The Brief | March 4, 2024

The Brief: Investor optimism and urgency in Latin America

ImpactAlpha
Image credit: LanzaJet
The team at

ImpactAlpha

Greetings Agents of Impact! 

👋 In Austin for SXSW? Join ImpactAlpha’s Dennis Price for “An investor talk on AI: All-in or all-hype,” a conversation on AI opportunities in education and workforce development with JFF Ventures’ Sabari Raja, Lumos Capital’s Rohan Wadhwa, and Kapor Capital’s Brian Dixon, today at 2:30pm CT.

In today’s Brief:

  • Overhead at the Latin America Impact Investing Forum
  • Harnessing geothermal energy
  • Energy-efficient cooling in India
  • Igniting a just transition in Africa

Featured: Overheard in Merída

FLII feeds investor optimism and urgency about Latin America’s future (video). Agents of Impact didn’t want last week’s Latin America Impact Investing Forum in Mexico to end. The closing celebration spilled over to a hacienda in downtown Merída, where Sonen Capital’s Raul Pomares hosted gatherings throughout the week. The DJ arrived. The mezcal flowed. Deals were sealed, or at least toasted. Spotted at the after-party: FLII hosts Rodrigo Villar and Carolina Puerta, ImpactAssets’ Tim Freundlich, Toniic’s Dipti Pratt, Maria Hollan of Timke Ventures, and Juanita Alvarez of PVBLIC Foundation, Sonen’s Sandra Sainz, and New Ventures’ Sebastián Welisiejko. Optimism about Latin America’s impact economy rose with the morning sun. “I feel super optimistic and full of energy,” Welisiejko, who recently joined New Ventures in Buenos Aires, told ImpactAlpha in a video interview. Welisiejko acknowledged Latin America’s “terrible” progress on the UN Sustainable Development Goals. “Monday, when we go to our work, hopefully everyone here, whether you’re an investor, entrepreneur or a big corporate, will walk out of FLII conscious that the urgency is there like never before.”

  • Wary reception. Nature-based solutions can deliver both social and environmental benefits and steady cash flows. But São Paulo-based Vox Capital’s regenerative ag fund failed to gain traction. Brazilian investors generally still regard impact fund structures as riskier than legacy investments. Vox, with over $250 million in assets under management, is relaunching the nature-based solutions strategy as a debt fund “grounded in blended finance and aims for leaner structures to attract funders,” Vox’s Daniel Brandão told ImpactAlpha. Regenera Ventures has raised roughly $4 million of its target $20 million fund to invest in regenerative land projects in Mexico; it expects a first close by year-end.
  • Brazilian beat. FLII participants welcomed the increased presence of Agents of Impact from Brazil. As Brazil assumes the G20 presidency, President Luiz Inacio Lula da Silva’s administration has greenlit the nation’s impact economy. “Brazil is back,” Lucas Ramalho, an official for the country’s National Impact Strategy, told ImpactAlpha. ImpactAlpha spoke with Ramalho and other newly energized Brazilian impact leaders, including PretaHub’s Adriana Barbosa, BlackWin’s Jéssica Rios, Lucas Conrado of Estimulo, Potencia Ventures’ Itali Collini, Cristiana Penteado and Laura Gontijo of Blue Like an Orange, Rodrigo Saad Horpaczky of Artemisia, and Vitoria Junqueira and Ricardo Ramos of Aliança Pelo Impacto, a partner in the launch of ImpactAlpha Latin America. 
  • Mobilizing capital. Dealmakers made time for meetings as well as parties in Merída. Managers who are actively raising capital to invest in the region include El Salvador-based Innogen Capital, Impaqto in Ecuador, Amazonia Impact Ventures in the UK, Savia Ventures in Mexico, EWA Capital in Colombia, Estímulo in Brazil, iThink.vc in Paraguay, and New York-based Winnipeg Ventures. Sonen Capital, Community Impact Management and Sorenson Impact Foundation all told ImpactAlpha that they’re increasing allocations to Latin America.
  • Investor enthusiasm. European bankers including Borja García Fernández of Citi Social Finance and Rafael Matos of Spanish development bank COFIDES made the case for investing through local intermediaries. Jay Dunn of Washington DC-based family office DF Impact Capital has built a portfolio of nearly two dozen investments in Latin America and the Caribbean, including New Ventures’ Viwala fund and Fonkoze in Haiti. Visa Foundation has allocated $35 million in grants and investments in the region, including in women-led funds like EWA. “The ecosystem is buzzing,” Visa’s Najada Kumbuli told ImpactAlpha. “We’re looking for opportunities, and there are a lot here.”

Dealflow: Energy Transition

Geothermal producer Fervo Energy gets $244 million to meet demand for clean energy. The techniques used for oil fracking also can be used to harness geothermal energy, a steadier, more consistent source of energy than wind and solar that doesn’t require storage. Houston-based Fervo has begun drilling at Cape Station, a 400-megawatt project in Beaver County, Utah. The company’s latest round of funding was backed by Elemental Excelerator, Galvanize Climate Solutions, Impact Science Ventures, Congruent Ventures, Capricorn’s Technology Impact Fund and others. “Demand for around-the-clock energy has never been higher,” said Fervo’s Tim Latimer. 

  • New electricity source. Cape Station is expected to deliver clean electricity to the grid in 2026. “Our technology is fully derisked, our pricing is already competitive, and our resource pipeline is vast,” said Latimer. Fervo raised $138 million in a Series C round in 2022. The company partnered with Google in 2021 to develop a plant in Nevada.
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LanzaJet secures $30 million from Southwest Airlines for sustainable aviation fuel. LanzaJet is a subsidiary of Chicago-based LanzaTech, which uses microbes to convert industrial carbon emissions into sustainable fuel and inputs for textile, rubber and packaging. LanzaJet taps LanzaTech’s supply of low-carbon ethanol to produce sustainable aviation fuel. Southwest’s investment in LanzaJet will support an ethanol-to-fuel production facility to help the airline meet its goal of replacing 10% of its fuel consumption with sustainable fuel by 2030. “Our work together will lead us closer to meeting aviation’s decarbonization goals by continuing to scale SAF production,” said LanzaJet’s Jimmy Samartzis. 

  • Decarbonizing air travel. The commercial airline industry uses 86 billion gallons of fossil jet fuel each year and contributes up to 3% of global carbon emissions. Decarbonization and electrification of air travel is catching on among big-name investors, policymakers and commercial airlines (see, “Zero-carbon air travel takes flight with a wave of new investments”). British Airways, United, JetBlue and Southwest have been active investors through dedicated venture funds.
     
  • Check it out.

Dealflow overflow. Investment news crossing our desks:

  • Enviria, a German commercial and industrial solar startup that provides financing, installation and storage services for companies looking to switch to solar energy, raked in over $200 million from BlackRock. (Reuters)
  • The OPEC Fund for International Development provided a $150 million policy-based loan to co-finance Colombia’s climate action policy and energy transition program. (OPEC Fund)
  • SDS Capital Group made a $17.5 million New Markets Tax Credit allocation to Bongards Creameries, a Minnesota-based farmer-owned co-op that will create up to 260 full-time jobs in low-income communities. (SDS)
  • Denmark’s Investment Fund for Developing Countries provided a $8 million investment to India’s Smart Joules to provide energy-efficient cooling for data centers, pharmaceutical manufacturing facilities and commercial offices. (YourStory)
  • Kenya-based fintech BFree, which bills itself as a solution to the consumer debt crisis in Africa, snagged $3 million in funding from Capria Ventures, Launch Africa and other investors. (TechCrunch)

Signals: Overheard at Sankalp 

Public equity for African small businesses, accelerating circular enterprises, financing women-led ventures. The theme of the Sankalp Africa Summit in Nairobi was “igniting Africa’s potential for a just transition.” As always, financing for small and medium-sized enterprises was a key concern, ImpactAlpha contributor Lucy Ngige reports. Africa Eats’ Luni Libes is in talks with the Mauritius stock exchange to list eight fast-growing companies as a way to attract investment. To list, the businesses must have recorded at least 25% compounded growth over the last five years, be profitable, and have minimal debt. Libes says many high net-worth individuals hold half their wealth in public equities, and half in bonds and fixed-income vehicles; only a sliver goes to other investments. “With this plan we’re looking at this half that goes into public stocks instead of the tiny sliver that remains,” he said. “That’s the breakthrough here.”

  • Circular route. Sustainable consumption and production in Africa could cut greenhouse gas emissions by 60% by 2050. Resource repurposing and efficient management is creating a circular economy in Africa worth $8 billion annually. “We partner with experts on specific issues like supply chain strengthening, establishing partnerships across sectors, access to technical data,” said Ada Marmion of the Africa Enterprise Challenge Fund, which has provided catalytic funding to over 400 businesses across Africa. “Being homegrown investors really helps because we understand this market.”
  • Keep reading.

Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

Simone Balch, formerly with Cambridge Associates, joins Sonen Capital as chief growth officer… Steven Novick, previously with Coller Capital, joins BlueEarth Capital as a senior adviser… Typeform’s Oji Udezue, Figma’s Shani Taylor, and Y Combinator’s Domonique Fines are among the inaugural class of venture scouts for Barclays Black Formation Investments, managed by Zeal Capital Partners. 

GEM is looking for an impact investment director in Charlotte, NC… One Earth Future Foundation has an opening for a program director in Somalia… Oikocredit is recruiting a Nigeria-based investment director… The Australian Retirement Trust seeks an impact portfolio manager… The Impact Investing Network is on the hunt for a community advisor in New Zealand. 

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– March 4, 2024