The Brief | February 2, 2021

The Brief: The Reconstruction podcast, lab-grown chicken, Backstage crowdfunding, sustainable rolling funds, Microsoft’s carbon capture

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Greetings, Agents of Impact! 

Featured: The Reconstruction

The moment when everything was possible… is now (podcast). The presidential election just finished had a decidedly different outcome than the previously most fiercely contested election. In 1876, the race between Samuel Tilden and Rutherford B. Hayes actually did go to Congress, which gave the electoral votes of Florida, Louisiana and South Carolina to Hayes in a deal to withdraw post-Civil War troops from those states. That signaled the end of Reconstruction, the decade-long experiment in multiracial democracy and inclusive prosperity. The white supremacist backlash that followed ushered in decades of Jim Crow. This time, there was no backroom sellout. President Joe Biden in his inaugural address called out white supremacy as “domestic terrorism that we must confront and we will defeat.” Reconstruction lost in 1876. Reconstruction won in 2020.

That lets us write a different narrative for our own experiment in multiracial democracy and inclusive prosperity. To help do so, host Monique Aiken sought out playwright Gene Bruskin for the second episode of ImpactAlpha’s podcast series, The Reconstruction. Bruskin is the creator of “The Moment Was Now,” a historical musical in the style of “Hamilton” set at a labor convention in 1869 Baltimore. Convening a fictional gathering to help structure alliances in the post-Civil War economy is Frederick Douglass. Black union leader Isaac Myers spars and strategizes with Susan B. Anthony, Irish unionist William Sylvis and African American feminist Frances Harper. “Reconstruction was a moment when it all was under consideration, and everything was possible,” Bruskin tells Aiken. “I started thinking of it as a time when America, almost, did the right thing.” Aiken asks Bruskin, a longtime labor organizer: Decades from now, how will we not need a play about how we missed this moment of our own? For his thoughtful reply, tune into The Reconstruction. 

Keep reading and listen in to “The moment when everything was possible… is now,” the second episode in ImpactAlpha’s new podcast series, The Reconstruction.

  • Welcome to The Reconstruction. Host Monique Aiken introduces the series and lays out some core principles of this Reconstruction in a brief audio clip. Tune in.
  • Episode 1. Catch up with Aiken’s conversation with 1863 Ventures’ Melissa Bradley, Learning from history to create opportunities for equitable wealth-building now.” 
  • On the beat. Find episodes of The Reconstruction podcast, and all of ImpactAlpha’s coverage of racial justice and inclusive prosperity, on our new landing page.

Dealflow: Follow the Money

Future Meat raises $26.8 million to go to market with lab-grown chicken. The one unproven category in the alternative protein craze is “cellular meat” – lab-grown meat from animal cells – which has yet to reach the consumer market. Israel-based Future Meat says it has gotten the production cost of its lab-grown chicken breast down to $7.50 apiece, making it one of the first of several dozen cellular meat companies to get close to a commercially-viable price point. Food giant ADM and others joined early investors Tyson Foods, Bits x Bites and S2G Ventures in the equity round to help Future Meat reach the consumer market.

  • Market hurdles. Cellular meat has been “perpetually 10 years out for the past decade,” because of unit production costs and lack of regulatory clarity, says Matthew Walker of S2G Ventures. Future Meat’s chicken and beef products cost $150-$200 per pound at its last funding in October 2019. “This is still a premium product, but they’re taking the technology to the point where it’s affordable and viable,” Walker told ImpactAlpha. Singapore is the first country to approve the sale of lab-grown meat. Walker anticipates cellular meat companies hitting the consumer market in the next 12 to 18 months, initially via food service businesses.
  • Cellular advantage. “This is a climate story,” says Walker. A kilo of farmed beef requires six kilos of animal feed and more than 15,000 liters of water. A kilo of farmed chicken requires two kilos of feed and more than 4,000 liters of water. Walker says that cellular meat requires virtually no land or water to produce.
  • Chow down.

Arlan Hamilton opens Backstage Capital to retail investors. Move over GameStop (and silver). More than 1,500 retail investors piled into a venture capital firm backing people of color, women and LGBTQ+ founders. Arlan Hamilton, who founded Backstage Capital in 2015, announced Monday morning that she would open the fund to retail investors via crowdfunding platform Republic. By evening, small investors had committed $1.07 million, the maximum allowed over a 12-month period through Reg CF crowdfunding, in amounts of as little as $100. Republic investors receive membership units in the Backstage LLC, which entitles them to 10% of management fees and carried interest for the firm’s past and future funds. “When we have upside, you have upside,” Hamilton said in an interview.

  • Underestimated. Hamilton has made a name for herself investing in diverse founders that venture capitalists overlooked (see, “The VC taking cold calls from underestimated entrepreneurs). Backstage has invested $12 million in more than 160 startups, the majority run by women or people of color. Many have raised follow-on funding from top-tier VCs. The Backstage portfolio includes LendStreet, Solstice Energy Solutions, Blendoor, Akash Systems, Carrot Fertility and Edlyft
  • Jump in

Robert Downey Jr.’s FootPrint Coalition launches sustainability ‘rolling funds.’ Sustainable investing is hot. Possibly hotter: Rolling funds. Rather than requiring a fund manager to raise a full fund in a short period of time, rolling funds, launched last February by AngelList, allow fund managers to accept new capital in the form of auto-renewing quarterly commitments. Footprint Coalition, founded by the actor Robert Downey Jr. in 2019 to invest in sustainability-focused companies, is bringing the two trends together.

  • Two funds. The group is launching FootPrint Coalition Ventures, which will roll out one early-stage and one later-stage rolling fund. “Investment in sustainable technology is a critical pathway toward the discovery and scaling of better solutions for our planet,” said Downey.
  • Sustainability sectors. FootPrint Coalition has made five investments, including one in French agtech startup Ynsect in October (see, “Ÿnsect raises $372 million for carbon negative, vertical insect farming”). The new funds will target sustainability-focused consumer products and services, food and agriculture technology, materials and industrial tech, energy and transportation, education and media, and advanced environmental solutions. 
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Suma acquires Mexican business tech venture Bind ERP. The Monterrey, Mexico-based small business resource platform has helped digitize more than 6,000 small businesses in Mexico. London, U.K.-based Suma SaaS Holdings acquired the company on undisclosed terms. Suma serves more than 100,000 small businesses in Latin America. It operates in Chile via Nubox, in Argentina via Colppy. The deal provides an exit for the venture firm Ignia, also based in Monterrey, which backed Bind ERP’s Series A round in 2017. 

  • Maturing market. The acquisition is another exit from Ignia’s portfolio of tech-enabled solutions for Latin America’s emerging middle class, said Ignia’s Fabrice Serfati. In 2019, the venture firm partially exited its investment in Mexico’s Provive, which acquires abandoned homes, fixes them up, and helps families secure financing to buy them (see, “Adobe Capital, IGNIA exit Mexican home rehab startup Provive”)
  • More.

Signals: Ahead of the Curve

Microsoft emerges as a major customer for captured carbon. The software giant paid an average of $20 per ton for up 1.3 million metric tons of carbon removal last year, making it one of the market’s largest purchasers. The carbon credits will help the company make progress on its ambitious goal to be carbon negative by 2035 and to eliminate by 2050 all the carbon it has emitted since it was founded in 1975. The broader goal: spur development of a commercial-scale carbon removal market. “It’s imperative that we move away from paying for carbon avoidance and focus on paying for carbon removal,” writes Microsoft’s Brad Smith. “The world must build a new market on an unprecedented scale and timeline, from nearly scratch.” (See, “Larry Fink’s corporate net-zero mandate pushes carbon markets mainstream.”)

  • Cost curves. Microsoft selected 26 projects from among 189 prospects in more than 40 countries. All but 1% of the carbon to be removed will come from natural solutions, such as forestry and soil carbon. The costs of technology solutions for capturing carbon today are more than 50 times nature-based solutions – a cost Microsoft hopes to help bring down over time. “We know engineered solutions will have to be a more prominent component of carbon removal procurement by 2030,” says Microsoft’s Lucas Joppa (see, “How negative can carbontech entrepreneurs go?”).
  • Natural capital. Among the carbon removal projects are the CommuniTree Carbon Program, which supports farming families growing native trees and forest-based enterprises in Nicaragua; SilviaTerra’s Natural Capital Exchange, a forest carbon marketplace; and four soil carbon sequestration projects in Australia purchased through Regen Network’s blockchain-based carbon exchange. Microsoft also purchased credits from three biochar initiatives. 
  • Engineering solutions. Just two technology plays made Microsoft’s cut. San Francisco-based Charm Industrial converts waste biomass into bio-oil that can be stored or converted into green hydrogen. Climeworks, in Switzerland, uses direct air capture to remove carbon dioxide to store or re-use. Microsoft’s Climate Innovation Fund invested in Climeworks, along with Congruent Ventures and South East Asia Clean Energy Facility, a group of foundations that aims to accelerate clean energy initiatives.​ 
  • Dig in.

Agents of Impact: Follow the Talent

Logan Ashcraft, ex- of Centrica, and Nicholas Adeyi, ex- of Guidehouse, join the investment team at Congruent Ventures… The Circulate Initiative, the nonprofit affiliate of Circulate Capital, has openings for a research director and a director of operations and strategy… Apple is looking for a carbon project manager to join its environment, policy and social initiatives team in Cupertino, Calif… Kiva is hiring a director of impact investor relations in New York… Solstice Initiative seeks a director of development in Cambridge, Mass… Collective Investment Group is recruiting an investment manager in Philadelphia. 

Thank you for your impact.

– Feb, 2, 2021