The Brief | October 10, 2023

The Brief: Today’s Call: The State of the Field, moving beyond financialization, LeapFrog’s emerging consumers, mitigating wildfire risk, child-lens investing

ImpactAlpha
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ImpactAlpha

Greetings, Agents of Impact!

🎙️ Join today’s Call: The State of the Field. ImpactAlpha is pleased to host this year’s “State of the Field” roundtable with TIIP’s Monique Aiken, Duke’s Cathy Clark, and Fran Seegull of the US Impact Investing Alliance and other Agents of Impact. Have your say today, October 10, at 10am PT / 1pm ET / 6pm London. Zoom right in (be prepared to log in).

Featured: System Change

Seven pathways for transcending wealth supremacy. The field of impact investing has staked itself as the venue for modeling and scaling up solutions. Marjorie Kelly of The Democracy Collaborative argues that impact investors are implicated in the problem as well. “Financialization,” or the growing power of financial markets at the expense of the real economy, is a major driver of the expanding polycrisis of income inequality, climate catastrophe, economic volatility and even war. “As impact investors, we’re caught in this system of wealth supremacy, even as we invest for the public good,” Kelly writes. In a follow-up to her earlier essay on ImpactAlpha, adapted from her book, “Wealth Supremacy,” Kelly takes up the challenge of what impact investors can do to “ensure capital would no longer be in control of, but in service to life.” The Democracy Collaborative, a nonprofit, worked with experts to identify pathways to accelerate the ownership transition and the next system of capital. Among them: wipe away debt, rebalance intergenerational wealth, and restrain extraction. 

  • Energy democracy. “Democratic ownership needs to be a deliberate part of the energy transition,” writes Kelly. Community-owned solar and battery projects, locally controlled microgrids, and energy cooperatives are becoming more common within the energy democracy community. In the new green energy system, “all the flows are essentially free,” says Carbon Tracker’s Mark Campanale, who suggests that super-profits and concentrations of wealth in oligarchs and energy corporations could disappear. “We could see a transformation of power.”
  • Public banks. What if banking and finance made the public interest their missions? Several cities in California are setting up public banks. An integrated network of state and regional public banks could focus “entirely on investment in the real economy, in greening production, in providing jobs, retirement security, and an economy of real human needs,” says Kelly’s colleague Joe Guinan at The Democracy Collaborative.
  • Main Street. Local businesses and farms, which create the majority of jobs, are starved of capital, while trillions of dollars flow to Wall Street. “While we’ve built superhighways for speculative investments, productive local investments travel dirt paths,” Kelly says. Needed: infrastructure to make local and impact investing easy. “Innovation is coming at warp speed from the impact investing world,” she says, with “countless funds springing up to invest in marginalized communities, decarbonize buildings, and advance sustainable development goals.”
  • Keep reading, “Seven pathways for transcending wealth supremacy,” by The Democracy Collaborative’s Marjorie Kelly on ImpactAlpha. Listen to Kelly’s conversation with David Bank on ImpactAlpha’s Impact Briefing podcast. 

Dealflow: Growth Markets

LeapFrog’s Emerging Consumer Fund secures $100 million commitment from IFC. LeapFrog Investments says its fourth fund is on track to reach a final close of $1 billion by February 29 – Leap Day. The fund has commitments from a global roster of LPs, including the Ford Foundation, Temasek, Prudential, Eli Lilly, and the European Investment Bank. “The fundraise has shown us that impact investing as a strategy has reached the boardrooms of the world’s largest asset allocators and managers in diverse industries,” said LeapFrog’s Andy Kuper. The growth equity fund invests in healthtech and fintech businesses targeting underserved populations in emerging markets. With its gender-lens objectives, the fund qualifies for the 2X Challenge and the International Finance Corp.’s Invest2Equal program.

  • Underserved consumers. LeapFrog has invested in four companies via the new fund, including Redcliffe Labs for low-cost medical tests in India, and Sun King for off-grid solar financing in Africa. Last month, it invested $50 million to help Singapore-based insurtech venture Bolttech deepen its customer base of lower-income and emerging consumers. “The world’s four billion emerging consumers are rising in incomes and prosperity, and we need to make sure that growth is sustained, inclusive and green,” Kuper said. Earlier this year, LeapFrog pledged to invest $500 million over the next decade in startups developing low-carbon solutions for emerging consumers in Asia and Africa. 
  • Strategic LP. Half of the IFC’s commitment will be allocated to the new fund. The rest will allow IFC to co-invest alongside LeapFrog in its portfolio companies. IFC committed a combined $65 million to LeapFrog’s first and third funds.
  • Check it out.

Vibrant Planet scores $15 million for wildfire-risk mitigation and forest resilience. Vibrant Planet launched in 2020 in response to California’s escalating wildfire seasons. This year’s wildfire season broke records for acreage burned, properties destroyed, smoke emissions, and human lives lost (see, “Wall Street CEOs fiddle while Maui burns and the world bakes”). Vibrant’s software helps land managers speed fire prevention and forest health projects and invest in carbon, water and biodiversity benefits. 

  • Nature-based solutions. Vibrant’s Series A round was led by Ecosystem Integrity Fund, with participation from Microsoft’s Climate Innovation Fund, Citi Impact Fund, SIG Climate and others. Vibrant, which is also backed by Elemental Excelerator and Earthshot Ventures, has raised $34 million to date.
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Dealflow overflow. Other deals crossing our desks:

  • Spain’s White Summit Capital is looking to raise up to €600 million ($633.2 million) for a decarbonization-focused infrastructure fund. The fund has a €150 million commitment from the European Investment Bank. (Bloomberg)
  • Finnfund made a $15 million 2X Challenge commitment to Metier Capital’s third growth fund, which is targeting $200 million for companies creating quality jobs for women in Africa. (Finnfund)
  • German climate-tech venture Purpose Green scored €3.3 million ($3.5 million) from Speedinvest and Atlantic Labs to help building owners map out energy retrofits. (Tech.eu) 
  • BlackRock launched a climate-transition private debt fund to invest in middle-market companies in the US and Europe. (ESG Today)

Short Signals: What We’re Reading

🇪🇺 vs. 🇺🇸 impact investing market. Amsterdam-based Phenix Capital’s Impact Database counts 1,160 European impact funds, compared to 773 US-domiciled impact funds. Private equity funds make up 42% of European funds, while in the US, private equity funds account for 58% of all impact funds. (Phenix Capital)

🧒🏽 Child-lens investing. All investor actions impact children and their wellbeing. Unicef advocates for “child-lens” investing, an approach through which investors intentionally consider child-related factors to advance positive child outcomes while minimizing child harm. (Unicef)

🔎 Racial equity in asset management. Statements in support of racial equity from BlackRock, Vanguard, State Street and Fidelity are not enough. Blackrock and State Street have conducted racial equity audits, but the largest asset managers are failing to deliver on racial equity in proxy voting. (Majority Action)

💰 Listening to microfinance clients. “Inclusive finance” companies offering financial services to low- income customers have boosted clients’ income and quality of life. But many clients remain financially vulnerable, according to 60 Decibels’s Microfinance Index Report. (60 Decibels)

🚗⚡👷🏾‍♀️ Green auto jobs. Electric vehicles contain fewer parts, so they require fewer workers. That’s one of the concerns of striking autoworkers. But is it true? A number of analyses show that electric vehicles could actually require more labor to build than gas-powered cars in the US, at least for the foreseeable future. (Heatmap)

⚡ Clean energy at rural co-ops. Electric cooperatives are clamoring for some of the $9.7 billion in the US Department of Agriculture’s new clean energy program. The hundreds of projects detailed in their proposals would require at least twice that amount to launch $93 billion in new investment across rural America. (NRECA)

Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

Opportunity Finance Network promotes Dafina Williams to chief external affairs officer… Skoll Foundation is looking for a production manager in Palo Alto, Calif… Mission Driven Finance seeks a remote vice president of investment management… Sumitomo Mitsui Banking Corp. is recruiting a sustainability program coordinator in New York… Halcyon has an opening for a finance manager in Washington, DC… Top Tier Impact is looking for a community operations intern in Singapore… 60 Decibels is on the hunt for a senior associate of impact measurement in Nairobi. 

👉 View (or post) impact investing jobs on ImpactAlpha’s new Career Hub.

Thank you for your impact!

– Oct. 10, 2023