The Brief | November 21, 2022

The Brief: Seeking inclusion alpha, committing to equity in California, streamlining government aid, Schneider’s corporate VC, #WTF at COP27

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Greetings, Agents of Impact!

Featured: Agents of Impact Podcast

VC Include’s Bahiyah Yasmeen Robinson on three drivers of inclusion alpha. Bahiyah Robinson is nearly one-third of the way toward her goal of seeding 100 women and historically-underrepresented fund managers by 2030. But “seeding” is not enough for the founder of nonprofit accelerator VC Include and for-profit Include Ventures, a fund-of-funds and direct investment vehicle that has raised more than $20 million toward a $250 million goal. The goal: “To make sure that they build resilient, institutional-grade asset management firms, that they’re growing from a Fund I, to a Fund II and a Fund III,” Robinson says on ImpactAlpha’s Agents of Impact podcast, recorded at VC Include’s gathering this month in Berkeley, Calif. In the coming weeks, ImpactAlpha will present podcast interviews with some of the managers, including Aisha Weeks of the Dearfield Fund for Black Wealth, Toussaint Bailey of Uplifting Capital, Eunice Ajim of Ajim Capital, and Himalaya Rao of The BFM Fund. “It’s not enough to just raise your first fund,” Robinson says. “It has to be value-creating, alpha-generating, and you’re supposed to be able to raise your second fund and your third.”

The alpha, or outperformance, that VC Include looks for comes, in part, from the ability of diverse-led firms to identify under-appreciated markets or opportunities and spot entrepreneurial talent that may be overlooked by other investors. Robinson said a second source of outperformance is in backing so-called “first-time” fund managers who traditionally have had difficulty making it through the screens of most institutional investors. Many of VC Include’s managers have track records, either as operators and entrepreneurs or as investment professionals in other firms. The third source of alpha stems, in part, from the historic tendency to underestimate founders and fund managers of color. “I talk about it as underpriced or mispriced product in the market – or what, as an investor, I call a discount,” Robinson says. “More traditional venture capital and private equity firms just don’t understand that market opportunity like we do.”

Sponsored by Mission Investors Exchange

How The California Endowment is investing for health and racial equity (Q&A). “There is no health equity without racial equity,” Robert Ross, president and CEO of The California Endowment, says in a conversation with Mission Investors Exchange’s Matt Onek. “Everyone, and every department, at The California Endowment is on this racial equity journey. Our overarching goal is to be able to center racial equity at every level and experience of TCE.” In the Q&A, Ross discusses the endowment’s journey to “institutionalize our commitment to racial equity throughout our governance and processes.” The endowment’s impact and mission-related investment strategies include allocations to diverse-led fund managers and a $300 million social bond issue. “You can’t just flirt with racial equity,” says Ross. “You have to get married to it.”

  • Read the full interview with The California Endowment’s Robert Ross’s and MIE’s Matt Onek.
  • Join the conversation. Ross will be speaking at Mission Investors Exchange’s 2022 national conference in Baltimore, December 5-7 (ImpactAlpha is a media partner). MIE members, foundations and other philanthropic asset owners can register here.

Dealflow: Government Tech

Beam raises $6.4 million to streamline government aid to families in need. Brooklyn-based Beam launched in 2016 (then called Edquity) to help educational institutions identify at-risk students and provide their households with cash assistance for unexpected expenses, housing or food. The company rebranded to help low-income families in the U.S. access government assistance. “We realized we could apply our technology to government programs to get critical services to the most vulnerable people,” Beam’s David Helene told ImpactAlpha. “Our expansion into government is the most genuine way to bring about the impact we’re trying to see in the world.” How it works: Beam’s platform lets constituents submit documents for rent relief, public utility benefits and emergency cash assistance. Helene said Beam helps governments with identity verification, decision-making and embedded payments, “so that there’s no fragmentation between processing and payments.”

  • Public assistance. Beam says it has administered $180 million in public assistance funds to approximately 300,000 households since the start of the Covid pandemic in 2020. Investors in its Series A round include Potencia Ventures, Spring Point Partners, Lumina Impact Ventures, Schmidt Futures, Imaginable Futures and American Family Insurance. Beam is “a prime example of the transformational solutions we seek to fund as part of our goal to advance economic justice,” said Spring Point’s Margot Kane.
  • More

Schneider Electric commits €500 million for climate and industrial tech. The French electrical equipment maker launched SE Ventures, its corporate venture capital arm, with an €500 million (then about $600 million) in 2018. Schneider committed an additional €500 million to invest in climate tech, industrial AI, mobility, real estate tech and cybersecurity. “We live in a world that’s facing crises on three fundamental levels: energy, economy and climate,” said Schneider’s Nadège Petit. “There’s never been a greater need for transformation, or a greater opportunity for positive impact – impact that we create by innovating in three fundamental ways: electrification, digitalization and decarbonization.” SE Ventures will begin deploying the new funding in January.

  • Corporate impact. SE Ventures has backed seven venture funds and more than 40 startups. Portfolio companies include Sense, which helps homeowners monitor energy usage in real-time, and AiDash, which forecasts storm and wildfire damages for utilities, energy companies and municipalities. GreenStructure, a joint venture between Schneider Electric and impact investor Huck Capital, covers upfront costs for large building owners to transition to clean energy.
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Dealflow overflow. Other investment news crossing our desks:

  • Daylight, a neobank that provides financial planning for the LGBTQ+ community, raised $15 million in Series A funding from Kapor Capital, CMFG Ventures and other investors.
  • Bangalore-based Goodera scored $10 million from investors, including Elevation Capital and Omidyar Network India, to help corporations manage their social-responsibility programs.
  • Tunisia’s Beekeeper Tech snagged seed funding to offer low-cost equipment to beekeepers in the Middle East and North Africa to increase the productivity of their hives.

Signals: COP Watch 

On deadline, COP27 wrangles with loss, damages and fossil fuels. Exhausted negotiators from nearly 200 countries clinched a climate agreement in the wee hours Sunday as the two-week global climate summit came to a close. In: “loss and damages” and a goal of keeping warming to 1.5 degrees Celsius. Out: the phaseout of fossil fuels and peaking of carbon emissions by 2025. That progress was achieved at all amid is a feat in itself (see, “COP27 may exceed low expectations”). The agreement to create a loss and damages fund to help poor countries recover from storms and droughts made worse by global warming is “a historic breakthrough,” Rachel Kyte of the Fletcher School at Tufts University told ImpactAlpha. The agreement shows “that the world can recognize the plight of the vulnerable must not be treated as a political football,” said Power Shift Africa’s Mohamed Adow. Other highlights:

  • Fossil-fuel disconnect. Fossil fuel lobbyists flooded Sharm El Sheik, the Red Sea resort town where the summit was held. Last year’s COP in Scotland called for the phasing out of unabated coal. A majority of countries wanted to add oil and gas to that language this year, along with a goal of peaking emissions by 2025. Saudi Arabia and other oil producers thwarted that, winning language that refers to a transition to “low-emission” sources, which could include natural gas. The result, tweeted the scientist Nick Cowern, is that “loss and damage costs will inevitably come to exceed the ability of any group of countries to pay them.” The 20 most climate-vulnerable countries have suffered $525 billion in climate-related losses since 2000.
  • Shared future. The final agreement calls for the creation of a loss and damages fund, with details to be worked out over the next year. Sherry Rehman, Pakistan’s climate minister, called it “a down payment on the longer investment in our joint futures.” Wealthy nations have not made good on earlier funding promises, including $100 billion a year promised in 2015 to help low- and middle-income countries mitigate and adapt to climate change. “What we have is an empty bucket,” said Adow. “Now we need to fill it.” 
  • #WTF. The question hanging over nearly every issue at COP is where the money will come from. Funding countries’ energy transitions, helping communities adapt to the here-and-now impacts of climate change, and paying for the devastating losses of extreme weather will cost trillions of dollars annually. COP27 delegates took to wearing buttons that read #WTF for “Where’s the Finance?” With wealthy nations hemmed in by domestic politics, energy concerns and a looming recession, the focus is on getting creative. Under consideration: new insurance schemes, development finance reform, carbon markets and public-private partnerships aimed at speeding just energy transitions.
  • Get the full scoop.

Agents of Impact: Follow the Talent

Lucas Di Grassi, former Formula E world champion and U.N. environmental ambassador, joins Vidavo Ventures as venture partner… Participant Media promotes Danice Woodley to executive vice president of people and culture… GIIN’s Kelly McCarthy steps down as chief impact officer… Sheryl Kucer, ex- of Dyson Capital Advisors, joins Veris Wealth Partners as chief operating officer. 

Pacific Community Ventures is hiring an associate director for corporate and community partnerships, a policy counsel or manager, and a spring intern… The Office of the Illinois State Treasurer is recruiting a deputy director of corporate governance and sustainable investment… The Nature Conservancy seeks a remote grant specialist. 

Fifty Years launches “Repo Grants,” a fast-grants program that will award $25,000 to $100,000 for research projects focused on the female reproductive system… Tbli Group will accept votes until Wednesday, Nov. 30 for the “Better World” prize for ESG and impact measurement systems… The new Climate+Positive Investing Alliance (C+PIA) is calling on individual investors, investment advisors and fund managers to think beyond net zero to net climate-positive solutions… The Future Leaders’ Climate Summit will take place March 3-6 in Miami Beach, Fla.

Thank you for your impact!

– Nov. 21, 2022