The Brief | July 26, 2022

The Brief: Supplying sustainable lithium, decarbonizing whole cities, seeding agtech in Argentina and India, blended finance for NGOs

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Greetings, Agents of Impact!

Featured: Better Batteries

EnergyX and its rivals raise resources for the sustainable lithium race. Lithium, a key input for the batteries that power electric vehicles and grid-connected storage, can be mined in open pits, with the usual environmental destruction. Or it can be extracted from salt ponds via evaporation, a time and water-intensive process. Austin-based Energy Exploration Technologies is pursuing climate tech’s latest holy grail: sustainable lithium production. EnergyX says its membranes can separate lithium from salty brine in a more eco-friendly way. Pilots show the membrane can speed up the process and boost the amount of lithium recovered while shrinking the amount of water and land needed. The next step for EnergyX and its rivals will be proving their technologies can scale. EnergyX secured a $450 million commitment from private equity firm Global Emerging Markets Group

  • Supply chain. The race to scale up lithium production comes as automakers scramble to secure supplies and prices soar. In May, the Biden administration earmarked $3.1 billion in infrastructure funding to help build a domestic battery supply chain. The U.S. Energy Department yesterday announced a $2.5 billion loan to a joint venture of General Motors and LG Energy Solutions to build new lithium-ion battery plants in Ohio, Tennessee and Michigan. Lilac Solutions, an Oakland-based startup, uses ion-exchange beads to more efficiently absorb lithium from brine. Lilac raised $150 million last fall from Lowercarbon Capital, Earthshot Ventures and BMW. It is also backed by Breakthrough Energy Ventures and received catalytic funding from Prime Coalition. Ford, meanwhile, cut a deal with Australia-based Ioneer to buy lithium from the company’s mining project in Nevada.
  • Public markets. EnergyX’s new financing is contingent on the company going public, which it hopes to do by 2024. Once public, EnergyX can draw down the equity as needed in return for common stock. “This deal gives us a huge runway once we go public,” said EnergyX’s Teague Egan. IPOs have dropped steeply in recent months as the markets have soured. EnergyX secured $20 million last May from Obsidian Acquisition Partners, Helios Capital, and the University of Texas, as well as from individual investors via crowdfunding. It plans to again tap individual investors in an upcoming Regulation A crowdfunding raise.
  • Social and governance. Sustainable technology is just part of the lithium-extraction equation. Mining companies must mind their S’s and G’s, for social and governance, along with their E’s, for environment. “To put it bluntly, ESG has never played a large role within the mining industry,” EnergyX’s Egan writes in a guest post on ImpactAlpha. EnergyX successfully demonstrated its technology in a pilot project in Bolivia. After consulting with community members near the site, it ditched a plan for free e-bikes to showcase lithium batteries in favor of free eyeglasses for students and funding for six schools. “The extraction of resources has always had a lasting effect on the environment,” Egan says. “But this does not need to define the future.”
  • Keep reading, “EnergyX and its rivals raise resources for the race for sustainable lithium,” by Amy Cortese on ImpactAlpha. Also read Teague Egan’s guest post, “It’s time for mining companies to embrace ESG.”

Dealflow: Catalytic Capital

BlocPower secures a $3 million guarantee from Kresge Foundation to green and electrify buildings. The foundation is supporting a loan-loss reserve capitalized by the New York State Energy Research and Development Authority, or NYSERDA, which will help BlocPower deploy financing from Goldman Sachs and Microsoft. The two layers of catalytic capital contributed to BlocPower’s selection as the lead of a public-private partnership to decarbonize 6,000 buildings in Ithaca, N.Y., one of the first citywide electrification initiatives in the U.S. Kresge’s Joe Evans said the electrification of a city’s entire building stock is exciting, “but especially so when paired with a justice-focused approach to workforce development and a commitment to prioritizing buildings housing low-income families.” The guarantee “removes $3 million of risk from the equation through a loan-loss reserve, which helped make the financing from Goldman Sachs and Microsoft possible,” Evans told ImpactAlpha

  • Whole cities. BlocPower estimates that heat pumps and other improvements will help tenants save up to 70% on annually energy bills, and cut Ithaca’s 400,000 tons of annual CO2 emissions by 40%, while creating a local green workforce (for context, see “Inside BlocPower’s mission to upskill workers and green New York City buildings”). In May, Ithaca’s director of sustainability, Luis Aguirre-Torres, accompanied BlocPower’s Donnel Baird and Jeffrey Dunston of the Northeast Brooklyn Housing Development Company to present the plan to the World Economic Forum (for context, see “Live-ish from Davos: Taking on the world with BlocPower and friends”).
  • Replicable model. BlocPower says it has retrofitted more than 1,200 buildings to date, with projects underway in 26 cities, including Philadelphia, Milwaukee and Baltimore (see, “Agent: Donnel Baird, BlocPower”). Earlier this year, Oakland-based East Bay Community Energy partnered with BlocPower to electrify 60 low and medium-income single-family homes. East Bay used proceeds from two municipal bonds to deploy $1.4 million in financing and incentives for the projects. Last year, NYSERDA awarded $4 million to Metro Industrial Areas Foundation to work with BlocPower on retrofitting projects for religious congregations and other anchor institutions in underserved communities in New York. “We’re hoping to see them scale services to more cities and places, especially those with aging infrastructure and few other market opportunities to convert to greener, cleaner energy,” Evans said. “We also hope to have some great proof points and stories about the positive impacts from climate, health and economic lenses about building retrofitting and heat pumps.”
  • More.

Dealflow overflow. Other investment news crossing our desks:

  • Hydrogen-powered airplane maker ZeroAvia raised $30 million from Barclays Sustainable Impact Capital, International Airlines Group and others.
  • Woman-led Twine Ventures secured $25 million to invest in early-stage healthcare, fintech and climate tech founders.
  • Argentina’s raised $3.1 million to help farmers in Latin America and the U.S. improve the traceability of their crops and benefit from sustainable agriculture practices.
  • India’s Piatrika Biosystems secured $1.2 million, led by Ankur Capital, to make sustainable seeds and farm inputs cheaper and more accessible to farmers.

Impact Voices: Blended Finance

How NGOs are blending capital to amplify their impact. With less than eight years to go, annual funding is still trillions of dollars short for meeting the U.N. Sustainable Development Goals’ deadline. Many non-governmental organizations are recognizing that public and philanthropic capital aren’t sufficient. “To achieve impact at scale, NGOs need to engage with the private sector,” writes Regina Rossmann of Convergence Blended Finance in a guest post for ImpactAlpha. Many NGOs are blending financing from philanthropic and public-sector funders to tap private capital. “NGOs have a more realistic picture of what the target beneficiaries need and understand how to measure effectively,” Rossman says. “They play a critical role throughout the process – from design to implementation to evaluation.”

  • Value for money. The NGO CARE advises the SheTrades Fund in building “gender-just” businesses in South and Southeast Asia. The veteran humanitarian relief organization ICRC is delivering rehabilitation services in conflict and post-conflict countries in Africa through a private sector-backed impact bond. And The Nature Conservancy is leading impactful “blue bonds” that help countries like Belize offset debt with marine conservation efforts. Rossman cites Mauricio Rincon of Opportunity International in describing how NGOs amplify the impact of investments: “Ultimately, the investor gets higher value for money – not just in financial terms but also in terms of impact.”
  • Keep reading, “How NGOs are blending finance to amplify their impact,” by Convergence’s Regina Rossmann on ImpactAlpha.

Agents of Impact: Follow the Talent

The Plug’s Sherrell Dorsey is the new host of the TED Tech podcast…  Michael Sheren, formerly with the Bank of England, joined MetaVerse Green Exchange as president and chief strategy officer… Lissy Smit, ex- of Rabobank, is named CEO of Dutch impact investor Aqua-Spark… BlackRock seeks a vice president of global impact research in New York… NatureVest is hiring a director of strategy to lead its impact management team.

Princeville Climate Technology seeks a senior investment professional in San Francisco or Berlin… Origen Carbon Solutions is looking for a remote project development lead for carbon removal… MSCI ESG Research is hiring an impact investing and screening specialist in New York… Hop on  the “Creating Good Jobs” webinar from Reimagine Main Street, Common Future, and WorkRise, today at 3pm.

Thank you for your impact!

– July 26, 2022