Greetings, Agents of Impact!
Featured: ImpactAlpha Original
CrossBoundary Energy’s fund exit is a proof point for Africa’s commercial solar market – and catalytic capital. An African solar energy fund that only five years ago appeared too risky even for impact investors has delivered, yes, impact – and a hefty return. CrossBoundary Energy has sold its 40-megawatt off-grid solar portfolio to ARCH Emerging Markets Partners, giving its investors a full exit and a 15% return. The blended-finance facility also helped unlock financing for a fast-growing sector of Africa’s energy market: rooftop solar for commercial and industrial users. “Distributed renewables are becoming an accepted reality and an increasing trend across Africa,” CrossBoundary Energy’s Pieter Joubert told ImpactAlpha. ARCH invested $40 million to acquire the portfolio and enable CrossBoundary Energy to deliver new rooftop solar installations for Africa’s large commercial businesses and industrial users.
What allowed the fund to get off the ground in 2015 was a $1.3 million first-loss recoverable grant from USAID’s Power Africa initiative. That risk-reducing cushion enabled CrossBoundary Energy to convince impact investors to back its then unproven thesis: that Africa’s commercial and industrial users would pay for on-site power. CrossBoundary Energy leveraged the commitment to raise more than $6 million from Blue Haven Initiative, Ceniarth, Slocum Investments, Treehouse Investments and others. “That was a really important part of the equation for us,” Blue Haven Initiative’s Lauren Cochran says. “We saw the opportunity but there was a lot of uncertainty on everything from whether they could import the panels to get the projects up and running to collect payments.” CrossBoundary Energy helped finance and install 40-megawatts of solar generating capacity and 10-megawatt-hours of battery storage projects. Africa’s commercial and industrial solar sector grew exponentially over the life of the fund, from 4 megawatts of installed capacity in 2015 to more than 60 megawatts in early 2019. At least 110 megawatts of additional capacity are under development. Power Africa’s Mark Carrato called the exit a “validation” of the initiative’s “emphasis on helping catalyze the private sector to provide life-changing access to electricity across sub-Saharan Africa.”
Keep reading, “CrossBoundary Energy’s fund exit is a proof point for Africa’s commercial solar market – and catalytic capital,” by Jessica Pothering on ImpactAlpha.
Dealflow: Follow the Money
Astanor Ventures raises $325 million for sustainable food and agtech. Good Harvest Partners I, Astanor’s first institutional fund, will back “entrepreneurs developing scalable solutions to re-align nature, agriculture, and culture,” said cofounder Eric Archambeau. The focus is on U.S. and European companies addressing climate-related challenges in agriculture and food production and that advance the U.N. Sustainable Development Goals.
- Proof points. The Brussels-based tech investor has backed roughly 20 companies at multiple growth stages, including insect farming company Ÿnsect (see, “Ÿnsect raises $372 million for carbon negative, vertical insect farming”), vertical farm operator Infarm, seaweed-based plastics alternative Notpla, and climate modeling startup Cervest.
- Escalation. Agrifood fundraising and investing has increased since the pandemic started, as vulnerabilities in the food system have been exposed (see, “‘Pandemic risk’ spurs investors to press food producers for changes”). “A lot has been accumulating in the industry,” Astanor’s Christina Ulardic told ImpactAlpha, citing everything from unhealthy food and its costs on the global healthcare system, to the environmental impacts of industrial agriculture. “COVID is just the tip of the iceberg.”
- Share this.
Revolution Acceleration SPAC to bet on social and environmental policy shifts. Blank check company Revolution Acceleration Acquisition Corp., founded by ex-Democratic presidential candidate John Delaney and Revolution’s Steve Case, plans to raise $250 million to target companies that can benefit from “the convergence of innovation, government policy and regulation,” according to its filing. The politically-savvy founders – Delaney is also a former Maryland Congressman – are keying in on an expected acceleration of environmental and social shifts under a Biden administration.
- Impact alpha. “We believe that the impact of government policies on our economic and environmental systems will continue to grow and that government spending, regulation, taxation and public-private partnerships will critically affect the behavior and growth prospects of businesses and the overall ability of investors to generate returns,” reads the filing.
- Catch up: Read, “‘Healthy living’ SPAC Better World Acquisition Corp. launches on Nasdaq,” “TPG’s ‘special purpose acquisition company’ aims at sustainable business,” and “Greenhouse venture AppHarvest will reach the Nasdaq before its tomatoes reach consumers” on ImpactAlpha.
Lion’s Head backs Bboxx to expand off-grid energy access in the DRC. Bboxx has been installing smart, off-grid solar systems in greatly underserved markets like the Democratic Republic of the Congo and Togo for a decade. It has secured a $4 million loan from Lion’s Head’s $100 million blended-finance debt fund, the Facility for Energy Inclusion Off-Grid Energy Access Fund. The new capital will support Bboxx’s expansion of home solar unit sales in the DRC, where less than 20% of the population has access to reliable electricity. The fund issued Bboxx an $8 million loan last year for its work in Rwanda. Read on.
Impact Voices: Pass the Mic
Valuable lessons to help investors integrate impact and financial management. Impact measurement and management isn’t just magical thinking. “With enough effort and skill, the practice produces value and insights for investors, which can help them make better and higher-impact investing decisions,” write Bridespan’s Michael Etzel and Stephanie Kater, who reviewed The Impact Management Project’s “Impact-Financial Integration“ handbook for ImpactAlpha. The handbook shares lessons from 13 investors on integrating impact with financial risk and return. Financial and impact performance are typically assessed separately, say Etzel and Kater. “The handbook tears down this divide so that investors can play a greater role in solving social problems.”
- Advancing the practice. Along with the nuts and bolts of impact management, the handbook offers insight into how the field can go further, say Etzel and Kater. Involving stakeholders, for example, “is a vital best practice for impact investors, though often more talked about than actually practiced.” The Bridgespan partners point to Boston Ujima Fund as one of the few funds giving community members a real say in the governance of the fund (see “Boston Ujima Project is rebalancing risk, returns and power in local impact investing”).
- Stepping back. What’s most remarkable about the handbook “is that it happened at all,” write Etzel and Kater. “By sharing their experiences, the investors have helped to build a road-tested infrastructure for the field.”
- Read the full post.
Strengthening impact investing in sub-Saharan Africa and South Asia with collaboration, local solutions and scale. Against the backdrop of climate change, racial and economic inequality, extreme poverty and the ongoing pandemic, “the opportunity for impact investors to ‘step up’ their support to developing economies is clear,” write IMPACT Programme’s Shruti Goel, Palladium’s Tom Adlam and The Good Economy’s Matt Ripley in a guest post on ImpactAlpha. The UK’s IMPACT Programme convened its portfolio partners to strengthen the impact investment ecosystems in sub-Saharan Africa and South Asia.
- Among the takeaways: Solutions need to be rooted in regional and national issues and to avoid a ‘one size fits all’ thinking. “Local leaders must lead the design and execution of solutions driven by local needs, opportunities and development priorities,” says Venture Capital Trust Fund’s Hamdiya Ismaila, who has led the effort to establish a National Advisory Board for Impact Investing Ghana. “There is a need to support local fund managers and investment intermediaries to raise funds from local or regional investors.”
- Keep reading.
Agents of Impact: Follow the Talent
John Kerry, the former secretary of state and senator from Massachusetts, will lead the Biden administration’s effort to combat climate change. “The work we began with the Paris Agreement is far from done,” tweeted Kerry. “I’m returning to government to get America back on track to address the biggest challenge of this generation and those that will follow.”… Arctaris Impact Investors is looking for a senior fund accountant in Boston… Applications for the Notley Fellowship for young business and technology professionals to contribute to Austin’s social innovation ecosystem are open through Tuesday, Dec. 1… ImpactAlpha’s David Bank joins Impact Entrepreneur’s Laurie Lane-Zucker to discuss “Reporting on impact,” Thursday, Dec. 3.
Thank you for reading. An earlier version of this article inaccurately stated that CrossBoundary Energy investors made a 15X return. It was 15%.
– Nov. 24, 2020