Greetings, Agents of Impact! It was great to see so many of you at ImpactAlpha’s happy hours in Copenhagen during the GIIN Impact Forum, and on yesterday’s Plugged In conversation between ImpactAlpha’s Sherrell Dorsey and Black Farmer Fund’s Olivia Watkins.
🎙️Join the next Agents of Impact Call: The State of the Field. The upside: Impact investing has gone mainstream, with increasingly aligned global frameworks and impact assets under management passing the $1 trillion mark. The downsides: climate crises, political backlash and geopolitical uncertainty. ImpactAlpha is pleased to uphold a tradition and host this year’s “State of the Field” roundtable. Join TIIP’s Monique Aiken, Duke’s Cathy Clark and Fran Seegull of the US Impact Investing Alliance, with other special guests, Tuesday, Oct. 10, at 10am PT / 1pm ET / 6pm London. RSVP today.
Featured: Overheard at the GIIN Impact Forum
Ambition and humility at the GIIN as impact investors seek global capital for local impact. If crises beget opportunities, impact investing has a bright future. “We find ourselves in a polycrisis,” Amit Bouri of the Global Impact Investing Network said to open the GIIN’s Impact Forum in Copenhagen. But impact investors who came to Copenhagen to raise funds, pursue partnerships, and connect with colleagues were anything but glum (especially at our hopping side-events). As Bouri said, “Navigating these challenges requires this unique duality: The ambition to envision and lead monumental change and the humility to recognize the vastness of our journey ahead.”
- Institutional impact. For the $247 billion Ontario Teachers’ Pension Plan, net-zero climate commitments served as “a gateway into impact investing,” said managing director Robert Sturgeon. His team has developed its impact strategy over the past 18 months, but when he went before the fund’s board in November, “we took a step back,” Sturgeon said. Instead, the fund (with seven consultants) opted to run nine portfolio companies through impact assessments. Among the learnings: “There are a lot of people saying, ‘This can’t be an impact investment because it’s a good investment,” he said. “No, impact investing is investing with a different lens, but you can still make very profitable investments.” Geraldine Leegwater of PGGM in the Netherlands said the $240 billion pension plan already has met its 2025 goal of qualifying 20% of its portfolio as sustainable development investments. The pension fund is building impact into the front end of its investment process.
- Catalytic development finance. Pressure is mounting on international development finance agencies to be more responsive, risk tolerant and catalytic in their investment approaches (see, “Risk-averse development finance institutions are more often catalyzed than catalytic“). Denmark’s International Fund for Developing Countries, or IFU, is one of the first to announce reforms. The commercially-minded agency, which has 18 billion Danish krone ($2.5 billion) in assets under management, is getting more money to invest in climate mitigation and adaptation, and in Africa and other fragile states. “There’s a change in the way that the government looks at commercial finance,” IFU’s Birgitte Bang Nielsen told ImpactAlpha. “They see that we can be a good instrument for climate finance and for Denmark to reach the goals that we signed up for in Paris.”
- Meanwhile, in Tokyo. Impact investing truly went global this week, with near-simultaneous events in Copenhagen, Málaga, Spain (GSG Global Impact Summit), and Tokyo (PRI in Person). From Japan, TIIP’s William Burckart reports for ImpactAlpha, “Japan in many ways is taking a systems approach.” Prime Minister Fumio Kishida announced Japan will issue 20 trillion yen ($130 billion) in “climate transition bonds” to catalyze private investment in renewable energy, green hydrogen, and the decarbonization of steel, chemicals and automobiles. Burckart writes: “The urgency of taking a system-level investing approach in order to drive sustainability outcomes was on full display” at PRI in Person. Read his full post.
- Keep reading, “Ambition and humility at the GIIN as impact investors seek global capital for local impact,” by David Bank and Jessica Pothering on ImpactAlpha.
Dealflow: Investing in Health
Cortica raises $115 million to expand care for children with autism and neurodiverse conditions. San Diego-based Cortica launched in 2017 to streamline the fragmented care journey that families of autistic and neurodivergent children experience when seeking diagnosis and treatment. The company’s “whole-child” model includes medical treatment, behavioral therapy, and family support and counseling. CVS Health Ventures led a $40 million extension to top off Cortica’s Series D financing round. Other investors include LRVHealth, Ascension Investment Management, and the University of Wisconsin Foundation.
- Outcomes. One in 36 children in the US are autistic, according to the Centers for Disease Control. Cortica says its model has shown improved outcomes for conditions such as seizures, sleep disorders, and behavioral and communication issues that can occur with autism, reduced emergency and inpatient admissions, and reduced use of heavy medications. Cortica’s $115 million round includes $75 million raised earlier this year from Autism Impact Fund, Ajax Health, Deerfield Management and other investors.
- Read on.
CrossBoundary Access backs UK-based Mobile Power for battery swapping hubs in Nigeria. CrossBoundary Access has raised $35 million from the African Development Bank, Microsoft, Bank of America and other investors for solar mini-grids that provide clean, reliable, low-cost electricity to rural households and businesses in Africa. In Nigeria, CrossBoundary committed up to $10 million for a partnership with Mobile Power to build local battery-swapping hubs close to customers. The hubs will enable CrossBoundary to set up mini-grid sites faster and more cheaply and could serve 300,000 people. They are also expected to create thousands of local jobs, CrossBoundary’s Lynne Wesonga told ImpactAlpha, and eliminate roughly 160,000 tons of carbon emissions. The partnership is part of CrossBoundary Access’s strategy to deploy $150 million in blended finance to provide clean energy to a million people in the next three years.
- Batteries-as-a-service. Mobile Power’s pay-per-use batteries enable rural Africans to access clean power at no up-front cost. Smaller batteries are used for phone charging, lighting and other small appliances, while larger batteries can power vehicles, businesses and larger appliances. Mobile Power’s hubs, which rent and swap the batteries, are solar-powered and operated by local agents. “Poles and wires are the best way to get large amounts of power to big energy consumers,” said CrossBoundary’s Gabriel Davies. “But innovations like Mobile Power’s battery swapping tech allow us to match distribution capex with customer needs.”
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Macquarie Asset Management takes a minority stake in Sonen Capital. The deal gives San Francisco-based Sonen Capital, a longtime impact investment advisor to families, foundations and institutions, a balance sheet capital boost to grow its outsourced chief investment officer services and expand its impact measurement and reporting capabilities. “This is the core of what we do. We haven’t always communicated that to the market clearly,” Sonen’s Raul Pomares told ImpactAlpha. When Sonen launched in 2011, it created a group of targeted products to help organizations move into impact investing, Pomares explained. “Now with the investment from Macquarie, we will be able to scale custom impact solutions.” Sonen will maintain day-to-day management and operations of the firm.
- Impact in focus. Macquarie’s Graeme Conway acknowledged Sonen’s long history of impact measurement. “Investors continue to have increasing expectations for their portfolios, including knowing how their investments impact society,” Conway said in a statement. Amanda Feldman, who co-founded the Impact Management Project, joined Sonen as head of impact engagement.
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Dealflow overflow. Other deals crossing our desks:
- Brookfield’s Global Transition Fund will acquire Banks Group’s renewables portfolio, which includes 11 onshore wind farms in Scotland and the UK. The deal is valued at nearly $1 billion. (Bloomberg)
- Blue Earth Capital raised over $100 million for a credit impact fund focused on financial inclusion, affordable housing, energy access, healthcare and agrifood businesses in Africa, Asia and the Americas. (Blue Earth Capital)
- LA-based Cove scored $6.6 million in Series A financing to sell its biodegradable and home-compostable packaging materials to consumer-packaged goods companies. (Cove)
- Europe’s FlexSea snagged €2.3 million ($2.4 million) in seed funding to develop a biodegradable and seaweed-based alternative to plastic film packaging. (EU-Startups)
Signals: Smallholder Agriculture
Investors are bullish on digitizing Africa’s agricultural supply chain. When Desmond Koney inherited his father’s farm, he discovered firsthand the challenges of smallholder farmers in Ghana and across much of Africa, including getting access to farm inputs and technical assistance and finding customers. After digitizing his farm operations, he’s helping others do the same with Complete Farmer, which last week raised $10.4 million in equity and debt. Complete Farmer’s financing is an exception to the downturn in agtech funding in Africa, which fell 77% in the first half of 2023 compared to a year ago, according to AgFunder’s latest report. Digitization of agricultural supply chains – connecting farmers to customers, input suppliers and advice – is a bright spot.
- One-stop shops. The trend is towards layering many of the services into one-stop-shops for farmers, which investors increasingly want to back (for context, see “Apollo Agriculture is out to show how financing smallholder farmers can boost production and profits”). Ventures providing online financing, marketplaces, logistics and food processing support attracted more than half of all funding to African ag and food tech startups in 2022.
- Outlook. This year’s downturn follows a record $636 million invested in African agtech in 2022. Core investors continue to see opportunity. High inflation and weakening economies have made it more expensive for Africans to import food, increasing demand for locally-grown produce, said Tekedia Capital’s Ndubuisi Ekekwe. And long-term trends bode well. “Technology uptake, population growth and the immediacy of risks and opportunities posed by climate change position agrifood tech strongly,” said Katapult Africa’s Danny Smith.
- Keep reading, “Investors are bullish on digitizing Africa’s agricultural supply chain,” by ImpactAlpha contributor Lucy Ngige from Nairobi.
Agents of Impact: Follow the Talent
Schneider Electric is hiring an impact and ESG analyst in Singapore… Also in Singapore, IIX seeks a portfolio management associate vice president… Paramount is recruiting a sustainability senior director in London… CalSTRS is on the hunt for an associate portfolio manager for sustainable investment and stewardship strategies in Sacramento.
Next Street is looking for a capital advisory manager in New York… The American Heart Association has an opening for a social impact associate portfolio manager in Dallas… Citi Foundation seeks proposals from 50 community-based and impact-focused organizations for $1 million each in unrestricted funding over three years.
Common Future will select 10 BIPOC, women and/or non-binary-led organizations for its 2024 accelerator cohort… Impact Capital Managers is accepting applications for up to 20 fellows for next year’s Mosaic Fellowship… This year’s Impact Summit America, hosted by Phenix Capital Group, will take place in New York, Wednesday, Oct. 18.
Thank you for your impact!
– Oct. 5, 2023