The Brief | April 25, 2024

The Brief: Upskilling lenders for the Great Deployment

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

Greetings Agents of Impact!

In today’s Brief:

  • Calling green project developers and financiers
  • Latin America’s impact tech startups
  • Housing lender exit in India
  • Investing with a child lens 

Lenders face a steep learning curve in deploying capital for green community infrastructure. Green project development and project finance skills have always been in short supply. Now, with $27 billion in Greenhouse Gas Reduction Fund awards teed up for community solar, building electrification and local EV charging projects, those skills will be in even greater demand. “There’s going to be a huge need for talent and resources to make this all work,” says Trenton Allen of Sustainable Capital Advisors, a financial advisory and consulting firm that worked with the Justice Climate Fund on its winning proposal for GGRF funding. Allen is launching what he calls the Sustainable Infrastructure Finance Academy to offer resources and advice to community lenders, local governments and developers. “When you’re cranking along on these projects and trying to deploy this capital, you’re going to need to call someone to gain some perspective or support,” explains Allen. “That knowledge may not be deep in these organizations. They may not have two or three expert climate folks like they do for housing and small business.” 

  • Support system. Sustainable Capital Advisors is among a handful of groups looking to help new and existing lenders and project developers get up to speed to and smooth the deployment of the historic government funding. San Francisco-based Banyan Infrastructure offers software to streamline the project finance lifecycle, from origination and underwriting, to risk management and reporting. “It’s project-finance-in-a-box,” says Banyan cofounder Amanda Li. She is working with green banks and community lenders that won GGRF funding and are “being tasked to create programming and scale it in a very quick timeline.”
  • Community infrastructure. The Milken Institute’s online Community Infrastructure Center has been connecting economic development officials and project sponsors with the resources they need to compete for capital, including technical assistance, capacity support and public funding. It is looking to expand those services as GGRF funds flow. Sustainable Capital Advisors’ offerings will include group learning opportunities and direct one-on-one support, as well as a database of educational resources on topics such as climate finance and energy markets, and tools such as financial models and risk calculators.
  • Keep reading, “Lenders face a steep learning curve in deploying capital for green community infrastructure,” by Amy Cortese on ImpactAlpha

Dealflow: Impact VC

IDB Lab backs small businesses in Paraguay and health access in Ecuador. The experimental venture funding arm of the Inter-American Development Bank inked two investments in markets with little available venture or impact capital. IDB Lab provided a $3 million anchor investment for iThink VC, an investment firm that supports early stage tech startups in Latin America, focusing on Paraguay and Bolivia. iThink VC was co-founded in 2021 by Jazmin Gustale Gill, Paraguay’s former vice minister of inclusive economic growth and founder of the country’s national innovation strategy, and Juan Cruz Valdez Rojas, who previously worked with Bayer and Monsanto. They have made 10 investments, including Bolivia-based Koban, a neobank, and DeltaX, an Uber-like service for heavy cargo shipments and deliveries. “I see how Latin startups are transforming our region’s problems into business opportunities,” said Gill. iThink VC is looking to raise $20 million for its fund.

  • Investing in health. IDB Lab also provided $2 million in debt financing to DoctorOne, a telemedicine service for remote patients in Ecuador. The company partners with cooperatives, associations and microfinance institutions to treat people in their networks and in the communities they serve. DoctorOne is expanding its virtual healthcare services and launching mobile units to provide affordable in-person care in rural areas.
  • Check it out

Indian home lender Altum Credo’s $40 million round gives investors a partial exit. Pune, India-based Altum provides mortgages for first-time homebuyers underserved by other financial institutions. Its digital underwriting and loan disbursement process offers five to 20-year mortgages for homes valued up to 2.5 million rupees, or $30,000. The fintech venture, which launched in 2017, has served 11,000 borrowers in a half-dozen states in India.

  • Invest, divest. Altum raised its Series C equity round from Z3 Partners and impact investor Oikocredit. British International Investment, Aavishkaar Capital and others also participated. The round provided a partial exit to several early investors, which were not named.
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Dealflow overflow. Investment news crossing our desks:

  • The US Department of Energy’s Loan Programs Office closed a $362 million loan to CelLink Corp. to build a manufacturing plant in Georgetown, Texas for electric vehicle parts. (DOE)
  • Midi Health raised $60 million in an equity round led by Emerson Collective to provide remote care for women going through perimenopause and menopause. (Midi Health)
  • Netherlands-based Aquabattery raised €6 million ($6.4 million) from EIT InnoEnergy, InnovationQuarter, Invest-NL and other investors to develop its saltwater-based long duration energy storage system. (EIT InnoEnergy)
  • Impact venture fund Impact X backed a $3 million equity round for Bump, a Black-led fintech venture that helps entrepreneurs in the creative economy manage their finances. (TechCrunch)

Impact Voices: Child-Lens Investing

Mission investing to improve children’s lives at the Kellogg and Annie E. Casey foundations. The W.K. Kellogg Foundation in Battle Creek, Mich., and the Annie E. Casey Foundation in Baltimore share a common mission: to improve the lives of American children. To deliver on that mission, the institutions have added debt and equity investments to their grantmaking toolkits. Over 17 years, the $8 billion Kellogg Foundation has committed more than $310 million through mission-related investments, or MRIs and catalytic program-related investments, or PRIs. Annie E. Casey has committed 3% of its $3.4 billion endowment to impact investments. Roughly 70% was committed as PRIs and 30% as MRIs. 

The foundations’ portfolios, explored in a pair of guest posts, reflect what Unicef calls “child lens investing” (for context, see “Unicef leads investors to see their investments through children’s eyes”). Child-lens investment sectors go beyond the obvious categories of childcare, education and child nutrition. As the foundations demonstrate, kids benefit through investments in renewable energy, affordable housing, racial equity, and access to capital in underserved communities.

🟰Kellogg’s racial-equity lens. Alignment with the foundation’s programmatic goals has helped Kellogg “lean into our racial equity focus directly on all our investments,” writes Kellogg’s Cynthia Muller. More than 90% of mission-related investment commitments between 2017 and 2021 went to communities of color; 60% went to diverse managers or owners, including Vamos Ventures and Harlem Capital. Three-quarters have gone to job access and enterprise development, through organizations like Founders First Capital Partners. In a milestone evaluation shared exclusively with ImpactAlpha, Kellogg reveals it met its target internal rate of return of 4-6% across the MRI portfolio since inception 17 years ago. Its investments between 2017 to 2022 did even better, generating an 11% IRR. Its risk-taking PRI portfolio is valued at approximately the level of its invested capital.

👧🏽 Annie E. Casey’s child care investments. Impact investments “can help repair the child care system,” writes the foundation’s Essma Bengabsia. Casey’s program-related investment portfolio is increasing the availability of quality affordable child care through San Diego-based Mission Driven Finance’s Care Access Real Estate, which purchases properties for day care centers then leases these properties to providers. The foundation is increasing access to capital with an investment in Maine-based Coastal Enterprises, which has financed or advised more than 175 child care businesses. An investment in Impact America Fund has supported companies like Winnie, an online marketplace for child care that helps millions of parents find day care facilities and preschools. Says Bengabsia, “Impact investing can catalyze innovation, build evidence and scale effective strategies to ensure the child care sector works for families and the economy.”

Join Muller and La June Montgomery Tabron of the Kellogg Foundation and Tracy Kartye of the Annie E. Casey Foundation at Mission Investors Exchange’s 2024 National Conference in Los Angeles, May 7-9. ImpactAlpha is the media partner for the event. Register today.

Agents of Impact: Follow the Talent

Nick Moon, previously with LeapFrog Investments, joins Circulate Capital as its new chair… Arctaris Impact Investors seeks an investor relations analyst in the Boston area… One Acre Fund is hiring a US operations associate in New York… Impact Finance Center is hosting its national community foundation impact investing landscape scan, Thursday, May 30… Applications are open for the Urban Future Prize Competition, a competitive prize for early-stage climate tech startups to win cash prizes and admission into NYU Urban Future Lab’s ACRE Incubator.

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

Thank you for your impact!

– April 24, 2024