The Brief | May 12, 2023

The Week in impact investing: Alpha

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TGIF, Agents of Impact!

🗣 Leading with impact. When pitching big money investors, impact managers used to lead with “alpha” and downplay “impact.” Not any more. Impact is now a signal of alpha. Hundreds of exits racked up by early impact funds are putting to rest any lingering concerns (sigh) about their ability to generate market-rate returns, as Amy Cortese reported. A majority of the exits met or exceeded investor expectations for financial returns, according to Impact Capital Managers and law firm Morrison Foerster, and eight in ten met their goals for impact. Private equity firms as well are adopting impact for an edge, rolling out employee ownership strategies (KKR), diversity goals (HarbourVest) and decarbonization funds (Brookfield Asset Management), as NYU’s Tensie Whelan shared in a guest post in ImpactAlpha (and on this week’s Impact Briefing podcast). In a challenging fundraising environment, some are doubling down. Brookfield says its follow-on energy transition fund could top $20 billion (see Dealflow Spotlight, below). A deeper commitment to impact helped Novulis, an Ecuador-based dental care company that serves low-income families, grow revenues and attract growth capital, Jessica Pothering reported.

Impact alpha benefits flow the other direction as well. Impact solutions that adopt business models and tap private capital can drive down costs and scale their reach. Acumen portfolio companies d.light and Burn Manufacturing are using carbon credits they can earn by reducing emissions to lower the upfront costs of climate-friendly products for low-income consumers. Catalytic grants from Visa are enabling emerging women-led funds in Africa to prove their investment theses and build a track record. “The capital we will deploy will have a multiplier effect on our ecosystem, not only supporting Altree but supporting women and small businesses in the greater value chain,” Altree’s Jenni Chamberlain told Jessica. Communities in the US are pushing back on speculators and fighting gentrification with legal structures and evergreen investment funds to preserve ownership of commercial and residential assets. Educators are mapping opportunities to direct generative AI to enhance student outcomes and success, Impact Engine’s Rahul Bhide and Ainsley Campbell shared on ImpactAlpha. Agents of Impact have infected the host: Impact alpha (lowercase, with a space) is going viral. – Amy Cortese and Dennis Price

The Week’s Podcast

🎧 Impact Briefing. Tensie Whalen of the NYU Stern Center for Sustainable Business joins host Brian Walsh to discuss the long and winding road to responsible private equity. Plus, the headlines. 

The Week’s Agent of Impact

Aina Abiodun, VertueLab: Centering community in climate tech in the Pacific Northwest. Nigeria-born climate entrepreneur and “professional nomad” Aina Abiodun is bullish on place-based climate innovation. “There is nothing more urgent than when you’re living the disaster,” Abiodun tells ImpactAlpha. Hawaii, for example, has committed to greening its energy production. New York is moving aggressively to decarbonize its building stock. As the incoming head of Portland-based climate nonprofit VertueLab, which has funded climate tech in the Pacific Northwest for 15 years, she says, “Let’s tackle this thing from a local perspective and see how we can build it out.” Abiodun was the first Black woman to run a venture-backed tech company in Germany, at healthy living company 8fit. In New York, she co-founded Salt to finance local climate projects. Before joining VertueLab, Abiodun advised other climate tech founders as an entrepreneur-in-residence at Elemental Excelerator. From climate finance to community engagement, “I now understand how all this stuff works,” she says.

VertueLab began as a state-funded entity to commercialize clean energy innovation coming out of Oregon universities. Today, as an independent nonprofit, it supports regional climate tech startups through its philanthropic investor-backed Climate Impact Fund. The fund’s 14 investments include EV charging solution OpConnect in Portland and solar panel efficiency venture BlueDot Photonics in Seattle. VertueLab’s next fund will be government anchored, seek impact capital from foundations and family offices, and will have a more intentional focus on overlooked entrepreneurs and frontline communities. Poised to accelerate it all is the Inflation Reduction Act. Abiodun sees her role as “a steward” of VertueLab’s activities to ensure “they are benefiting communities at large.” Like peer nonprofit early-stage climate investors Elemental and Prime Coalition, Abiodun believes the right mix of community and capital can help “close the gap between the urgency of our situation and the slowness of the bureaucratic ways in which money is coming through the system.”

The Week’s Dealflow

Deal spotlight: Brookfield bucks fundraising malaise as it eyes another mega decarbonization fund. Private equity funds are bracing for a challenging fundraising year. Not Brookfield Asset Management. Already this year, the Canadian firm has raked in $19 billion across its strategies. Its second energy transition fund is expected to approach $25 billion. The firm’s Bahir Manios cited the “strong demand from institutional capital for this strategy” on the firm’s quarterly earnings’ call this week. Brookfield closed its inaugural transition fund at $15 billion last June, calling it the largest energy transition fund on record. The fund is already 85% deployed. “The amount of capital that is required in this sector is very large,” said Brookfield’s Bruce Flatt

  • Investment heft. Brookfield is following the money as it looks to double its fee-based assets under management to $1 trillion within five years and offset its troubled commercial real estate portfolio. Helping energy and industrial companies decarbonize, along with a push into credit, is key to that effort. “The scale of our capital focused on transition really makes us unique,” said Flatt. “And that does allow us to target not only the largest, but the most attractive opportunities in the transition space.” 
  • Attractive opportunities. In March, Brookfield led a consortium of investors in a $10 billion takeover of Origin Energy to “deploy our renewable development capabilities to decarbonize and transition a very large energy market player in Australia,” said Flatt. The transition fund portfolio also includes a $1 billion investment in Mumbai-based Avaada Group to finance green hydrogen and ammonia projects. Asia and the Middle East have taken on greater importance in Brookfield’s overall fundraising and investment strategy, as commitments from US-based investors have slowed.
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Catalytic capital. Catalytic Climate Finance Facility scored $12 million to test and launch new finance tools… Visa provided catalytic “working capital grant” to three women-led funds in Africa… Inter-American Development Bank provided an $85 million guarantee for Ecuador’s planned $800 million debt-for-nature swap.

Climate finance. Green-Got, a French green neobank that invests in environmental projects, raised €5 million… Silicon Valley Bank keeps green project finance rolling under new ownership.

Education and skills. BeeReaders raised $3.5 million to close the literacy gap for Spanish-speaking students… Edtech funding for STEM tools in a diverse Santa Clara school district.

Energy transition. a16z allocates $500 million to its “American Dynamism” strategy… Offshore wind developer Gazelle Wind Power acquired F. Carceller, a Spanish naval shipbuilding firm… Lithium mining companies Allkem, in Australia, and Livent, in the US, merged in a $10.6 billion deal… NextEra Energy Partners plans to sell off its natural gas pipelines to focus on renewable energy… Schmidt Family Foundation backed Nithio for clean energy access in Africa… UK-based Actis launched a $500 million Japan-focused clean energy arm.

Green materials. Canada-based Cyclic Materials secured $27 million to recycle rare earth elements… Former NBA star Rick Fox’s climate tech venture Partanna scored $12 million to make low-carbon concrete. 

Impact tech. Acumen invested in CropSafe, which is supporting smallholder farmers in Nigeria to access global markets, reduce crop losses and adopt sustainable agriculture practices… Frontline Wildfire Defense raised $6.4 million to help homeowners and businesses track nearby wildfires… India-based EV ride-hailing venture Blusmart Mobility raised $42 million in equity and debt funding.

Inclusive fintech. El Salvador’s Cubo raised $3.5 million to digitize payments for small businesses… Mexico-based fintech venture R2 secured a $100 million line of credit from Community Investment Management… MPOWER secured $150 million debt investment from Goldman Sachs for higher-education financing.

Investing in health. Embr Labs secured $35 million in debt funding for its wristband that helps women manage menopause… Nigeria’s JEAY Healthcare raised pre-seed funding to provide telemedicine services… Pharmaceutical company Eli Lilly backed LeapFrog Investments’ fourth Emerging Consumer Fund.

The Week’s Talent

Jacmel Growth Partners appointed Mark Hardaway, ex- of the University of California, as chief financial officer…  Blackstone’s EQ Office named Samantha Sims, ex- of Warner Music, as senior vice president of social impact and sustainability… Gina Wolf, ex- of Meta Platforms, joined Spearmint Energy as a senior vice president of strategy and project development. Jake Dahm, ex- of Avantus, joined the renewable energy firm as a senior director of development.

Kimberly Stotzer succeeded Quentin Strode as chief executive officer of NEW Community Investments… Don Wood, ex- of DFJ, joined B Capital as a venture partner focusing on climate tech… Nogoye Dieng, ex- of Principles for Responsible Investment, joined BNP Paribas Asset Management’s sustainability center as a senior stewardship analyst. Sindhu Janakiram, ex- of Refugee Integration Insights, joined the firm as an ESG analyst and equity lead.

Matthew Cohen, ex- of TrueTag Technologies, joined Clean Energy Ventures as an investment principal… Amy Seusing, a former senior director of corporate and foundation relations at the Obama Foundation, was named chief development officer of Jobs for the Future… Impax Asset Management promoted Leah Wood to global head of marketing and client experience… Arclight Capital Partners appointed Leo Denault, former chairman and CEO of Entergy, as a senior advisor and board member… Andy Fyfe is leaving B Lab after 13 years to join 60 Decibels.

Spearmint Energy hired Gina Wolf, ex- of Meta Platforms, as senior vice president of strategy and project development, and Jake Dahm, ex- of Avantus, as senior director of development… Matthew Goldstein, ex- of M12, joined Systemiq Capital as a general partner. Lydia Guett, ex- of Cambridge Associates, also joined the climate tech venture firm as head of growth… Jack Ma, the billionaire founder of Chinese e-commerce giant Alibaba, joined University of Tokyo as a professor of sustainable agriculture and food production.

The Week’s Jobs

💼 Share the week’s impact jobs. Want to post a job in The Brief? Drop us a note.

In New York

The Natural Resources Defense Council is recruiting a data and analytics strategy director… New York State Insurance Fund is on the hunt for a senior ESG and sustainability lead… The Global Impact Investing Network is hiring an impact institutional clients associate director and a corporate impact investing associateCiti has an opening for a net-zero analyst and assistant vice president… New Level Resources is looking for an impact investment fall research intern.

Other East Coast locations

Habitat for Humanity International has an opening for an associate general counsel of real estate and impact investing in Atlanta… Also in Atlanta, the Community Foundation for Greater Atlanta seeks a senior program officer for its housing funds… MassMutual seeks an impact investing analyst in Boston… CarterPierce seeks an impact fund investing associate in Chicago.

West Coast

Climate Policy Initiative is looking for a director of operations in San Francisco… REDF has an opening for a senior associate of capacity building in San Francisco or Los Angeles… Align Impact seeks a public markets manager and a head of advisory in Santa Monica, Calif. 

In Europe

Brock & Decker seeks an investment associate in London… Carrée Biebuyck & Partners is on the hunt for an impact investing analyst in Brussels… Prime Capital is recruiting a sustainability management associate in Frankfurt… The London School of Economics is looking for an impact investing associate… Acre seeks a senior climate specialist in Edinburgh, Scotland. 

More global locations

Rally Assets is looking for a private investment research senior associate and a head of finance, operations and compliance in Toronto… Oikocredit has an opening for a regional capacity building specialist in Costa Rica… Symbiotics is on the hunt for an Africa-focused investment analyst in Cape Town… The Impact Investors Council is hiring a research associate in Mumbai… Also in India, Caspian is hiring an impact associate or senior associate… The Ford Foundation is hiring a regional director in Beijing… Minderoo Foundation is looking for a blue economy officer in Sydney.

Remote jobs

Rewiring America is recruiting a head of investment… 17 Asset Management is hiring a sustainable investing fellow… TruFund Financial Services is looking for a New Market Tax Credits impact investment officer.

That’s a wrap. Have a wonderful weekend. 

– May 12, 2022