The Brief: Nature’s gold vault, workers’ comp, consumer carbon footprint, battery swapping for two-wheelers, boosting returns at emerging-market impact funds

The team at

ImpactAlpha

Greetings, Agents of Impact! 

👋 Agents of Impact Call No. 45: Creative capital for gender-smart investments. Women-led funds in emerging markets are finding innovative ways to raise and deploy high-impact capital. To learn how they’re doing it, join the conversation with Leila Charfi of Actawa Ventures in Tunis, Anna Raptis of Amplifica Capital in Mexico City, Lelemba Phiri of Africa Trust Group in Cape Town, Nicole Garcia of USAID Invest, and Suzanne Biegel of GenderSmart, in a special subscribers-only Call with ImpactAlpha’s Jessica Pothering and David Bank, Wednesday, Sept. 28 at 9am PT / 12pm ET / 6pm Cape Town. RSVP today.

🤝 Let’s connect. The ImpactAlpha team will be on the scene at this fall’s impact events. Let us know where you’ll be in this quick survey.

💸 ICYMI. The LIIST has September’s roundup of impact funds and companies we believe to be raising capital.

Featured: Impact Crypto

A low-carbon way to store your gold: Leave it in the ground. What’s the most eco-friendly way to mine gold? Not to mine it. Nature’s Vault, a blockchain-based finance company headquartered in Singapore, is buying up mining claims in Canada for the express purpose of not digging for gold. Instead, the company is selling crypto “legacy tokens” as digital proof of the underlying value of the gold. “When someone buys our token, they’re buying a quantifiable amount of gold that our company commits to preserve,” Nature’s Vault’s Phil Rickard tells ImpactAlpha. As unusual as that may sound, consider that most traditional buyers of gold never see their assets and have only a digital record of their holdings. About half the world’s gold sits as bars in remote bank vaults. Producing and refining a single ounce of gold generates nearly one ton of carbon dioxide. For vanity materials like gold, silver and sometimes platinum, Rickard says, “there’s not really much of a reason to dig it up and stick it in a bank vault anymore.”

Nature’s Vault is negotiating to buy a substantial gold mining claim in Ontario called the North Star Deposit. In April, Nature’s Vault secured the rights to an estimated 125,000 ounces of gold in Pistol Lake, in Ontario’s Thunder Bay. Nature’s Vault is aiming to secure rights to a million ounces of in-ground gold to back up tokens issued on the (carbon-neutral) blockchain Polygon to “monetize the value of the mineral asset and leave it in the ground without having to dig it up,” Rickard says. The company has privately sold $2.2 million in tokens and has raised about the same amount in seed funding for the company itself. The price of gold, a traditional inflation hedge, is currently about $1,680 an ounce. Mining claims value gold in the ground at five or six dollars an ounce. The difference is in securing permits and plans, establishing a mine, and pulling out and refining the gold over 20 years. “We can short-circuit and disrupt the whole process,” Rickard says, “and say, ‘There’s no reason to take that capital risk. Let’s just go ahead and find the value now.’”

Dealflow: Inclusive Economy 

Pie Insurance raises $315 million to provide workers’ comp coverage for small businesses. Most U.S. businesses are required to carry workers’ compensation insurance, which covers medical expenses, lost wages and rehabilitation costs for employees injured at work. Washington, D.C.-based Pie Insurance says more than three-quarters of small businesses overpay for such coverage. The insurance tech company provides workers’ comp insurance in 39 states and says it can help business owners save up to 30%. The company partners with more than 2,800 local and national insurance agencies. “Pie is disrupting the highly fragmented small business commercial insurance market” by pricing and underwriting insurance risks differently, said Pie’s John Swigart.

  • Inclusive insurance. The Series D investment round more than doubles Pie Insurance’s capital raised to over $615 million. Centerbridge Partners and Allianz X, an investments division of Allianz Group, led the round.
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Future scores $5.3 million to reward consumers for reducing their carbon footprints. More U.S. consumers are looking to make climate-friendly purchases to reduce their carbon emissions. “There’s a common misconception that reducing carbon emissions in our day-to-day life is hard and expensive,” said Jean-Louis Warnholz, who co-founded Future with Kamal Bhattacharya. The Maryland-based fintech startup offers a debit card that gives 6% cash back for climate-smart purchases such as electric charging, circular fashion, plant-based meat and dairy products, public transportation, and rentals of electric bikes, scooters and vehicles. Future users can track their footprints with a mobile app that provides recommendations to earn more cash and emit less carbon.

  • Low-carbon transition. Investors in the seed round include Accomplice, Active Impact Investments, Techstars Ventures, Urban Impact Ventures and author and comedian Beratunde Thurston. Future says it will partner with climate-friendly brands and launch more incentives for customers to fight climate change.
  • Check it out

Dealflow overflow. Other investment news crossing our desks:

  • Washington, D.C.-based GiveCampus raised $50 million to make it easier for nonprofit K-12 schools, colleges and universities to raise funds.
  • RenewCO2 snagged $2 million in seed financing led by Energy Transition Ventures, as well as $8 million in non-dilutive grants, to make no-carbon plastic and chemical products.
  • Brazil’s Leoparda Electric secured $8.5 million in a seed round to build a network of swappable battery stations for electric two-wheelers in Latin America.
  • A joint partnership between OMERS Infrastructure and Spring Lane Capital will invest in sustainable food, water, energy, transport and waste businesses in North America.

Impact Voices: Performance Anxiety

How emerging market impact funds can reverse the curse of low (return) expectations. The performance of emerging market private equity impact funds is weaker than their developed market counterparts. To attract sufficient capital, emerging market managers must outperform, which can be achieved only with greater investment discipline and a sharper focus on financial returns, the IFC’s Clemens Feil and Neil Gregory of Johns Hopkins University argue in a guest post on ImpactAlpha. Investors more broadly have given up some returns by investing in emerging markets versus development markets, “but have given up twice as much when investing in emerging market impact funds versus developed market impact funds,” the authors write. And lower returns scare away investors. Both investors and fund managers have a role to play in breaking the cycle.

  • Fund managers need discipline. Choose appropriate instruments and structures, such as preferred equity, convertibles, redeemable features and liquidity puts, to help mitigate liquidity risks and optimize financing for companies, the authors advise. Avoid overpaying for equity regardless of impact. And avoid “layering” risks — for example, investing in an unproven business in a politically volatile country with a weak legal framework.
  • Fund choices matter. Larger funds that are diversified across industries and geographies face lower portfolio risk than single-country, single-sector or single-theme funds. Investors should insist on the same returns as non-impact private-equity funds, look for funds that target more established companies with achievable growth prospects – and be patient. Investing with a longer time horizon in emerging markets can improve returns.
  • Keep reading, “How emerging market impact funds can reverse the curse of low (return) expectations,” by Clemens Feil and Neil Gregory on ImpactAlpha.

Agents of Impact: Follow the Talent

DBL Partners seeks an associate in San Francisco… Close Group Consulting is looking for a manager/director… Veris Wealth Partners is hiring a wealth manager in New York… Impact Capital Managers, a network of general partners of market-rate impact funds, welcomes Grounded Capital, SEMCAP, St. Cloud Capital, Meliorate Partners and Tenacious Ventures as its newest members. 

Axios’ Alan Neuhauser will host a conversation with Jigar Shah, the U.S. Department of Energy’s loan program office director, Tuesday, Sept. 27… Common Future and Pacific Community Ventures will host policy entrepreneurs charting an inclusive economic policy, Tuesday, Sept. 27… Next City’s Oscar Perry Abello will moderate a webinar on Patagonia’s restructuring and perpetual purpose trusts, Wednesday, Sept. 28 (for context, see, “ImpactAlpha Deal Spotlight: Exit to stakeholders“).

Thank you for your impact!

– Sept. 22, 2022