The Brief | May 17, 2021

The Brief: Investing in women of the world, digitizing vintage clothing, scrutinizing carbon offsets and income-share agreements, ending unsustainable subsidies

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Greetings, Agents of Impact!

Featured: The Reconstruction

Patience Marime-Ball on driving change by changing who controls capital (podcast). Women are not waiting to be saved. Women are doing the saving. That’s the mantra of Marime-Ball, who has set an ambitious goal to raise $5 billion, over 10 years, for Women of the World Endowment. Marime-Ball joined host Monique Aiken on The Reconstruction podcast to talk about how to catalyze investment in women and girls and change who has decision-making power over investments more broadly. Marime-Ball, who grew up in Zimbabwe and earned both MBA and law degrees from Northwestern University, is a veteran of the International Finance Corp.’s Banking on Women initiative, early gender bonds and the Women Entrepreneurs Opportunity Fund. After leaving IFC, “I started getting frustrated at the fact that the bigger market – the institutional pools of capital – were not seeing this opportunity the way I was seeing it,” she tells Aiken.

Women of the World’s nonprofit status allows it to raise donation capital for its evergreen endowment. Marime-Ball intends to make the endowment a demonstration of a 100% mission-aligned portfolio. The aim is to “invest in women as drivers of change, women who are doing the frontline work,” Marime-Ball says. Such a shift would change the narrative from women as beneficiaries to women as drivers of solutions. Take nurses, who were largely responsible for helping patients survive COVID. Globally, about 76% of nursing staff are women. “What if 76% of healthcare budgets were actually allocated through the sensibility of 76% of their staff, which happens to be female?” Marime-Ball says. “That kind of thinking is what we fuel with our capital. It’s what we want to invest into.”

Keep reading, “Patience Marime-Ball on driving change by changing who controls capital,” by Monique Aiken and Anjali Deshmukh, and listen in to the latest episode in ImpactAlpha’s podcast series, The Reconstruction.

  • Podcast seriesThe Reconstruction features engaging conversations with leaders of this reconstruction. Meet Kelli SaulnyRey RamseyMelissa BradleyRodney FoxworthCarmen RojasDaryn Dodson and others who are moving capital toward justice. Catch up on Spotify, Apple or Anchor.
  • The beatThe Reconstruction’s landing page on ImpactAlpha has summaries of all of the podcast episodes, as well as original coverage, dealflow, features and Agents of Impact.

Dealflow: Creative Economy

Thrilling raises $8.5 million for secondhand fashion marketplace. The Black and Asian-owned startup helps small vintage and second-hand shops in the U.S. sell their products online. Roughly 95% of the more than 300 sellers on Thrilling platform are women and/or Black, Indigenous, and people of color. Prelude Ventures led the round. Defy, Congruent Ventures, Urban Us, Closed Loop, Phoenix Rising and DLA Piper Venture

  • Lived experience. Founder Shilla Kim-Parker’s grandparents owned a dry cleaner’s, one of the first Black-owned businesses in their small town in North Carolina. “Having grown up among small business owners, especially in and around apparel, I heard firsthand how they felt left behind by the tech industry,” Kim-Parker told dot.LA.

Sylvera rakes in $5.8 million to strengthen ratings for carbon offsets. Ambitious net-zero emissions targets by corporations are driving a boom in carbon offset projects, such as farming practices that sequester carbon in soil, wetlands preservation and restoration, and sustainable forestry (see, “Farmers harvest ‘soil carbon’ to meet rising corporate demand for emission offsets). London-based Sylvera uses satellite imaging and machine learning to assign a score based on the performance and quality of offset projects, much like the ratings Moody’s and S&P assign to bonds. 

  • Wild west. Of 35 projects analyzed by Sylvera, nearly half didn’t live up to promises. Carbon offset markets are a “Wild West,” wrote Carlos Gonzalez-Cadenas of Index Ventures, which led the seed round. He said Sylvera “exists to set the global standard and act as a stamp of quality for projects.” Seedcamp, Speedinvest and Revent also participated. Separately, Sylvera landed a $2 million research contract from Innovate UK, a government research agency. 

Dealflow overflow. Other investment news crossing our desks:

  • Boston Biotech firm Ginkgo Biowork agrees to merge with special purpose acquisition company Soaring Eagle Acquisition in a $17.5 billion deal.
  • Australian startup Zoomo raises $12 million to electrify delivery fleets through e-bike subscriptions, in a round led by Australian VC AirTree.

Signals: Ahead of the Curve

Pricing in externalities illuminates the true cost of investing in unsustainable companies and sectors. Sustainable innovations such as electric cars, renewable power or plant-based proteins may be more expensive than the carbon-intensive approaches they replace, at least at first. Such “sustainability premiums” tend to disappear as new approaches scale up. Likewise, “unsustainability discounts,” the effective subsidies that older approaches receive with the ability to externalize their truce costs, will also disappear as carbon is priced, and governments get serious about climate action, argues Christian Zabbal of Spring Lane Capital in a guest post. “How quickly these discounts disappear – and who will be left holding companies whose true cost makes them more than toxic – is going to be the investment theme of the next decade,” he writes.

  • Apples to apples. Take the 10,000 kilowatt-hours needed to power an average home in the US for a year. Coal-fired electricity would cost around $400. “Cheap power, right?” Zabbal asks. “Well, yes, as long as you don’t consider the externalities,” including the $750 to $1,800 needed to remove the three tons of CO2 produced by burning that coal.
  • Add it up.

Accountability for outcomes can spur impact investments in educational income share agreements. Investing in higher education and workforce development for minorities and underserved communities, through financing structures like income share agreements, could be a compelling impact investment opportunity. “From addressing systemic racism and a lot of the challenges we have, we can do great things with this tool and create a lot of impact,” Community Investment Management’s Jacob Harr said at last week’s Impact Capital Forum. “We can also take this tool and just have a lot of short sighted ways to potentially make things worse.” Income share agreements, or ISAs, allow students to pay for college, coding bootcamps and other educational and vocational training programs with little to no upfront tuition, in exchange for a fixed percentage of their future income. ISAs typically don’t require a credit score and co-signer, and don’t accrue interest.

  • Legislative agenda. “The public sector, the private sector and elected officials have to pave the way for innovative higher education financing solutions and ISAs are one of those potential solutions that will make sense for students,” U.S. Sen. Todd Young of Indiana said at the forum. Young plans to reintroduce the ISA Protection Act with Sens. Mark Warner, Marco Rubio and Chris Coons

Agents of Impact: Follow the Talent

George Kelly, most recently of Bespoke Mitigation Partners, joins Quantified Ventures as managing director… Whitney Fogle Lewis, ex-Carlson Capital, joins Tiedemann Advisors as chief compliance officer and deputy general counsel… Accion Venture Lab is recruiting a U.S.-based senior director of global investments… The Racial Justice Investing Coalition is hiring a part-time program coordinator… Salesforce is looking for a senior manager of climate and nature research in San Francisco… The Predistribution Initiative has openings for interns to research market and economic trends.

The Predistribution Initiative is also hosting a discussion with Karen Petrou, author of Engine of Inequality: The Fed and the Future of Wealth in America, Monday, May 24… Highwater Women is presenting “Creating Value for Investors Through Community Development Funds,” Tuesday, June 8… As You Sow introduces As You Vote, a proxy voting service in partnership with Proxy Impact.

Thank you for your impact.
– May 17, 2021