The Brief | August 14, 2023

The Brief: Indigenizing catalytic capital, Big Solar securitizations, pursuing perovskites, Charlotte’s affordable housing, getting started with impact ratings

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Greetings, Agents of Impact! 

👋 Agents of Impact Call: Indigenizing catalytic capital. A new crop of investors and entrepreneurs is flipping the outworn script in Indian Country. Resource constraints and bureaucratic obstacles on tribal lands have stifled business creation and economic prosperity in Indigenous communities. Resourceful entrepreneurs are tapping community lenders, private investors, philanthropic funds and public dollars to launch Native-led businesses, create jobs and provide vital services. On next week’s call, Kate Finn of First Peoples Worldwide, Navajo Power’s Brett Isaac, Siċaŋġu Co’s Clay Colombe and other Agents of Impact will dive into the challenges of and opportunities for investing in Native communities, Wednesday, Aug. 23, 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Access to Energy

Big Solar: D.light securitizes customer loans as incumbents consolidate off-grid energy market. Africa’s solar standouts are enjoying a moment of sun in an otherwise frosty investment climate. Makers, distributors and financiers of small-scale solar products raised nearly $550 million in the first seven months of the year, according to data from Africa: The Big Deal. San Francisco-based d.light’s $125 million debt facility, backed by TBD Group, brings its total securitized financing to $490 million since 2020. Securitized financing enables d.light to move outstanding customer loans off of its balance sheet, freeing up capital to finance new customers. The use of solar receivables and cash flow securitizations signals investors’ confidence in low-income and rural customers as reliable borrowers – at least when customer data comes from now-established market incumbents. “It would be hard if you’re now coming in as a new player and wanting to compete,” d.light’s Ned Tozun tells ImpactAlpha. “People underestimate the operational complexity to run a pay-as-you-go business.”

  • Big get bigger. D.light securitized $30 million in receivables from customers in Tanzania into a local currency debt facility that could ultimately leverage up to $125 million. D.light and off-grid solar peers M-Kopa and Sun King have claimed more than three-quarters of off-grid solar funding in Africa so far this year. M-Kopa collected $255 million in a mix of debt and equity in May. Sun King raised $130 million in debt, also in May, following a $330 million Series D equity round last December (see, “Zola, Sun King and M-KOPA offer three paths to Africa’s off-grid energy future”). Small players can still find niches in smaller markets: Yellow, which delivers solar home systems in Malawi, Rwanda and Madagascar, raised $14 million in June.
  • Bank financing. The pandemic set back a decade of energy access improvements. One promising trend is the emerging interest in asset-based lending from commercial banks, which until recently have been reluctant to finance pay-as-you-go solar because of perceived risk of lending to low-income, rural customers. D.light used its own customer purchasing and repayment data to raise its latest debt round. To de-risk early deals, the US International Development Finance Corp. anchored d.light’s first securitized debt facility, in Kenya. British International Investment supported Sun King’s recent securitization facility. “It just wouldn’t have happened otherwise,” Tozun says of the catalytic role of international development finance institutions. “We would love for them to continue participating as we do more of these structures.”

Dealflow: Energy Transition

Caelux snags another $12 million to make solar panels more efficient. Solar power costs have dropped by more than 75% since 2010. But the efficiency with which solar panels convert sunlight to energy has only inched up in the past decade, from 15% to 20%. Pasadena-based Caelux is among several startups coating glass with crystalline perovskites to boost solar cells’ output. With Inflation Reduction Act incentives, it is building a plant in Baldwin, Calif., outside of Los Angeles. Perovskites capture higher energy blue light, complementing silicon’s lower energy red light absorption. “We will enable much higher power output at the same cost per watt,” Caelux’s Leslie Chang told ImpactAlpha

  • Offtakes. Caelux has raised $12 million in a Series A extension round led by Singapore’s Temasek. Khosla Ventures, Mitsui Fudosan and Fine Structure Ventures also participated, bringing Caelux’s Series A round to $24 million. India’s Reliance New Energy injected $12 million into Caelux last September and agreed to purchase the first 100 megawatts produced for a solar factory in Gujarat. 
  • Solar everywhere. Caelux expects to launch its first product, for residential solar panels, by the end of next year and then expand into commercial and utility-scale solar. Energy-conducting perovskites can be applied to surfaces ranging from car roofs to window shades to satellites. “We see perovskites as an accelerant to be able to get everybody to their goals,” said Chang. “It’s thinking about how we can turn all of these different industries into renewable energy vehicles.”
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Truist adds $15 million for naturally-occurring affordable housing in Charlotte. The Housing Impact Fund, managed by Ascent Housing, has raised $67 million to create and preserve 1,200 units of naturally-occurring affordable housing, or NOAH. Such rental housing is crucial to maintain low rents without federal subsidies. “Without protection, NOAH apartments will not stay affordable, and we risk losing these units to redevelopment and pricing thousands of people out of the housing market,” said Ascent’s Mark Ethridge. Ascent’s second Housing Impact Fund will focus on Charlotte, where affordable housing hasn’t kept pace with demand; gentrification has pushed many low-income and minority renters out of their neighborhoods. Other investors in the fund include PNC, Atrium, Honeywell and the Leon Levine Foundation.

  • Inclusive economy. Former White House chief of staff Erskine Bowles, Carousel Capital’s Nelson Schwab and Ascent launched Housing Impact Fund in 2020. The inaugural fund raised $58 million and has acquired five NOAH apartment communities with 805 units and 2,000 residents. Ascent says it intentionally partners with minority-led companies to support job creation.
  • Check it out

Dealflow overflow. Other news crossing our desks:

  • Arizona-based Persefoni raised $50 million in a Series C round led by TPG Rise for PersefoniGPT, its AI product for carbon accounting and management. (Persefoni)
  • Germany’s Kraftbock secured €20 million ($22 million) in Series B funding, led by Shell Ventures, for sustainable thermal storage for energy-intensive industries like steel and glass. (EU-Startups)
  • Regeneration.VC and The 22 Fund led a $2.4 million seed round for Nature Coatings, an LA-based biochemicals startup that converts waste materials into zero-carbon fuel. (Nature Coatings)

Impact Voices: Impact Management

Getting started with impact ratings. A fundamental question facing impact investors is, “Which investments have more impact?” write Jackson Gates and Mike McCreless of Impact Frontiers and Marieke Spence of Impact Capital Managers in a guest post on ImpactAlpha. In part two of the online course, “Impact For Decision-Making,” the authors offer a simple way to classify managers’ investments with impact ratings. Their video module dives into the what, why and how of impact ratings, and identifies the methods that work best for different types of investors. 

Agents of Impact: Follow the Talent

Michael Pugh, ex- of Carver Bancorp, becomes CEO of LISC… Christian Rosenholm, formerly an ESG advisor for the Export and Investment Fund of Denmark, joins the GIIN as director of institutional engagement… Rob Meloche, ex- of Strategic Impact Advisors, joins 2X Global as director of partnerships and impact.

Acumen is looking for an off-grid solar investment director for Africa… 60 Decibels seeks a manager in Bangalore… ResponsAbility is hiring a climate finance project manager and a climate-smart agriculture technical specialist in Lima, Peru… Abrdn is recruiting a real estate ESG asset manager in Amsterdam… Quantified Ventures seeks an associate director of water and climate finance.

Triodos Investment Management has an opening for a head of fund management… Accion is on the hunt for a managing director for its Center for Financial Inclusion… The Environmental Policy Innovation Center is looking for a biodiversity markets program manager and a water equity-focused manager for the Southeast US… Raise Green is hiring an investor marketplace associate.

Thank you for your impact.

– Aug. 14, 2023