Greetings, Agents of Impact!
Featured: Muni Impact
Optimizing the municipal bond market for health equity and racial justice (podcast). The municipal bond market has been called the original impact investment asset class, a source of capital for water, housing, parks, libraries, transit and other essential infrastructure. But laced with historical biases, the U.S. municipal bond market has often been a source of racial harm as well. The Robert Wood Johnson Foundation has embarked on a broad effort to reshape the nearly $4 trillion muni market around health equity and racial justice. “When we started looking around for what were the big veins, the big pools of capital that weren’t fully optimized for investing in health, the municipal finance market showed up very strong,” Kimberlee Cornett, the foundation’s senior director of impact investing, says on the latest Agents of Impact podcast, which kicks off ImpactAlpha’s Muni Impact project. Access to clean water, affordable housing, high-quality schools, parks and open spaces and job opportunities all contribute to health and wellbeing, says Cornett’s colleague, Zoila Jennings.
- Project partners. With a $4 million grant, Robert Wood Johnson is backing the Bond Markets and Racial Equity Project from the Public Finance Initiative and the National League of Cities. Public Finance Initiative is readying a framework for issuers. Separately, the foundation’s strategy brings together bond advisors, ratings agencies and activist financial advisors such as Adasina Social Capital, and fiscal justice research groups like Activest.
- Pricing differentials. Racial equity shows up in munis bonds in a variety of ways. In many cases, investors’ perception of risk in communities of color is higher than the actual risk, a phenomenon that has been called the “Black tax” (see, “The Bonds of Inequality,” by Destin Jenkins). “That very well may be both a remnant of historical exclusion of those communities and a lingering perception of risk that simply has to be – we use the word “eviscerated” – eviscerated from the capital markets,” Cornett says in the podcast.
- Keep reading, and listen in to Kimberlee Cornett and Zoila Jennings in conversation with ImpactAlpha’s David Bank in the podcast, “Optimizing the municipal bond market for health equity and racial justice.” Follow all of our Muni Impact coverage, made possible with support from the Robert Wood Johnson Foundation.
- Agents of Impact Call. Public Finance Initiative’s Lourdes Germán, Robert Wood Johnson’s Kimberlee Cornett and other special guests will join “Optimizing muni bonds for racial equity,” Wednesday, Nov. 16 at 10am PT / 1pm ET / 6pm London. RSVP today.
- We’re hiring! ImpactAlpha is looking for a smart thinker and quick writer to own the municipal finance and community investment beat. Know someone? Please share the job description.
Dealflow: Climate Tech
Solugen rakes in $200 million to expand zero-carbon chemical production. The company blends feedstocks such as sugars, air and carbon dioxide with genetically-engineered enzymes to create alternatives to conventional chemicals. Solugen will use the investment to build a new “bioforge” production plant in Minnesota. Solugen’s existing Houston-based plant produces more than 11,000 tons of carbon-negative chemicals per year for more than 30 customers, including the U.S. Department of Defense. Solugen’s first product was a plant-based alternative to hydrogen peroxide. The company has since expanded its range to chemicals for the food, water, energy, infrastructure and hygiene sectors.
- Early investors. Returning investor Lowercarbon Capital led the new investment round, which pushed Solugen’s valuation above $2 billion. Participating investors include Fifty Years VC, Temasek Holdings, climate VC firm Refactor, and global asset manager Baillie Gifford. Swedish investor Kinnevik contributed $50 million to the round to help Solugen break into the European market.
- Profit potential. Solugen says it is on pace to make more than $100 million in revenue this year. The company is not yet profitable, but Fifty Years’ Seth Bannon, who sits on Solugen’s board of directors, told ImpactAlpha, “Companies like Solugen are utilizing advances in synthetic biology to achieve software-like margins making and selling carbon-negative chemicals.”
- Dive in.
Baltimore’s Conscious Venture Partners raises $17 million to back purpose-driven startups. The Baltimore-based fund manager is expanding across the U.S., and internationally through a partnership with TEC de Monterrey in Mexico. Conscious Venture Partners, which aims to raise $50 million, was started by former hedge fund manager Jeff Cherry, who leads the Conscious Venture Labs accelerator. In 2015, Cherry moved the accelerator and fund to a Baltimore location near the site of the riots that followed the killing of Freddie Gray. “We had to put a stake in the ground,” Cherry told ImpactAlpha. The riots “were also about underinvestment in minority communities.”
- Conscious companies. Conscious Ventures’ tally of investments includes Hungry Harvest, which repurposes surplus food from the Mid-Atlantic; Shea Radiance, which sources Shea butter from West Africa for body care products; and Danae Prosthetics, a company that 3D-prints prosthetics.
- Upsurging Baltimore. Conscious Venture Partners (and Labs) is part of Upsurge Baltimore, which is supporting high-impact startups in the city. Other partners include Techstars Equitech, Maryland Momentum Fund, Spark Coworking, Brown Advisory and Johns Hopkins Technology Ventures.
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Dealflow overflow. Other investment news crossing our desks:
- Equity crowdfunding platform StartEngine is acquiring rival SeedInvest after securing an undisclosed amount of capital from Circle.
- Kinara Capital, which provides unsecured, no-collateral loans to micro and small businesses in India, secured $24.3 million in equity capital in a round led by British International Investment.
- Joro scored $10 million in Series A funding from Jay-Z’s Roc Nation, Norrsken VC and other investors to help consumers manage and offset their carbon emissions.
Agents of Impact: Follow the Talent
Chante Harris, ex- of Venture For ClimateTech and SecondMuse, joins Schmidt Futures for a residency program on climate finance innovation… Gareth Zahir-Bill, ex- of Shell Foundation, joins Green Climate Fund’s South Korea office… Elizabeth Seeger, former managing director of sustainable investing at KKR, joins the International Sustainability Standards Board.
CarbonDirect is hiring a hydrogen scientist in San Francisco… Mission Driven Finance is looking for a senior investment analyst and several other roles… The Drawdown Fund, a climate growth equity fund managed by Tiger Grass Capital, seeks an associate for its investment team in Park City, Utah… LISC is recruiting a manager of legal operations in New York.
Boston Network for International Development is hiring a program associate in the greater Boston area… Applications are open for the Atlantic Fellows for Social and Economic Equity program… Eight companies will form the Workforce and Justice Alliance to support criminal justice reform in the U.S.
Thank you for your impact!
– Oct. 31, 2022