The Brief | September 23, 2024

The Brief: Women leading the commercialization of climate tech

ImpactAlpha
Credit: Aerones, a Blume Equity portfolio company
The team at

ImpactAlpha

Greetings Agents of Impact! Climate Week NYC is in full swing and the meetings, events and announcements are coming in, well, hot. See our cheat sheet and get ready for the climate takeover of this week’s Briefs. What are you seeing, hearing and doing? Let us know and we’ll try to work it into the mix. – David Bank

In today’s Brief:

  • Female managers are betting on growth-stage climate tech   
  • How climate action lowers the cost of groceries 
  • Financing Africa’s EV startups with carbon credits

These six women-led funds are capitalizing the commercialization of climate tech. There was no old boys network to break into in the growth-stage of climate tech investing when the women at Blume Equity launched their first fund. Back in 2020, there were few funds of any sort dedicated to helping Europe’s climate solutions reach commercial scale. “The growth stage was this missing middle,” says Blume’s Clare Murray. “We saw it as a huge opportunity.” Blume is among a new crop of fund managers stepping up to address the shortage of growth capital for companies that have proven their technologies, and may even have found their first customers, but now need to scale up production – and their climate impact. Many of those fund managers are women. And even as managers raising their first or second funds, they are aiming big in order to write checks of the size companies need for deployment and commercialization, which is orders of magnitude larger than what’s required for R&D, prototyping or early market testing.

  • Making a splash. Blume is nearing a final close of $200 million for its first fund. Avaana Capital, an early growth-stage climate investor that focuses on India, is close to closing its $120 million second fund. Ankur Capital, also in Mumbai, is dedicating 70% of its planned $150 million third fund to climate tech and sustainable agtech. In the US, Trellis Climate, a Prime Coalition fund, launched in April to invest in growth-stage climate tech ventures that need funding for their first commercial plants. AiiM Partners, which supports climate tech commercialization, is targeting $200 million for its second fund. Elemental Impact is channeling $100 million in US federal funding from the Greenhouse Gas Reduction Fund to deploy climate tech in underserved communities. Aim high and prove the thesis, Murray says. “It’s just as hard to raise $20 million as it is to raise $200 million.” 
  • Investing in women. These fund managers aren’t saying they have identified capital gaps or promising climate solutions because they are women. But they also are not not saying that. “There are more than enough talented women, but the question is, are they surrounded by supportive board members, by investors who listen to them?” says AiiM’s Shally Shanker. Half of the companies in AiiM’s portfolio are women-led companies or companies where they’ve been able to significantly influence the gender balance post-investment. Women still represent a small minority of climate fund managers and entrepreneurs. In India, Avaana has seen an uptick of female founders in its pipeline – in part, the team thinks, because they’re a women-led fund. 
  • Proven technologies. Later-stage investing avoids “moonshot risk,” Shanker says. AiiM makes equity investments in early-growth companies, most of which have signed commercial contracts. “We are taking commercialization risk. We come in after companies have de-risked the technology.” First of a kind, or FOAK, capital, allows companies to build their first production plants, expand their physical footprint in new markets, and test out new business lines and models. “This first-of-a-kind funding gap is a big one, and now is the time to solve it,” Lara Pierpoint of Prime Coalition’s new Trellis Climate fund told ImpactAlpha. Trellis is focusing on deals of $10 million to $100 million that are seen as too risky for commercial infrastructure and debt investors. 
  • Keep reading, “These six women-led funds are capitalizing the commercialization of climate tech,” by Jessica Pothering on ImpactAlpha.
  • Gender (and climate) smart. Find dozens of other funds investing at the intersection of climate and gender. At our Climate Week NYC event tomorrow, Heading for Change, UBS and ImpactAlpha will explore how climate investors are scaling impact and returns with a gender lens. Join Heading for Change’s Sana Kapadia and Jackie Vanderbrug, UBS’ Andrew Lee and Amantia Muhedini, Courageous Capital Advisors’ Laurie Spengler, MCE Social Capital’s Camilla Nestor, and The 22 Fund’s Tracy Gray, in conversation with ImpactAlpha’s David Bank, Sept. 24 at 4pm ET. Register your interest. (Note: Heading for Change sponsors ImpactAlpha’s Climate + Gender coverage.)

Impact Voices: Fiduciary Future

How climate change is making your groceries more expensive. Pocketbook issues are eclipsing climate concerns. But many people don’t realize that global warming is already hitting their pocketbooks.  Prices are significantly higher for cocoa, olive oil, coffee, milk, wine, cheese, almonds, cereal, fruit and just about every global food staple, at least in part because of climate change. “Record breaking droughts, flooding, rising sea levels, hurricanes, wildfires and other extreme weather events amplified by fossil fuel pollution have decimated crop yields and made grocery bills unaffordable for many families,” writes As You Sow’s Andrew Behar in his latest Fiduciary Future column on ImpactAlpha. The nonprofit As You Sow tracks the evidence of climate inflation in a new report, “How extreme weather is driving up the price of food,” and on its microsite, ClimateInflation.org. “Because the causes of inflation are often invisible, most Americans have yet to realize that climate change is behind the surge in prices,” Behar says.  

Dealflow: Low-Carbon Transition

Cerulean Ventures closes $10 million fund for nature and biodiversity. The new climate tech venture capital firm in Santa Barbara, Calif., will use the fund to invest in pre-seed startups developing solutions to protect nature and biodiversity through carbon removal, renewable energy credits, sustainable supply chains, and blockchain technology. Cerulean was launched in 2022 with support from anchor investor One Small Planet – the nonprofit and venture fund of William Peterffy – the Regen Foundation and Regen Network, and several global family offices. 

  • Alpha in impact. Co-founder and partner Matthew Stotts told ImpactAlpha that Cerulean aims to solve “two of the hardest problems in climate” – greenwashing and the “green premium,” or the additional cost for climate-friendly products and services. Cerulean seeks out scalable tech businesses “at the intersection of accounting and accountability.” Investees include Earthbanc, a Stockholm-based measurement, verification and monitoring company for restoration projects, and Washington, DC- based Jasmine Energy, which is looking to streamline the fragmented market for renewable energy credits.
  • Read more.

Climate Asset Management raises more than $1 billion for nature-based real assets. London-based HSBC and the UK-based climate investor Pollination launched Climate Asset Management and its first fund, Natural Capital Fund, in 2020 to prove the institutional investment case for protecting and restoring natural resources. A diverse group of global financial institutions and corporations have provided “a huge vote of confidence for this new and emerging asset class,” said Climate Asset Management’s Martin Berg. Last year, CAM co-launched a separate Nature-Based Carbon Fund, a follow-on to a fund CAM started with Apple called Restore Fund. Across CAM’s three funds in total, Apple and two of its suppliers provided roughly $280 million, bringing the  amount raised to $1 billion (see, “How Big Tech can restore forests – and credibility in voluntary carbon markets”). 

  • Institutional impact. The Natural Capital Fund invests in regenerative agriculture, sustainable forestry and other nature-based real assets in developed markets. The fund is backed mainly by pensions and insurers, such as Germany’s Gothaer Group, which committed $100 million through its asset management arm. The Nature-Based Carbon Fund invests in carbon projects in emerging markets that generate nature-based carbon credits for its corporate LPs, like UK-based pharmaceutical giant GSK. Both the Natural Capital Fund and Nature-Based Carbon Fund are anchored by HSBC.

Kaleidofin clinches $13.8 million to bank India’s informal borrowers. Chennai-based Kaleidofin uses AI and machine learning algorithms to help lending partners such as banks and microfinance institutions sharpen credit assessments on low-income individuals and small or informal enterprises in India. Kaleidofin’s software has facilitated over $2.7 billion in lending to 4.7 million borrowers since 2020. The new equity funding round was led with $11 million from Rabo Partnerships. 

  • Financial inclusion. Participating investors in the round include Dell Foundation, Oikocredit, Omidyar Network India and Flourish Ventures. Kaleidofin is hoping to bring in an additional $10 million in equity this year from investors. It is also looking to add $8 million in debt, of which Dell Foundation committed $1 million. The infusion of capital will help boost lending, particularly to  female entrepreneurs and agribusinesses in India’s rural areas.
  • Check it out.

Dealflow overflow. Investment news crossing our desks:

  • Dutch impact investor Goodwell Investments made its first investment in Uganda, in Agent Banking Co., a provider of digital financial services in underserved communities. (Goodwell)
  • New York-based Air Company raised $69 million in Series B funding, backed by Lowercarbon Capital, to make sustainable aviation fuel and other products from captured CO2. (Air Company)
  • Solar Impulse Venture Fund, a joint venture of BNP Paribas Asset Management and the Solar Impulse Foundation, has raised €150 million ($167 million), its minimum target for the SFDR Article 9 “ecological transition” fund. A final close is expected by year end. (BNP Paribas)

Signals: Electrify Everything

At Africa E-mobility Week, EV startups look to carbon credits and loans against their batteries. Africa’s small scale but increasing adoption of electric vehicles is creating an investable opportunity in e-mobility, reports ImpactAlpha’s Lucy Ngige. Among the highlights from Africa E-mobility Week in Nairobi: Startups tapping carbon credits to overcome lingering financing challenges.

  • Carbon credits and battery securitization. Netherlands-based startup Zeroca develops and sells carbon credits for e-mobility. The company is partnering with EcoKada, a Nigerian delivery startup that solely uses e-bikes. EcoKada is tapping carbon credits through Zeroca’s program to subsidize operational costs and offer cheaper rates to customers. Such carbon credits, says Joseph Wambugu of Swiss carbon market specialist Ecosecurities, can create additional revenue streams for EV startups to help them grow. Battery securitization, which involves using EV batteries as collateral to secure financing, is another emerging approach. That would let companies raise funding based on the value of the EV batteries in their fleets, says Jakob Hornbach of Ugandan e-mobility startup Gogo.
  • E-mobility dealflow. Africa, the Caucasus and the Middle East account for less than 1% of global EV uptake. Adoption is increasing in some African markets like Kenya, driven in part by policy intervention. One sign of the opportunity: Investors are lining up to back e-mobility startups. Nairobi-based Roam raised $7.5 million last year to expand electric motorbike and bus manufacturing. BasiGo snagged a fresh $3 million this year for e-bus production in Kenya and Rwanda. Rwandan e-bike manufacturer Ampersand raised $19.5 million in equity and debt last year, topped with another $2 million this year.
  • Keep reading. 

Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

JUST Capital taps former PayPal CEO Dan Schulman as chairman of its board of directors, replacing JUST’s co-founder Paul Tudor Jones II… The Aspen Institute is spinning out its Climate Philanthropy Catalyst Coalition, which will be headed by Randall Kempner. Kempner is also launching Prosperity Strategies, a consulting firm focused on climate-smart economic development… Carlos Martín, currently with Joint Center for Housing Studies, will become Resources for the Future’s research and policy engagement vice president in October.

Social Finance seeks a head of communications in Boston… Maycomb Capital has an opening for an investment analyst in New York… Acumen America is recruiting an investment associate in San Francisco… ImpactPHL’s John Moore, Zenith Wealth Partners’ Jason Ray and Chris Capato’s Public Media Foundation will join a virtual discussion on the workings of foundation boards and investment gatekeepers and how foundations are investing locally, Wednesday, Sept. 25.

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

Thank you for your impact!

– Sept. 23, 2024

Correction: An earlier version of The Brief stated that AiiM invests in pre-revenue companies. AiiM invests in post-revenue companies.