The Brief | August 9, 2023

The Brief: Mangrove revival in Pakistan, bankruptcy for electric bus maker, giving circles, lab-grown pork, piloting character-based lending

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Greetings, Agents of Impact!

Featured: Nature-Based Solutions

Revival of Pakistan’s mangroves provides a blueprint for global restoration. Mangroves are among the planet’s most productive and diverse ecosystems. The forested wetlands support countless species and the livelihoods of more than 120 million people. They stabilize shorelines, protect them from storms, clean local water, and hold up to five times more carbon than terrestrial forests. Governments, nonprofits and local communities have raced to rebuild these vital ecosystems, which have been ravaged by timber exploitation, coastal development and industrial pollution. Worse, projects to rehabilitate hundreds of thousands of acres of mangroves around the world often fail. In Sri Lanka, mangrove restoration projects have suffered an average failure rate of 80% since 2000. Similarly grim outcomes have been found in Thailand, the Philippines and Madagascar. A notable exception: Pakistan. “Pakistan really got mangrove restoration spot on,” Daniel Friess, a mangrove expert with the National University of Singapore, tells ImpactAlpha. “It provides a roadmap to look at and learn from.”

  • Stepwise. The South Asian nation lost up to three-quarters of its mangrove forest in the last century. In recent decades, Pakistan has been a rare country to show a net gain in mangrove area, a result of a stepwise approach that prizes local knowledge and community engagement. Projects have largely avoided mistakes that hamper many restoration efforts, from planting in the wrong places or with the wrong densities, to choosing easy-to-grow species over native ones. A commercial logging ban and protected designation for parts of the Indus delta also helped, journalist Marcello Rossi reports for ImpactAlpha
  • Public-private. One of the world’s most ambitious mangrove restoration projects is underway in the Indus River delta. Delta Blue Carbon aims to rehabilitate nearly 900,000 acres of degraded mangrove forests along the coastline, sequestering an estimated 142 million tons of carbon over 60 years. The project “takes a more systematic, large-scale, and participative approach” than many grassroots efforts, says Nadeem Khan of Indus Delta Capital, a Karachi-based developer working with the provincial government of Sindh. Delta Blue Carbon has already replanted more than 200,000 acres of degraded wetlands. In November, the project’s first 250,000 metric tons of carbon credits were sold, at around $28 a ton, to buyers including Microsoft, Carbon Growth Partners, Pollination and Trafigura.
  • Keep reading, “Pakistan’s mangrove revival offers a blueprint for global restoration efforts,” by Marcello Rossi on ImpactAlpha

Dealflow: SPAC-down

Electric bus maker Proterra files for bankruptcy. A darling of sustainability investors in private markets has gone bankrupt just two years after going public. Proterra, a US-based maker of electric buses and battery systems for heavy-duty vehicles, filed for Chapter 11 protection amid mounting supply chain costs and tepid demand. The 20-year-old company attracted early funding from sustainability investors including Generation Investment Management, Cowen Sustainable Advisors and Obvious Ventures before going public via a merger with a special-purpose acquisition company, ArcLight Clean Transition Corp. “We have faced various market and macroeconomic headwinds that have impacted our ability to efficiently scale all of our opportunities simultaneously,” Proterra’s Gareth Joyce said in a statement. Shares of the company fell more than 88% on Tuesday’s news.

  • Ups and downs. Proterra sold more than 1,300 electric buses to transit agencies and cities across the country, including in Miami, Chicago and Albuquerque, and the counties of Arlington, Va., and Sonoma, Calif. Many of those municipalities are now among a long list of creditors with unsecured claims. The company raised a total of $682 million in venture capital; its largest equity holders include Kleiner Perkins, BMW iVentures and Daimler Trucks. President Biden hailed the EV maker as part of the push to pass his infrastructure bill, which included tens of billions for zero-emissions vehicles and electric school buses. Energy Secretary Jennifer Granholm faced criticism for her stake in the company, which she eventually sold.
  • Chinese competition. Proterra says it will continue operations as it pursues a restructuring ​“to strengthen its financial position through a recapitalization or going-concern sale.” The company’s inability to turn a profit highlights the challenges facing upstart EV companies, particularly in the US. China’s BYD, the world’s largest EV bus maker, should sell three million buses this year, Raymond James’ Pavel Molchanov told Canary Media. BYD has benefited from a half-decade-long push from the Chinese government to convert fossil-fuel fleets.
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Giving platform Grapevine raises $1.9 million in equity and grants. New York-based Grapevine launched in 2017 to help individuals, businesses and communities fund causes they support. The platform facilitates “giving circles,” through which people collectively pool donations and decide what organizations to fund. The women-led organization has facilitated $25 million in donations from individuals, companies and donor-advised funds. Grapevine itself raised $1.7 million in seed equity and $180,000 in grants. Investors include PJC, Ulu Ventures, Social Good Fund and Focus Impact Partners

  • Repeat funding. Unlike giving platforms like GoFundMe or Kickstarter, Grapevine is designed for recurring donations, providing organizations with a larger base of repeat funders. Grapevine says it vets organizations supported on its platform to ensure they’re eligible for tax-deductible donations and are in good standing with the US Internal Revenue Service. It earns revenues from voluntary “tips” from recurring donors.
  • Inclusive gifting. Philanthropic giving in the US amounts to about $500 billion annually. Black- and Indigenous-led organizations receive only about 1% each. “While working in the nonprofit sector, I saw that the philanthropic industry only worked well for the super wealthy,” said Grapevine’s Emily Rasmussen. “It motivated me to create a solution for the rest of us.” About 60% of its giving circles are identity-based. The organization is working with other nonprofits including AARP, Idealist, Philanthropy Together and Giving Compass to “bring in more diverse perspectives so that more dollars are provided to underrepresented and diverse communities.”
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Dealflow overflow. Other news crossing our desks:

  • Dutch lab-grown pork maker Meatable raised $35 million in a round led by Agronomics and Dutch government-backed impact investor Invest-NL. (Meatable)
  • San Francisco-based Equilibrium Energy scored $33 million to partner with battery developers to support renewable energy integration with the electricity grid. (Equilibrium Energy)
  • BlackRock and the government of New Zealand launched a NZ$2 billion ($1.2 billion) fund to finance the country’s transition to 100% renewable energy by 2030. (Bloomberg)
  • Nigeria’s Traction clinched $6 million to provide inventory and sales tracking, digital payments, and financial services to small businesses. (Disrupt Africa)
  • Canadian carbon tech venture Carbon Upcycling Technologies secured $26 million to convert CO2 into concrete, industrial-grade plastics and other materials. (Finsmes)

Impact Voices: Inclusive Economy

Lending on character, not collateral, to shift capital and power to Black and Native leaders. Character is a proxy for trust. To increase the flow of capital to diverse-led businesses, character-based lending has emerged as an alternative to more common approaches based on collateral or credit scores. In the aftermath of the Covid pandemic, Common Future launched a pilot to test character-based lending strategies with community-rooted lenders Native Women Lead, ConnectUP! and Mortar (for context, see “How some communities and funders are practicing participatory investing to share power as well as capital”). “Through the pilot we shifted power to local partners, who set underwriting criteria, decided on loan terms and chose borrowers,” write Common Future’s Ana Ramos and Eric Horvath, who recently left the nonprofit. The model, they say, leveraged the lenders’ cultural competence and local expertise “to create sourcing channels and evaluation criteria that others would not be able to access or would consider ‘too risky.’”

  • Shifting capital. Through this month, the partners will have deployed nearly $900,000 of relationship-driven loans to 18 Black, Indigenous, and people of color-led small businesses in Arizona, Minneapolis, New Mexico and Ohio. Common Future aimed to distribute loans to traditionally marginalized borrowers at interest rates of 0% to 3%. All borrowers in the portfolio identify as BIPOC; 80% are women. The median loan size was $42,500, with a median interest rate below 2%. “We wanted BIPOC entrepreneurs to capture the upside, or at least not be subject to the downside, rather than the relatively more privileged investors,” write Ramos and Horvath.
  • Up next. Native Women Lead will continue offering capital from its Creative and Restorative funds. ConnectUP! is raising up to $5 million to scale lending to Brown and Black businesses in Minnesota. Mortar, in Cincinnati, hopes to provide regular access to character-based loans. Last year, Common Future acquired Community Credit Lab, with which it first partnered to facilitate the pilot. 

Agents of Impact: Follow the Talent

Eliza Golden Roady, ex- of Acumen, joins the Sorenson Impact Center as a managing director of impact… Regenerative Capital Group is accepting applications for its CEO-in-residence program for social entrepreneurs in Canada… Solstice is hosting a free webinar on “Lessons in low-income inclusion for community solar projects,” Thursday, Aug. 10.

The Regenerative Food Systems Investment Forum will take place in Denver, Sept. 26-27… AFSIC is hosting its Investing in Africa conference in London, Oct. 9-10… Also in London, the African Private Equity and Venture Capital Association, or AVCA, is hosting its Sustainable Investing in Africa Summit, Thursday, Oct. 12.

Thank you for your impact.

– Aug. 9, 2023