Greetings, Agents of Impact! Thank you to the hundreds of Agents of Impact who tuned into yesterday’s policy Call, “The Year of the ‘S’”. We’ll have the recap and replay in Friday’s brief.
Featured: Opportunity Zones
Blending public incentives and private capital to drive social impact through real estate. Developers seeking to create thriving communities with affordable housing and accessible services are eager to share their strategies. “It’s a very data driven process,” says Nina Tschinkel of Catalyst Opportunity Funds, which draws on public datasets to understand racial demographics and identify food deserts or lack of affordable housing, education and preventative health care. In rural areas, “It’s a question of, how much do you have to de-risk a deal?” said Patrick Mullen of Arctaris Impact Investors, which specializes in investments in low-income Opportunity Zones. Strategies for regenerative cities and rural economic development are on the agenda at next week’s Sorenson Impact Summit in Utah. A preview:
- Impact real estate. A 161-unit workforce housing development in Tacoma’s Hilltop neighborhood is demonstrating how social impact strategies can help a project succeed. The mixed-use Koz on MLK complex (video) that opened last May is aimed at residents making less than 80% of the area’s median income. Rents start at under $1,000 for a studio – utilities included. Ground floor retail includes a credit union focused on underserved borrowers, and a food co-op that stocks local produce. Catalyst Opportunity Funds put up half of the capital. “There’s an urgency and need to look at successful case studies,” Tschinkel told ImpactAlpha. Catalyst, launched by Sorenson Asset Management in 2019, has raised nearly $300 million for community-driven real estate projects and is eyeing a second, $250 million fund. Catalyst leverages tax credits, grant dollars, and Opportunity Zone incentives: its projects have been supported by $77 million in public funds. Keep reading.
- Rural Opportunity Zones (video). Opportunity Zones are not just for urban centers. The capital-gains tax breaks, intended to encourage long-term investments in low-income areas, have spurred statewide efforts from Alabama and Virginia, to Utah, Colorado and Indiana. “Opportunity Zones provide the impetus for this new mousetrap that now exists to serve Alabama’s low-income places,” says Alex Flachsbart of Opportunity Alabama. The efforts “unlock capital that previously was just not looking at these types of areas,” says Arctaris’ Mullen. Flachsbart and Mullen collaborated on the “Rural Opportunity Zone and Recovery Playbook,” a toolkit from Sorenson Impact Center and the Utah Association of Counties. The pair sat down with ImpactAlpha’s David Bank – on camera – to talk about what’s working and what’s not in rural Opportunity Zones. Go deeper.
United’s Sustainable Flight Fund raises $100 million for sustainable aviation fuel. Chicago-based United Airlines is seeking to scale up the supply of sustainable aviation fuel to decarbonize commercial air travel. Last year’s Inflation Reduction Act included tax incentives for airlines to transition from kerosene-based jet fuel. The Sustainable Flight Fund received commitments from United as well as Air Canada, Boeing, GE Aerospace, JPMorgan Chase and Honeywell. British Airways and JetBlue are backing companies like ZeroAvia and Universal Hydrogen, which are developing hydrogen-electric powertrains for commercial aircraft (see “Zero-carbon air travel takes flight with a wave of new investments”).
- Fuel production. United plans to keep raising capital, including from United travelers, who can donate $1, $3.50 or $7.00 to the fund when they purchase tickets online. The airline says if the 152 million passengers who flew on United last year each contributed $3.50 to the fund, it’d be enough to build a refinery capable of producing up to 40 million gallons of sustainable fuel per year. “The fund is not about offsets or things that are just greenwashing,” said United’s Scott Kirby. “We’re creating a system that drives investment to build a new industry around sustainable aviation fuel, essentially from scratch.” United aims to reach carbon neutrality by 2050 without relying on carbon offsets.
- Fuel supply. The Sustainable Flight Fund will invest in startups able to produce fuel to supply United planes. The airline has backed low-carbon fuel companies including Portland-based NEXT Renewable Fuels, which converts recycled organic materials like cooking oil into biofuel that can replace petroleum-based diesel, and New York-based Dimensional Energy, which captures carbon emissions from heavy industries and transforms them into aviation fuel that can be used by airlines with existing infrastructure.
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Dealflow overflow. Other investment news crossing our desks:
- Eko raised 750 million Indian rupees ($9.1 million) in Series B funding to help microenterprises in India transact with their customers online.
- Climate justice nonprofit RE-volv scored $3 million in program-related investments from the Kresge and Schmidt Family foundations to help nonprofits and houses of worship in U.S. underserved communities add solar power.
- Nairobi-based Power Financial Wellness raised $3 million in a seed round backed by Quona Capital to provide financial services to gig workers in sub-Saharan Africa.
- Scotland’s Topolytics, which maps waste supply chains for waste management and recycling companies, snagged €1.7 million ($1.8 million).
Signals: Disability Justice
The impact case for bridging financing gaps for disabled founders. Mexican-American paralympic athlete Diego Mariscal, who was born three months premature with cerebral palsy, is out to prove the thesis that having a disability can be a competitive advantage in business. Mariscal runs 2Gether-International, a Washington, D.C.-based impact accelerator that supports entrepreneurs with disabilities. He is looking to raise a $5 million fund to support high-growth impact startups in 2Gether’s network of nearly 600 disabled founders. “We want to show that here’s this community of people that are underserved, that are facing systemic oppressions, high levels of unemployment rates and high poverty levels, but if nurtured and supported in the right way can yield very successful businesses because of their lived experiences,” he told ImpactAlpha.
- Long Covid. Ibrahim Rashid, a founder who had lost the ability to walk due to the virus, wrote in ImpactAlpha about how Long Covid has focused new attention on disability justice. Rashid has built Strong Haulers, a tech platform to help Long Covid haulers manage their symptoms (see, “Six ways to build the Long Covid economy”). Covid-19 was “a mass disability event,” says Enable Ventures’ Regina Kline, a disabilities lawyer turned investor (see, “Agent of Impact: Regina Kline”). Enable invests in growth-stage ventures founded by, for, or with people with disabilities.
- Disability cohorts. 2Gether has raised a little over $1 million to help 70 disabled founders raise more than $41 million from investors. Between 80-90% of founders that have gone through 2Gether’s cohorts are working on disability-focused solutions. “Many of the founders we’ve helped were already on the cusps of raising capital,” said Mariscal. “They just needed an extra push.”
- Keep reading, “The impact case for bridging financing gaps for disabled founders,” by Roodgally Senatus on ImpactAlpha.
Agents of Impact: Follow the Talent
Data ecologist Eric Berlow (see “Agent of Impact: Eric Berlow”), designer Millicent Barty and chef Dieuveil Malonga are part of the new Climate Cohortof Emerson Collective Fellows… Consumer Reports’ Marta Tellado and Tolga Kurtoglu, former CEO of PARC: a Xerox company, are named to Omidyar Network’s board of directors. Vistria Group’s Mona Sutphen will serve as a board observer… Brian Buccella, ex- of Bird and Segway, joins Highland Electric Fleets as chief commercial officer.
Female Founders Fund is hiring a head of strategic communications in New York… Levoca is recruiting a senior associate of sustainable finance and impact in Miami… TheSchultz Family Foundation is looking for a senior program officer in Seattle… Kellogg Foundationseeks a mission driven investment analyst… Align Impact is hiring an investment research summer analyst… SOCAP Global is accepting proposals for its SOCAP Open track through April 1.
Thank you for your impact.
– Feb. 23, 2023