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Featured: Climate Risk
Letter from New Orleans: Climate risk is business risk, and opportunity. After days of cleanup at his home in New Orleans, and with power finally restored, Rob Lalka sat down to reflect on the perils and possibilities of the current moment. “Impact investing is increasingly becoming, simply, smart investing,” the Tulane University business professor, Obama-era State Department official and former director at Village Capital writes in a guest post on ImpactAlpha. Hurricanes like Ida are coming more often and with greater force, while the U.N. warns that carbon emissions are putting billions of people in danger. But by accounting for such risks and solving for all stakeholders, he says, we can “imagine new ways to build cross-sector partnerships and use business, the greatest wellspring of innovation known to man, to save the world and ourselves.”
Lalka moved to New Orleans after 2005’s Hurricane Katrina. When Ida knocked out power for over a million Louisianans, 30,000 line workers from 40 states came to Louisiana to work around the clock to restore power (for more on the role of essential workers in disaster recovery, listen to Resilience Force’s Saket Soni on The Reconstruction podcast). Community organizations are working alongside global nonprofits like World Central Kitchen, which has served over 100,000 meals in southeastern Louisiana. Lalka was struck by the spirit of Cleo Robinson, from the New Orleans restaurant Dooky Chase, who told Chef José Andrés, “I don’t care what you have, or you don’t care what I have, but we become a unit for the common good, and spreading love.” Lalka is a longtime advocate for the impact economy. A decade ago, his colleagues Kris Balderston and Lala Faiz at the State Department’s Global Partnership Initiative wrote, “This transformation has the potential to be as significant as the green revolution and the industrial revolution—where we take a longer-term view and enable a new era of sustainable economic opportunities.” With BlackRock’s Larry Fink, TPG’s Jim Coulter, the U.N.’s António Guterres and other public figures trying to tackle climate change, Lalka says, “Our leaders are finally leading.” From where he sits in New Orleans, it’s clearer now than ever: “We have so much work yet to do – together.”
Keep reading, “Letter from New Orleans: Climate risk is business risk, and opportunity,” by Rob Lalka on ImpactAlpha.
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Five recommendations for assessing real estate climate risk. How real estate investors can navigate data for measuring climate change risks. Learn more.
Dealflow: Climate Solutions
Elemental Excelerator spins out Earthshot Ventures with $60 million for inclusive climate tech. Honolulu-based Elemental has built a track record over the past decade backing entrepreneurs responding to the climate crisis in their own communities, including BlocPower’s Donnel Baird and ChargerHelp’s Kameale Terry and Evette Ellis. The nonprofit accelerator has notched 20 exits, including Scoot, Proterra, Ampaire and Xos. Elemental is now spinning out Earthshot Ventures as a separate climate VC firm to “increase catalytic funding for bold and diverse founders transforming markets,” said Elemental’s Dawn Lippert. Earthshot has raised $60 million from Emerson Collective, Microsoft’s Climate Innovation Fund, NextGen America’s Tom Steyer, Kleiner Perkins’ John Doerrand and others. “Earthshot raises the bar for equitable climate tech investment,” said Emerson’s Laurene Powell Jobs, who chairs Elemental’s board. Lippert will lead the venture fund alongside Elemental investor-in-residence Mike Jackson, and Ramsay Siegal, former head of Elemental’s portfolio.
- Climate capital. The Earthshot fund will invest in early-stage hardware and software-based climate tech startups, supporting seed rounds to Series B, and will connect founders with its global network of investors, policymakers and other partners. Other limited partners in the fund include Employees’ Retirement System of Hawaii, McKinley Alaska Private Investment, Stafford Capital Partners and Facebook’s Chris Cox.
Addi rakes in $140 million to scale ‘buy now, pay later’ in Latin America. Latin America led the world in e-commerce sales growth last year, attracting investors to platforms like Nuvemshop that are accelerating the shift to online business. Addi lets customers in Brazil and Colombia pay over time for purchases from more than 500 retailers and merchants. The service is interest and fee-free, and users need only their ID and phone number. The Series B financing will help Addi expand to Mexico early next year.
- Inclusive economy. Companies and investors have been swooning over buy now, pay later models, which expand the pool of potential e-commerce customers. PayPal is buying Japanese startup Paidy for an estimated $2.7 billion, while Square is paying $29 billion for Afterpay in Australia. Investors in Addi’s round include Greycroft, Quona Capital, Endeavor Catalyst, Andreessen Horowitz, Foundation Capital and Union Square Ventures.
- Dig in.
Elvie scores $97 million to make health products for women. The London-based company makes tech products for pumping breast milk and pelvic-floor health. “Our goal is to create the go-to destination for women’s health at all life stages, providing sophisticated, accurate and personalized solutions,” said Elvie’s Tania Boler. The round was backed by BlackRock, BGF, Octopus Ventures, Hiro Capital, IPGL, Westerly Winds, Hiro Capital and Blume Equity, a women-led growth equity impact fund investing in sustainable food and health companies.
- Gender-lens investing. The market opportunity for “femtech” is projected to reach $50 billion by 2025. Digital health provider Mae raised $1.3 million to address health inequities for Black women who are pregnant. On-demand women’s and family health startup Maven secured $110 million. Pumpspotting, which offers maternal health support via a mobile app, raised $1.2 million.
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Dealflow overflow. Other investment news crossing our desks:
- Amazon and The Nature Conservancy launch the Agroforestry and Restoration Accelerator to advance nature-based decarbonization solutions and support local farmers in Brazil.
- AV Ventures’ impact fund invests $700,000 in Kupuev Academy to build a campus for teaching STEM to underserved students in Kyrgyzstan.
Impact milestones: Fusion first. MIT spin-off Commonwealth Fusion Systems conducted a successful test of its new superconducting magnet – a key component in the company’s plans to generate net fusion energy by 2026 and carbon-free commercial power early in the 2030s (for context, see “Long coming but slow to arrive, fusion energy approaches a milestone on path to commercial deployment”). The magnet generated a sustained magnetic field of more than 20 tesla. “This magnet will change the trajectory of both fusion science and energy, and we think, eventually, the world’s energy landscape,” said MIT’s Dennis Whyte, who heads the school’s Plasma Science and Fusion Center, where the test took place.
Signals: Climate Tech
Investors rally behind India’s early, active climate tech scene. India’s recognition of its vulnerability to climate change has spurred a set of ambitious targets to curb carbon emissions (by 35% of 2005 levels by 2030), ramp up renewable energy consumption (to 40% by 2030) and ignite electric vehicle adoption. Climate tech innovators and investors are responding to the challenge. Investors have pumped $1.2 billion in equity into India’s homegrown climate tech startups in the past five years, including $506 million in 2019, according to Impact Investors Council, Climate Collective and Arete Advisors. The dollar volume is far short of the capital needed to meet India’s climate goals, but aligned with the country’s very early-stage tech innovations. More than half of the climate tech startups funded between 2016 and 2020 were seed-stage ventures. “Startups have proven to be great at piloting new pathways and further developing inventions to the point that they become ubiquitous,” the authors say.
- Mobility and energy. Sixty percent of India’s climate tech capital went to clean mobility, including logistics, electric vehicle adoption and charging infrastructure (for context, see, “Shift to electric rickshaws and motorcycles is drawing investors to emerging markets’ e-mobility opportunity”). Ride hailing company-turned-EV manufacturer Ola Electric raised $267 million in 2019. One-quarter of the capital went to clean energy, including generation, access, storage and optimization. “A lot of government work has been focused on emission reductions and a shift to renewables—and consequently the technology ecosystem in this space has thrived,” the report states. More than half of India’s electricity still is powered by coal.
- Tune in. Impact Investors Council is hosting a discussion on the report, “Unlocking Capital for Early Stage Climate-tech Startups,” today.
- Wonk out.
Agents of Impact: Follow the Talent
Mission Driven Finance is looking for a controller in San Diego or remote… ImpactEngine is hiring a senior associate for economic opportunity in Chicago… The David and Lucile Packard Foundation is hiring a communications officer in Los Altos, Calif…. DBL Partners seeks a director of impact in San Francisco… Resonance Impact Advisory is looking for an innovative finance analyst / senior analyst… New Energy Nexus is accepting applications for its inaugural “Climate Fintech: Cards and Payments Challenge,” which will award $100,000 to the winning startup.
Thank you for your impact.
– Sept. 9, 2021