The Brief | August 22, 2022

The Brief: Risk capital in West Africa, India’s artisan economy, next-gen nuclear, Kenya’s smallholder farmers, disrupting wastewater management

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Greetings, Agents of Impact!

Featured: Frontier Finance

Teranga Capital: Taking risks to build an impact ecosystem in West Africa. Dakar-based Teranga Capital does private equity deals. It deploys venture capital. It helps small businesses get investment-ready. It’s even building an investment arm for informal and micro-businesses. Such category-crossing may be what it takes to build Senegal and the rest of francophone West Africa into a hub of high-impact businesses. It could also provide a road map for impact fund managers in other frontier and emerging markets. Senegal, a country of 17 million people, is growing as a startup hub but remains overshadowed by nearby Nigeria, which since 2016 has received nearly 60% of the private capital coming into West Africa. Senegal’s share: 6%. “We’re a provider of early-stage capital no matter the ticket size, whether it’s seed, acceleration or growth,” says Teranga’s Olivier Furdelle. “As an impact fund, we want to broaden access to finance for Senegal’s most promising enterprises and entrepreneurs.”

The scarcity of private capital is an opportunity for impact-minded investment funds like Teranga to shape the country’s equity landscape (for context, see “Senegal’s Startup Act eases the way for entrepreneurs”). The firm’s portfolio ranges from daycare centers to dental clinics, agri-processors to tech startups. Afrikamart, a digital agri-marketplace, connects smallholder farmers with retailers, hotels and restaurants to create a more efficient supply chain. Teranga’s most recent investment, Socium.Job, connects African companies to global talent. The fund has also backed SECAS, a woman-led cereal processing company looking to expand production domestically and internationally, and COGELEC, a provider and installer of solar electric and hydraulic equipment in rural areas. Teranga is also going downmarket, partnering with Mastercard Foundation on a financial inclusion initiative for micro-entrepreneurs. “This broadens the impact,” says Furdelle. “If we come back to what is our overall mandate and mission as an impact fund manager, it’s financial inclusion.”

Dealflow: Artisan Economy

Beyond Capital Ventures backs Lal10 to boost profits for India’s rural artisans. Global retailers like Amazon and Alibaba rely on artisans in emerging countries for handmade goods. But makers often aren’t fairly compensated or recognized for their work. Delhi-based Lal10 says it is helping artisans sell their products at the best price, enabling them to increase their income by 25% on average. The company’s wholesale online marketplace connects 2,200 local makers of handloom and handicraft products with more than 400 global retailers. The handicraft sector is India’s second-largest employer after agriculture. Woman-led Beyond Capital, an impact fund focused on emerging markets, led Lal10’s $5.5 million bridge financing round.

  • Digitalization. Lal10 aims to help 1.2 million artisans in India reach the global market. Makers in smaller cities like Bhagalpur, Pochampally, Maheshwar and Amroha “are yet to come on the global map,” said Lal10’s Maneet Gohil. Lal10 secured $1.1 million in a 2020 round backed by Sorenson Impact and Upaya Social Ventures.
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Bill Gates-founded TerraPower raises $750 million for next-gen nuclear energy. Nuclear energy is having a moment. Aging plants are being extended to mitigate an energy crunch in Europe and the U.S. But it’s a new crop of small, modular reactors that could shift public perception and revive nuclear energy as a source of carbon-free energy. The new reactors are projected to be safer, more efficient and at least 33% smaller than their hulking predecessors. Bellevue, Wash.-based TerraPower, which bills itself a “nuclear innovation company,” is also pursuing nuclear medicine to fight cancer. Gates, who founded TerraPower in 2006, re-upped in a $750 million round that included the South Korean conglomerate SK. The capital will be used to build TerraPower’s Natrium demonstration reactor at a retiring coal plant in Wyoming. The project is supported by the U.S. Department of Energy’s Advanced Reactor Demonstration Program.

  • Nuclear risks. The Natrium reactor uses a sodium-based cooling system and molten salt for energy storage, which the company says is safer and less costly than other methods. At least one nuclear veteran is not convinced. TerraPower is “following in the footsteps of a 70-year-long record of sodium-cooled nuclear technological failures,” nuclear engineer Arnie Gundersen wrote in Climate & Capital. The company “will siphon valuable public funds and research from inexpensive and proven renewable energy alternatives.”
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Dealflow overflow. Other investment news crossing our desks:

  • Boston-based Bevi raised $70 million from Cowen Sustainable Investments to supply bottle-free water dispensers to offices and commercial spaces.
  • U.K.-based Patchwork Health scored €24 million ($28.4 million) to address  Europe’s health workers shortages (see, “Addressing the nursing shortage”).
  • iProcure, which connects smallholder farmers in Kenya with agricultural inputs like seeds and fertilizers, snagged $10.2 million in Series B financing.
  • French sustainable cooling company Koolboks clinched $2.5 million for its pay-as-you-go solar refrigerators in Africa.

Impact Voices: Water Tech

Wastewater startups are helping companies reduce costs and carbon footprints. The water cycle is often overlooked in discussions about climate change. For World Water Week, ImpactAlpha is spotlighting wastewater management innovations that cut costs, digitize processes and reduce emissions. The global wastewater treatment market is expected to reach more than $460 billion by 2030. Smart sensors, “Internet of things” platforms, onsite treatment technologies and other innovations are shaking up a sector that has seen little change for a century. “Industrial water monitoring and treatment innovations are moving toward decentralized, small-scale automation, and investors are taking notice,” writes Ginger Rothrock of Indianapolis-based HG Ventures in a guest post. Among the opportunities:

  • Onsite treatment. Treating wastewater onsite allows companies to capture and destroy contaminants without having to haul large quantities away. Kentucky-based ElectraMet removes heavy metals using a membrane-free and chemical-free process. ZwitterCo is commercially deploying fouling-resistant membranes that treat organic and oily wastewater streams and capture chemicals for reuse. London-based Puraffinity targets micro-pollutants in water.
  • Smart management. Investors and executives want to understand facilities’ costs and carbon footprints before they are built. Princeton-based Transcend automates engineering for water and wastewater treatment facilities. 120Water makes digital tools to monitor the presence of lead, copper and other toxins in drinking water.
  • Keep reading, “Wastewater startups are helping companies reduce costs – and carbon footprints,” by HG Ventures’ Ginger Rothrock.

Agents of Impact: Follow the Talent

Isabelle Hau, an advisor to Better World Ed, becomes executive director of Stanford Transforming Learning Accelerator… Virginia-based Enable Ventures is hiring a principal… Aspiration is looking for a researcher for its carbon programs (see, “IFC partners with Aspiration in $10 million fund to lift quality of carbon credits”)Tides seeks a remote program officer for civic engagement and democracy.

CapShift is looking for an impact investing fellow and an impact investing intern60 Decibels seeks an inside sales associate in New York… The California Endowment is hiring an impact investing portfolio manager in Oakland… Ketchum seeks a vice president for purpose, social, impact and sustainability in New York… Sumitomo Mitsui Banking Corp. is recruiting a director of emerging sustainability businesses in San Francisco.

Black Philanthropy Month is hosting “Black giving worlds: A 5,000-year-old legacy for our times,” with CNN political analyst Bakari Sellers in conversation with BPM and WISE Fund’s Jackie Bouvier Copeland (see, “How philanthropy unbound can put humanity back into investing in all its forms”)Nigeria’s Energy Transition Plan will launch on Wednesday, Aug. 24… The Global Steering Group for Impact Investing is holding the second of its Impact Summit Series on boosting capital flows in emerging markets, Thursday, Sept. 22.

Thank you for your impact!

– Aug. 22, 2022