaboration.”
- Scaling investment. Investors are keying in on sustainable infrastructure in underserved communities. Reactivate, a joint venture between Lafayette Square and Invenergy, is looking to invest a half-billion dollars in dozens of community solar projects in the next two years (for context, see “Solar proves a pathway for private capital to flow into low-income communities”).
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Ubiquitous Energy scores $30 million for solar-powered windows. The Redwood City, Calif.-based company was founded in 2011 by MIT and Michigan State University scientists and engineers looking to lower carbon emissions by integrating solar power into everyday products. The result: transparent solar, which converts light into electricity with semiconducting materials while maintaining transparency. The company has raised $70 million to commercialize the technology, which can also be used in consumer electronics and cars.
- Product development. The Series B round, backed by investors including window maker Andersen Corp., Red Cedar Ventures and Riverhorse Investments, brings Ubiquitous closer to mass production by 2024, Ubiquitous’ Susan Stone told ImpactAlpha. “When we’re talking about bringing a technology like ours from lab to product, there’s a lot of development work and maturation that needs to happen.”
- Solar energy. Ubiquitous has installed windows with global partners, including Japanese conglomerate ENEOS Holdings. By 2050, its goal is to install one billion square feet of transparent solar windows. The company’s windows can be installed in residential or commercial buildings to produce energy when the sun is out. “The long-term goal is transparent solar everywhere, not just windows,” Stone said.
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Jumpstart Nova raises $55 million to invest in Black healthcare founders. If venture capital for Black entrepreneurs remains scarce, venture funding for Black healthcare founders is almost nonexistent. Marcus Whitney, who has since 2015 led Jumpstart Health Investors to invest in more than 150 healthcare founders, brought together Eli Lilly, HCA Healthcare, Cardinal Health, American Hospital Association, Bank of America and a number of other investors to back Jumpstart Nova.
- Racial health equity. The fund will invest in the seed and Series A rounds of Black-led and founded tech companies focused on health services, biotech, diagnostic devices, health IT and consumer health and wellness. “Hospitals and health systems need strong partners to collaborate with to build healthier and more equitable communities,” said AHA’s Rick Pollack. “Jumpstart Nova aims to provide talented but too-often overlooked entrepreneurs with the capital they need to advance this important work.”
- Check it out.
Dealflow overflow. Other investment news crossing our desks:
- BMW i Ventures, the venture capital arm of BMW Group, is standing up a $300 million fund to invest in early to mid-stage companies in sustainability, transportation, manufacturing and supply chains.
- Polycarbon scores $2 million in seed financing to provide biotech, pharmaceutical and diagnostic laboratory partners with alternatives to single-use scientific plastic.
- Woodforest National Bank invests $500,000 in Austin Housing Conservancy Fund to purchase and preserve affordable housing for essential workers.
- French e-waste startup Back Market, which manages an online marketplace for electronic devices, raises $335 million in Series D funding.
Agents of Impact: Follow the Talent
Cheers to Jessica Pothering, ImpactAlpha’s stalwart senior editor and reporter, who celebrated her birthday over the weekend. Happy birthday, Jessica!… Holly Gordon of Participant is named to the board of JUST Impact… Andy Knapp, ex- of Energy Workforce and Technology Council, joins Invenergy as executive vice president of public affairs… Ignia’s Alvaro Rodriguez-Arregui joins Harvard Business School as a senior lecturer of entrepreneurial management… Austin Blackmon, ex- of TerraVerde Energy, joins Earthshot Ventures as a senior associate…
USAID is looking for a senior climate finance advisor… The U.S. Department of Homeland Security is hiring for its new Climate Change Professionals program… Social Finance seeks an associate director of partnerships in Boston… BSR (Business for Social Responsibility) is looking for an associate director of ESG investing in the Utica-Rome area of New York… The California Endowment is recruiting an impact investing analyst in Los Angeles… Infosys Consulting seeks a senior consultant of sustainable investing (location flexible).
Thank you for reading.
– Jan. 18, 2022