The Brief | May 4, 2021

The Brief: VC for African entrepreneurs, decarbonizing cement, solid-state batteries, grading Biden’s first 100 days, ESG policy shifts

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Greetings, Agents of Impact! 

Featured: Impact Voices

Outsiders get the bulk of venture capital in Africa. Peer-selection can change the game. E-commerce giant Jumia made waves in 2019 as the first African tech company to list on the New York Stock Exchange. One problem: Jumia isn’t quite an African company. Jumia was “registered in Germany and founded by French entrepreneurs, who chose to base their engineering team in Portugal,” Malian tech accelerator founder Issam Chleuh wrote at the time. Chleuh’s piece sounded the alarm about “extractivism” in an African tech ecosystem “dominated by investors and players from outside the continent at the expense of native-born entrepreneurs,” write Ben Wrobel of Village Capital and Meg Massey of Sanspeur in an excerpt from their book, Letting Go: How Philanthropists and Impact Investors Can Do More Good By Giving Up Control. Such “digital recolonization” is a legitimate fear, say Wrobel and Massey, “a version of neocolonialism playing out through the lens of impact investing.”

Anger over the imbalance in VC funding has roiled startup circles from Nairobi to Lagos. More than 90% of funding for East African fintech startups went to expat entrepreneurs, according to a 2017 study. Last year, Kenya-based angel investor network Viktoria Ventures found that only 6% of startup funding goes to local founders; in Nigeria, Techpoint reports that West African founders secure only 19% of the region’s venture funding. One remedy is the peer-selection model pioneered by Village Capital, in which cohorts of entrepreneurs rank their peers and together decide which ventures most deserve investment. Fellow entrepreneurs directed seed funding from Village Capital to the Nigeria-based personal savings app PiggyVest. Founder Odunayo Eweniyi went on to raise a traditional venture round. On a continent where foreign VC investors are showing up with biases as well as financing, peer selection offers a corrective. The model represents another way to wrest decision-making power from experts or investors, Wrobel and Massey say, and give it to “non-profit leaders or social entrepreneurs who are closer to the ground.”

Keep reading, “Outsiders get the bulk of venture capital in Africa. Peer-selection can change the game,” by Ben Wrobel and Meg Massey on ImpactAlpha.

Sponsored by Ceniarth: Impact-First Year in Review

Investing for impact first. Ceniarth, the family office of Diane Isenberg, has been on a three-year mission to deploy 100% of its roughly $450 million in assets to ‘impact-first’ investments. Amid last year’s challenges, Ceniarth increased its impact-first allocation to $174 million, completing 22 impact-first deals totaling $31 million. “Impact-first investors recognize that there are often trade-offs between returns and impact particularly when serving marginalized, vulnerable communities,” the Ceniarth team explains in its annual report. “Impact-first investors are willing to wade into this complexity in an effort to support funds and enterprises that would otherwise not be able to access capital.” Ceniarth’s commitments to community development financiers detailed in this year’s report include Oweesta, Southern Bancorp and Rural Community Assistance Corp. Enterprise loans went to One Acre Fund, Apollo Agriculture and many others. Ceniarth’s fund allocations included Huruma Fund, Andes Plus Fund and Women’s World Banking.

Dealflow: Follow the Money

Breakthrough Energy Ventures backs three climate-tech startups. The billionaires-backed venture capital firm collected another $1 billion at the start of this year to invest in up to 50 startups with game-changing climate solutions (see, “Breakthrough Energy Ventures doubles down on cleantech”). BEV backed sustainable cement and concrete startup Solidia Technologies, carbon-capture verification service Pachama, and Fervo Energy, which designs geothermal energy systems.

  • Low-carbon cement. Solidia says its cement and concrete technology can eliminate more than 1.5 gigatons of CO2. The New Jersey-based company raised $78 million from BEV, Imperative Ventures, Zero Carbon Partners, BP and others.
  • Nature-based tech. San Francisco-based Pachama uses satellite imaging and AI to measure carbon captured in forests. BEV led $15 million in financing for what Pachama’s Diego Saez-Gil calls “a tech-enabled platform that can unlock climate-meaningful funding for mass restoration and conservation of nature.” BEV’s Peter Turner will join Pachama’s board of directors.
  • Clean energy. Fervo’s Tim Latimer said the company’s geothermal energy systems “can make 100% carbon-free energy a reality around the world.” BEV backed the Houston-based company’s $28 million Series B round.
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Solid Power secures $130 million to scale EV battery production. The Colorado-based company develops solid-state batteries for electric vehicles that it says are cheaper, more efficient and safer than conventional lithium-ion batteries. Its Series B financing round was led by BMW Group, Ford Motor Company and Volta Energy Technologies. Solid Power will scale up its production line early next year to deliver batteries to Ford and BMW. Ford’s Ted Miller says Solid Power’s batteries will “increase vehicle range, improve interior space and cargo volume, deliver lower costs and better value for customers.” 

  • Solid-state batteries. San Jose, Calif.-based QuantumScape, which developed a fast-charging solid-state lithium battery, went public via a SPAC in December (see, “Fresh off its IPO, QuantumScape claims EV battery breakthrough”). “The development of all solid-state batteries is one of the most promising and important steps towards more efficient, sustainable, and safer electric vehicles,” said BMW’s Frank Weber.
  • Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • 1863 Ventures launches the 3Rs Grant Program, with support from Capital One and Rockefeller Foundation, to help 1,500 Black business founders in 15 cities restore their businesses post-COVID (listen to 1863 Ventures’ Melissa Bradley on The Reconstruction, “Learning from history to create opportunities for equitable wealth-building now”).
  • Fintech venture Ensibuuko raises $1 million from FCA Investments to expand financial services to 200,000 rural customers in Uganda.

Signals: Ahead of the Curve

Agents of Impact see transformation – and trouble – in Biden’s first 100 days. More than 230 million COVID vaccine shots. Nearly $2 trillion in economic stimulus. A return to the Paris climate agreement. At the 100-day mark, the historically diverse administration is executing, and polls show nearly two-thirds of Americans are optimistic about the direction of the country. There is yet more to be done. What’s your take? Drop a note to [email protected] or reply to this email. We’ll round up submissions later this week.

  • Economic justice. “I am both surprised by the ambition of this administration and disappointed by its retention of policies and political norms that exacerbate wealth inequality and entrench white supremacy,” writes Carmen Rojas of the Marguerite Casey Foundation, a guest on The Reconstruction podcast, in a post on ImpactAlpha. The upside: “The administration has started to demonstrate how government spending is tied to expanding opportunity, fulfilling civil rights commitments, and expanding civic engagement,” writes Rojas (listen in: “Carmen Rojas on practicing truth in the service of freedom”). Among her disappointments: Insufficient action on immigration, student debt, the minimum wage and policing (note: Biden yesterday lifted the annual cap on admission of refugees to 62,500, from 15,000).
  • Climate tailwinds. “This is the first administration that has ever come into office making climate change a top priority,” Julie Gorte of Impax Asset Management said on The First 100 Days, hosted by US SIF. The administration rejoined the Paris agreement on Day One and committed to reduce U.S. emissions by 50% by 2030. An all-star climate team has infused climate strategy at the Securities and Exchange Commission, the Commodities Futures Trading Commission, the Treasury Department and the Federal Reserve. Biden’s American Jobs Plan includes billions for electric vehicles, grid upgrades and clean technologies. “Right now we have a tailwind on climate change, and we should take advantage of it,” Gorte says.
  • Sustainable investing. The Biden administration has placed champions of environmental, social and governance, or ESG, investing, at the SEC (Gary Gensler) and the Department of Labor (Martin Walsh). It paused enforcement of Trump administration rules meant to quell the ESG wave. US SIF’s Bryan McGannon said he’s hopeful Congress will amend retirement-plan rules to end the back and forth. “Our preferred pathway to solve this pendulum of policy shifts is to have Congress amend ERISA again to plainly say that ESG criteria may be considered under fiduciary duty,” he says.
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Agents of Impact: Follow the Talent

Sonal Shah, ex- of the Beeck Center, joins the Asian American Foundation as founding president… The Marguerite Casey Foundation appoints to its board Georgia leader Stacey Abrams, Impact Capital Partners’ Ellis Carr, National Urban Indian Family Coalition’s Janeen Comenote, Mijente’s Marisa Franco, WestFuller Advisors’ Ian Fuller, Color of Change’s Rashad Robinson and Empire Health Foundation’s Zeke SmithChloe Capital and Cornell University are launching Diversity in ClimateTech to support underrepresented founders combating climate change.

Climate tech venture Gro Intelligence makes Time’s Most Influential Companies of 2021 (see, “Alt-credit and mobile-money apps give African fintechs a closeup view of climate risks – and opportunities”)… Inclusive Prosperity Capital is recruiting a managing director and investment analyst of clean energy finance… Educate Global is looking for an investment principal in Nairobi and a part-time non-executive director in Mauritius… The Racial Justice Investing Coalition is hiring a part-time or contractual program coordinator.

Thank you for your impact.

– May 4, 2021