Greetings, Agents of Impact! And the answer is yes: we’ll be your Valentine!
In today’s Brief:
- Deploying private capital against homelessness
- Seeding African climate tech
- Investing in America’s heartland
- Optimizing for menstrual cycles in the workplace
Featured: Impactful Real Estate
SDS Capital deploys private equity for permanent housing for homeless Californians. California has the largest homeless population in the US with over 180,000 people living in shelters, tents, cars, under highways and other public places. Developing affordable, supportive housing for marginalized families often requires a hunt for public funding and grants that can take years and incur a mountain of legal fees. The Los Angeles-based SDS Capital Group says it can more quickly and cost effectively create permanent housing for the homeless using private capital exclusively. The impact real estate manager has so far financed four projects with more than 200 units for formerly-homeless residents in Los Angeles. “We have to find better, scalable, more cost-effective ways to build housing for those who are homeless,” says SDS founder Deborah La Franchi. “Especially in LA County. California’s homelessness problem – it’s completely broken.”
- Private financing. La Franchi closed SDS’s Supportive Housing Fund in October 2021 with funding mainly from banks and foundations, including Kaiser Permanente, California Community Foundation and First Republic Bank. SDS raised another $40 million last year for its pipeline of projects. The Supportive Housing Fund’s first 11 projects will provide 835 units of permanent housing. Formerly-homeless families will have onsite access to mental health support, substance abuse treatment, healthcare, 24-hour case management, job training and other services from SDS’s nonprofit partners. SDS covers most of the construction costs; its development partner RMG Housing comes up with the rest.
- Family of funds. SDS currently manages over $1 billion in assets across a portfolio of six impact funds and co-investment vehicles, including a nonprofit foundation fund that has tapped $7 million of SDS Capital’s New Markets Housing Tax Credit exit fees to provide flexible financing to microfinance institutions in distressed communities. SDS Capital’s latest fund, American South Fund Management last week raised $174 million, anchored by $50 million from pension funds including the New York State Common Retirement Fund. La Franchi aims to compete for more institutional mandates. “We can’t grow if we can’t get to these investors,” she says. “I need pensions. I need insurance companies. That’s how I can have more impact, but it’s a huge barrier.”
- Keep reading, “SDS Capital deploys private equity to finance permanent housing for homeless Californians,” by Roodgally Senatus on ImpactAlpha.
Dealflow: Climate Tech
Catalyst Fund seeds nine African climate tech startups. The impact tech fund of BFA Global invested $1.8 million in companies that “directly empower farmers, healthcare providers, waste workers, and small and medium businesses to adapt to the changes brought by climate change and drive climate positive economic growth,” said Catalyst Fund’s Maelis Carraro. One-third of the fund’s new portfolio companies are based in Nigeria, which was until last year Africa’s tech powerhouse. EarthBond installs rooftop solar systems and links small businesses to solar energy financiers. Scrapays operates a rewards-based recycling program for businesses and households. Zebra CropBank provides solar-powered micro-warehousing and access to markets for small farmers.
- Farmer resilience. More than half of Africans, and 80% of low-income Africans, depend on the agriculture sector for their livelihoods. Tanzania’s Mazaohub offers farm management software, soil health testing, and financing to smallholder farmers. Keep it Cool in Kenya provides solar-powered refrigeration and cold transport for fish producers. Senegal’s Tolbi uses satellite imagery and AI to provide agronomic advice and help farmers adopt climate-smart practices.
- Climate + health. In Tanzania, Medikea offers low-cost telehealth services to low-income communities to manage malnutrition, heat-related illness, and other climate-related health issues. Egypt’s NoorNation installs modular clean water and off-grid energy systems in remote communities. South Africa’s Thola helps food, hospitality and mining companies comply with biosecurity measures to prevent food and environmental contamination and the spread of zoonotic diseases.
- State of climate finance. The investments bring Catalyst Fund’s portfolio count to 19. Dozens of early-stage venture funds have invested $3.4 billion in African climate tech startups since 2019. Energy startups took in the largest share of capital, while agriculture-focused startups are the most numerous. Private capital accounts for just 14% of climate finance in Africa, lower than other regions.
- Check it out.
Beta Boom scores $14.5 million to back ‘under the radar’ founders. The majority of founders in Beta Boom’s portfolio are women and people of color who graduated from non-Ivy League schools and are based outside of VC hubs like Silicon Valley. “Many of our founders tell us that Beta Boom is the first time they feel like they’ve been taken seriously – which is both encouraging and disconcerting at the same time,” said Beta’s Sergio Paluch. These are founders “who are intimately connected to the problem they are trying to solve [and] have the power to become the next generation of unicorn founders – if given the opportunity.”
Dealflow overflow. Investment news crossing our desks:
- Paris-based Essence App raised €500,000 ($535,000) to help women and their employers improve productivity and rethink workflows around female employees’ menstrual cycles. (EU-Startups)
- Denmark’s Aegir Insights secured €8.5 million ($9.1 million) to provide data and analytics software for off-shore wind projects. (Aegir Insights)
- Ilara Health raised $4.2 million in debt and equity to digitalize Kenya’s rural and peri-urban healthcare providers. (Africa Private Equity News)
- San Francisco-based Camus Energy raised $25 million in Series A financing to help utility operators integrate power from electric vehicles and batteries, solar inverters and smart thermostats. (Camus)
Impact Voices: Racial Justice Lens Investing
A spend-down foundation asks, ‘What is Enough?’ In less than 10 years, Kataly Foundation will have put its entire $450 million endowment towards its mission of wealth redistribution and racial justice. Asking “What is enough?” means interrogating “the underlying assumption that philanthropy always needs more in its coffers,” writes Kataly’s Lynne Hoey in her second in a series of guest posts. The foundation’s plan to shift its investments from public markets to Black and Indigenous-led community banks and community development financial institutions hit an early roadblock. Those institutions either did not have the capacity to absorb that much capital at once, says Hoey, or didn’t have the tolerance for credit risk in communities to which Kataly wanted to direct capital.
- Investment priorities. Kataly asked, “What could be achieved in communities with a committed pot of funds that isn’t reliant on returns? What would be the annual costs for running the foundation to spend out its endowment?” That helped the foundation put a real number on what it needed to achieve its goals, Hoey says, and “think more creatively about what our investment priorities could be [and] combat the idea that we need to continue accumulating wealth.”
- Keep reading, “A spend-out foundation asks, ‘What is Enough?’” by Lynne Hoey on ImpactAlpha. ICYMI: “How Kataly Foundation is divesting from Wall Street.”
Agents of Impact: Follow the Talent
Featured job: Dynamic Planet seeks a campaign director. The director will lead the strategy and development of a multi-year campaign to communicate the benefits of ocean regeneration through marine protected areas to coastal communities around the world. (Posting jobs on ImpactAlpha’s Career Hub is a subscriber benefit. Submit your job postings today).
Working Power names Yerina Mugica, formerly of Natural Resources Defense Council, as co-executive director… ReFED is hiring a director of people and culture in Long Island City, NY… Climate Power seeks a deputy managing director in Washington, DC… Morningstar is recruiting a director of sustainable fixed income products in Chicago.
The Center for Sustainable Finance and Private Wealth is on the hunt for a training and engagement program associate in San Francisco… Schroders has an opening for a temporary sustainability manager in London… Habitat for Humanity is recruiting an associate general counsel for market development and impact investing.
Thank you for your impact!
– Feb. 14, 2024
