Greetings, Agents of Impact!
Featured: The LiiST
Seven more impact funds that are raising capital now. On last week’s Agents of Impact Call, we heard from first-time, women managers of small impact funds in emerging markets. The takeaway: Write the check. “We are overtrained and over-mentored and underfunded,” Africa Trust Group’s Lelemba Phiri said on The Call. “We need the conversation to move from, ‘We believe in this and we think it’s something that can make a difference,’ to really putting your money where your mouth is.” From Cape Town, Phiri’s Enygma Ventures Fund partners with other first-time, women managers to source deals and establish track records.
Investment policies that exclude first-time managers exclude deep talent that may find value where other investors don’t know to look. This month’s edition of The LiiST, with Realize Impact, features mostly emerging markets impact funds, including two first-time, women-led funds.
- Mirova SunFunder is dialing up its lending capacity for clean energy providers in Africa and other emerging markets. Following Mirova’s acquisition of SunFunder last year, the firm is looking to raise $500 million for its Gigaton Empowerment Fund to accelerate access to clean energy for more than 10 million people and eliminate 18 million tons of CO2-equivalent emissions.
- Five35 Ventures invests in early-stage tech startups founded by and for women across Africa. It’s aiming for $30 million after closing $1 million last year. The firm wants to cut many small checks. “None of the other pieces make sense unless we can allocate more capital to women,” founder Hema Vallabh told ImpactAlpha.
- Alder Point Capital is looking to raise a $200 million fund for income-producing timberland and cropland in climate-resilient regions of the U.S. “Even in these relatively climate-resilient regions, there’s a lot of adaptation and resilience investment that we need to make in order to ensure that we can still grow enough food in this country,” Alder Point’s Chris Larson told ImpactAlpha.
- This month’s LiiST also includes Africa Trust Group’s Enygma Ventures Fund; global water-tech fund Echo River Capital’s Fund I; agrifood-focused Africa Eats; and Realize Impact and Sprout Enterprise’s R.I.S.E. fund to support the livelihoods of artisans in emerging markets. (Note: Realize Impact’s Luni Libes is also the founder of Africa Eats.)
- For more details, including contact information, keep reading, “The LiiST: Seven impact funds that are raising capital now,” edited by Jessica Pothering on ImpactAlpha. Check out past editions of The LiiST.
Dealflow: Low-Carbon Transition
LanzaTech secures $550 million carbon recycling partnership with Brookfield Renewable. Chicago-based LanzaTech uses microbes to convert industrial carbon emissions into sustainable fuel and inputs for textiles, rubber and packaging. Earlier this year, the company agreed to a $1.8 billion merger with AMCI Acquisition Corp. II, a special purpose acquisition company, or SPAC. Brookfield Renewable, through its $15 billion Global Transition Fund, will invest $500 million in LanzaTech to ramp production in Europe and North America and $50 million for the company’s corporate development. Brookfield will add another $500 million if LanzaTech hits milestones for carbon capture and conversion. “LanzaTech’s technology provides a new way to decarbonize hard-to-abate sectors across the economy,” said Brookfield’s Natalie Adomait. “Each additional plant has the potential to keep the equivalent of 100,000 tons of carbon from the atmosphere each year.”
- Commercial footprint. LanzaTech’s first two commercial plants have produced more than 30 million gallons of ethanol, offsetting the release of over 150,000 metric tons of CO2 into the atmosphere. The company has plants under construction to make carbon-based products for Unilever, Lululemon, Zara and L’Oreal Paris.
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South African home cleaning service SweepSouth raises $11 million, led by Altheia IDF. The domestic services industry in Africa has a reputation for being unregulated and exploitative. Cape Town-based SweepSouth, an online service, launched in 2014 to offer workers independence, security and steady income increases and to give customers affordable and flexible services. The company is expanding in South Africa, Kenya, Nigeria and Egypt. SweepSouth is also championing the economic and legal rights of domestic workers in South Africa. Gender-lens investment fund Alitheia IDF backed the Series B round alongside Naspers Foundry, the Michael & Susan Dell Foundation, Endeavor Catalyst, E4E Africa and others.
- Women-led funds. Female fund managers in South Africa are banding together to support enterprises by and for women (see, “How women-led funds in South Africa are unlocking capital for women and small businesses”). Women-led Altheia IDF, a joint venture between Nigeria’s Alitheia Capital and South Africa’s IDF Capital, raised $100 million last year to invest in growth-stage, women-focused businesses in Africa. Revenue-based financing fund Linea Capital, also a woman-led fund, provided bridge financing for SweepSouth and re-upped with non-dilutive capital in the Series B round.
- Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Loop raised $60 million from Fifth Wall Climate, Keystone National Group and others to expand its network of electric vehicle charging stations in the U.S.
- Nova Credit, a cross-border credit reporting agency that helps migrants build credit histories, secured $10 million from HSBC.
- New Delhi-based Mufin Green Finance snagged 450 million rupees ($5.5 million) in Series A funding from Incofin to offer electric vehicle financing in India.
- Oikocredit contributed $1.5 million to Ghana-based Farmerline’s pre-Series A round to connect West African farmers to inputs and markets.
Impact Voices: Beyond ESG
SOCAP Spotlight: Using ESG for good, not for evil. A hot topic when impact investors gather in person for SOCAP this month: ESG investing. The practice of integrating environmental, social and governance factors in investment decision-making has come under attack, for different reasons, from red-state politicians and the impact faithful alike. Catalytic leaders, investors and entrepreneurs are responding with transparency, capital commitments and new products, writes Spectrum Impact’s Rehana Nathoo in a guest post on ImpactAlpha. “There’s something in the air – a dogged determination to protect this hard-earned momentum.” Nathoo, along with Ander Iruretagoyena from Impact Engine, Yusuf George from Engine No. 1, and Jessica Matthews from JPMorgan, will air out the issues on the SOCAP panel “Greenwashers beware: Using ESG for good, not for evil.” Nathoo offers some advance thoughts:
- One size does not fit all. A company’s approach to ESG will depend on its particular business model and risk factors. “Materiality suggests that there are certain factors, informed by your business model, geography, sector, etc., that specifically affect your choices,” says Nathoo. A manufacturer might be concerned with conservation of resources, while for a single-office financial services firm, it’s more about who and how you’re banking.
- Carrots vs. sticks. Divestment is one strategy. But shareholders that actively engage with poor ESG performers can “influence, push, cajole and convince in a way that those who abstain cannot,” says Nathoo.
- ESG is not impact investing. It bears repeating. The conflation of the two terms has led to a lot of misunderstanding and frustration. ESG is a type of analysis that uses environmental, social and governance factors to make decisions and assess risk, explains Nathoo. Impact investing is outcomes-driven. “The deeper we understand this, the easier it’ll be to create a set of tools and frameworks that everyone can use – regardless of where they are in their impact journey,” she says.
- Keep reading, “SOCAP Spotlight: Using ESG for good, not for evil,” by Rehana Nathoo on ImpactAlpha.
Agents of Impact: Where to Meet
Fall conference season is underway. Register now for these upcoming ImpactAlpha partner events:
- The GIIN Investor Forum 2022 takes place Oct.12-13 in The Hague with Kristin Aamodt of ArcTern Ventures, Anurag Agrawal of Aavishkaar Group and others. ImpactAlpha subscribers get 10% off. Register here. (And join ImpactAlpha and fellow Agents of Impact to kick off the forum with Oxford’s Social Impact Portfolio, Tuesday, Oct. 11. RSVP today.)
- The Regenerative Food Systems Investment Forum is set for Oct. 12-13 in Denver with Jason Aramburu of Climate Robotics, Donna Holmes of Iroquois Valley Farms, and other guests. Subscribers get 15% off with code IMPACT.
- SOCAP22 is back in person, Oct. 17-20 in San Francisco with Willy Foote of Root Capital, Cecilia Foxworthy of Agora Partnerships, and other guests. Subscribers save $250 with code s22_ImpactAlpha.
- Mission Investors Exchange national conference convenes in person Dec. 5-7 in Baltimore featuring Lisa Hamilton of Annie E. Casey Foundation, Darren Walker of Ford Foundation and others. MIE members can register here.
Thank you for your impact!
– Oct. 4, 2022
