Greetings, Agents of Impact!
Share your hot takes on today’s U.S. election. Whatever the results, and whenever we know them, today’s election will reset the landscape for impact investing and sustainable finance. ImpactAlpha is looking to Agents of Impact to start charting the new narrative. What’s next for impact investing and sustainable finance? How will the new landscape affect your work? Where are the opportunities – and the risks? Share your insights and we’ll start rounding them up on Thursday (and update them next week). Send a few lines or a few paragraphs to [email protected]m (or reply to this email) or use this handy online form.
Featured: ImpactAlpha Original
Q&A: How ESG pioneer Amy Domini is finding impact alpha in ‘sustainable solutions.’ At an earlier peak in the COVID pandemic, Domini Impact Investments launched a mutual fund that looked a little different than its previous funds. The new thing: identifying major human and ecological needs and investing in companies with the solutions to those needs. The Sustainable Solutions Fund went beyond merely selecting public equities that demonstrate strong social, environmental and governance, or ESG, profiles relative to their peers – the strategy Domini had built its reputation on (see, “Asset managers compete on impact as investors move beyond ESG”). Even before the pandemic, Domini had lined up a portfolio of companies, including Beyond Meat, Teledoc, Atlassian and Hologic (and, of course, Tesla), delivering healthcare, climate-resilient food, remote work and affordable financial services and launched on April 1. Since then, the portfolio of about three dozen stocks has grown in value by more than 60%. Suddenly, “there was an acceleration of need for those goods and services that we had discovered,” says Amy Domini, who founded the $2 billion sustainable investment manager more than 30 years ago.
On the eve of the U.S. election, Domini sat down, virtually, with ImpactAlpha to take stock of ESG and impact investing. A culture of individualism and continued political interference, she says, is slowing adoption in the U.S. Domini’s Sustainable Solutions Fund couldn’t have been built even a few years ago. When she created the Domini 400 Social Index in 1998, the one company most responsible investors wanted to own was Ben & Jerry’s. “They ran a great company, had a great corporate culture, they had a lot of fun. But ice cream is not a solution to human needs,” Domini says. Now, entrepreneurs reaching public markets are taking on bigger human and environmental challenges. “They want to provide the service beyond petroleum, or beyond meat for that matter.” Her biggest concern is not today’s election, but the prospect of a compounding series of climate catastrophes that triggers a massive repricing of risk in global markets. “It’s a massive threat that we’ve been just gliding by because it hasn’t happened yet.”
Keep reading, “Q&A: How industry pioneer Amy Domini is finding impact alpha in ‘sustainable solutions’,” by Dennis Price on ImpactAlpha.
Dealflow: Follow the Money
Chingona Ventures backs SUMA Wealth to help U.S. Latinos build wealth. Beatríz Acevedo built mitú, a media and entertainment company for young Latinos. Now, she has adapted the engagement tools for SUMA Wealth to deliver financial education for millennial Latinos in the U.S., offering tools like a home-buying calculator, credit card payment planner and savings advice. The new company’s $1 million pre-seed round was led by Chicago-based Chingona Ventures and backed by Backstage Capital and a raft of female investors.
- Returns on inclusion. Chingona was one of the eight Black and Latino-run funds to share $50 million from PayPal. The firm has made 15 investments since January, with a focus on early-stage impact ventures and diverse founders (see, “Agent of Impact: Samara Hernandez, Chingona Ventures”).
- Dive in.
Zeal Capital Partners raises $22.3 million to bridge U.S. wealth and skills gaps. Zeal, based in Washington, D.C., is also part of PayPal’s new cohort of diverse fund managers. “We need more businesses delivering solutions to bridge the wealth and skills gap at scale,” said Zeal’s Nasir Qadree. Other investors include the Alfred P. Sloan Foundation, a university endowment and family offices. The fund’s first investment is fintech firm Esusu, which is also a portfolio company of Impact America Fund (see, “Hunting for unicorns in the disruption of systemic racism”).
Norway’s Statkraft to buy solar power developer Solarcentury. The Norwegian state-owned utility is paying $151.34 million to acquire U.K.-based Solarcentury. The deal inches Statkraft, which is known for its hydro-power production, closer to its goal of owning 8-gigawatts of wind and solar facilities by 2025. Solarcentury has developed 1.3-gigawatts of installed solar power since 1998 and claims to have a pipeline of projects totalling 6-gigawatts.
- Green exit. The deal provides an exit to Solarcentury investors, including Zouk Capital, which led Solarcentury’s £13.5 million (then $21.6 million) funding round in 2012.
- Check it out.
Signals: Ahead of the Curve
Equity crowdfunding grows up with a new $5 million limit on ‘Reg CF’ offerings. Businesses from microbreweries to football clubs to electric vehicle makers to “mom and pop” shops have made use of Regulation Crowdfunding under the JOBS Act, which created pathways for small and mid-sized businesses to “crowdfund” capital from everyday investors. Now, the Securities & Exchange Commission has approved amendments that increase the offering limit from $1.07 million to $5 million. The amendments “open significant new opportunities for businesses to use this capital to recover from the current economic crisis or launch innovative new products and services,” said Jason Best of Crowdfund Capital Advisors. Since “Reg CF” went into effect in 2016, more than 2,800 companies in 50 states have raised over $500 million dollars. Concerns about fraud have largely proven unwarranted, paving the way for the SEC’s changes. The amendments will go into effect 60 days after they are published in the Federal Register.
- Bigger sums. Offering limits were also raised for other provisions of the JOBS Act. Companies employing rule 504 of Regulation D, often used for intrastate offerings, can now raise $10 million, up from $5 million. Companies using the “mini-IPO” process under Regulation A can now raise up to $75 million, up from $50 million. TerraCycle, which recycles hard-to-reuse materials for major consumer brands, for example, raised more than $6.7 million using the exemption.
- Impact offerings. Crowdfund Capital Advisors reports that at least a quarter of recent “Reg CF” offerings have been from women- and minority-led teams. Impact-oriented businesses have been making use of crowdfunding portals such as WeFunder, Republic and StartEngine. New entrants such as Raise Green and WaterWorks are focused on impact sectors (see, “Grassroots platforms are not waiting for Washington to invest in a green new deal”). Eve Picker of real estate crowdfunding site Small Change tells ImpactAlpha the higher limits will help establish “an alternative financing source for these projects that more often than not hold no interest for traditional financial institutions.” Projects on Small Change have included tiny homes, energy efficient affordable housing, and transit-oriented development, many led by women or people of color.
- Covid recovery. Crowdfund Capital Advisors is advocating for a $20 billion “Main Street Recovery Co-Investment Fund” financed with unused federal COVID relief funding. The proposed fund would match individuals’ investments in businesses struggling to survive the pandemic.
Agents of Impact: Follow the Talent
Big Society Capital seeks a data and portfolio manager in London… MassMutual is looking for an impact investing associate in Boston… Resonance is hiring a director of innovative finance in Burlington, Vt. or Washington, D.C… Shared Value Initiative is hosting “Resilience Reimagined: CEO Blueprint For Racial Equity” with Michael McAfee of PolicyLink, Martin Whittaker of JUST Capital, and FSG’s Lakshmi Iyer, Tuesday, Nov. 10… Johnson & Johnson and Village Capital host the startup showcase “Shaping the Future of Healthcare Work in the U.S.” with VilCap’s Victoria Fram, Melissa Buckley of CHCF Health Innovation Fund, and Frank Rodriguez and Stacy Feld of Johnson & Johnson, Thursday, Nov. 12… Elatus Capital Advisors and 17 Asset Management are hosting the “Caribbean Sustainable Investment Forum,” Tuesday, Nov. 17.
Thank you for reading.
–Nov. 3, 2020