The Brief | February 26, 2020

The Brief: ImpactAlpha U, early-stage agrifood tech, Town Hall’s healthcare fund, JetBlue’s sustainability-linked loan, pandemic-lens investing

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Greetings, Agents of Impact!

Featured: ImpactAlpha Original

Mission investors seek to give nature a boost with early-stage capital for high-tech agriculture. Humans have deployed technology to defy nature’s limitations on food cultivation – to nature’s detriment. Now, a growing number of venture capitalists are doubling down on technology to harmonize agriculture and nature. Mission-driven investment firms are writing early checks to companies making biological crop treatments, food preservation techniques and tech-controlled farms that replicate, improve, and restore natural growing environments. “I think the food system is where the internet was in 1996 or 1997,” says Chuck Templeton of agrifood tech investor S2G Ventures. “Many companies are using machine learning to make evolution happen at a much faster pace, with much larger trials, at much cheaper costs with more predictable outcomes.”

Agrifood tech is a nascent venture capital sector, representing only $20 billion of nearly $300 billion in global venture investment. But the pipeline of high-tech, impact-driven companies is growing. “Upstream” technologies closest to the land and food production claimed $563 million in seed-stage agrifood tech ventures last year, according to AgFunder’s Agri-Food Tech Investing ReportS2G Ventures re-upped in the $48.5 million Series B financing for Terramera, a Canadian agtech company developing bio-crop protection products to reduce chemical use and improve farmland health. California-based Trace Genomics, on a mission to help growers “optimize costs, manage risk and protect their soil as a capital asset,” has raised more than $22 million since 2015. New investors like environmentally-focused Ospraie Ag Science and “mission-driven” Agroecology Capital don’t explicitly call themselves impact investors, but they’re backing early technologies in part for their positive impact potential. Agroecology closed its first deal last month, in Swiss food preservation tech startup AgroSustain. “Consciousness is what we need to change the way we’re growing food,” says Agroecology’s Djalil Reghis. “But if you provide technology, you make the behavioral transition easier.”

Keep reading, “Mission investors seek to give nature a boost with early-stage capital for high-tech agriculture,” by Jessica Pothering on ImpactAlpha.

Dealflow: Follow the Money

BNP Paribas closes sustainability-linked loan with JetBlue Airways. The margin JetBlue pays on its loan from the French bank will fluctuate with the airline’s environmental, social and governance score. JetBlue earlier this year announced that its domestic flight operations would be carbon neutral. The sustainability-linked loan amends an existing $550 million revolving credit facility. “Our owners, many of whom are also crew members, want to see how ESG initiatives are connected to our financials,” said JetBlue’s Sophia Mendelsohn. Performance will be rated by ESG-research firm Vigeo Eiris.

  • Sustainable finance landscape. The “sustainable debt” market is likely to surpass $400 billion this year, according to S&P Global Ratings. European banks lead all green-labeled issuances. BNP Paribas closed a sustainability-linked syndicated credit facility earlier this month with professional services firm WSP Global. Last month, the bank closed an incentive-linked corporate revolving credit facility with Canada’s Brookfield Renewable Partners.
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Town Hall Ventures raises $260 million second healthcare fund. New York-based firm led by Andy Slavitt, the former head of the Center for Medicaid and Medicare Services, and Oxeon Ventures partners Trevor Price and David Whelanfocuses on healthcare solutions for underserved communities. Town Hall’s first fund backed more than a dozen companies, including Unite Us to connect individuals and communities to supportive services.

Rockefeller Foundation commits $65 million to boost economic mobility for low-wage workers. The new Equity and Economic Opportunity Initiative will support proven economic policies like the Earned Income Tax Credit and Child Tax Credit and seek to mobilize responsible investments in Opportunity Zones in a dozen cities and the District of Columbia. Rockefeller aims to catalyze more than $1 billion in private capital and more than 8,000 living-wage jobs by 2025.

Signals: Ahead of the Curve

Needed: New models for ‘pandemic-lens investing.’ SARS. Zika. Ebola. The COVID-19 coronavirus is the latest infectious outbreak wreaking social and economic havoc. The World Health Organization has warned that dangerous pathogens may become more common in the face of climate change, urbanization and overuse of antibiotics. On Tuesday, the Centers for Disease Control warned Americans that things “could get bad,” and the Trump administration asked for $1 billion to counter the coronavirus (even as he has proposed budget cuts for critical health agencies). The U.S. isn’t the only country unprepared for a pandemic. Action on the climate crisis is measured in years or even decades; containing a pandemic requires both immediate action and long-term preparedness. Vaccines, for example, take many years and billions of dollars to bring to market. Some ways to bridge the gap:

  • Pandemic bonds. Amid the 2016 Ebola outbreak, the World Bank created the Pandemic Emergency Financing Facility, a “catastrophe bond” aimed at getting “surge funding” to developing countries at risk. The World Bank’s Jim Yong Kim promised the bond would create “an entirely new market for pandemic risk insurance.” The offering raised $320 million from bond investors, pension funds and asset managers in the U.S. and Europe. The high yields were offset by the risk of losing principal in the event of a pandemic. Now we have one, but no payout has been triggered. That will happen only 12 weeks after the start of an outbreak and after at least 20 deaths in two countries. That costs valuable time. “The whole scheme is set up to minimize the probability of payout,” Harvard Global Health Institute’s Olga Jonas told The Wall Street Journal.
  • Catalyzing R&D funding. The Coalition for Epidemic Preparedness (CEPI) was founded in 2017 by the governments of Norway and India, the Bill & Melinda Gates Foundation, the Wellcome Trust and the World Economic Forum. Some of the $760 million it has raised has been channeled to biotech companies developing critical vaccines. One CEPI fundee, Cambridge, Mass.-based Moderna, shipped its first batch of a coronavirus vaccine for testing this week. A clinical trial could begin by May.
  • Innovation ecosystem. Austin-based PandemicTech, a “virtual incubator” and resource network, takes a more localized approach to fighting pandemic infectious disease threats. This year, $100,000 in awards to PandemicTech Fellows will give special consideration to projects that address the coronavirus.
  • Tech solutions. Pandemics and vaccines have been the realm of governments and philanthropy. But the global health challenge opens up opportunities for impact investors as well. Two potential areas: better diagnostic tools for distributed testing, and technology that can accelerate clinical trials, says Skoll Foundation’s Bruce Lowry.
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Agents of Impact: Follow the Talent

Ginger Cassady was named executive director at Rainforest Action Network… Omidyar Network is hiring a principal and a director of strategic communications on its “reimagining capitalism” team in Washington, D.C…  Blue like an Orange Sustainable Capital is looking for an investment analyst in Washington, D.C. (see Blue Like an Orange offers a report card for the Sustainable Development Goals)… Spring Point Partners seeks an associate director of impact investments in Philadelphia… Kin&Co is hiring an associate director in Toronto… Applications for Beeck Center’s 2020 student cohort are open… Community Capital Management is hosting a webinar, “Impact and ESG Investing: 2019 Year in Review,” on Monday, Mar. 16.

Thank you for reading.

–Feb. 26, 2020