The Brief

The Brief: Progress and possibilities at SOCAP24

ImpactAlpha · November 4, 2024

Greetings Agents of Impact!

In today’s Brief:

  • Moving from intention to action at SOCAP24
  • Breaking down barriers to climate and biodiversity action
  • Green bank funding for e-buses and green buildings 
  • Building resilience in Asheville

Progress and possibilities for climate action and inclusive prosperity. Fear, uncertainty and anxiety is giving way to determination, affirmation and new possibilities. A year ago, investors and founders were on the defensive in the face of legal and political attacks on ESG and DEI. At this year’s SOCAP gathering in San Francisco last week, Agents of Impact were singing a new tune: Investing for inclusion, equity and diversity is essential for long-term performance. “This is about fiduciary duty,” said CapEQ’s Tynesia Boyea-Robinson, who co-founded the nonprofit network Freedom Economy with Adasina’s Rachel Robasciotti to defend the rights of justice and sustainability investors. “We’re not just pushing back. We’re not just fighting back. We are standing 10 toes down on what makes good financial sense.”

  • Settling accounts. Robasciotti and Boyea-Robinson have more freedom to act because of the strategic settlement of several key lawsuits. Atlanta-based Fearless Fund in September settled a lawsuit brought by the conservative-led American Alliance for Equal Rights that alleged racial discrimination in a small grant program for Black female founders. At a private lunch on the sidelines of SOCAP, Founders First CDC’s Shaylon Scott shared for the first time publicly that the nonprofit arm of Founders First Capital Partners had also settled a lawsuit brought by the conservative group. Boyea-Robinson positioned the settlements as a strategic win; both organizations shut down the grant programs but protected their core missions. The terms mean the entities can’t be sued again and avoid a broader court battle that could set legal precedents. “It’s not a legal change,” Boyea-Robinson said. Getting beyond the lawsuits opens a lane for affirmative litigation, she added. “It’s now time for us to play offense. Together.”
  • Reconstruction redux. Progress on climate and inclusive prosperity sparked the attacks in the first place. Moving forward confidently despite the headwinds became a theme of the conference, especially ahead of a consequential US election. “If we take three steps forward and we take a step or two back, we can’t think that we’re back to where we started,” Activest’s Micah Gilmer said following the premiere of “Equity and ownership,” ImpactAlpha’s new documentary on Napoleon Wallace and his network of organizations in North Carolina that together form a multi-front strategy for Black wealth building and multi-racial prosperity (watch the trailer and read the backgrounder, “From North Carolina, a playbook for the Reconstruction of Black wealth,”). “We are actually at a moment where we have an opportunity to continue moving forward,” Gilmer said. 
  • Intention to action. Moving forward requires overcoming inertia. “When you leave this conference, do one thing next week. Do something uncomfortable,” said Antony Bugg-Levine, who has started an impact investing advisory practice. “It is the comfort of people in positions of power that is stopping us from closing the gap between this intention and action.” Greg Neichin of Ceniarth took up Bugg-Levine’s call to action in calling on other wealthy families and institutions to take on more risk and even lower returns to drive more impact. “Impact-first. Catalytic. The terms actually don’t matter. What matters are dollars getting into communities in need,” said Neichin, explaining Ceniarth’s decision to join other family offices and foundations in putting fresh funding behind the Catalytic Capital Consortium (for context, see, “C3 doubles down to scale up deployments of catalytic capital”). “Call it whatever you want, as long as you bring dollars into hard-to-reach places.”
  • New paradigm. Across SOCAP, Agents of Impact were working to bridge gaps and make unlikely connections. For example, JW Carpenter is helping lead Prosper’s mission to make Birmingham, Ala., a destination for ideas, talent and funding. “We don’t think all the smart people live in seven cities in the United States,” Carpenter told ImpactAlpha. In Birmingham, “outside talent, outside ideas, outside funding can couple with the talent we’ve got and the investment we’ve got locally to make cool things happen in industries across the board.” In Mexico, SVX Mexico’s Laura Ortiz is leading a paradigm shift. “We need to move from a paradigm that separates the feminine from the masculine, that separates the Global North from the Global South, that separates the financial world from the real asset world,” said Ortiz, a general partner at Regenera Ventures. “We need to go into a unity paradigm.” 

Breaking down barriers to addressing the climate crisis. How do you get 195 countries to agree on a plan for as divisive a topic as climate change? “It’s pretty simple. You make sure that all representatives of all 195 governments that have to agree to this are in the room. Then you lock the doors,” Christiana Figueres, the chief negotiator for the landmark 2015 Paris Climate accord, half-joked at SOCAP’s packed opening session. Mental boundaries, such as short-term thinking and even the concept of a nation-state, have held back climate progress. “The process to get to the Paris Agreement was really a five-year effort of inviting all these government representatives to pierce beyond those two boundaries.” Breaking barriers to accelerate climate action was a theme at SOCAP last week, which came as the COP16 global biodiversity conference was wrapping up in Cali, Colombia, and just two weeks before global climate negotiations kick off at COP29 in Baku, Azerbaijan.

  • Biodiversity bust. COP16 wound down without an agreement on how to fund the protection of nature and biodiversity, including a pledge to protect 30% of the world’s land and oceans by 2030. As in global talks to reduce greenhouse gas emissions, wealthy nations balked at putting up the funds needed to support action by the Global South. Still, nature has been rising up the climate agenda as more investors and leaders appreciate that the issues are inextricably linked. “We should be working toward a much more holistic way of measuring our impact and our relationship with the planet that doesn’t artificially create boundaries that make sense to humans but don’t make any sense to nature,” Figueres told ImpactAlpha. 
  • Nature on the balance sheet. The shift includes putting a monetary value on nature, rather than treating it as something that only has value when it is extracted. Biodiversity credits, akin to carbon credits, are gaining interest as one way to do that. But nature may defy such monetization. Tom Chi of San Francisco-based At One Ventures called for a new category, called “sacred,” for natural ecosystems that drive the planet’s core metabolism. “I think every human being can understand that precisely,” he said. “Trading [carbon] credits is way more complicated than understanding sacredness.” Only in recent human history has the extraction mentality become dominant; Indigenous communities have lived for generations in harmony with the land, added SVX’s Ortiz. “We do know how to be architects of abundance.”
  • Urban restoration. Most discussions of biodiversity revolve around rainforests, mangroves or rural farms. Urban restoration efforts require different funding mechanisms, argues Anastasia Mourogova Millin of Ombrello Solutions. Instead of paying for ecosystem services, she says, “let’s underwrite nature based on the value it creates to adjacent assets.” For example, every $1 invested in nature and biodiversity create about $100 worth of real estate value over 30 years, she says. Mourogova Millin’s Civic Infrastructure Bond, anchored by the Woodcock Foundation, taps commercial real estate developers for 10% of the increased asset value in order to pay off bonds floated to create parks and other projects, starting in Montreal. After the bond is paid off, the real estate proceeds will go into a community endowment fund.
     
  • Keep reading, “Breaking down barriers to addressing the climate crisis,” by Amy Cortese on ImpactAlpha.  

Dealflow: Energy Transition 

Coalition for Green Capital commits $175 million for green real estate and electric buses. The Coalition for Green Capital has announced its first deals since being awarded $5 billion under the Greenhouse Gas Reduction Fund for green lending. The green bank network plans to extend a $100 million line of credit to Coventry Structured Investments, a Los Angeles-based asset management firm, to provide loans for commercial real estate energy retrofits. A separate, $75 million loan to Massachusetts-based Highland Electric Fleets will help finance the rollout of 1,300 e-buses in school districts across the country. CGC says its investment will mobilize a total of $1.2 billion in public-private investing. “That’s our basic model: take our money, have a big multiple with other money, and try to have significant impact,” CGC’s Reed Hundt told ImpactAlpha. The group aims to allocate all of its $5 billion award within 12 months. 

  • Capital leverage. Coventry makes Commercial Property Assessed Clean Energy, or C-PACE, loans to small businesses for green upgrades. The loans can be refinanced to recycle capital. Hundt said he expects to see a 10x multiple on CGC’s investment. “This facility will create significant liquidity to allow projects to progress while focusing the benefits of the projects on core values to both companies,” said Coventry’s Rasool Alizadeh. The line of credit may be provided through CGC or via member green banks in states where Coventry operates. For the school bus fleet upgrades, Highland will tap grants and rebates available through the Environmental Protection Agency’s Clean School Bus Program in addition to the 10-year loan from CGC. Some of the debt will help create vehicle-to-grid programs that generate revenues by helping utilities balance their electricity loads. 

JPMorganChase grants $2 million to expand access to employee ownership. Twelve million businesses with $10 trillion in assets will change ownership over the next decade. Most of the owners of these businesses haven’t developed an exit plan. JPMorganChase is funding four organizations to support 200 employee ownership transitions by giving business owners “the knowledge and tools they need to secure their legacies,” said JPMorgan’s Jennie Sparandara. The grant package includes $1.1 million to Project Equity, the Oakland-based nonprofit that co-manages the Employee Ownership Catalyst Fund with Mission Driven Finance. JPMorgan’s grant will support the development of an employee ownership industry certification for advisory businesses that provide exit planning services to retiring owners. 

  • Ecosystem building. Ownership Works, the nonprofit organization that KKR’s Pete Stavros launched in 2022, received $500,000 to develop new partnerships with private equity investors and portfolio companies, and for research and impact evaluation. JPMorgan is a founding partner of Ownership Works. The Employee Ownership Expansion Network received $500,000 to build a network of state outreach centers to provide education and training to business owners. The Aspen Institute’s $75,000 grant will go towards its next Employee Ownership Ideas Forum. The annual event convened investors, researchers, policymakers and other employee ownership industry leaders in Washington, DC, earlier this year.
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Dealflow overflow. Investment news crossing our desks:

  • Luxwall raised $51 million in Series B financing to scale up production of its energy saving windows at a new Michigan facility. It is opening up a second facility in Detroit with an additional $31.7 million grant from the US Department of Energy. (LuxWall)
  • San Francisco-based insurance tech venture Delos Insurance clinched $9 million in a Series B round led by HSBC Management to insure homes in communities abandoned by other insurers due to wildfire risk. (Delos Insurance)
  • CREW Carbon raised $5.3 million in seed capital to use minerals for wastewater treatment and carbon capture and sequestration. (CREW Carbon)
  • Growth Investment Partners, a Ghanaian small business investment firm launched and funded by British International Investment, backed Truecoco for soybean processing and a biochar carbon removal project. (APEN)

Impact Voices: Inclusive Economy

Mutual aid network in Asheville helps overlooked entrepreneurs rebuild after Hurricane Helene. A month or so after Helene roared through Asheville, many are still without water or power. “We are finding that the work of connecting the dots that we do at Neighborhood Economics is more valuable than ever,” writes Kevin Jones, SOCAP co-founder with his wife Rosa Lee Harden, and more recently, Neighborhood Economics. Jones is part of a mutual aid network that has sprung up to address access to water, electricity, the Internet, food and other immediate challenges. The distribution of aid, like the distribution of finance in normal times, can be uneven. The loose-knit community is identifying entrepreneurs who may be overlooked, such as caterers who don’t have physical presences or industry associations. “The goal is to make visible the groups one step down the organizational hierarchy of visibility to funders,” writes Jones. “​​This spreads risk, expands opportunity [and] makes the money smarter, faster.”

  • Repair Asheville. Jones’s home, which also houses the Neighborhood Economics office, was flooded when the Swannanoa River coursed through it for six hours. A Repair Asheville fundraiser will split every dollar contributed with local underrepresented entrepreneurs in the community. After $50,000, every donation will go directly to those underrepresented entrepreneurs.  

Agents of Impact: Follow the Talent

Global Development Advisors adds Roger Santodomingo of the Aspen Network of Development Entrepreneurs to its board of directors… New York-based impact investor Lupoff/Stevens Family Office welcomes Kay Makishi, previously with Oxonian Ventures, as vice president… Katie Sarro steps down as head of marketing and research of Kauffman Fellows to become head of global marketing of Flourish Ventures… New Majority Capital is looking for an acquisition specialist in Boston… Open Society Foundations is on the hunt for a strategic advisor in New York.

Community Investment Management has an opening for an investment analyst… Better Society Capital seeks an impact manager in London… Confluence Philanthropy is hiring a climate solutions program director… AVPA’s annual conference is happening today through Wednesday in Nairobi… Rutgers University’s Institute for the Study of Employee Ownership and Profit Sharing will host its seventh annual Private Equity and Employee Share Ownership Symposium, Friday, Nov. 22.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Nov. 4, 2024