The Brief | October 28, 2021

The Brief: Regeneration in practice, Just Climate, Fifty Years, Black vision fund, India’s smallholder farmers, carbon management, fixing blended finance

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Greetings, Agents of Impact! 

Featured: Regeneration

Embracing regenerative practices to restore climate and community. Take a deep breath. We’re 60 years into an 80-year paradigm shift away from economic extraction and towards the regeneration of human and natural systems. That process “is going to go absolutely berserk in the next 10 to 15 years,” Volans’ John Elkington said at the Global Impact Investing Network’s “Next Normal Now” event (ImpactAlpha is the series’ media partner). “I have rarely seen a concept come up as fast as ‘regenerative’,” said Elkington, an author and sustainability leader who coined the term “triple bottom line” in 1994. The GIIN’s Amit Bouri said regeneration takes impact investing beyond simply reducing harm and enhancing sustainability. Regenerative practices “help us leverage the power of investment to right wrongs, to reverse harm that has been done in the past, and to replenish and restore ecosystems and natural stops to critical thresholds.”

  • Jubilee justice. With a proven system of rice intensification, Jubilee Justice is helping Black farmers in Louisiana and Mississippi raise yields and income while reducing methane and water use. With Potlikker Capital, Oakland-based Jubilee helps the farmers integrate regenerative farming practices and cooperative ownership with reparative capital in the form of grants, recoverable grants and low or no-interest loans. “You cannot expect to have the same kind of requirements for people who have been so maligned financially through economic apartheid,” said Jubilee’s Konda Mason.
  • Farmland transitions. An evergreen debt fund managed by rePlant Capital in Boulder, Colo., ties the terms of its low-interest loans to biodiversity improvements of soil in order to help farmers transition farmland to regenerative and organic agriculture. The transition of farmland helps produce “healthier products at scale [that are] more affordable to more people,” said rePlant’s Robyn O’Brien.
  • Next Normal Now. Catch up on earlier sessions in the series with,Inclusion is driving growth in the Next Normal Now’and “Wanted: safe, simple, scalable investments to drive capital to climate solutions.”
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Dealflow: Follow the Money

Generation stands up Just Climate for capital-intensive climate solutions. Goldman Sachs Asset Management, Microsoft Climate Innovation Fund, Ireland Strategic Investment Fund and Harvard Management Co. are among the founding partners of the new unit, which aims to mobilize capital for companies and projects tackling hard-to-decarbonize industries. Generation Investment Management’s David Blood said Just Climate will finance “typically asset-heavy parts of the climate transition that are often too capital intensive, unproven at scale, or in geographies too challenging for investors to consider.” Blood will chair the new unit, with Generation’s Colin le Duc as vice-chair. Shaun Kingsbury, ex- of the U.K. Green Investment Bank, has joined as chief investment officer.

  • Dornbusch’s law. Generation’s Al Gore told Morgan Stanley’s Audrey Choi at the bank’s Sustainable Investing Summit that the tipping point has arrived in the race to net-zero greenhouse gas emissions. “We are at the point where we have that multi-sector alignment, and we are finally generating the momentum,” Gore said, citing the late German economist Rudi Dornbusch. “His law says this: ‘Things take longer to happen than you think they will. But then they happen faster than you thought they could.’”
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Fifty Years raises $90 million for high-impact bets on deep tech. The San Francisco venture firm’s early bets on “deep tech” include chemical decarbonization firm Solugen, now valued at $1.8 billion, satellite internet company Astranis, valued at $1.4 billion, and lab-grown meat producer Upside Foods, formerly known as Memphis Meats. Fifty Years’ said in a blog post that its $90 million third fund is “exclusively for founders building insanely ambitious, incredibly hard, and radically important companies to solve the world’s biggest problems.”

  • Grooming impact unicorns. Fifty Years tapped 44 founders of unicorn tech companies as limited partners in the fund, including the founders of Stripe, Spotify and GitHub, as well as Solugen and Astranis. The focus of the new fund: climate tech, synthetic biology, platform therapeutics, healthcare, connectivity and space. The firm said, “We’re also excited by possibilities enabled by Web3,” the decentralized internet built on blockchain and peer-to-peer nodes.
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Black Vision fund raises $25 million to support Black-owned small businesses. Expanding Black Business Credit, a consortium of Black-led community development financial institutions, or CDFIs, launched the fund before the pandemic. “The demand for our work is greater now than it’s ever been,” said Hope Credit Union’s Bill Bynum, who chairs the consortium (see, “Agent of Impact, Bill Bynum”). Despite the increase in capital committed to advance racial equity and Black communities, “a lot of the resources that are being deployed haven’t reached communities of color as they should.” The Black Vision Fund will provide debt financing for ECCB’s seven CDFIs to invest in their communities.

DeHaat secures $115 million to expand its farmer marketplace in India. The Gurgaon-based online marketplace, launched in 2012, connects 650,000 of India’s smallholder farmers to more than 250 corporate buyers, and it provides access to farming equipment, inputs and financing. The Series D round was led by Belgium’s Sofina and Lightrock India, with participation from Singapore’s Temasek, Dutch development bank FMO and other international investors. The company aims to reach five million farmers by 2024. Share this post.

Persefoni scores $101 million for carbon management software. Tempe, Ariz.-based Persefoni helps institutional investors and financial institutions manage their carbon footprints. The Series B round, co-led by TPG’s Rise Fund and Prelude Ventures, will help the company expand its platform internationally. Check it out.

Signals: Catalytic Capital

Blended finance struggles for traction in the ‘decade of action.’ Blended finance that leverages public or philanthropic capital to increase private investment in sustainable development has unlocked about $160 billion for sustainable and impact investments since 2010, according to The State of Blended Finance 2021,” from Convergence. That’s not nearly enough to bridge a multi-trillion-dollar gap in financing for the U.N.’s 2030 Sustainable Development Goals and to avert a climate catastrophe. Blended finance transactions have averaged about $9 billion per year for the past five years; the global pandemic caused a drop to only $4.5 billion last year. “The field is nowhere at the scale it needs to be,” Convergence’s Joan Larrea said on ImpactAlpha’s Call No. 33 this week.

  • Usual suspects. Most commercial capital for blended finance deals continues to come from development finance institutions and multilateral banks rather than the private sector. “We tend to see the same players every year in blended finance,” Convergence’s Ayesha Bery told ImpactAlpha. Impact investors including Ceniarth, Calvert Impact Capital, Oikocredit and Soros Economic Development Fund are mainstays, as are foundations including the Shell, Rockefeller and Gates foundations.
  • Leading by example. BlackRock, the governments of France and Germany, the Hewlett Foundation and Grantham Environmental Trust raised $250 million for the Climate Finance Partnership blended-finance fund, which invests in emerging-market climate infrastructure. On a smaller level, Mexico-based Sistema Bio has relied on blended finance to drive adoption of waste-to-fuel biogas technology among emerging market farmers. Oxygen Hub is using a blended-finance model to build a franchise network of local oxygen producers to fill Africa’s medical oxygen supply gap (see, “How the pandemic is propelling innovators to bridge healthcare gaps in emerging markets”).
  • Catalytic capital. Too few investors are willing to adjust their risk appetites to unlock additional capital. “We need to see the development banks putting up a little bit more risk capital,” says Bery. Also needed: “Real concessional capital coming from donor governments, development agencies and foundations.”
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Agents of Impact: Follow the Talent

U.S. Treasury Secretary Janet Yellen appoints Janis Bowdler, ex- of the JPMorgan Chase Foundation, as counselor for racial equity… Former Greenpeace activist Steven Guilbeault is Canada’s new minister for environment and climate change… Sabina Curatolo is departing as Impact Investing Australia’s acting CEO.

JLL seeks a global energy and sustainability director in New York… E Pluribus Unum is hiring a director of philanthropy and strategic partnerships in New Orleans… Democracy Works seeks a chief executive officer… Long-duration storage startup Noon Energy is looking to fill several positions… SheEO is accepting applications from women-led social ventures for its venture cohort until Nov. 1.

Thank you for your impact.

– Oct 28, 2021