The Brief | October 26, 2021

The Brief: Today’s Call: Catalyzing climate capital, COP dealflow, Builders’ second fund, lab-grown breast milk, expanding employee ownership


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Greetings, Agents of Impact! 

Featured: Catalytic Capital

Off-takes, guarantees and blended finance: A lexicon of catalytic climate capital. Investments in climate solutions are crucial, but purchase orders can be transformative. Corporations are increasingly using their purchasing power to green their operations and accelerate the transition to a low-carbon economy. Hertz’s order of 100,000 Tesla Model 3s to revamp its rental fleet underscored the power of corporate purchase agreements to drive adoption of new technologies. The $4 billion order was an unmistakable sign that the proverbial hockey stick in electric vehicle adoption is at hand. Hertz launched in 1918 with a dozen Ford Model Ts. 

Such purchase orders and other “off-take agreements” are a key piece of the catalytic capital playbook. American Airlines, ArcelorMittal, General Motors and other companies are working with Breakthrough Energy Catalyst, which is helping broker advance purchase agreements for critical climate technologies like carbon capture and sustainable aviation fuel. The LEAF Coalition has signed up companies including Airbnb, Bayer, Delta Airlines, Nestlé and Amazon to purchase carbon offsets to finance the protection of tropical forests. The scramble by such incumbents to retool for the net-zero future could launch the industry giants of tomorrow. “The next 1,000 unicorns,” BlackRock’s Larry Fink declared this week, will be “businesses developing green hydrogen, green agriculture, green steel and green cement.” 

Keep reading, “Off-takes, guarantees and blended finance: A lexicon of catalytic climate capital,” by Amy Cortese on ImpactAlpha. 

  • Hop on The Call. Hundreds of Agents of Impact have registered for today’s Call to explore how investors are crowding in capital to close financing gaps for climate solutions. Join them, along with Breakthrough Energy’s Jonah Goldman, Prime Impact’s Amy Duffuor, LEAF Coalition’s Heather McGeory and Convergence’s Joan Larrea, in conversation with MacArthur Foundation’s John Balbach and ImpactAlpha’s David Bank and Amy Cortese, today at 10am PT / 1pm ET / 6pm London. Zoom right in (no RSVP necessary).

Dealflow: Climate Tech

Investors ramp up climate tech investments ahead of COP26. Venture capital investors poured $16 billion into climate tech startups in the first half of 2021. They’re padding the total ahead of next week’s COP26 global climate summit. Boston-based Via Separations raised $38 million to electrify and decarbonize high-emission industrial processes. The MIT spin-off replaces fossil-fuel energy to separate chemicals, pulp and petrochemicals. Texas-based NGP ETP led the Series B round, with 2040 Foundation and existing investors including Prime Impact, Safar Partners and The Engine.

  • Energy transition. Enpal, a German residential rooftop solar startup, secured $172 million from SoftBank’s Vision Fund 2. San Francisco-based AutoGrid Systems scored $85 million to provide virtual power plants for renewable project developers and energy-as-a-service companies. RCF Acquisition Corp., a special purpose acquisition company, or SPAC, is looking to raise up to $200 million to invest in assets “across the critical minerals value chain that are poised to benefit from the global energy transition.”
  • Hydrogen fuel. Germany’s Sunfire uses electrolyzers for producing green hydrogen to decarbonize industrial companies. The company raised $125 million in a Series D round backed by Carbon Direct Capital and Lightrock. It’s the latest deal for a startup aiming to green the aviation industry and follows hydrogen-powered drone company H3 Dynamic’s $26 million Series B round (for context, see “Singapore’s H3 Dynamics closes $26 million for hydrogen-powered air cargo and logistics”).
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​​Builders Fund clinches $50 million to invest in growth-stage impact companies. San Francisco-based Builders Fund reached an intermediate close on its targeted $100 million second fund, bringing its total assets under management to nearly $150 million. The firm’s 2021 Impact Report calls out portfolio company MIXT’s partnerships with hospitals to feed frontline workers through the pandemic and off-grid solar product developer MPOWERD’s response to Hurricanes Etna and Iota last year.

  • Solar financing. Builders Fund led the $60 million Series D financing of residential solar company PosiGen, investing $25 million to make solar power more accessible. PosiGen says it helps low and moderate-income households save at least $12 million a year on their electricity bills. The performance of PosiGen’s portfolio has enabled the company to reduce the cost of its project-level debt, Builders Fund’s Tripp Baird told ImpactAlpha. “PosiGen has been a huge win for our investors and really hits on some key impact themes for us.”
  • Read on.

Dealflow overflow. Other investment news crossing our desks:

  • Lab-grown breast milk maker BIOMILQ scores $21 million from investors including Breakthrough Energy Ventures and Blue Horizon Ventures.
  • German micro-mobility sharing app TIER rakes in $200 million to deploy e-scooters, bikes and mopeds in Europe.
  • Australia’s For Purpose Investment Partners launches a $250 million fund to invest in social and affordable housing for women over the age of 55.
  • The National Bank of Iraq secures a $10 million debt investment from the International Finance Corp. to increase access to loans for Iraq’s small businesses. 

Signals: Capitalism Reimagined

Expanding employee ownership to empower workers and strengthen small businesses. Impact investors are giving small businesses a boost with a powerful tool that can increase the wealth of employees, their families and their communities: employee ownership. The Seed Commons, a community wealth cooperative, has invested nearly $8 million in local communities. Apis & Heritage Capital Partners in June raised $30 million for its Legacy Fund I to transition businesses with large workforces of color into employee-owned businesses. Longtime investors Shared Capital Cooperative and The Cooperative Fund of New England provide critical financial services to local employee-owned businesses (for context, see “These 12 impact funds are catalyzing transitions to employee ownership”). “It’s time for investors at all levels – from private philanthropy to institutional investors – to join us in this work,” writes Diane Ives, who leads the employee ownership strategy at the Kendeda Fund, in a guest post. “Systemic change only happens at scale.”

  • Employee ownership equals. Kendeda earlier committed $24 million to four nonprofits expanding employee ownership: Evergreen Cooperatives’ Fund for Employee Ownership, Project Equity, ICA Group and Nexus Community Partners. Through their joint Employee Ownership Equals campaign, the partners are providing expert guidance on how to begin a transition. Employee ownership is “a proven tool to fight the systemic inequalities in our economy,” writes Ives. “It’s bold – but it’s not risky.”
  • Keep reading, “Expanding employee ownership to empower workers and strengthen small businesses,” by Kendeda Fund’s Diane Ives.

Agents of Impact: Follow the Talent

Perry Clarkson is promoted to principal at SJF Ventures… Kristin Ihnchak, ex- of Chicago Metropolitan Agency for Planning, joins Greenprint Partners as director of equitable planning… RSF Social Finance adds five new staff members: Ali Robinson and Michael Jones join as senior relationship managers in lending; Dana Stranz comes on as director of credit and portfolio management; Ellie Pickrell joins as relationship manager in lending; and Vic McKellips as client development manager.

Candide Group’s Olamina Fund is hiring a portfolio manager… Acumen seeks a senior associate of insights in New York… The Ford Foundation is looking for a manager of portfolio operations in New York… The ImPact is looking for a West Coast community manager… Urban Institute is hiring a director of federal equity initiatives and a director of racial equity analytics.

Thank you for your impact.

– Oct 26, 2021