The Brief: Impact VCs show up for Kamala Harris

Greetings Agents of Impact!

☎️ The Call: Mapping an impact investing path through the new legal landscape. The effects of this summer’s Supreme Court decisions gutting the “administrative state” already are playing out in legal challenges to rules on climate action, labor rights and corporate accountability. Join Better Markets’ Dennis Kelleher, B Lab’s Jorge Fontanez and The Shareholder Commons’ Rick Alexander, in discussion with Fran Seegull of the US Impact Investing Alliance and ImpactAlpha’s David Bank, to explore how investors can protect critical impact priorities, Wednesday, August 14 at 9am PT / noon ET / 5pm London (please note time change). RSVP.

In today’s Brief:

• VCs ♥️ Kamala
• Solar in low-income communities
• Making Indonesia’s microfinance providers more efficient

Featured: Impact Forward

VCs embrace Kamala Harris’s vision for an economy that works for all. The billionaire and former host of The Apprentice is not, in fact, America’s pro-business presidential candidate. That would be Vice President Kamala Harris, according to more than 4,000 venture capitalists and tech founders who turned out for the VCs for Kamala video call on Wednesday. “Kamala Harris is actually, in fact, the business candidate,” said LinkedIn founder Reid Hoffman, the billionaire Democratic donor. “Kamala Harris is very good for diversity of innovation, through innovation for all of us.” Talking points shared by the Harris campaign touted her vision of growth through broader inclusion. “You cannot have economic growth without a stable society,” said Stephen DeBerry of Bronze VC, among the prominent impact investors on the call. Former President Donald Trump, he said, “represents an existential threat to the stability of our democracy.” Impact VCs, including DeBerry, Tracy Gray of The 22 Fund, Brian Dixon of Kapor Capital, Stefanie Thomas of Zeal Capital Partners, Shayna Harris of Supply Change Capital and Nneka Kibuule of Aligned Climate Capital, are among nearly 1,300 investors and founders who signed a pledge to vote for Harris in November. 

• Inclusion alpha. As Trump was peaking in popularity in June, Marc Andreessen, Ben Horowitz, David Sacks, Chamath Palihapitiya and other Silicon Valley VCs lined up behind the former president. Harris’s broader economic message, of an economy that works for all, has energized a more diverse set of investors and founders focused on what DeBerry called “growth lying fallow on the edges.” In response to a question from ImpactAlpha’s Lynnley Browning, who moderated part of the the call, Mac Conwell of RareBreed Ventures in Baltimore said, “As a VC, yes, regulations suck, right? They get in the way. They make things harder. But they also make sure that this system doesn’t collapse.”
  
• VCs love… slide decks. Bloomberg Beta’s Roy Bahat’s pitch deck reminded the venture capital crowd of the Biden-Harris team’s economic traction: stock market highs (until recent weeks), low unemployment, new manufacturing jobs and record new-business applications. Another plus: Harris will help startups thrive, he said. Harris cast the tie-breaking vote “to build large-scale factories for semiconductors, electric vehicles, batteries, solar cells and more,” Bahat noted. “What really resonates for me about the future that Kamala would help us unlock is that we can actually invest in the future that we know is possible,” said La Keisha Landrum Pierre of L.A.-based Emmeline Ventures. The alternative, she said, “prevents that.”

• Due diligence. The campaign said Harris’s economic agenda “is about generating growth and innovation by giving America’s middle-class more opportunities and more financial security, and by investing in expanding the productive capacity of our economy.” Billionaire VC Ron Conway, who has known Harris for 20 years said she is “eminently qualified to be president of this country.” He added, “We don’t need to do due diligence on this candidate.”
  
• Keep reading, “VCs embrace Kamala Harris’s vision for an economy that works for all,” by Lynnley Browning, Dennis Price and Amy Cortese.

Dealflow: Clean Energy

Sunwealth scores $5 million from Inclusive Prosperity Capital for ‘high-impact’ solar projects. More low-income and underserved communities in the US are taking a shine to solar, thanks to the Biden administration’s incentives and potential cost savings on residential utility bills. In the past decade, Cambridge, Mass.-based Sunwealth has built, financed and operated nearly 650 community-scale solar projects that have cut energy bills and brought clean energy and green jobs to US communities, many in low-income and underserved areas. The $5 million debt facility from Hartford, Conn.-based nonprofit investor Inclusive Prosperity Capital will finance 18 solar systems in nonprofit, faith-based and affordable housing projects. The systems are expected to generate $11.4 million energy savings, create more than 120 jobs, and offset more than 85,000 metric tons of carbon emissions over their operational lifetimes. 

• Green bank partnerships. Inclusive Prosperity’s John D’Agostino said he hopes the transaction will “set a precedent for future partnerships with mission-aligned developers like Sunwealth.” Inclusive and Sunwealth are also exploring ways to secure funding from the Greenhouse Gas Reduction Fund, or GGRF, which has a strong focus on underserved communities. Inclusive is a partner of the Connecticut Green Bank, a member of the Coalition for Green Capital, one of the GGRF awardees.
  
• Bankrupt solar pioneer. Not all is sunny in solar land. SunPower, a Richmond, Calif.-based residential solar and storage developer and operator, this week filed for Chapter 11 bankruptcy protection after job cuts and financial shortfalls in the past year. The US solar pioneer will sell some of its assets to California-based Complete Solaria. Complete Solaria’s CEO TJ Rodgers served as SunPower’s board chair from 2005-2011. SunPower counts between $1 billion and $10 billion in assets and liabilities, according to the filing. The stalking-horse purchase agreement — a bid on a bankrupt company’s assets from a buyer chosen by the bankrupt company —might include Blue Raven Solar, for which SunPower paid $165 million in cash in 2021.
  
• Check it out.

Djoin raises seed funding to modernize Indonesia’s microfinance institutions. Credit unions and financial cooperatives play a key role in providing access to financial services for Indonesia’s largely unbanked population, especially in rural communities. Bali-based startup Djoin is helping microfinance providers modernize their operations to reach more rural dwellers. 500 Global, which has backed tech startups Canva and Reddit, provided the undisclosed amount of seed funding. “To include all of Indonesia in the country’s growing economy, we need to use technology,” says 500 Global’s Khailee Ng. “Credit unions have served many unbanked communities. Using Djoin to help them scale could enable so much more for the nation.” 

• Backing digitization. Four-year-old Djoin offers technology that allows microfinance customers to make deposits and withdrawals and other basic transactions. It also serves as an intermediary for loan collection and disbursement from the financial institutions to the borrowers and offers a credit assessment engine for underwriting. Djoin says it facilitated up to $35 million in loans in 2023, and cut non-performing loans by more than half for over 80 microfinance institutions in 2022. Djoin’s founders secured $1 million in 2022 to develop the product and acquire customers. Separately, US nonprofit Accion earlier this year raised $152.5 million for its Accion’s Digital Transformation Fund to support similar startups digitizing operations for emerging market financial institutions. The fund has backed India’s Annapurna Finance and IKF Finance in its portfolio.
  
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Dealflow overflow. Investment news crossing our desks:

• MCJ Collective invested in The Nuclear Company’s nuclear power plant development. The Kentucky-based company was started by Jonathan Webb, founder of the now-defunct high-tech greenhouse grower AppHarvest. (MCJ Collective)
  
• Upaya Social Ventures notched an exit from portfolio company Resham Sutra, a Delhi-based social enterprise that provides solar-powered machinery to India’s silk artisans. (Upaya Social Ventures)
  
• Indian agtech startup Oorja raised $1.5 million in early stage equity financing from Acumen, Artha Impact’s Elea, Echoing Green and other investors to provide solar irrigation systems to smallholder farmers. (Oorja)

Impact Voices: Ownership Economy

A primer for investors branching into employee ownership. The “silver tsunami” of retiring Baby Boomers is teeing up a $10 trillion transition of wealth and assets, and ample opportunities for investors to finance transitions to employee ownership. “Timing and signaling matters,” write Julie Menter and Curt Lyon of Transform Finance, which is out with a brief for investors to cut through the complexity, find entry points and identify financial and impact potential in employee ownership investing. For ImpactAlpha, Menter and Lyon provide a primer of Transform Finance’s analysis of more than 50 funds focused entirely or partly on employee ownership. A list of these funds is available on ImpactAlpha’s Ownership Economy fund database.

• Ownership strategies. Employee ownership funds are collectively raising $3.8 billion. About one-quarter focus exclusively on ownership and ownership-transition deals. Others like the Cooperative Fund of the Northeast and Community Vision include employee ownership as a dimension of their strategies, which may also include investing in underrepresented business owners or supporting regional economic development. A third category of funds occasionally invest in employee ownership transactions that present opportunities to make market-rate returns. Such occasional investors are less likely to structure additional worker benefits into their deals.
  
• Weighing returns and impact. Which strategies offer the best entry point for investors curious about employee ownership? Are Employee Stock Ownership Plans equally impactful as investments in worker cooperatives or employee ownership trusts? “The impact of different fund approaches and the scale of their operations matters,” write the pair. Transform Finance provides an impact breakdown of different fund strategies. Important considerations include: what percentage of economic rights are going to workers compared to other stakeholders; the size of the workforce impacted; and the size of the underlying businesses.
  
• Go deeper.

Agents of Impact: Follow the Talent

👋 Meet Agents of Impact – like you. As part of the ImpactAlpha community, you have access to an incredible network of professionals putting finance to work for good. You can give as well as get, by sharing your valuable insights and experience with other investors, entrepreneurs and advocates. Join us next Tuesday, Aug. 13, for an hour of facilitated introductions to other Agents of Impact who are pushing the boundaries of impact investing. Register today.

Robert Wood Johnson Foundation’s Kimberlee Cornett, Invest for Better’s Janine Firpo and Ellen Remmer, Grameen America’s Andrea Jung, SDS Capital’s Deborah La Franchi, Resilience Capital Ventures Gillian Marcelle, Calvert Impact’s Jennifer Pryce and Green Century Funds’ Leslie Samuelrich are among the Agents of Impact on Forbes’ “50 Over 50: Investment” list. 

Taarika Gopinath, former investment analyst at Prudential, joins Social Finance as impact investing associate… Chemonics International seeks a strategic investment fund director… Blue Forest is looking for a project associate and a controller…Green and Healthy Homes Initiative is hiring a Baltimore-based senior program officer to lead its Thriving Communities Grantmaker Program.

LISC is recruiting an asset management director… Common Future is on the hunt for a chief operating officer in Oakland… Black Farmer Fund’s Olivia Watkins will join Community Capital Live, Aug. 14 at 2pm ET, to discuss investing in Black food and agriculture ecosystems to build wealth and health. 
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– August 8, 2024