Greetings, Agents of Impact!
👉 Don’t miss “The Climate Finance Tracker: Catalytic Capital for Adaptation and Equity,” with ImpactAlpha’s Zuleyma Bebell and Eric Berlow of Vibrant Data Labs at SOCAP next week. Check out the interactive, visual database on ImpactAlpha.
Featured: Institutional Impact
How Patagonia’s private plan for the public good inadvertently reveals the limits of impact investing. It’s been about enough time for Patagonia vests to go from cliche affectation of hedge fund bros to icon of a new form of capitalism – and back again. In her latest column, ImpactAlpha contributing editor Imogen Rose-Smith pulls on one thread of the fleece that was largely overlooked after founder Yvon Chouinard gave away Patagonia, valued at $3 billion, to a trust: Chouinard’s deep-seated distrust of the public markets. “Once you’re public, you’ve lost control over the company, and you have to maximize profits for the shareholder, and then you become one of these irresponsible companies,” the 83-year-old rock climber told The New York Times. Impact investors, as it happens, largely agree. Their position: “The walled garden of the private markets and billionaire philanthropy may be exclusive and out of touch, but at least it can remain true to the cause of impact,” Rose-Smith writes.
Rose-Smith cites the cautionary public-market tales of NRG, Danone, Unilever and, of course, Ben & Jerry’s. Then she pulls a switch: “The public markets at least represent a more democratic venue on which to fight for our values, and the future of the world, than billionaire and multi-millionaire philanthropy ever will,” she says. The real reasons for Patagonia’s trust structure may have been to allow Patagonia to keep contributing financially to the political cause of fighting climate change, she says. “For every good billionaire with a cause there’s at least one bad billionaire equally committed to political causes on the other side, and keen to not pay taxes.” Electronics entrepreneur Barre Seid, for example, gave 100% of the shares of his company, Tripp Lite, to a new conservative nonprofit, which then sold them to reap $1.7 billion to work against climate action, among other causes. “What’s to stop Rupert Murdoch from putting Fox into a trust to pursue his disinformation campaign from beyond the grave? Or Peter Thiel? Or whichever of the Koch brothers is still alive?” Rose-Smith writes. “The idea of these zombie businesses wandering around doling out political checks to whatever pet causes their deceased billionaire founder championed has the makings of a dystopian nightmare that I wish we could all wake up from.”
- Keep reading, “How Patagonia’s private plan for the public good inadvertently reveals the limits of impact investing,” by Imogen Rose-Smith on ImpactAlpha. Catch up on all of Imogen’s Institutional Impact columns.
Dealflow: Green Infrastructure
Hy24 Partners hauls in €2 billion for clean hydrogen infrastructure. The Paris-based fund manager has closed a €2 billion ($1.9 billion) fund to invest in hydrogen fuel infrastructure in the Americas, Europe and Asia. The fund will invest across the supply chain, from renewable and low-carbon hydrogen production to hydrogen-powered transportation fleets and refueling stations. Hy24 is a joint venture between private equity investor Ardian and FiveT Hydrogen, which last year raised €260 million for green hydrogen production, storage and distribution.
- Industrial might. The fund is the cornerstone of what Hy24 calls an ecosystem of investors with the capacity to put 10 to 15 times more capital to work around the globe. Participants include South Korea’s Lotte Chemical, TotalEnergies, Baker Hughes, Airbus, Crédit Agricole Assurances and Allianz. The network “will put us in a unique position to grow this industry at scale into a decisive asset class,” Hy24’s Laurent Fayollas said in a statement.
- Done deals. Hy24 led a $122 million raise in March for Berlin-based H2 Mobility to build a network of hydrogen fueling stations across Europe. It also participated in a €200 million raise for Germany’s Hy2gen to produce green hydrogen fuel for sea and ground transportation, aviation and industrial applications.
- On trend. The €2 billion raise continues a string of hydrogen-related deals. Last month, Paris-based Mirova, the impact unit of French asset management firm Natixis Investment Managers, raised $1.5 billion for a cleantech fund including green hydrogen projects. The U.S. Department of Energy announced a $7 billion grant program aimed at funding a network of clean hydrogen hubs.
- Read on.
Propagate scores $10 million to help farms transition to agroforestry. Agroforestry, the integration of trees in agricultural production, promises to sequester carbon, decrease erosion, reduce soil nutrient loss, and increase biodiversity. New York-based Propagate makes it easier for investors to fund low-risk agroforestry projects and help farmers transition into the practice. The company offers software for regenerative farm planning and management, supports commercial agroforestry development, and makes equity investments for agroforestry transitions. Propagate’s Ethan Steinberg says the company has “built an ecosystem that can commercialize an industry.” Propagate and other regenerative agriculture ventures and investors convene this week at the Regenerative Food Systems Investment Forum in Denver (ImpactAlpha is a media sponsor).
- Regenerative ag. Belgian impact family office The Nest led the Series A round, alongside AgFunder, the TELUS Pollinator Fund for Good, Techstars and the Grantham Environmental Trust’s Neglected Climate Opportunities Fund. The investment will help Propagate roll out a profitability and production forecasting tool.
- Agroforestry projects. Last month, the U.S. Department of Agriculture announced a $60 million award to Propagate, The Nature Conservancy, Climate Finance Solutions, Appalachian Sustainable Development and other environmental partners to transition 30,000 acres in 39 U.S. states over five years.
- Share this post.
Dealflow overflow. Other investment news crossing our desks:
- Nigerian financial data startup Stears raised $3.3 million in a seed financing from MaC Venture Capital, Serena Ventures and Omidyar’s Luminate Fund.
- Estonia’s FlyFeed snagged €3 million ($2.9 million) in seed funding to build an industrial-sized insect farm next year to produce affordable proteins, oils and fertilizers.
- Philadelphia Accelerator Fund, a $10 million fund for Black and Brown developers, provided a $675,000 loan to TPP Capital for an 88-unit affordable workforce housing complex in Philadelphia.
Signals: Place-Based Impact
New Mexico taps fixed-income strategy for small business lending. A state-backed economic development fund has allocated $25 million to expand small business lending in underserved communities in New Mexico. The New Mexico Small Business Investment Corp. is backing Local Impact Fixed Income Targeted Investment New Mexico, or LIFT NM, an impact investing initiative managed by Toronto-based RBC Global Asset Management helping low-income, women-led and Indigenous families in New Mexico access housing and homeownership. To move into small business lending, LIFT NM will partner with community development finance institutions, or CDFIs, to make “community advantage” loans under the U.S. Small Business Administration, or S.B.A. The CDFIs include Lendistry, a Black-owned lender in Los Angeles; Arlington, Va.-based Capital Impact Partners; and local nonprofit community lender Dreamspring (formerly Accion New Mexico). RBC GAM will purchase roughly 200 loans from the lenders and sell them to New Mexico Small Business Investment Corp.
- Local impact. LIFT NM launched in New Mexico last year with $11 million from local foundations and institutions to boost homeownership, affordable rental housing and healthcare in the state (for context, see “How place-based investors are pooling endowment capital for local affordable housing and small-business lending”). So far, the initiative has helped more than 50 low to moderate-income families access mortgage loans for single family housing and more than 200 low-income households, mostly women-led, secure affordable housing units on tribal lands.
- Small business lending. To help small businesses weather the pandemic, New Mexico Small Business Investment Corp. deployed $45 million to local CDFIs. S.B.A. loans require lenders able to wade through bureaucracy, says NMSBIC’s Russ Cummings. “We saw the RBC Access Capital Strategy as just being a logical extension of what we’re already doing with our CDFI lending.”
- Keep reading, “New Mexico investment group taps fixed-income strategy to grow small business lending in the state,” by Roodgally Senatus on ImpactAlpha.
Agents of Impact: Follow the Talent
Caleb Ballou, ex- of JPMorgan Chase & Co., has founded Trimtab Impact, an impact fund of funds, with support from MacArthur Foundation, The ImPact and Blue Haven Initiative… GenderSmart’s Suzanne Biegel, Visa Foundation’s Najada Kumbuli, EQT Group’s Jen Braswell, Northern Arc Investments’ Kshama Fernandes and others will join the 2X Collaborative’s inaugural board of directors.
Azolla Ventures is hiring a partner, a principal and an investment analyst… Urban Institute is looking for a policy program associate for race and equity research in Washington, D.C… The Nature Conservancy seeks a diversity, equity and inclusion coordinator for the Asia Pacific region… The Pan American Development Foundation is looking for a program officer of migration in Costa Rica… Acre is recruiting a director of corporate social responsibility in New York.
BlocPower, Energy Outreach Colorado and Denver’s Office of Climate Action, Sustainable and Resilience form a three-year partnership to electrify 200 low- to moderate-income homes in Denver… Woodforest National Group launches Allivate Impact Capital, a new impact fund management subsidiary.
Thank you for your impact!
– Oct. 12, 2022