Greetings, Agents of Impact!
Today’s Call. Hundreds of Agents of Impact will explore how innovative financing can bridge startup and small business funding gaps. Can alt-finance change who and what gets funded? And keep startup funding flowing in a downturn? Join Kim Folsom of Founders First and Wefunder’s Jonny Price, along with Astrid Scholz of Zebras United and Armillaria, Ron Boehm of BOMA Investments, Andrea Armeni of Transform Finance, and Kevin Jones of Neighborhood Economics, in conversation with ImpactAlpha’s David Bank and Dennis Price, today at 10am PT / 1pm ET / 6pm London. Zoom right in
- Pre-read. See, “In a volatile market, alternatives to venture capital keep financing flowing to diverse founders,” by Dennis Price.
Featured: Climate Capital
Catalytic investors sharpen their tools to accelerate commercialization of climate solutions. The stubborn gap in financing for early-stage innovations for years was an obstacle to the development of breakthrough climate solutions. Lo and behold, venture capitalists and other commercial investors swarmed to climate opportunities, pouring nearly $40 billion into climate-related startups last year. Now, the climate financing gap has moved downstream, as all those startups with early-stage innovations seek to commercialize their solutions. The movement of promising technologies, first into demonstration projects and then into large-scale production, remains far too slow to meet the climate emergency.
- Project finance. “There are now many hatchling companies that could dramatically reduce emissions if they can achieve commercial scale,” Prime Coalition’s Sarah Kearney and Karine Khatcherian write in a guest post on ImpactAlpha. Gaps in financing “early deployments” stymie first-of-a-kind, or FOAK, projects, small-scale deployments for new business ventures, and projects in the pre-construction phase. Catalytic capital could cover a FOAK project’s third-party costs, reduce risks to enable co-investment by mainstream investors, and build first-loss reserves to absorb cost overruns and performance risks, the authors say.
- Keep reading, “Helping promising climate solutions cross ‘the second Valley of Death’,” by Sarah Kearney and Karine Khatcherian.
- Off-takes and advance purchases. Investors and corporate customers are committing capital to accelerate the commercialization of not-yet-ready-for-primetime technologies and nature-based solutions. Breakthrough Energy Catalyst has raised more than $1.5 billion to build first-time plants for critical climate tech, including green aviation fuel and carbon removal tech, and secure corporate commitments to purchase the products and services – at a premium – when they are available. Frontier, an initiative led by payments company Stripe and other tech giants, will spend close to $1 billion by 2030 on advanced market commitments for permanent carbon removal.
- Keep reading, “Catalytic investors sharpen their tools to accelerate commercialization of climate solutions,“ by Amy Cortese and David Bank on ImpactAlpha.
Dealflow: Battery Tech
Group14 Technologies rakes in $400 million to commercialize silicon batteries. Battery tech ventures are raising big rounds in the race for better lithium batteries. Seattle-based Group14 developed a silicon-carbon material it says can improve on the graphite anodes in lithium-ion batteries for electronics, cars and planes. “The pressure is on to support the demand we see,” Group14’s Rick Luebbe said. The company will build a manufacturing facility in the state of Washington to produce batteries as soon as the second half of next year.
- Electric vehicles. Cellforce Group, Porsche’s battery manufacturing subsidiary, will use Group14’s tech to start producing lithium-silicon battery cells in Germany by 2024. Porsche led Group14’s Series C round, with participation from BlackRock and Temasek’s Decarbonization Partners. Porsche is looking to make 80% of its new vehicles electric by 2030. Group14 secured $52 million from South Korea’s SK Group last year.
Inclusive Prosperity raises $13 million for energy upgrades for underserved communities. The Hartford, Conn.-based nonprofit is looking to democratize access to clean energy by providing financing to local energy companies to install heat pumps and make other clean energy upgrades. “We can’t win on climate unless we’re attentive to racial equity and justice and bring everyone along,” said Elizabeth McGeveran of McKnight Foundation, which invested $5 million, as did MacArthur Foundation; Kresge Foundation invested $3 million. With the program-related investments, McGeveran said, Inclusive Prosperity and local partners “will create more opportunities for underserved communities to reap the benefits of the clean economy.”
- Blended capital. Inclusive Prosperity will tap other private and public capital to finance clean energy upgrades for faith-based institutions, small commercial businesses, affordable housing property owners, and low-income homeowners. “The need for catalytic capital is only growing,” said Inclusive Prosperity’s Kerry O’Neill. “It’s how we’ll ensure everyone has access to the benefits of clean energy.”
- Check it out.
Manara scores $3 million to upskill tech workers in North Africa and the Middle East. Former engineers Iliana Montauk and Laila Abudahi launched Manara last year to offer coding classes for engineering students from Arabic and English-speaking countries. Manara aims to train 6,000 students per year, half of them women, up from Manara’s current rate of 60 per year. Graduates have gone to work at big tech companies like Meta (formerly Facebook) and Google; they pay 10% of their salary in the first two years on the job (for a similar example, see “How Pursuit is upskilling low-income New Yorkers for high-paying coding jobs”). Abudahi said she became an engineer in Palestine and “wanted to make it easier for people back home to do the same.”
- Good jobs. Stripe led the pre-seed financing round. Participating investors include LinkedIn founder Reid Hoffman, Y Combinator’s Paul Graham and other angel investors. Manara will use the capital to expand training for interviewing and networking.
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Dealflow overflow. Other investment news crossing our desks:
- Latina-led Chingona Ventures secured $52 million from investors, including Melinda Gates’ Pivotal Ventures, to invest in overlooked founders of early-stage companies.
- Egyptian fintech Paymob raised $50 million in Series B funding to facilitate digital payments online and in-person for merchants.
- American Express issued a $1 billion ESG bond to finance green buildings, energy efficiency, renewable energy and circular economy projects.
- North Sky Capital invested $25 million in battery storage and circular economy projects via its third green infrastructure fund.
Agents of Impact: Follow the Talent
Department of Justice attorney Cynthia Ferguson will lead the department’s newly established Office of Environmental Justice… Project Drawdown is recruiting a chief scientist and a team of senior / associate scientists… Blackrock seeks a sustainable investing research and strategy associate / vice president in New York… Vista Equity Partners seeks an associate of ESG data and reporting… Insight is looking for a financial manager in Oakland.
Upstart Co-Lab is searching for an impact investment associate… Pachama is hiring a chief of staff and other roles… The Robert Wood Johnson Foundation is recruiting an assistant vice president for strategic communications… 17 Communications becomes a certified B Corp… Climate XChange is hosting May’s “State Climate Policy Network National Call,” Wednesday, May 25.
Thank you for your impact!
– May 10, 2022