Greetings, Agents of Impact! It was great to see so much interest in financing for employee ownership on yesterday’s Call. We’ll have a recap and replay in Friday’s brief.
⚡Plugged In, with Sherrell Dorsey. A century ago, Black farmers represented 14% of all farmers in the US. Now? Just 1.4%. Barriers to affordable financing have cost many farmers their land and operations. On the next live call in ImpactAlpha’s Plugged In series, host Sherrell Dorsey will check in with Olivia Watkins of Black Farmer Fund, which recently raised $11 million to provide flexible capital to Black farmers and food business owners in the US Northeast. Join live on LinkedIn, Wednesday, Oct. 4 at 10am PT / 1pm ET / 6pm London. RSVP today.
- Catch up quickly. “Black Farmer Fund is reimagining US agricultural finance, on farmers’ terms,” by Black Farmer Fund’s Melanie Allen.
Featured: Climate Finance
With catalytic climate financing, Department of Energy looks to demonstrate, deploy and decarbonize. “We’re the government and we’re here to help.” The US Department of Energy is trying to turn the old punchline into reality. Armed with hundreds of billions of dollars from a trio of historic laws, the agency is stepping into the role of convener, funder and cheerleader for what it calls a “private sector-led, government-enabled” clean energy transition that will touch every sector of the economy. The government “is ready to bet big, and bet smart,” Energy Secretary Jennifer Granholm told the 600 entrepreneurs and investors assembled for the DOE’s first-ever “Demonstrate Deploy Decarbonize” conference in Washington, DC, co-hosted by the Cleantech Leaders Climate Forum.
- Bridge to bankability. On cue, the DOE’s Loan Programs Office announced a $3 billion loan guarantee for Sunnova Energy to support the Houston-based company’s plans to bring its virtual power plants to disadvantaged communities. It is the first commitment from the loan office for a VPP, which adds grid capacity by managing demand from distributed energy assets. “The goal for all of these technologies is to rapidly scale them across the bridge to bankability, because we absolutely need them to thrive,” said Jigar Shah, head of the $400 billion Loan Programs Office, who presided over the conference (listen to ImpactAlpha’s podcast conversation with Shah on building that “bridge to bankability”).
- Scaling up. The International Energy Agency’s latest “Net Zero Roadmap” insists that limiting warming to 1.5 degrees Celsius is still possible, but “the path has narrowed.” The roadmap zeroes in on four strategies: tripling renewable energy capacity, doubling efficiency, slashing methane emissions by 75%, and boosting penetration of EVs and heat pumps. “We’re fired up, and we’re trying to think about how we can move faster, how we can think bigger,” said Tim Hade of Scale Microgrids, a New Jersey-based builder and operator of distributed energy. Scale Microgrids is hoping to provide 1% of the 160 gigawatts of virtual power plant capacity needed by 2030.
- Industrial decarbonization. Chemicals, refining, iron and steel, food and beverage, pulp and paper, cement, aluminum, and glass – eight hard to abate sectors account for some 14% of US emissions. The DOE’s “Liftoff” report suggests that incentives that boost the economics of industrial electrification, new materials and feedstocks, electrolytic hydrogen carbon capture and storage, and other technologies could reduce industrial emissions by 40% by 2030. “There are opportunities today to make money and to deploy in 2023,” said Katherine Scott of the DOE’s office of technology transitions. The agency is expected to announce its regional hydrogen hubs, along with $8 billion in funding, as early as next week.
- Keep reading, “With catalytic climate financing, Energy Department looks to demonstrate, deploy and decarbonize,” by Amy Cortese on ImpactAlpha.
Dealflow: Ownership Economy
Vernier Science Education transitions to a perpetual purpose trust. Vernier Science Education, a textbook, software and lab equipment provider for K-12 science and technology education, is converting ownership to a perpetual purpose trust to preserve the company’s mission. The Oregon-based company was founded more than 40 years ago by high school physics teacher Dave Vernier. It’s been helmed since 2015 by John Wheeler, who joined the company as a design engineer 30 years ago and is preparing to step down. The trust, he said, “will enable us to secure the future of our employees, reinvest in our business, and continue our mission of creating a STEM-literate society.”
- Trust transitions. Purpose trusts are getting a fresh look as an inexpensive and flexible structure for aging business owners in search of succession plans (see, “Through ‘ownership trusts,’ investors can help employees become owners and owners retire”). Patagonia founder Yvon Chouinard adopted the structure last year as part of his succession plan. Companies transition ownership to a special entity that handles governance and ownership benefits, such as profit-sharing to employees (see, “A Utah auto shop demonstrates a pathway to worker ownership via a perpetual purpose trust”).
- Check it out.
Infravision scores $23 million for drone-enabled grid upgrades. Australia-based Infravision has developed AI-powered drones to install and upgrade transmission lines. Infravision says its drones can string a high-voltage transmission line in as little as seven months, compared to 10 years, on average, with current methods. The company works with electric utilities and contractors in Texas and San Francisco, as well as New South Wales and Queensland in Australia.
- Path to net zero. The majority of the US electricity grid’s 600,000 miles of transmission lines are more than 25 years old. To reach the Biden administration’s zero-carbon electricity goals, over a million miles of new transmission is needed. “Transmission remains the fundamental constraint to decarbonizing the grid and unlocking the net-zero economy,” said Sameer Reddy of Energy Impact Partners, which backed Infravision’s Series A round. Other investors include Equinor Ventures and Edison International.
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Dealflow overflow. Other deals crossing our desks:
- Tanzania’s NMB Bank issued the first tranche of a 10-year, $400 million multi-currency bond to finance climate change adaptation initiatives and sustainable development projects. (Zawya)
- Green hydrogen producer InterContinental Energy raised $115 million to expand its portfolio of projects in Australia and the Middle East. (Bloomberg)
- Scottish seaweed grower and processor Oceanium raised $2.6 million from Builders Vision, the World Wildlife Fund, Green Angel Ventures, and two family offices in the Hong Kong-based Sustainable Finance Initiative network. (Vegconomist)
- Impact investment fund Cuna del Mar backed LocalCoho, an Auburn, NY-based indoor salmon farming venture that supplies fish to high-end restaurants. (LocalCoho)
- StretchDollar secured $1.6 million in pre-seed funding to help small companies in the US set up healthcare plan stipends for their employees. (StretchDollar)
Signals: Racial Equity
Overheard at the Congressional Black Caucus: Boosting Black ownership. “We haven’t made a significant improvement in the Black homeownership rate since the Fair Housing Act was passed, and that really is a travesty,” Kevin Blackburn of the Federal Home Loan Bank said at last week’s annual legislative conference of the Congressional Black Caucus Foundation. The five-day event convened Black politicians, business leaders and innovators to discuss strategies for wealth and health in Black communities. Blackburn said the bank’s down payment-assistance program has deployed roughly $141 million over the past two decades to help Black families in the US that earn less than 80% of their areas’ median income purchase homes (see, “Dearfield Fund secures $7.5 million to help Black first-time homeowners make down payments”).
- Developing developers. Actor-turned-developer Malik Yoba of Yoba Development helped launch a real estate development curriculum for New York City high-school students. “We’re so tired of people coming and building in our neighborhoods, where we say, ‘Here they come, building something we can’t afford,’” said Yoba. “The question I always ask is ‘Who’s they? And how do we become them?’” Wells Fargo Foundation announced a $500,000 grant to establish the Black Real Estate Developers Academy, a partnership of the National Association of Real Estate Brokers and Enterprise Community Partners. “The work that needs to be done within our community can only be done in partnership with those who truly have fingers on the pulse of what’s happening,” said Wells Fargo Foundation’s Otis Rolley.
- Keep reading, “Overheard at the Congressional Black Caucus: Boosting Black ownership,” by Roodgally Senatus on ImpactAlpha.
Agents of Impact: Follow the Talent
🎙️ Reminder: Upstart Co-Lab and ImpactAlpha are co-hosting, “Investing in an inclusive creative economy,” with Upstart’s Laura Callanan and Ward Wolff, and ImpactAssets’ Deb Parsons, in conversation with ImpactAlpha’s Dennis Price, Thursday, Oct. 5. RSVP.
JUST Capital promotes chief strategy officer Alison Omens to president… Anne Cushing, ex- of ACMC, joins BlueHub Capital as senior vice president of marketing and engagement… Jobs for the Future seeks an associate vice president focused on workforce and regional economies in California… Kapor Capital has an opening for a venture partner in Oakland… 60 Decibels is looking for an India manager in Bangalore… ABC Impact is on the hunt for an intern in Singapore… SVX is recruiting an impact fund services senior associate or manager.
Thank you for your impact!
– Sept. 28, 2023