The Brief | October 7, 2021

The Brief: Place-based fixed income, private-markets ESG, European foodtech, agri-marketplace in Pakistan, Black and Latinx tech founders, Detroit’s EV dreams

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Greetings, Agents of Impact!

⚡Next week’s Call: Black tech, green solutions. Kameale Terry and ChargerHelp are making “electric vehicle service technician” a middle-class job accessible to anyone with a high school degree. “We see what we’re doing as laying a foundation for workforce development of the future,” says Terry (see “Agents of Impact: Kameale Terry and Evette Ellis). Join Terry, along with Taj Eldridge of Include Ventures, SaLisa Berrien of COI Energy, Donnel Baird of BlocPower and other Agents of Impact, in conversation with The Plug’s Sherrell Dorsey and ImpactAlpha’s David Bank, Tuesday, Oct. 12 at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Investing in Place

How place-based investors are pooling endowment capital for local affordable housing and small-business lending. In New Mexico, a nonprofit community health organization, a hospital and a local foundation all wanted to put more of their capital to work for impact in the “Land of Enchantment.” They came together to commit $11 million into a bond strategy called Local Impact Fixed Income Targeted Investment New Mexico – or LIFT NM. The capital will support homeownership, small business growth, affordable rental housing and healthcare in the state. Managing the strategy is RBC Global Asset Management, which has raised a total of $1.7 billion for its Access Capital Community Strategy, including through funder collaboratives in California, New York and Minnesota. “This is a perfect way we can align more of our endowment with our mission and invest in our local community,” said Jerry Jones, chief financial officer of Anchorum St. Vincent, the community health nonprofit. 

With low-risk investments in guaranteed mortgage-backed securities from federal agencies and local, state and federal government-backed loans and securities, the fixed-income strategy fits easily into standard endowment portfolios. That provides an easy on-ramp for even change-averse investment offices to align more of their organizations’ capital with their social missions. The investments come from charitable endowments, not their programmatic or grant budgets. “A couple years ago investors would ask, ‘Why should we try to make investments that provide a financial return and have a social benefit?’” RBC’s Ron Homer told ImpactAlpha. “Now more and more people are asking, and I hope they continue to ask, ‘Why shouldn’t we make an investment that provides a financial return as well as the social benefits?’”

Keep reading, “How place-based investors are pooling endowment capital for local affordable housing and small-business lending,” by Roodgally Senatus on ImpactAlpha.

Dealflow: Private-market ESG

Consortium launches Novata to drive ESG reporting in private markets. Private companies and private markets represent the majority of the world’s economic activity, but their environmental, social and governance, or ESG, performance has been opaque at best. A consortium including the Ford Foundation, Omidyar Network, S&P Global and Hamilton Lane, are backing Novata, a new public benefit corporation aiming to streamline ESG measurement, data collection and benchmarking for private companies and private-markets investors. “We view it as a crux issue when it comes to the whole ESG story,” Novata’s Alex Friedman, ex- of the Gates Foundation and UBS Wealth Management, told ImpactAlpha. Banks and insurance companies, for example, increasingly are pricing loans and policies on environmental and social performance indicators.

  • Climate pledges. Private-company data is particularly important in calculating climate impact, Friedman said. “All these net-zero commitments that have been signed up to by public companies, they’re somewhat hollow if you can’t actually look at the supply chain of those public companies, and the supply chains are private companies.”
  • Keep reading

Five Seasons Ventures raises €180 million for European foodtech. Investors deployed €3 billion in European food tech ventures last year. “There are lots of companies that have raised good money and have grown really fast,” Five Seasons’ Niccolo Manzoni told TechCrunch. Five Seasons’ early-stage fund will back impact-focused foodtech startups in Europe. The firm has backed 14 foodtech companies in Germany, France, Italy, Portugal, Switzerland and the U.K. Its latest investments include plant-based snacks maker The Nu Company and vly, which uses pea protein for a milk alternative. While working at a European family office, Manzoni was an early investor in foodtech giants and rivals Impossible Foods and Beyond MeatOnward

Tazah raises $2 million to connect Pakistan’s farmers to small food retailers. The Lahore-based agricultural marketplace wants to streamline Pakistan’s $60 billion food supply chain and help farmers secure better prices by cutting out supply-chain middlemen. Farmers earn only 25% of the sale price of mangoes, for example. “There is huge fragmentation on both supply and demand side, and it leads to suboptimal outcomes for both farmers and businesses,” founder Abrar Bajwa told ImpactAlpha. Market inefficiencies “translate into food price inflation, so customers also suffer.” East Africa Fruits in Tanzania and WayCool in India also are helping small retailers more easily source fresh-food inventory. Bajwa, previously with the ride-sharing company Swvl, launched Tazah in July with Mohsin Zaka, formerly with the food delivery company Careem

  • Funding spree. Pakistan’s startups raised $173 million in the third quarter of 2021 – nearly three times the amount raised in all of 2020, according to data from i2i. Most of the capital is going into e-commerce deals. Bajwa estimates there are more than 50 startups in Pakistan tackling issues in the agrifood value chain. Investors in Tazah’s pre-seed round include Global Founders, Zayn and Sunu Capital and i2i, Suya and Ratio Ventures.
  • Check it out.

Hearst’s Level Up Ventures to invest in Black and Latinx tech founders. The media conglomerate launched Level Up Ventures to make cash investments in pre-seed and seed rounds for Black- and Latin-led tech businesses. The venture arm is meant to complement the company’s HearstLab, which is focused on women-led startups in the fintech, data analytics, health, transportation, enterprise tech and media sectors. HearstLab and Level Up present an opportunity “to scale and sustain women and diversity-founded startups with capital and strategic support,” said Hearst’s Eve Burton.

  • Inclusive VC. Hearst’s Carlton Charles will lead Level Up Ventures. The fund’s first investment is in Options MD, a Black woman-led healthtech startup helping create free personalized treatments for people with depression and other treatment-resistant illnesses. Following the murder of George Floyd, the share of Black Americans screening positive for anxiety and depression jumped from 36% to 41%.
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Dealflow overflow. Other investment news crossing our desks:

  • Brazilian “social commerce” platform Favo, which helps small businesses and entrepreneurs with marketing, raises $26.5 million from Tiger Global Management, GFC, Elevar Equity and others.
  • Actis’ BTE Renewables, Craftskills Limited and The Nature Conservancy provide a $10 million loan to Kenya-based Kipeto Wind Power Project to encourage nature conservation in areas surrounding its wind farms.
  • SoLa Black Impact Fund, SDS Supporting Housing Fund and Community Capital receive funding from Pacific Premier Bank’s $50 million Equitable Impact Initiative for underserved communities.
  • Pomona Impact invests $1 million in Hybrico, a Guatemala-based company that offers cost-efficient and environmentally-friendly energy-as-a-service for major telecom companies in Latin America. 
  • Krane Funds Advisors added two ETFs to track the European Union (ticker: KEAU) and California (KCCA) voluntary carbon markets (for context, see: “That feeling when investors realize carbon is going to $100 a ton sooner than they expected).

Signals: Electrify Everything

The EV race is on as GM and Ford move to overtake Tesla. Once laggards, U.S. automakers are racing to embrace the all-electric future – and Tesla-like valuations. General Motors is aiming to double its revenues by 2030 as it rolls out dozens of electric cars, trucks and delivery cars. The goal: To be the No. 1 U.S. EV maker. Ford is investing $7 billion to build three U.S. plants for electric batteries and pickup trucks, the largest investment in its 118-year old history. Electrification, along with software-based services and autonomous driving technology, will transform GM “from automaker to platform innovator,” GM chief Mary Barra said at the company’s investor day. One believer: the hedge fund Engine No. 1, which has taken a roughly $22 million stake in the carmaker. “The internal combustion engine is also reaching the end of its era,” reads a white paper prepared by the hedge fund, which made its name by taking on Exxon. Unlike Exxon, “GM has gone all in” on the energy transition, Engine No. 1’s Chris James told CNBC

  • Chip shortage? Automakers from GM to Honda saw sales slump last quarter, which they blamed on an industry wide chip shortage. ARK’s Cathy Wood has another explanation: slowing demand for gas-powered cars. She points to Tesla’s record setting third-quarter sales of more than 241,000 vehicles, a 73% jump from a year ago – and the fact that EVs require up to five times as many chips as internal-combustion cars.
  • Climate leader. By 2025, GM plans to roll out more than 30 electric models, including a $30,000 compact SUV, and sell a million EVs a year. Barra also cited the company’s $25 million Climate Equity Fund to help close equity gaps, and the company’s partnership with Breakthrough Energy Catalyst to scale critical decarbonization technologies like hydrogen and biofuels. 
  • Take a spin

Agents of Impact: Follow the Talent

Lorenzo Bernasconi, ex-of the Rockefeller Foundation, joins Lombard Odier Investment Managers as head of climate and environmental solutions… ABC World AsiaappointsTan Shao Ming and Sugandhi Matta as chief investment officer and chief impact officer, respectively… Myra Jones-Taylor, ex- of Zero to Three, is named chief policy impact officer at Urban Institute… Pacific Community Venturesappoints Kapor Center’s Lili Gangas, CAMEO’s Carolina Martinez, and Ecotrust’s Olivia Rebanal to its board… Katherine Lorenz of the Cynthia and George Mitchell Foundation was elected vice chair of the Environmental Defense Fund’s board of directors… Ginny Reyes Llamzon, ex- of Global Innovation Fund, joins MCE Social Capital as general counsel… 

Village Capital is hiring a head of team & organizational development in Washington, D.C… Tufts University is looking for a professor of the practice of impact investing/environmental social governance… Uganda Green Enterprise Finance Accelerator is accepting applications… XOCO’s Future of Impact Summit Oct. 4-8 is focusing on accelerating an equitable recovery and closing the digital divide… Callaway Climate Insights in hosting “Countdown to COP26,” today at 9am ET… The Global Forum on Democratizing Work is wrapping up today.

Thank you for your impact.

– Oct 7, 2021