Greetings, and thanks to the hundreds of Agents of Impact who turned out for yesterday’s Call, and especially our guests and guides through the expanding capital markets for startups and small businesses. Send your own alt-capital models, trends, deals and scoops to [email protected] (or just hit ‘reply’).
Featured: Climate Investing
Grounding climate investment in direct impact and community power. For the first investment from its new Sustainable Growth Equity team, J.P. Morgan Asset Management chose not solar power, energy storage or electric vehicles, but Arcadia, which raised $200 million for software that provides data and monitoring for companies in all of those sectors. Some investors are playing the low-carbon transition by investing in software companies, The Wall Street Journal reported, “wagering that the startups have a quicker path to profitability because they don’t need to spend heavily to make physical products such as electric cars or solar panels.” There are other ways to make more direct climate impact. In a pair of guest posts on ImpactAlpha, investment managers offer guideposts for staying close to frontline communities and targeting impact investments.
- Seven or more ways to lead with justice in climate investing. Investing in Black and Indigenous communities on the front lines of the climate crisis “is a more efficient, effective and equitable way to transition to a sustainable, climate-neutral world,” Pedro Henriques da Silva of Global Endowment Management writes in a guest post. The Charlotte-based “outsourced CIO” has rounded up climate justice considerations. Integrate your thinking, says Nili Gilbert of Carbon Direct. “Environmental justice is a structural way of seeing these issues as implicitly correlated.” Invest in frontline communities, says Vanessa Roanhorse of Roanhorse Consulting. “People say, ‘Oh it’s so big, how do we fix it?’” says Tracy Gray of the 22 Fund. “Focus on where you are, and don’t get distracted everywhere else.” Read da Silva’s full post.
- Fixed-income and municipal-bond strategies for direct climate impact. Green bond issues could reach $1 trillion this year. But many green bonds, like ETFs sorted for ESG considerations, finance corporations that may be part of the problem, writes RBC GAM’s Brian Svendahl. “The more targeted and direct we can be with our impact investments, the better we can address climate change and support the most vulnerable among us,” he says. Fixed-income strategies and municipal bonds, along with direct debt or equity investment in renewable energy enterprises, have more impact than generic green funds and bonds, says Svendahl. Blue Forest Conservation’s Forest Resilience Bond deploys private capital to finance forest restoration. Municipal bonds finance East Side High School District’s solar power program in San Jose, Calif. Read Svendahl’s full post.
Dealflow: Returns on Inclusion
LISC raises $100 million to expand Entrepreneurs of Color Loan Fund. The new fund will buy loans off the books of community lenders to free up their capital for more lending to minority entrepreneurs. “The Loan Fund offers that missing liquidity,” said George Ashton of the Local Initiatives Support Corp. “While there is a secondary market for SBA loans, there is no similar option for many other types of loans.” JPMorgan Chase committed $50 million, and was joined by Block (formerly Square), Amalgamated Bank, Costco, Forbright Bank and Rippleworks. The softening economy, COVID and the war in Ukraine “mean that funds such as the Entrepreneurs of Color Loan Fund are more important than ever to support historically marginalized communities and BIPOC entrepreneurs,” Rippleworks’ Doug Galen told ImpactAlpha.
- Community recovery vehicles. An earlier effort to strengthen the balance sheets of community development financial institutions was developed by Calvert Impact Capital and Minneapolis-based Community Reinvestment Fund to help sustain underserved communities through the COVID pandemic. Loan purchasing funds in New York, California, Washington state and 15 states across the southern U.S. supported an additional $210 million in loans to 3,500 businesses. The Entrepreneurs of Color Loan Fund will purchase loans made by partner CDFIs.
- Dive in.
Equity Group secures $165 million to finance small businesses and climate projects in Africa. Through a partnership with the International Finance Corp., the Nairobi-based banking group will invest $80 million in equity in climate projects over five years, and extend loans and financial services to at least five small enterprises and 25 million households. The goal: create 50 million jobs.
- Sustainable development. The credit facility includes $50 million each from IFC and the British International Investment (formerly CDC Group) and $65 million from Symbiotics, FMO and responsAbility. IFC will acquire a 6.7% stake in Equity Group, making it the second-largest shareholder behind Arise Investment. Equity Group has subsidiaries in Kenya, Rwanda, Uganda, Tanzania, South Sudan and Democratic Republic of the Congo.
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Dealflow overflow. Other investment news crossing our desks:
- HCAP Partners invested in FleetNurse to connect healthcare workers to healthcare facilities that need to fill shifts on short notice.
- Atlanta-based burger chain Slutty Vegan raised $25 million in Series A funding led by Richelieu Dennis’ New Voices Fund, bringing its valuation to $100 million.
- White Oak Global Advisors provided a $21.3 million loan to recycling and waste disposal company Omni Recycling to complete its acquisition by Salt Creek Capital.
- San Francisco-based biotech venture Brightseed secured $68 million in a Series B round, led by Temasek, to discover nature-based health solutions.
Agents of Impact: Follow the Talent
Kapor Capital’s Uriridiakoghene “Ulili” Onovakpuri and Brian Dixon become managing partners as Mitch and Freada Kapor step back (“we are not retiring”)… Terry Angelos, who led Visa’s global fintech and crypto divisions, will become CEO of DriveWealth… responsAbility promotes Tara Hesse to chief operating officer and Martin Heimes to head of private debt… Joelle Gamble, formerly of the White House National Economic Council, joins the U.S. Department of Labor as chief economist… Casey Bell, ex- of the National Rural Utilities Cooperative Finance Corp., joins Pacific Community Ventures as chief impact officer.
Borealis Philanthropy is hiring a remote director of finance… The University of Oxford seeks a director of the Smith School of Enterprise and the Environment as well as several research associates… Mighty Earth seeks a senior director for its decarbonization campaign… The Rockefeller Foundation is looking for a senior associate for its strategic learning and impact team… Calvert Impact Capital is hiring a strategy officer.
Social Nest Foundation is looking for a head of entrepreneurship in Valencia, Spain… Regen Foundation is hiring a director of development… UNDP’s Global Fund is recruiting a communications specialist… ClimateWorks Foundation is recruiting a grants assistant… The National Community Reinvestment Coalition has extended the deadline for its Equitable Development Fellowship to May 20.
Thank you for your impact!
– May 11, 2022