The Brief | October 21, 2021

The Brief: Living Cities Q&A, crypto in West Africa, funding the crowdfunders, good gig jobs, mapping ocean impact, $100 billion climate downpayment

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Greetings, Agents of Impact! 

The Call: Catalytic climate capital. Global investment in the low-carbon transition looks likely to cross the $1 trillion mark this year, but three to four times that much is needed to keep climate goals in range. Join Breakthrough Energy Catalyst’s Jonah Goldman, Prime Impact’s Amy Duffuor, LEAF Coalition’s Eron Bloomgarden, Convergence’s Joan Larrea and other Agents of Impact who are using catalytic capital to bridge persistent capital gaps in early-stage innovation, full-scale commercialization and climate justice, Tuesday, Oct. 26th at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Returns on Inclusion

Living Cities’ Joe Scantlebury sees cities as the template for an inclusive America. U.S. President Joe Biden wants to “build back better.” Joe Scantlebury is out to make sure the rebuild includes all Americans. “I grew up in a single-parent household. I’m real clear on the hardships that we face,” says the incoming CEO of Living Cities, a 30-year-old collaborative of 19 philanthropic foundations and financial institutions investing to close racial income and wealth gaps. “It’s important that we have policies that really enable the majority of Americans and a significant portion of our population to participate in the full economy.” Brooklyn-born Scantlebury takes the helm at the nonprofit following the departure of long-time CEO Ben Hecht. The outpouring of empathy following the murder of George Floyd created an opportunity to reach for a collective humanity. Now it’s time to deliver, Scantlebury says in a Q&A with ImpactAlpha.

To model the inclusive future, Scantlebury draws on decades of lessons from Living Cities itself, which has been testing race-intentional investing in Albuquerque, Memphis, Minneapolis/St. Paul and other cities. “How do we transform a country using cities as the template?” asks Scantlebury. The organization’s Catalyst Family of Funds has deployed nearly $80 million through two funds. Recent commitments to Kim Folsom’s Founders First Capital, Melissa Bradley’s 1863 Ventures, John Green’s Blackstar Real Estate Partners and other Black, Indigenous and fund managers of color aim to increase investments in entrepreneurs who generate wealth for their communities. “We can see it. It’s tangible,” says Scantlebury. Living Cities plans to introduce a third, more expansive fund to put capital in the hands of BIPOC fund managers. “There were $50 billion of pledges made to address racial inequity, and we’re still waiting to see whether those resources actually arrive,” Scantlebury says. “Our hope is to actually demonstrate the how.”

Dealflow: Democratizing Impact

Cameroon’s Ejara raises $2 million for impact-focused crypto. Crypto is having a moment in Africa. Dozens of African fintechs promising to democratize access to cryptocurrencies across the continent have raised venture capital funding. Ejara was launched by Nelly Chatue-Dio to serve financially-underserved consumers in francophone West Africa, especially women. The woman-led startup offers simple, mobile-based cryptocurrency investment and savings options, as well as financial literacy tools. Ejara’s $2 million funding round was backed by CoinShares Ventures, Anthemis Group, impact investor Mercy Corps Ventures and others.

  • Crypto for impact. “Crypto in Africa is being driven by other factors rather than financial inclusion,” observes Samora Kariuki of Frontier Fintech. “The space is yet to offer useful everyday banking solutions for the unbanked.” But crypto, compared to mobile money and traditional financial services, could offer lower fees, faster transaction processing, and higher yields. It’s also a way for emerging market consumers to get access to more stable currencies through “stablecoins” like USD Coin, which is pegged to the U.S. dollar.
  • Early mover. What differentiates Ejara is “how they’re thinking about financial education and responsible use of crypto, and how it can be beneficial to people, rather than just trying to increase trading activity,” Mercy Corp Ventures’ Dan Block told ImpactAlpha. Ejara is one of the few crypto players in francophone West Africa, Block added. “And I think they’re the only one that is really doing it responsibly.”
  • Dive in.

Republic raises $150 million to ride the growth of equity crowdfunding. Roughly 250,000 retail investors are funding startups and small businesses online each month, according to Kingscrowd. That has spurred fundraising for crowdfunding platforms like New York-based Republic, which raised $150 million in a round led by Valor Equity Partners. Returning investors Galaxy Interactive and Motley Fool Ventures and new investors Pillar VC and Brevan Howard also participated. Republic raised $36 million in March. The platform has facilitated more than $700 million in investments to 600 companies.

  • Crowdbonding. San Francisco-based SMBX raised $11.5 million to democratize lending to small businesses. Launched in 2016, SMBX lets retail investors invest as little as $10 in small business bonds and receive monthly payments. The marketplace has hosted nearly $3 million in bond offerings. Co-founder Ben Lozano told ImpactAlpha that SMBX expects to list more than 250 new bonds in the coming year. The seed round was led by Group 11, with participation from Better Ventures, Impact America Fund, Unpopular Ventures, Berkeley SkyDeck and former Vanguard executives Paul Heller and Jim Norris. More.
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Dealflow overflow. Other investment news crossing our desks:

  • Wonolo clinches $138 million to connect gig workers with temporary and flexible work that pays a living wage.
  • BOND, Emerson Collective, Capricorn’s Technology Impact Fund, Social Capital and others back Saildrone to assess climate impacts on the oceans through data collection and ocean mapping.
  • Electric vehicle battery maker Our Next Energy raises $25 million, with backing from Breakthrough Energy Ventures, Assembly Ventures and BMW i Ventures.

Signals: Countdown to COP

$100 billion is just a down payment on financing the climate transition in developing nations. For want of a nail… the kingdom was lost, as the old proverb goes. For want of $100 billion, a global climate agreement may be lost. Whether wealthy nations will meet their (repeated) promise to deliver $100 billion per year to help developing nations address climate changes may determine the fate of the COP26 global climate summit kicking off in Glasgow in 10 days. Africa’s main negotiator is calling for wealthy nations to raise their payments more than 10-fold, to $1.3 trillion per year by 2030. Private sector financing is critical to bridge the yawning gap. And the emerging consensus holds that such private financing depends on ‘catalytic capital’ to mitigate risks of investing in many emerging markets (see, “Deploying catalytic capital to bridge financing gaps for climate action”). Some promising approaches:

  • Climate Investor One. South Africa’s Climate Fund Managers has raised close to $1 billion to finance renewable energy projects in Africa, Asia and Latin America via its Climate Investor One facility. One sub-fund offers technical assistance at the earliest stages of a project. Another provides equity finance to see projects through the construction phase. A third pooled-refinance fund helps to unlock new capital from institutional investors for post-construction operational debt. The blended finance facility was developed by Dutch development bank FMO and the Global Innovation Lab for Climate Finance.
  • Pay for success. Tropical forests store up to a quarter of all above-ground carbon and represent half of the world’s land-based biodiversity. The Lowering Emissions by Accelerating Forest finance, or LEAF Coalition, a global coalition of governments and corporations, aims to mobilize at least $1 billion to pay countries and states to protect their forests. Launched by Norway, the U.K. and the U.S. in April, it has attracted participation from Amazon, Airbnb, Bayer, Delta Airlines, GlaxoSmithKline, Nestlé, Salesforce and Unilever.
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Agents of Impact: Follow the Talent

ImpactAlpha partner event: “Humankind: Deploying innovative investment structures to accelerate inclusion,” is among the breakout sessions at the Next Normal Now series on regeneration from the Global Impact Investing Network, Wednesday, Oct. 27. Guests include Alix Peterson Zwane of Global Innovation Fund, Stephen Buchanan of Mosaic Capital Partners and Gustavo Katz Braga of Common Fund for Commodities. RSVP today.

Tessa Flippin, formerly of Chicago’s TechNexus Venture Collaborative, has launched Capitalize VC to empower diverse entrepreneurs and investors… CDC is hiring a director for capital solutions in London… Candide Group is looking for a portfolio manager for its Olamina Fund… Visa seeks a director of social impact stakeholder engagement and content creation in San Francisco… Aceli Africa is hiring a senior associate in Dar es Salaam, Tanzania… Societe General is recruiting a CSR and sustainability analyst in Singapore… Also in Singapore, McKinsey seeks a sustainability insights manager.

Thank you for your impact.

– Oct. 21, 2021