Greetings Agents of Impact!
In today’s Brief:
- What do we do now?
- This month’s Liist of impact funds
- Battery bonanza
Featured: Impact OMG
As the vibe shifts (again), Agents of Impact ask: What do we do now? Anxious utterances at impact investing gatherings this spring highlighted growing concerns over the coordinated attacks on environmental, social and governance, or ESG, investment decision-making, as well as diversity, equity and inclusion, or DEI. The past week’s confluence of Supreme Court decisions and democratic jitters here and abroad have turned that worry into a full-scale panic. “Devastating implications,” was how the US Impact Investing Alliance’s Fran Seegull put it to ImpactAlpha when asked about the court’s end-of-term decisions on regulations and governance (see, “Supreme Court rulings threaten to turn policy tailwinds into headwinds for impact investors”). In an understatement, US SIF’s Maria Lettini told ImpactAlpha, “The US policy outlook is certainly on the minds of the global capital market players.”
- Pushback to the backlash. The more than 300 impact faithful who gathered in Chicago last week for the US Sustainable Investment Forum’s annual conference resolved to mount a renewed push to “shift the narrative” at a crucial moment in American politics and US and global climate policy. Conference attendees proposed a range of options: a laser focus on long-term trends and positive results; a plaintive call for that elusive bipartisan progress; the mobilization of a popular constituency for sustainability and inclusion; and an immediate sprint to safeguard hard-won gains before they are lost. “At the end of the day, we should prevail,” said lllinois State Treasurer Michael Frerichs.
- Bipartisan appeal. One theme that seems to have crossover appeal: building US social, economic and climate resilience. Through the Inflation Reduction Act and other Biden-era laws, tax credits and loans have already jumpstarted US manufacturing for solar power, EVs, batteries and chips, creating jobs and revitalizing regions in Republican states. US SIF is working with the US House of Representatives’ Sustainable Energy and Environment Coalition to socialize the message that the IRA and ESG investing are pro-business and economic boons. “Southern states love the jobs,” said Vistria PRG’s Jon Samuels. A recent Milken Institute-Harris poll found broad support among Americans and business leaders for cultivating resilience and place-based innovation, what Milken called “an emerging consensus.”
- Self-inflicted wounds. Underpinning the concerns is a recognition that ESG investing, certainly, if not impact investing as well, has been vulnerable to attack because proponents have not demonstrated results tangible enough to rally a popular constituency. Investors noted that the industry itself has often buried its work in jargon that fails to communicate the business case in clear, simple language. “We have an incredible opportunity to explain ourselves,” said US SIF’s Rachel Curley.
- Keep reading, “As the vibe shifts (again), Agents of Impact ask: What do we do now?” by Lynnley Browning and David Bank on ImpactAlpha. Share your own hot take.
Dealflow: Better Batteries
California-based Sila rakes in $375 million to produce battery materials. The late-stage equity round will help Sila wrap-up construction on a large battery materials plant in Moses Lake, Wash. The facility will produce Sila’s “Titan” silicon, which can replace graphite in battery anodes for electric vehicles. The change increases energy density by up to 25%, allowing faster charging and longer usage in EVs, the company says. Another advantage: Silicon can be sourced domestically, qualifying for US tax credits, while most graphite is mined in China. Sila aims to cut EV charging time to less than 10 minutes and lower the per-kilowatt hour cost of batteries. Mercedes-Benz is the first customer of Sila’s plant.
- Battery performance. Lead investors in the round include Sutter Hill Ventures and funds and accounts managed by T. Rowe Price Associates. Bessemer Venture Partners, Coatue, Perry Creek Capital and others. The fundraise may set up Sila for a public offering: the startup was on Pitchbook’s list of 10 climate tech companies most likely to IPO (EV battery makers Northvolt, Verkor and Lyten also made the list). Battery tech and recycling continues to attract venture capital (see, “Battery recyclers are raising money and ramping up for retired EVs”). Sila has raised more than $1.3 billion from private investors and $100 million from the US Department of Energy. A competitor, Seattle-based Group14 Technologies, has also raised big rounds in the race for better performing lithium-ion batteries.
- Check it out.
AeroShield Materials lands $14.5 million for energy-saving windows and doors. The Massachusetts-based startup will use the grant from the Department of Energy’s Advanced Research Projects Agency, or ARPA-E, to build a pilot manufacturing facility for its transparent aerogels for insulated glass. AeroShield’s silica aerogel, developed at MIT, has the transparency of glass and can be applied to windows and doors in buildings, cars, ovens and freezers to reduce carbon emissions and improve energy performance by up to 65%.
- Scale up. The grant was one of four totaling $63.5 million awarded by DOE’s Seeding Critical Advances for Leading Energy technologies, which provides funding to previous ARPA-E grantees “that have successfully de-risked their technology and established a viable route to commercial deployment.” The other awardees include thermal battery maker Antora Energy, lithium metal battery maker Ion Storage Systems, and Queens Carbon, a carbon-neutral cement materials maker.
- More.
Dealflow overflow. Investment news crossing our desks:
- First Australians Capital secured $20 million in a first close of its Catalytic Impact Fund to provide patient debt capital to Indigenous-owned and run businesses in Australia. (First Australians Capital)
- Germany’s Vytal clinched €6.2 million ($6.6 million), led by Emerald Technology’s Sustainable Packaging Innovation Fund, to supply reusable food and beverage packaging to shopping malls, university campuses, events and entertainment venues and others. (Tech.eu)
- Hungarian agtech venture Scoutlabs, formerly known as Smapp Labs, scored $2 million for affordable, AI-powered insect monitoring. (Vestbee)
- FSD Africa Investments’ Nyala Fund invested $1 million in Linea Capital, a South African firm that provides revene-based financing to enterprises focused on women’s economic inclusion and job creation. (FSD Africa)
Signals: The Liist
Innovations in community investing and the revival of venture capital in emerging markets. This month’s Liist of impact funds actively raising capital is a tale of two markets. Fund managers in emerging markets are going all-in to raise traditional, if impactful, VC funds, despite the still-sluggish venture capital market. With valuations down and many entrepreneurs looking for capital, opportunities abound for investors willing to get their hands a little dirty. In the US and Canada, in contrast, fund managers are iterating on traditional approaches to financing for community resilience, ownership and wealth. For example, New Majority Capital is repurposing the structure of a buy-out fund to transfer small business ownership to underrepresented entrepreneurs.
- Seeding the VC pipeline. First-time fund manager Savia Ventures, in Mexico, is entering the market alongside a new crop of climate entrepreneurs. Its first fund is cutting pre-seed stage checks. “Latin America is the largest untapped climate market opportunity right now,” Savia’s Andres Beahr told ImpactAlpha (watch ImpactAlpha’s video interview with Beahr). Orbit Startups, part of US-based venture fund SOSV, is accelerating and investing in pre-seed and seed-stage startups in Africa, the Middle East, Asia and Latin America, mostly with an eye on social solutions.
- Climate leadership. From Monterrey, Mexico, Dalus Capital is keying in on early and growth-stage climate opportunities in countries like Costa Rica and Colombia with progressive climate policies. “In these countries, we see firm commitment to supporting the private sector, innovation, early-stage investment, and very firm commitments and institutional efforts to mitigate or reduce carbon and adapt to climate change,” Dalus’ Rogelio de los Santos told ImpactAlpha.
- Ownership and agency. New York-based Homium is helping existing homeowners tap their unrealized home equity gains and new homeowners make their down payments by letting them sell a portion of their equity to other investors through “shared appreciation” (see, “Homium aims to help home buyers overcome the down-payment hurdle”). Homeowners get cash up front, and pay nothing until they refinance or sell.
- Keep reading, “The Liist: Innovations in community investing and the revival of venture capital in emerging markets,” by Jessica Pothering and Lucy Ngige on ImpactAlpha.
- Scan more than 100 impact funds that have been raising capital in the past year on The Liist, ImpactAlpha’s searchable database. Know an impact fund manager currently raising capital? Complete this short form.
Agents of Impact: Follow the Talent
ImpactAssets adds several new hires, including Benjamin Stephan, formerly with Dalberg Advisors, as investment product manager; Daniel Flores, formerly with Springboard, as a sales operations analyst; Julia Price, previously with Cambridge Associates, as an investment operations associate; and Justin Haskins, previously with the Small Enterprise Assistance Funds, as controller.
Octopus Ventures appoints Erin Platts, previously with HSBC Innovation Banking UK, as CEO… Paul Tregido, a former debt capital markets vice chair at Credit Suisse, joins Blue Earth Capital’s credit investment committee… Toniic seeks a remote relationship manager to focus on the Americas.
Blue Owl Capital is looking for a responsible investing senior associate or vice president in New York… Triodos Bank is hiring a senior relationship investment manager in Brussels… BlueOrchard Finance has an opening for a private equity analyst or associate in London… Proxy Review, a collaboration between As You Sow, Proxy Impact and the Sustainable Investments Institute, is hosting a webinar on Thursday, July 11.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– July 2, 2024
