The Brief: Rethinking lending risks, modeling climate impact, women’s wellness, energy from water, Apple’s impact accelerator, boldface taskforce

The team at

ImpactAlpha

Greetings, Agents of Impact! 

Featured: Impact Voices

How CDFIs are rethinking lending risk to build BIPOC-led businesses and wealth. Community development financial institutions have become the darling of corporations, foundations and governments looking to advance racial economic justice through access to fair and affordable capital. But CDFIs “need to take a hard look at our own practices to root out underwriting habits and approaches to ‘risk’ that are rooted in systemic racism from the traditional financial system,” Bulbul Gupta of Pacific Community Ventures argues in a guest post for ImpactAlpha. “We believed our underwriting criteria were flexible,” she says, but upon investigation found that PCV was excluding too many businesses run by people of color. “We call upon all investors to challenge the historic injustices and racially-biased misconceptions that erroneously guide perceptions of risk.”

  • Write-off reality. Amid COVID, PCV doubled its small business lending portfolio, with more than 76% of the capital going to California entrepreneurs of color and women and 85% invested in economically distressed communities. The lender’s write-off rate remained below 1%, lower than the average loan loss for U.S. banks. PCV has eliminated minimum credit scores and collateral requirements, dropped minimum thresholds for annual revenues and years in business, limited questions about personal assets, and added flexibility around profit margins. Enterprise Community Partners is likewise re-examining its real estate underwriting practices to address misperceptions of risk that extract wealth from communities of color.
  • Read, “How CDFIs are rethinking lending risks to build BIPOC-led businesses and wealth,” by Pacific Community Ventures’ Bulbul Gupta on ImpactAlpha. 

Modeling long-term emissions reductions to drive climate tech investments now. The increasing flow of capital to climate solutions offers a chance to avoid the most catastrophic climate scenarios, says Sarah Kearney of Prime Coalition. But how can an investor choosing between one venture trying to reduce emissions in shipping and another capturing emissions directly from the air know which could have the bigger impact? “Increased investor focus on modeling the long-term impact of climate technologies can better inform these long-term bets on the future,” Kearney writes for ImpactAlpha.

  • Calculating carbon. Prime’s CRANE tool to help investors and entrepreneurs assess a new technology’s emissions-reduction potential has attracted more than 2,000 users. Breakthrough Energy Catalyst and CDP have developed a separate catalyzed emissions reduction framework to help investors calculate how much their funding may drive down future emissions. FullCycle Climate Partners uses an internal “carbon return on investment” methodology to determine the highest climate impact per dollar invested (see below).
  • Future forward. Prime is refining CRANE in collaboration with the Oil and Gas Climate Initiative, Energy Impact Partners, Autodesk and Bridges Fund Management. The working group is collecting feedback to develop common language, open-source methodologies, tools and platforms to estimate the future greenhouse gas impact of investments in technologies, services and business models. Prime is hosting a discussion on the initiative on Sept. 9.
  • Read, “Modeling long-term emissions reductions to drive climate tech investments now,” by Prime Coalition’s Sarah Kearney on ImpactAlpha.

Dealflow: Follow the Money

On-demand women’s and family health startup Maven raises $110 million. Former journalist Kate Ryder launched Maven in 2014 to address gaps in women’s healthcare. “Our plan is to be front and center in shaping the new equilibrium between digital and in-person care, and to make starting and raising a family better for all,” Ryder wrote of Maven’s Series D raise, which set the New York-based company’s valuation at more than $1 billion. Maven runs a network of health practitioners in 350 women’s and family health specialties, as well as care advocates, to advise on fertility, adoption, pregnancy, and postpartum and other parenting issues. The company created Maven Foundation to partner with nonprofit organizations to offer free in-person and virtual care for women and families in New York City.

  • Oprah’s favorite things. Investors in Maven include billionaire Oprah Winfrey. The round was co-led by Dragoneer Investment Group and Lux Capital.
  • Onward.

FullCycle Climate Partners invests in water-tech startup InPipe Energy. More than 1,000 terawatt-hours of energy are needed to pump, treat and distribute water globally each year. Portland-based InPipe makes a valve that converts excess water-pipe pressure into carbon-free energy. The energy-as-a-service solution helps municipal water providers save money and water and reduce emissions. FullCycle led the $6.5 million Series A round.

  • Policy push. The $1 trillion infrastructure bill passed by the U.S. Senate earmarks at least $55 billion for investment in the country’s aging water infrastructure. FullCycle partner Stephan Nicoleau told ImpactAlpha there’s a “massive” opportunity “to innovate at the intersections of water and energy, especially in a way that makes the infrastructure of tomorrow more resilient than our current systems.”
  • Project finance. FullCycle invests equity into companies as well as their projects. As part of the deal with InPipe, FullCycle will exclusively finance the company’s projects around the world. The investment is the third for FullCycle, which focuses on pre-commercial, post-validation climate solutions. Other investments include circular plastics recycler Synova and controlled agriculture startup Sustainitech.
  • Dive in.

Apple’s inaugural Impact Accelerator includes 15 Black and Brown climate startup founders. The accelerator is part of Apple’s $100 million Racial Equity Equity Initiative launched in June 2020. The three-month training will give founders an opportunity to partner with the tech giant, which aims to achieve net-zero carbon status by 2030. Among the participants is BlocPower’s Donnel Baird (see, “Agent of Impact Donnel Baird”). Others include Natalie King of energy-efficiency service provider Dunamis Clean Energy Partners; Anuar Garcia of GreenTek Solutions, which recycles and refurbishes technology products; and Maurice Brewster of Mosaic Global Transportation.

  • Cohort. One third of the founders are women. Laurie Ann Sibani’s L2S Engineering helps clients achieve sustainable environmental targets. Vickie Lewis runs VMX International, a solid waste collection and recycling services company. Volt Energy Utility, led by Gilbert Campbell III, develops, finances and operates solar projects.
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Dealflow overflow. Other investment news crossing our desks:

  • Ford Foundation commits $5.5 million to HouseUS Fund to address the U.S.’s affordable housing crisis; the Robert Woods Johnson Foundation pledged $2 million.
  • International Finance Corp. commits $3 million to Quest Medical Imaging Ghana to increase access to diagnostic services for COVID, tuberculosis and other respiratory illnesses.
  • Low Income Investment Fund and Purpose Built Communities launch a $45 million Accelerator Fund to support neighborhood initiatives addressing racial equity, economic mobility and health.

Agents of Impact: Follow the Talent

Boldface taskforce. BlackRock’s Sandra Boss, U.N. special envoy Hiro Mizuno, S&P Global’s Douglas Peterson, Generation Investment Management’s David Blood and former Danone CEO Emmanuel Faber are among the headliners of the new Impact Task Force convened by the G7 under the U.K.’s presidency. The task force, chaired by former Minister Nick Hurd and coordinated by the Global Steering Group for Impact Investment, aims to help governments mobilize capital for inclusive climate solutions ahead of November’s COP26 summit in Glasgow. Other Agents of Impact: Courageous Capital’s Laurie Spengler, LeapFrog’s Andrew Kuper, Morgan Stanley’s Audrey Choi, CDC Group’s Nick O’Donohoe, Albright Stonebridge Group’s Elizabeth Littlefield, Blue like an Orange’s Bertrand Badré, JUST Capital’s Martin Whittaker, the IFC’s Neil Gregory, Social Finance’s Tracy Palandjian, Temasek’s Eliza Foo and the GIIN’s Amit Bouri.

Andrew Rabinowitz, ex- of Marathon Asset Management, joins K2 Integrity Holdings as co-chief executive officer to expand ESG asset management and consulting… Mark Garcia, ex- of Thomas H. Lee Partners, joins Arctaris Impact Investors as chief financial officer… Sarah Drinkwater is stepping down as director of responsible technology at Omidyar Network… Dorian McCorey and Muriel Foster join BLCK VC as community manager and program officer, respectively. 

Candide Group is hiring a portfolio analytics manager in Oakland… The Asia Society Policy Institute seeks an associate director of climate… Techstars is recruiting an ESG project manager, a climate change practice entrepreneur-in-residence and a sustainability accelerator entrepreneur-in-residenceAbacus is hiring an investment research analyst in Santa Monica, Calif… Rippleworks is looking for a venture director of projects.

The Investment Integration Project launches its “Build the Market” initiative to prepare financial markets for system-level investing… Macro and Beats launch a film pitch competition for students and alumni of historically Black colleges and universities… Pocketed is looking for incubators, accelerators and investors in Canada and the U.S. to help match entrepreneurs with non-dilutive grant funding.

Thank you for your impact.

– Aug. 18, 2021