The Brief: What Agents of Impact expect (video), emission-free steel, immigrant entrepreneurs, affordable homeownership, boom in ESG bonds and funds

The team at

ImpactAlpha

Greetings, Agents of Impact! 

Featured: Agents of Impact Call

The Call No. 26: What Agents of Impact are expecting in 2021 (replay). A few keywords thrown around on last month’s Agents of Impact Call: accountability, electrification, institutional, reconstruction — and impact. Agents of Impact shared 2021 predictions for emerging markets, catalytic capital, racial equity and justice, climate finance, ESG and much more. Top of mind: Access to finance for small and growing businesses will determine the shape of the COVID recovery, both in the U.S. and around the world. “The new administration will try to make up for 30 years of disinvestment in one year,” predicted Calvert Impact Capital’s Beth Bafford. “We’ll see if they’re successful.”

  • Progress on racial wealth gaps. Apis & Heritage Capital’s Todd Leverette expects equity ownership and worker ownership to become major tools for bridging the racial wealth gap. Latresa McLawhorn Ryan of the Atlanta Wealth Building Initiative predicts the mobilization of voters for Georgia’s runoff election would spill over into a broader civic revival.
  • Accelerated climate finance. Carbon Tracker Initiative’s Mark Campanale sees “a managed decline of global fossil fuel production,” and calls for a Fossil Fuel Non-Proliferation Treaty to drive the transition to a low-carbon economy. ImpactAlpha’s David Bank forecast “electrify everything” will become an investment rallying cry this year, and Amy Cortese predicts climate investments will reach $1 trillion in 2021, up from around $600 billion a year for the past few years. 
  • Enhanced accountability. ImpactAlpha’s Monique Aiken is committed to “finding those models that are doing it well, and calling out those who said they were going to and are not.” The Beeck Center’s Erika Davies, founder of The Racial Equity Lab, is calling for more rigor in 2021 “for how organizations are actually holding themselves accountable for internal progress on these issues such that it sticks.” Courageous Capital’s Laurie Spengler wants honesty “about who is actually receiving the capital and who is not, and to push to ensure that we’re expanding, not just retrenching.”

Read more and watch the video replay, “The Call: What Agents of Impact are expecting in 2021,” by Roodgally Senatus on ImpactAlpha. 

Dealflow: Follow the Money

Immigrant-focused One Way Ventures closes second fund. The Boston-based fund, which cuts checks of up to $1 million to immigrant-founded startups, raised $57.5 million for its second fund, TechCrunch reports. One Way raised $28 million for its first fund in 2019 and has invested in more than 40 companies, including home care training company CareAcademy (see, CareAcademy raises $9.5 million to upskill a generation of caregivers and “Agent of Impact: Helen Adeosun) and e-scooter company Superpedestrian, which just closed a $60 million round.

  • Immigrant founders. Unshackled Ventures also invests with an immigrant-founder lens, and helps founders navigate the U.S. immigration and visa process. It raised a $20 million fund in 2019. 
  • Check it out

Mission Driven Finance raises $2 million to support homeownership in San Diego. The average cost of a home in the San Diego area is $600,000, making homeownership unaffordable for more than half of the city’s population. Mission Driven Finance’s Homebuilding Investment Fund will help San Diego Habitat for Humanity develop 37 new homes affordable for purchase by lower-income households. 

  • Philanthro-plus. The $2 million will serve as a low-interest line of credit to free up Habitat’s balance sheet and expand its building capacity, Mission Driven Finance’s David Lynn told ImpactAlpha. Habitat’s 2.25% interest rate can be considered “philanthropy plus,” Lynn says. “As a first pilot fund to test whether this works with Habitat, we wanted to keep it as affordable as possible.” The fund’s investors, including donor-advised funds and local community foundations, stand to make a 2% return. 
  • Read on

Boston Metal raises $50 million to produce emission-free steel. Boston Metal is set on greening fossil-fuel heavy metal production. Steel production, heavily reliant on coal, is responsible for 8% of global CO2 emissions. Boston Metal’s electrical process cuts steel’s carbon footprint along with production costs. The company, which spun out of an MIT lab in 2012, has raised $50 million from eight unnamed investors. Earlier investors include Breakthrough Energy Ventures, Prelude Ventures, and MIT spin-out fund, The Engine. Read on.  

Devic Earth raises $1.4 million to cut industrial air pollution. The Bangalore-based company, founded by cardiologist Srikanth Sola, produces an industrial-scale air purifier to cut toxic air pollution from emission-heavy sectors like steel and cement production. Its pre-Series A round was backed by impact investor Blue Ashva Capital.

Signals: Ahead of the Curve

Short takes. A few of the reports and data points crossing our desks:

  • ESG bond boom. Issues of ESG bonds reached nearly $500 billion in 2020, as agencies, sovereigns, supranationals and corporates rushed to raise capital to address COVID relief efforts under social and sustainability labels. The bond issues were up 80% year-over year, per Morgan Stanley Research (see, “Countries and companies tap fixed-income markets with ‘social bonds’ for COVID relief).
  • Sustainable ETFs. A record 18 new sustainable exchange-traded funds launched in the fourth quarter of last year (matching the total for the first nine months of the year), according to Sustainable Research and Analysis. Among the new ETFs: JPMorgan Carbon Transition US Equity ETF, Adasina Social Justice All Cap Global ETF and VictoryShares Top Veteran Employers ETF.
  • Community ownership. In “New models for community shareholding,” the Urban Land Institute explores how emerging funds from Nico in Los Angeles to the Northeast Investment Cooperative in Minneapolis are helping residents to benefit from development in their neighborhoods and build wealth (see, “Neighborhood investment company helps Los Angeles residents buy back the block).
  • Opportunity Zone impact. Public officials, philanthropists, community organizations and investors have run more than 500 projects through Urban Institutes’ Opportunity Zone community impact assessment tool (see, “Assessing community impact in Opportunity Zone projects).

Agents of Impact: Follow the Talent

Cori Zarek, former deputy U.S. chief technology officer, replaces Sonal Shah as executive director of Georgetown University’s Beeck Center for Social Impact and Innovation… BMO Harris Bank is looking for an impact investing associate in New York… Imaginable Futures seeks a principal on its U.S. investment team in Washington, D.C… The Social Innovation Forum is recruiting a development manager in Boston… 

McKinsey & Co. launches the McKinsey Institute for Black Economic Mobility, a think tank to help advance racial equity… Indie.vc is accepting applications all year from startups seeking investments of $250,000 for companies with revenues of up to $10,000 per month or $500,000 for those with monthly revenues up to $100,000 per month. 

Thank you for reading!

– Jan. 6, 2020