Greetings, Agents of Impact!
Zoom into The Call. The pandemic-induced pause in greenhouse gas emissions has provided a glimpse of a low-carbon future. On today’s ImpactAlpha’s Call No. 19, Climate Policy Initiative’s Barbara Buchner will offer an update the state of climate action, while Greenbacker Capital’s David Sher, Equilibrium Capital’s Dave Chen, Caprock Group’s Matthew Weatherley-White and other Agents of Impact report on the mobilization of capital for clean energy and green infrastructure. Join The Call today, Thursday, June 18, at 10am PT / 1pm ET / 6pm London. Haven’t RSVP’d? Zoom right in.
- Join the conversation. Share your thoughts before, during or after today’s call on ImpactAlpha’s #climate-regeneration Slack channel. Not yet on Slack? Sign up and click “channel browser” in the left column.
Featured: Impact Voices
Pricing for impact: How Agents of Impact can move from bluster to bold action. ImpactAlpha in recent weeks has highlighted responses to the COVID-19 pandemic and recession, the climate emergency, and the long overdue reckoning with structural racism and systemic injustice. “Yet compared to the magnitude of the crises and in the context of all that needs to be done to even begin to stimulate systemic change, the examples are few in number and paltry in amount of capital deployed,” writes Laurie Spengler of Courageous Capital Advisors in a provocative guest post on ImpactAlpha. Spengler calls out what she says are “excuses for the delay and modesty of actions.” Impact investors have put out “too many words over these past few weeks and not enough capital,” she says. The heart of the matter: “An unwillingness to price for impact at a time of global pandemic, social unrest, and the incontrovertible exposure of deep systemic bias.”
Impact investors need to shift from the defensive activity of protecting current investments and play offense, by making impact explicit and accountable. “Our message cannot be: ‘You are on your own. When you stabilize and show me you are fully back on track in a world none of us can anticipate, then come talk to me for investment,’” Spengler argues. In this uncertain environment, “Why is it that investees are expected to bear 100% of the risk?” Spengler’s examples: The demand from a veteran impact investing asset manager for higher interest because of rising ‘perceptions’ of risk. Development finance institutions’ rejection as ‘concessionary’ – in a zero-percent interest rate environment – of a 3% note supporting women-led small and growing business in sub-Saharan Africa. And the recent survey by the Global Impact Investing Network that found only 18 of 122 investors are likely to commit more capital than planned in response to the COVID pandemic. “How can we respond in any way other than by dialing up commitments?” Spengler asks. “Preserving the status quo – of our commitments, in our actions – simply won’t get us to where we say we want to be. Impact must be our guide when it is needed, not just when it is convenient.”
Keep reading, “Pricing for impact: How Agents of Impact can move from bluster to bold action,” by Laurie Spengler on ImpactAlpha.
- Response, recovery and resilience. The initial findings of the R3 Coalition, hosted by the GIIN: The severity and urgency of social and environmental needs are intensifying. Impact investors face acute needs in their own portfolios. Impact investors have capital available to support priority sectors. Emerging markets risk disproportionate capital shortages, even though they remain of interest to many impact investors. And deploying capital effectively in the current climate requires innovation and efficiency. The full readout.
- We want to hear from you. How can impact investors step up to meet the moment? Join the conversation in our #Agents-of-Impact Slack channel. Or send 250 words or so to [email protected] (or reply to this email) and we’ll round up responses in The Brief next week.
Dealflow: Follow the Money
Gig-worker platform Steady secures $15 million to expand pandemic support. Atlanta-based Steady set out to be a one-stop shop to improve the financial health of U.S. gig workers, by posting jobs, offering financial tips, providing telemedicine and, now, making emergency grants to weather the COVID shutdowns. Among Steady’s two million members, the pandemic has hit Black members hardest, said Steady CEO Adam Roseman. “We are focused on delivering immediate and measurable economic value to our members during these unbelievably traumatic times.”
- The investors. The company’s Series B round was backed by Recruit Strategic Partners, Flourish Ventures, Loeb Enterprises, Propel Venture Partners and CMFG Ventures. Propel invested in the company’s $9 million round two years ago alongside Omidyar Network and ex-NBA star Shaquille O’Neal.
- Check it out.
Chris Sacca’s Lowercarbon Capital backs 20+ climate tech deals. The Instagram, Twitter and Uber investor is back from his VC hiatus with a new family office focused on “technologies to reduce CO2 emissions, remove carbon from the atmosphere, and actively cool the planet,” reports Axios. Lowercarbon Capital, with tens of millions in assets, hasn’t yet accepted outside money “but there’s a growing possibility that it will do a formal fundraiser,” according to Axios.
- Climate alpha. The firm has quietly closed more than 20 deals in clean energy as well as industrial chemicals, food, transportation, building materials, and more. “We don’t think guilt and shame change behavior at scale over the long term,” Sacca tweeted. “We will win by giving markets clean, decarbonizing options that are cheaper, faster, cooler, and easier.” Sacca says the firm is funding research across an array of climate solutions. The team includes Sacca’s wife and co-founder, Crystal English Sacca, and Lowercase Capital’s Clay Dumas.
- Get the lowdown.
GreenLight Biosciences raises $102 million to develop vaccines. The Boston-area bioscience company uses gene-editing technology to develop environmentally-friendly alternatives to chemical pesticides in agriculture. GreenLight is looking to expand its RNA-based technology to develop vaccines, including for coronavirus. Morningside Ventures led the Series E round, which included backing from S2G Ventures, a sustainability-focused agrifood tech fund.
Legal & General commits £100 million to expand U.K. affordable housing. The investor backed affordable housing developer Bromford Housing Group to finance the company’s development pipeline. Bromford aims to build 12,000 new affordable units by 2028. The U.K. has roughly 1.3 million households on its social housing waitlist.
Chipper Cash clinches $13.8 million for no-fee cross-border payments app. The San Francisco-based fintech offers mobile-payment services in seven countries in Africa. It subsidizes its person-to-person service with a fee-based merchant service, TechCrunch reports. (PayPal’s early services used a similar model.) Deciens Capital and Raptor Group led the Series A round.
Degreed raises $32 million to offer free skills training to employees. The company partners with (and charges) employers to offer online training to workers looking for new skills. It has seen a boom of activity from workers at 250 companies amid the pandemic, particularly for soft-skills training, like crisis and change management and mental health, TechCrunch reports. Owl Ventures led the round.
Signals: Ahead of the Curve
Scaling the ‘capillary banking system’ to expand access to capital. When the COVID crisis hit, Alphabet’s philanthropic arm, Google.org, zeroed in on access to capital for women and minority-owned businesses through community development financial institutions, or CDFIs. Chief financial officer Ruth Porat jumped on board – and upped the ante. Porat carved out $120 million from Google’s balance sheet to make low-interest loans to CDFIs, a key conduit to underserved small businesses. The Grow with Google Small Business Fund, in partnership with the Opportunity Finance Network, also includes grants from Google.org for small CDFIs serving vulnerable populations. Now Google has added another $45 million in loans and $5 million in grants specifically for Black-owned businesses, bringing the total small business fund to $170 million in loans and $10 million in grants. “Working through CDFIs is really vital to bridging the gap” for access to capital, especially in communities of color, Porat said during OFN’s Small Business Finance Forum.
- First awards. OFN has disbursed the first $16 million in loans and grants to Citizens Potawatomi Community Development Corp., one of the largest Native-owned CDFIs; women-focused Grameen America; MoFi, which serves the Northern Rockies in Montana, Idaho, and Wyoming; Opportunity Fund, which serves under-resourced businesses in 45 states; California-based Pacific Community Ventures; Texas-based PeopleFund; Washington Area Community Investment Fund in Washington, D.C.; and other recipients.
- Banking deserts. Some 70% of African Americans don’t have a local-branch bank, says Vista Equity Partners’ Robert Smith, who spoke with Hope Credit Union’s Bill Bynum at the OFN forum. Smith famously paid off the student loans of Morehouse College’s class of 2019. He called on big banks to channel 2-3% of net income to expanding the “capillary banking system” of CDFIs and minority-owned banks. “Let’s feed the infrastructure that knows what that community needs,” he said.
- Beyond CDFIs. New models are arising to support and fund underserved entrepreneurs. Google.org has awarded a $5 million grant to Common Future, a nonprofit run by Agent of Impact Rodney Foxworth. The idea: “Spur innovation and perhaps create new ecosystems that support access to capital,” Google.org’s Justin Steele told ImpactAlpha. “It’s in the Google DNA: Let’s also take some risky bets on things that are a little different.”
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Agents of Impact: Follow the Talent
Future Positive Capital’s Sofia Hmich (another ImpactAlpha Agent of Impact), Varun Malhotra of Quona Capital, and Sarah Morgenstern of Flourish Ventures are among 61 Kauffman Fellows. Marlon Nichols of MaC Venture Capital, Melissa Richlen of MacArthur Foundation, and Allen Taylor of Endeavor were named to the Kauffman Fellows board.
The National Venture Capital Association launches Venture Forward to advance diversity and inclusion… ICA launches Resilience Lab Accelerator to support local manufacturers and service providers that create good jobs, generate wealth for employees and owners, and close wealth gaps for women and people of color… Fellows from Minneapolis-based FINN Lab’s second cohort present their social enterprise ideas June 24-25.
New Media Ventures seeks a head of investments in New York or the San Francisco Bay Area… Nia Impact Capital is hiring a financial analyst and client services/operations team member… Open Society Foundations is looking for an investment associate for its economic justice program in London… BTG Pactual’s Timberland Investment Group is recruiting an analyst of natural climate solutions in Seattle.
Thank you for reading.
–June 18, 2020