Greetings, Agents of Impact! Thank you to all the Agents of Impact who participated in yesterday’s call on allocator strategies for racial equity in municipal bonds. We’ll have the replay and roundup in tomorrow’s brief.
Featured: Energy Access
Zola, Sun King and M-KOPA offer three paths to Africa’s off-grid energy future. For a decade, access to affordable, reliable and modern energy increased by roughly 100 million people a year – until the global Covid-19 pandemic. Since then, the number of people who live without any access to electricity has actually increased, to more than 730 million people worldwide. The reversal of progress on Sustainable Development Goal No. 7 has been accompanied by a shakeout in the once-frothy global off-grid solar industry, which has attracted more than $3 billion in capital. “Survivors with specialized offerings may now be in position to ride post-pandemic growth,” ImpactAlpha predicted back in 2020. In interviews with ImpactAlpha, the c-founders and CEOs of Zola, Sun King and M-KOPA peered into the future of off-grid energy access in Africa.
- Tech design. Like many of Africa’s early off-grid solar players, Zola – formerly Off-Grid Electric – got its start small-scale household solar products. Zola has pivoted almost entirely out of direct sales to become a technology partner to other off-grid providers and utilities. It has inked deals with French utility EDF in Côte d’Ivoire, OVH Energy in Nigeria, and Econet Group in South Africa. “From the beginning we always believed our core competency was on the technology side,” says Zola Electric’s Bill Lenihan. “If I can train up companies that already exist in these markets with our technology, that’s way more rapidly and efficiently scalable.”
- Commercial capital. Sun King has largely stuck to knitting, selling lanterns and home solar products on a pay-as-you-go basis to five million households via thousands of field agents. Last month, Sun King raised $130 million from Citi, Stanbic Bank of Kenya and British International Investment by securitizing current and future cash flows from its customers. What the securitization represents, says Sun King’s Anish Thakkar, “is a way to channel much larger amounts of debt finance to make solar home systems affordable.” He adds, “It really is the key to linking these enormous pools of global, ESG-minded, return-seeking debt capital with this opportunity to deploy solar purchase financing to the hundreds of millions of homes that need it.”
- Financial services. “Our part of solar has always been financing the solar. We have always fashioned ourselves as a fintech company,” says M-KOPA’s Jesse Moore. In May, the company raised $255 million in equity and debt. Terms for the debt are linked to M-KOPA achieving solar financing growth in Kenya, as well as electric vehicle financing and gender-based lending targets. Cell phone financing is M-KOPA’s now most popular product. “When I’m asked what’s the science of our product R&D, the answer is that we just ask our customers. They tell us what they need,” says Moore. “There are many other life-enhancing assets beyond solar that we feel we can make affordable and accessible.”
- Keep reading, “Zola, Sun King and M-KOPA offer three paths to Africa’s off-grid energy future,” by Jessica Pothering on ImpactAlpha.
Dealflow: Inflation Reduction Act
CubicPV raises $103 million for US production of solar wafers. The Inflation Reduction Act showers incentives on domestic makers of solar, wind and battery components. “America currently has no domestic solar ingot, wafer or cell manufacturing capacity, and only modest capacity to produce solar modules, inverters and trackers,” was the sober assessment by the Solar Energy Industry Association last year. Bedford, Mass.-based CubicPV is looking to restart US production of solar wafers, the building blocks of solar cells, which are then assembled into solar panels. The company’s plan is “a direct result of the long-term industrial policy contained within the Inflation Reduction Act,” CubicPV says. With funding from Thailand’s SCG Cleanergy, Dallas-based Hunt Energy Enterprises and Breakthrough Energy Ventures, CubicPV plans to open a 10-gigawatt wafer plant and develop next-generation tandem wafer technology.
- Cost curves. The IRA’s 45X Advanced Manufacturing Production Tax Credit will make 100% US-made solar modules 30% less expensive than imported modules, according to a new analysis funded by the BlueGreen Alliance. Bonus incentives for paying prevailing wages, using apprenticeships and serving low-income communities provide additional bumps (CTVC has a good cheat sheet on the IRA’s tax incentives).
- More.
Generate ties up with McKinstry to offer ‘energy as a service’ to schools, hospitals and public entities. Cities are under pressure to decarbonize their buildings. The Virdis Initiative, a joint venture between Generate Capital and McKinstry, will offer “energy-as-a-service” that helps schools, hospitals and municipalities overcome budgeting obstacles. Virdis will cover upfront costs for building retrofits, energy systems, wastewater treatment and other sustainable infrastructure, and guarantee cost savings to “unlock economics, decarbonization and resilience at scale for customers and communities,” said Generate’s Scott Jacobs. “Communities can get the benefits of clean energy and resources without taking the associated financial and operational risks.”
- Strategic partners. The joint venture grew out of a 2019 partnership to provide energy infrastructure upgrades to a large school district. Generate and McKinstry later teamed up to design, build and maintain 11 community solar gardens in Denver. The project, in partnership with the city of Denver, is expected to produce 9.6 million kilowatt-hours of clean energy annually.
Keep Company raises $800,000 to provide caregiving support to workers. More than half of the tens of millions Americans with caregiving responsibilities are contemplating leaving their jobs. Bethesda, Md.-based Keep Company matches employees with a caregiving coach that guides them through a 12-week curriculum. Adrienne Prentice, a former corporate attorney, launched the company last year with co-founder Claudia Naim-Burt. After giving birth, Prentice says she “didn’t feel as if I was being perceived as capable or committed to my role now that I had a child at home.” Keep Company’s clients include law firms including Morrison Foerster and Cleary Gottlieb. Last month, New York-based Wellthy raised $25.5 million to provide caregiving support as an employee benefit. Share this post.
Dealflow overflow. Other news crossing our desks:
- Unspun snagged $14 million in Series A financing, led by Lowercarbon Capital, for its 3D weaving technology for sustainable manufacturing of textiles. (JustStyle)
- Brown Venture Group, a Minneapolis-based venture capital firm that invests in Black, Latino and Indigenous tech founders, secured a $3 million commitment from Huntington National Bank. (Twin Cities Business)
- Climate crowdfunding site Raise Green snagged $3.5 million in seed funding from Connecticut Innovations Climate Tech Fund and Skyview Ventures. Its community round is still open on WeFunder.
Impact Voices: Juneteenth
Active ownership, an overlooked path to collective liberation. Within many impact investing circles, there is a belief that private investments have greater and deeper positive impact than investments in publicly traded stocks. As we approach Juneteenth while celebrating LGBTQ+ this month, “we should think about how active ownership of publicly traded stocks is imperative for building an economic system that is equitable,” argues Ivy Jack of Gender Diverse Investing Collective.
- Shareholder toolset. The emphasis is on “active,” says Jack. Actively voting proxies. Actively engaging with corporations. Actively partnering with advocacy groups. Actively sponsoring and co-sponsoring progressive shareholder resolutions. “Investors who claim positive impact through security selection and ownership (or exclusion) are missing a range of opportunities to create change in powerful and wealthy companies,” Jack writes in an excerpt from Confluence Philanthropy’s forthcoming “Racial Equity Investing Paper,” co-authored by 14 Confluence members.
- Wage equity. Shareholders are playing a role in addressing wage injustices. In 2021, approximately 20 executive compensation packages failed to win shareholder approval, according to As You Sow. Trillium Asset Management votes against pay arrangements when the ratio of the CEO’s compensation to workers’ pay exceeds 50:1. NorthStar Asset Management approves executive compensation packages only if equity, stock options, bonuses and benefits packages for non-executive employees are equivalent to those of executive officers.
- Keep reading, “Active ownership, an overlooked path to collective liberation,” by Ivy Jack on ImpactAlpha.
Agents of Impact: Follow the Talent
Abbeygale Anderson of Cross Impact Capital, Edrizio De La Cruz of UFX, and Talib Graves-Manns and Wilson Lester of Partners In Equity are among 27 fund managers from 18 funds named to VC Include’s 2023 Fellowship for Impact Fund I Managers… Transform Finance’s Andrea Armeni joins the faculty of NYU’s Wagner Graduate School of Public Service as director of Social Impact, Innovation and Investment, succeeding Scott Taitel, who is retiring this fall.
The US Treasury Department released guidelines on how state, local and tribal governments can access The Inflation Reduction Act’s “direct pay” and transferability options. The agency will hold a briefing today at 12 ET and another on Thursday, June 29 to discuss the guidance… Salesforce will host a webinar on the evolving role of chief sustainability officers featuring Oxford University’s Bob Eccles, New York University’s Alison Taylor and Nike’s Noel Kinder, Wednesday, June 21.
Thank you for your impact.
– June 15, 2023
