The Brief | May 19, 2022

The Brief: Overheard in Philadelphia, Generation’s sustainable solutions, supply-chain financing in Africa, plant-based foods, Opportunity Zones and Covid recovery

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Greetings, Agents of Impact!

Featured: Returns on Inclusion

Overheard at Total Impact: Diversify decision-making and shift power to communities. Agents of Impact convened in the City of Brotherly Love, even as some unbrotherly events unfolded across the country and the globe. After a three-year pandemic pause, ImpactPHL’s Total Impact Summit returned to Philadelphia this week. “When we can get [investors] to be intentional with their investments, that’s a homerun,” said ImpactPHL’s Cory Donovan. “When we can get them to apply a local lens, that’s a grand slam.” The racist mass shooting in Buffalo underscored the urgency of racial equity work. “It’s a matter of life and death for some,” said Candide Group’s Morgan Simon. The equity imperative infused conversations on diversifying financial decision-making to shifting power to communities. 

  • From training to capital. “I do not like the word underserved,” said Della Clark of Philadelphia’s Enterprise Center. “Communities are being served, but with the wrong thing.” Instead of more training programs, she favors capital. And instead of debt, equity. Last month, Clark launched the Innovate Capital Growth Fund to provide growth capital to women and minority entrepreneurs in the mid-Atlantic region. She has raised $17 million, toward a target of $50 million, from Bank of America, the Delaware Valley Regional Economic Development Fund, Spring Point Partners and other investors.
  • Crashing the gates. It’s time for capital allocators to hand power to a younger generation of leaders who are proximate to the communities they seek to address, said Jackie Khor of Social Finance. “The solutions are all there.” One example: Boston’s community-led Ujima Fund. “Instead of me pitching a portfolio manager, I’m pitching the community, the entire Ujima membership base, on an investment opportunity,” explained Ujima’s Jock Payten.
  • Great expectations. More than 98% of asset managers are white men. Diverse fund managers trying to break in are judged on track records, assets under management and other metrics they haven’t yet built up. Getting an allocation is just the first hurdle. Not every investment works out. As we shift who has control of capital to BIPOC managers, there is a lot of pressure on first-time fund managers “to not fail,” noted Sylvester Mobley of Plain Sight Capital. More diverse managers will find more diverse entrepreneurs. “We have so many people that are sitting on the sidelines that can add so much significant economic value that we all benefit from,” said Founders First’s Kim Folsom.
  • Keep reading, “Overheard at Total Impact: Diversify decision-making and shift power to communities,” by Amy Cortese on ImpactAlpha.

Dealflow: Private Equity

Generation Investment Management raises $1.7 billion sustainable solutions fund. The private equity fund is Generation’s largest to date and the latest in the billion-dollar impact and sustainability fund club. The $36 billion manager’s fourth Sustainable Solutions Fund will follow strategies similar to its predecessor, which raised $1 billion for global low-carbon and climate solutions, human health, financial inclusion and the future of work. Deal sizes will range from $50 to $150 million. Limited partners include pension funds, endowments and high-net-worth individuals; more than half of the investors are from the U.K., Australia, New Zealand and Europe.

  • Sustainable portfolio. Generation’s private equity funds have deployed $2 billion since 2008. Portfolio companies include Kenyan pay-as-you-go finance company M-KOPA, sustainable nitrogen biofertilizer producer Pivot Bio, home healthcare platform AlayaCare, Taiwanese electric scooter maker Gogoro, tech upskilling company Andela and others.
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British International Investment provides $100 million guarantee for supply-chain financing in Africa. The guarantee from the U.K.’s development finance institution (formerly called CDC Group) will enable Citi to boost supply-chain financing for small businesses on the continent by $400 million. The working capital will help plug a $330 billion annual financing gap for Africa’s small businesses, which has been exacerbated by the Covid pandemic. BII has backed nearly $1 billion in trade and supply-chain financing with 11 banks in Africa and Asia, facilitating nearly $21 billion in trade.

  • Black economic empowerment. Working capital for South Africa’s Black-owned businesses will be a key focus—and impact criterion—of the facility. The country requires large companies to add Black businesses to their supply chains as part of South Africa’s Black economic empowerment policy, known as BBBEE, for remediating effects of apartheid. Most Black-owned businesses in the country are small and lack access to working capital and other debt. Supply-chain financing “helps small businesses deliver on contracts and shortens their wait to getting paid,” BII’s Freddie Tucker told ImpactAlpha.
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Infinitum Electric raises $80 million to commercialize electric motors. Austin-based Infinitum says its low-carbon air-core motors are more energy efficient and half the weight and size of conventional motors for industrial equipment, cars, aircrafts and buildings. “Our revolutionary motor systems offer a path forward to reduce electricity demand and carbon footprint,” said Infinitum’s Ben Schuler.

  • Electrify everything. Infinitum says it has over $900 million in potential orders from heavy industry, manufacturing, HVAC and transportation companies. The Series D round, backed by Cottonwood Technology Fund, Chevron Technology Ventures and Energy Innovation Capital, brings the company’s total raised to $135 million.
  • EV infrastructure. Separately, Washington, D.C.-based Inspiration raised $215 million to provide financing, leasing and charging infrastructure services for commercial fleets of electric vehicles. Portuguese EV charging operator Power Dot secured €150 million ($158 million) from private equity investor Antin Infrastructure Partners to expand its charging network to 7,000 stations by 2025.
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Dealflow overflow. Other investment news crossing our desks:

  • Elemeno Health raised $7 million in a Series A financing round led by SJF Ventures to help nurses execute day-to-day tasks more efficiently to improve patient care.
  • Robert Downey Jr.’s FootPrint Coalition Ventures backed Motif FoodWorks to develop new types of plant-based food.
  • HowGood secured $12.5 million, led by Titan Grove, to build a product sustainability database for food and personal care brands and retailers.
  • Optivolt scored $8.2 million in a seed round backed by Social Impact Capital to produce solar power, even in shaded environments, for electric vehicles, IoT devices and more.

Impact Voices: Policy Corner

American Rescue Plan, meet Opportunity Zones. Tens of billions of dollars in private capital mobilized for Opportunity Zones can maximize the impact of the $350 billion in funding from last year’s American Rescue Plan for communities hardest-hit by the pandemic. “The coordination of yield-seeking private investment with public funds can help make large visions a reality and deliver their intended impact more effectively and efficiently,” write Neli Vazquez Rowland of Chicago-based A Safe Haven and Reid Thomas of the professional services business JTC Americas. 

  • Chicago case study. A few years ago, it took A Safe Haven, a Chicago nonprofit that combats homelessness, four years to break ground on a 90-unit veteran housing project bogged down by 11 layers of federal, state and philanthropic dollars. The Opportunity Zones legislation has helped more quickly mobilize private capital to invest in supportive and affordable housing units for Chicago’s vulnerable populations.
  • Coordinating capital. Chicago’s new $1.3 billion plan to tackle the city’s affordable housing shortage draws on American Rescue Plan funds. By aligning Opportunity Zone incentives with public dollars, write Rowland and Thomas, “policymakers and developers can facilitate collaboration, resources and capital to fund more affordable housing (or small businesses, schools, and healthcare facilities) faster.”
  • Keep reading, “How Opportunity Zones can accelerate American Rescue Plan projects,” by Neli Vazquez Rowland and Reid Thomas.

Agents of Impact: Follow the Talent

Windward Fund’s Sunrise Project seeks an auto supply chain senior strategist… Steans Family Foundation is looking for a director of operations in Chicago… D-Prize is accepting applications from poverty alleviation startups and other organizations for a $20,000 prize… Applications are open for Lululemon’s Center for Social Impact “Here to Be” grant for community-led organizations supporting wellness in underserved communities… .ORG Impact Awards seeks nominations from mission-driven individuals and organizations.

Thank you for your impact!

– May 19, 2022