Greetings, Agents of Impact! If you’re just making it back from Burning Man, congratulations! Drop us a note with your experiences and your reflections.
Featured: The Liist
Impact managers scale up their ability to absorb and deploy capital. It’s just as hard to raise $10 million as it is to raise $100 million, or perhaps even harder. Given the tough economics of fund management, three of the funds in this month’s Liist have hundred-million-dollar targets. Two others are seeking up to $250 million. The step-ups also reflect the increasing sophistication of impact fund managers, as well as the scale of the challenges they are addressing. Farmland LP is seeking to raise up to $250 million for its third fund to speed the conversion of commercial farmland to certified-organic production. West Potomac Capital is seeking a similar amount to strengthen the capabilities of mission-driven financial institutions driving financial inclusion and economic growth in minority and low-income communities.
- NOAH’s arc. Private equity’s invasion of the single-family rental market has made many housing advocates skeptical that outside capital has a positive role to play in expanding the supply of affordable housing. Center Creek Capital Group is making the case that renovating and rehabilitating existing single-family rental housing, a form of naturally occurring affordable housing, or NOAH, can deliver long-term affordability (see, “Single-family rentals deserve a seat at the affordable housing table”). Center Creek, along with West Potomac, is raising capital from banks that need to satisfy requirements for local lending under the Community Reinvestment Act.
- Africa’s institutional investors. Currency volatility and other concerns have African funds increasingly tapping local institutional investors to finance infrastructure and economic development (see “Helping Africans invest in Africa”). Women-led Ditiro Capital in South Africa has backing from local pension fund managers Motor Industry Retirement Funds and Telkom Retirement Fund to invest in mid-sized businesses to creating quality jobs.
- Impact theses. Also on this month’s Liist of impact funds: the De-Carceration Fund in Philadelphia, which seeks up to $25 million for ‘justice tech’ startups to disrupt the US criminal justice system. Quona Capital is seeking $75 million to double down on promising emerging market companies that are using tech solutions to expand consumer and small business financial services (see, “Monica Brand Engel, Quona Capital: Taking on the messy work of financial inclusion“).
- Keep reading, “The Liist, September 2023: Impact funds scale up their ability to absorb and deploy capital,” by Roodgally Senatus on ImpactAlpha. Scan snapshots of dozens of innovative and impactful funds and managers in past editions of the Liist.
- Liisting Agents. Do you know an emerging or other impact fund manager currently raising capital? Drop us an email or complete this short form.
Sponsored by Tideline
Navigating impact lenses. Gender, racial equity and refugee-lens investing have proven to be effective approaches for surfacing cross-cutting themes and sharpening impact outcomes. Now comes child-lens investing to advance positive outcomes and minimize harm for the world’s 2.2 billion children. The next webinar in Tideline’s Compass series brings together practitioners who have deployed a variety of impact lenses, including Joy Anderson (Criterion Institute), Erika Seth Davies (Rhia Ventures), Tim Docking (Refugee Investment Network), Caitlin Rosser (Calvert Impact) and Cristina Shapiro (UNICEF USA), along with Tideline’s Ben Thornley and Jade Huynh. Join “Navigating impact lenses,” Tuesday, Sept. 19. Register here.
Dealflow: Agrifood Investing
CH4 Global raises $29 million to reduce livestock methane emissions. The roughly 1.5 billion cows on the planet emit more than 150 million tons of methane per year, making them the largest source of methane globally. Nevada-based CH4 Global is building a facility in New Zealand to produce a seaweed-based supplement that reduces such enteric methane emissions in cattle, sheep and goats. “We are receiving massive interest from governments, food producers and farmers of all sizes, fueling our sense of urgency that we must act now to avoid a climate tipping point,” said CH4 Global’s Steve Miller.
- Greenhouse gas. Methane has more than 80 times the impact on global warming, per ton, as carbon dioxide. That makes reducing it a high-impact climate imperative. CH4’s Series B round, led by DCVC and Cleveland Avenue, with other climate tech investors, brings the company’s total fundraising to $47 million.
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Finland’s Paptic scores €23 million for sustainable packaging materials. European Circular Bioeconomy Fund, a German impact fund, and Ecolab are joining the Series A investment in Paptic’s wood fiber-based materials to replace plastics in packaging. “Our investment will provide Paptic with the resources to serve growing demand for innovative packaging materials,” said ECBF’s Guillaume Gras. Around 100 global customers in 35 countries use the Finnish company’s materials for packaging.
- Capital blend. Separate from the investment round, Paptic secured €10 million ($10.8 million) loan from the Finnish Climate Fund, as well as a €2.5 million grant from the European Innovation Council’s accelerator program to hone its manufacturing approach. Investors in Paptic’s Series A equity round include Japanese trading house Itochu. “It took us a while to close, but we wanted to have the right investors [and] the right amount, and we even left some money on the table” said Paptic’s Tuomas Mustonen.
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Dealflow overflow. Other news crossing our desks:
- Pluralis, which invests in Europe’s independent media organizations, acquired an additional 13% stake in Poland’s Gremi Media. Pluralis is backed by Media Development Investment Fund. (Pluralis)
- Infinity Recycling’s Circular Plastics Fund secured €50 million ($54 million) from the European Investment Fund toward its target of €150 million. (Mirage News)
- Israeli fusion energy venture nT-Tao snagged $22 million in Series A financing, backed by Grantham Foundation, J-Impact and Sumitomo Insurance, to develop and test a compact fusion reactor. (nT-Taeo)
- Chicago-based venture capital firm Energy Foundry is looking to raise a $100 million fund to invest in clean energy tech companies. (SEC)
Six Short Signals: What We’re Reading
Catalyzing capital for development. Development finance institutions can free-up risk capital by leveraging shareholder equity with debt and shifting more mature investments off their balance sheets. That could mobilize more commercial capital for emerging markets, argues the UK’s development finance institution BII. (British International Investment)
Upskilling India’s workforce. More than 580 million people in India are in blue or gray-collar jobs. Investments in basic business management, digital marketing, communication and enhanced vocational skills can unleash their potential. Access to capital and to gig and other staffing platforms are among the most critical solutions. (Omidyar Network)
Equitable value chains. As demand for energy-transition materials accelerates, countries from Indonesia to Chile to Zimbabwe are pushing to move up the value chain to ensure that they benefit from the production and processing of materials such as copper. (Wood MacKenzie).
Natural capital bond risk. Countries are failing to protect their natural capital, putting water, air and soil resources in jeopardy, according to Barclays. The mispricing of “natural capital” risks in sovereign bonds could trigger downgrades in the bonds’ ratings. (Bloomberg)
Climate and economic justice. An interactive map from the US Council on Environmental Quality shows information about the climate, environmental, health and socioeconomic burdens faced by American communities. (CEQ)
The Wrexham Model. Hollywood actors Ryan Reynolds and Rob McElhenney brought new money and new stars to transform the Welsh football club and jumpstart the local economy. Can Wrexham be a model for Britain’s other struggling towns? “As a social enterprise, an economic enterprise and a sporting one, football clubs are very much at the forefront of their communities,” says conservative minister John Stevenson. (Politico)
Agents of Impact: Follow the Talent
Don’t miss these upcoming ImpactAlpha partner events:
- Sept. 26-28: CLIIQ Nexus Latam (Cuenca, Ecuador)
- Oct. 2-3: GSG Global Impact Summit (Málaga, Spain) (get 10% off with code “imp_a_gsg2023”)
- Oct. 4-5: GIIN Impact Forum (Copenhagen)
- Oct. 12: AVCA’s Sustainable Investing in Africa Summit (London)
- Oct. 18: Phenix Capital’s Impact Summit America (New York)
- Oct. 17-19: Pro Mujer’s GLI Forum Latam (Medellín, Colombia) (get 20% off with code IMPAGLI2023)
- Oct. 23-25: SOCAP23 (San Francisco) (save $250 with code “s23_impactalpha”)
Marquette Associates’ Ibrahim Rashid, Quotient’s Camila Thompson, and S2G Ventures’ Michelle Morales are among the 2023 fellows of the Clean Energy Leadership Institute… The Investment Integration Project is hiring a commission-based salesperson for SaaS platform subscriptions… Northern Arc Capital seeks a senior associate of impact and ESG in Mumbai… Triodos IM is recruiting a senior legal counsel.
Thank you for your impact!
– Sept. 5, 2023