The Brief | February 22, 2024

The Brief: New neighborhood economics

ImpactAlpha
San Antonio, Texas
The team at

ImpactAlpha

Greetings Agents of Impact!

In today’s Brief:

  • The Call: Driving alpha through impact
  • New neighborhood economics
  • Electrifying homes
  • California Endowment goes “all in” on impact

📞 Next Week’s Call: How fund managers drive alpha through impact. Private fund investments tend to attract the most attention when a deal is first closed, and again when an exit is achieved and returns are realized. But it is in the five to seven years between those events that dedicated asset managers can create value – and impact – for companies. Join Tideline’s Ben Thornley, Impact Capital Managers’ Marieke Spence, Bain Capital’s Larissa Quinn, and Aaron Rudberg of S2G Ventures, in conversation with ImpactAlpha’s David Bank, to explore the levers for effective and financially-material impact value creation, Wednesday, Feb. 28 at 10am PST / 1pm EST / 6pm London. RSVP today. 

🌎 Introducing ImpactAlpha Latin America. Ahead of next week’s Latin America Impact Investing Forum, ImpactAlpha is launching a specialized monthly newsletter for the region. Partners include FLII, New Ventures, Alterna, Latimpacto and Aliança Pelo Impacto. Opt-in to ImpactAlpha Latin America to track trends, follow the money, and connect with the Agents of Impact who are powering Latin America’s impact economy. Sign up. 

Featured: Ownership Economy

Can commercial corridors + broad ownership build community wealth without displacement? A corridor of new small businesses, restored buildings and projects on previously vacant lots is emerging in the majority Latino and low-income west side of San Antonio. The community’s plans for the commercial corridor, known as ESTAR West, is an example of a new crop of mixed-use real estate initiatives that combine small-business support and various flavors of local, community and shared ownership. “The corridor model isn’t a simple commercial real estate fund, and it’s not a housing fund, or just a business-support fund. It’s a community economic development fund,” says Kevin Doyle Jones, who is convening Neighborhood Economics in San Antonio next week. “It’s a real thing, and so we can put real money to work.” Jones, who earlier founded Social Capital Markets, or SOCAP, is bringing to San Antonio developers of corridor initiatives in Philadelphia, Los Angeles, Kansas City and other cities to “prove that the model works.” 

  • Corridor model. The category is broad enough to encompass a wide variety of place-based development strategies and legal structures, such as neighborhood and community land trusts. The examples share elements that put communities in control of neighborhood real estate assets and support local ownership of businesses as a way to prevent the displacement as neighborhoods change and gentrify. The thesis is that local and broad-based ownership of real estate and businesses enables long-time residents to participate in the upswing of their neighborhoods without being displaced by higher rents and outside developers. 
  • Local economy fund database. ESTAR West in San Antonio, LocalCode in Kansas City, and Kensington Corridor Trust in Philadelphia are among the nearly three dozen funds featured in ImpactAlpha’s Local Economy fund database, the latest in our set of searchable spreadsheets of specialized funds. The local economy fund database was built in collaboration with Neighborhood Economics, which also is working with The Mindful Marketplace and The Main Street Journal to introduce local investment funds from around the country on a new podcast, Community Capital Live.

Dealflow: Deploy!

Overture raises $60 million to help climate tech founders tap government support. It helps to be a specialist in the crowded climate tech investing space. Overture was founded a year ago by former Obama administration officials to help climate startups navigate the rules, regulations and corridors of power, as the Biden administration deploys hundreds of billions of dollars in incentives to decarbonize the economy. “Government is going to touch the climate transition in nearly every capacity,” Overture’s Michael O’Neil told ImpactAlpha. The Washington, DC-based early stage venture capital firm partners with government affairs firm Boundary Stone Partners to help portfolio companies identify government grants, loans, permitting assistance and policy opportunities. That specialty has helped Overture get into competitive deals and attract $60 million for its debut fund. 

  • Early stage funds. Schneider Electric’s SE Ventures and WovenEarth Ventures, a women-led fund of funds, were the main backers of Overture’s fund. Palo Alto-based WovenEarth recently secured $152 million for its own debut fund, which will invest in early stage climate funds. Overture is one of 13 US-based funds that WovenEarth has invested in. It has also invested in 21 startups, including thermal battery maker Antora, tax credit marketplace Crux, and Dexmat, a maker of high-performance carbon materials.
  • More. 

Eli snags $6.8 million to help consumers electrify their homes. Sales of heat pumps have outpaced gas furnaces in the US for the second year in a row. But green upgrades are arduous for consumers who must navigate a gauntlet of new technology, installation issues and financing options. The Inflation Reduction Act offers thousands of incentives, rebates and tax credits for people looking to buy heat pumps, solar panels, EV chargers and other green appliances. California-based Eli wants to streamline the process of electrification for consumers. Its product offerings are directed at the contractors, installers, utilities and other organizations that consumers typically look to for guidance.  

  • Incentives. Eli founder Jeff Coleman said the company “is building the digital infrastructure to streamline access to capital for consumers wishing to decarbonize.” Eli “can make unlocking the IRA’s trillions feel like a smooth consumer experience,” added Shawn Xu of Lowercarbon Capital, which co-led the $6.8 million seed round with Spero Ventures.
  • Share this. 

Dealflow overflow. Investment news crossing our desks:

  • Social Finance’s UP Fund invested $6 million in Tampa-based Learning Alliance Corporation to train US workers for jobs as broadband and fiber technicians. (Social Finance)
  • Israeli agtech startup WeedOUT raised $8.1 million in a round led by Fulcrum Global Capital for its green solution for herbicide-resistant weeds. (NoCamels)
  • Iowa-based soil analytics startup Trace Genomics raised $10.5 million in a round led by S2G Ventures and Ajax Strategies. (FinSMEs)
  • India’s National Investment and Infrastructure Fund invested 2.1 billion rupees ($25 million) in Amicus Capital’s second fund for  in manufacturing, healthcare and financial services startups. (YourStory)

Signals: Mission Investing

The California Endowment goes ‘all-in’ on impact. Now here’s an impact mandate: The California Endowment plans to move its entire $4 billion endowment to investments that align with its mission of supporting health and racial equity, making it one of the largest foundations to date to go “all in” on impact. Given the size of the endowment, it will take time to transition it to an all-impact portfolio, the foundation’s Kurt Chilcott and Amy Chung tell ImpactAlpha. The Endowment is determining the criteria it will use for making investments and measuring financial and programmatic success. “We think the field of impact investing and the supply of authentic impact investing opportunities is going to grow,” says Chung.

  • Everybody in. The California Endowment joins a small number of foundations, including the Heron, Nathan Cummings and Russell Family foundations, that have committed to aligning 100% of their portfolios to their missions. The Heron Foundation, which in 2012 became the first foundation to make such a commitment, achieved its goal in 2017. The Kataly Foundation, a $450 million foundation focused exclusively on building power and asset ownership in Indigenous, Black and other communities of color, has embarked on a similar journey. The California Endowment hopes to influence its peers, says Chilcott. “We need others to join us in this journey.”
  • Getting intentional. The move reflects a year-long deliberation by the foundation’s leaders. The Endowment had carved out $350 million for mission- and program-related investments that support California-based community development financial institutions and affordable housing intermediaries, as well as diverse fund managers such as Illumen Capital and Harlem Capital. “We are using our mandate and power as an institutional investor to stand with the communities we serve, and to contribute to a more inclusive brand of capitalism,” said Chilcott, along with the foundation’s Robert Ross and Leslie Kautz, in announcing the plans.
  • Keep reading, “The California Endowment goes ‘all-in’ on impact,” by Andrea Riquier on ImpactAlpha.

Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

Keyur Patel, previously with PSG Equity, joins Boston Impact Initiative as portfolio manager… Halcyon Venture Partners promoted Dahna Goldstein to co-founder and managing partner… Climateworks Foundation is hiring an associate director of justice, equity and inclusion… GAWA Capital seeks a senior investment officer in Madrid. 

Impact Investors Foundation has an opening for a program officer to support social enterprises in Lagos… Ocean 14 Capital becomes B Corp certified… The Shareholder Commons is kicking off a three-part webinar series next month to explore ways to protect the value of a diversified portfolio during the upcoming proxy voting season.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Feb. 22, 2024