The Week in Impact Investing: Basics

The team at

ImpactAlpha

TGIF, Agents of Impact! 

🗣 On the ground. There was no shortage of complex issues to dissect at this week’s Milken Global Conference, as Amy Cortese reported. Rising rates, sinking banks, paralyzed politics – and here comes artificial intelligence. Step outside Beverly Hills, or Washington, DC, or Silicon Valley, and the agenda is more practical and the work more grounded. In Jackson, Miss., Black churches are leading a local revival by focusing on their assets and their social impact, as David Bank discovered at the Neighborhood Economics conference. In Philadelphia, local leaders are mobilizing high-impact funds, and local founders are building high-impact ventures (see, Agent of Impact, below), as was on display at this week’s Total Impact Summit hosted by ImpactPHL. The city of Chicago is revamping what its municipal bonds fund in order to attract new investors, redress historic inequities, and cut its interest payments, as Oscar Perry Abello detailed on ImpactAlpha

Such efforts can wrest resilience from volatility. This month’s Liist of open impact funds was stocked with managers raising capital to finance community essentials, including local businesses, affordable housing and pathways to wealth creation, as Jessica Pothering and Roodgally Senatus reported. Upstart Co-Lab has stocked a pipeline of more than 300 creative funds and businesses for investors in the creative economy, including cultural institutions themselves, as Roody found at Upstart’s gathering in New York City. Other impact investors are finding ways to champion reproductive care after Dobbs, particularly in systemically underserved communities, Bridgespan’s Marina Fisher, Nate Wong, Lauren McDermott and Roger Thompson shared in a guest post. By going back to basics, Agents of Impact are charting a course forward. – Dennis Price

The Week’s Podcast

🎧 Impact Briefing. Himalaya Rao of the BFM Fund – for Black Founders Matter – speaks with David Bank about the impact alpha in racial justice investing and the challenges of first-time female fund managers. Host Monique Aiken has the headlines.

The Week’s Agent of Impact

John Moore, ImpactPHL: Stocking the pipeline for impact investments in Philadelphia. John Moore quit his corporate gig and moved to Philadelphia two decades ago. He found a city rich in social entrepreneurship and a growing community of practice around impact investing. Ben Franklin Technology Partners, Reinvestment Fund, Halloran Philanthropies, PIDC and B Lab are all based in Philly. As a member of Investors Circle (now the American Sustainable Business Network), Moore began making angel investments in high-impact startups. He has since backed more than 40 social ventures and impact funds, including Philly-based Wash Cycle Laundry and First Step Staffing. Another investee, Mosaic Development Partners, a Black-owned real estate developer, is “blowing up,” he boasts. “It very quickly became obvious that my life got better as Philadelphia thrived.”

As Moore and the growing community of impact investors dug in, gaps became apparent. “There weren’t products, there weren’t pipelines, there weren’t really good ways for this money to flow,” he recalls. Five years ago, Moore co-founded ImpactPHL to prime the pumps. Philly now boasts at least a dozen locally-focused impact funds, including Hatch BioFund, The Collective, and Kensington Corridor Trust. “Not more than 10 days go by that I don’t personally meet another angel investor or CEO who’s interested in social impact,” Moore says. This week, ImpactPHL’s flagship Total Impact summit was a showcase of impact investing innovation from around the country (see, “Overheard in Philadelphia”). “I am not the reason that ImpactPHL is doing so well,” Moore stresses. “I just happen to be privileged enough to have a surfboard on this massive wave of momentum that has been building for decades.”

The Week’s Dealflow

Deal spotlight: Impact fundraising defies market headwinds. What fundraising slump? The parade of new impact (and especially climate) funds continues despite economic warning signs. A first-time fund manager might have a very different take on the fundraising environment than a principal at a private equity powerhouse, like Apollo, which is out with a new $4 billion climate fund, or a corporate-backed manager like Marunouchi Innovation Partners, which raised $400 million for its climate tech fund with capital from Mitsubishi. The ImpactAlpha news desk is seeing impact funds of all shapes, sizes and angles hitting first and final closes, despite a steep drop in overall VC fundraising and a sober outlook for private equity this year. 

  • Early stage. “There are still over-subscribed deals happening frequently,” said Will Poole of Capria Ventures, which scored funding from Gates Ventures and others for its second emerging markets tech fund. Poole said early-stage investors like Capria are not facing the same headwinds in fundraising or dealmaking that later-stage managers are. Valuations have declined less in the early-stage segment, and investors are showing interest in emerging market opportunities, particularly in India and other parts of Asia.
  • Second funds. Four of the six funds on this month’s Liist of active raises are managers’ second funds (including Capria). It doesn’t always feel easier the second time around for many fund managers. Having a track record helps, said Brendan Mullen of Secha Capital, which is raising its second fund to invest in small and growing businesses in Southern Africa. “We can point to our thesis in action, our ability to drive pipeline, our ability to create value for portfolio companies and jobs, to invest in women.” Financial inclusion investor Anthemis is finding corporate backers to support a new strategy: a women-focused fintech fund.
  • Niche players. Institutional investors have become slower to cut checks, but family offices are eager to put capital to work, according to both Poole and Mullen. So are niche investors, observed Gina Foote of Conservation Law Foundation, which scored backing from healthcare provider UnitedHealth Group for its second Healthy Neighborhoods Equity Fund with Massachusetts Housing Investment Corp. “Impact investors, and especially healthcare investors, really grasped the power of investing not just in affordable housing,” Foote said, but in “breaking down silos and tackling these complex social challenges more holistically.”
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Clean energy. Sun King will expand into cookstoves with acquisition of PayGo Energy… Mumbai-based Avaada Group raked in over $1 billion to finance local green hydrogen and ammonia projects… New Delhi-based clean energy producer Serentica Renewables secured an additional $250 million from KKR… California-based Ohmium International, which produces electrolyzers for green hydrogen, raised $250 million. 

Climate tech. UK-based Persimmon invested £25 million in TopHat, a maker of low-carbon modular housing… Elemental Excelerator and Eni backed Energy Dome, which is making long-duration batteries… MCJ Collective invested in Windfall Bio to capture methane emissions from farms and convert it to fertilizer… Span raised an additional $97 million in Series B funding for its smart electric circuit breaker panels.

Climate resilience. Beneficial Returns backed Elisur Organic to help Peru’s coffee farmers diversify their crops.

Financial inclusion. Nigeria’s Nomba raised $30 million to provide banking and payment services to small businesses… Cross-border processor Rev acquired online payments company Netspend to reach underbanked customers… Encourage Capital invested in Svakarma Finance to finance clean energy access for India’s small businesses. 

Milestones. Calvert Impact crossed the $1 billion mark in retail sales of Community Investment Notes. 

Muni impact. Green muni bond in California provided $63 million to waste-to-fuel provider Divert… Muni bond finances post-Covid hospital infrastructure expansion in the Twin Cities.

Returns on inclusion. KKR acquired CoolIT to advance climate impact and worker ownership… Three Black resident entrepreneurs of the Jobs for the Future incubator merged their edtech ventures.

The Week’s Talent

Ohmium appointed renewable energy lawyer Andrea Nicolás to its board… Laura Cozzi was promoted to director of sustainability, technology and outlooks at the International Energy Agency… Transition VC brought on Anuj Khanna, ex- of C&S Electric, as a limited partner and investment committee member. 

Aura Cuellar, ex- of Shell US, joined LanzaTech as executive vice president of growth and strategic projects… The American Clean Power Association named Sarah Beerbower, ex- of the US Chamber of Commerce, as vice president of member relations… Aina Abiodun, ex- of Salt Climate Tech, replaced David Kenney as president and executive director of VertueLab.

Susannah Burrage, ex- of Innosight, joined Zeal Capital Partners as head of portfolio management… Lara Pierpoint, ex- of Actuate Climate, joined Prime Coalition as director of an early climate infrastructure program. Emily Lewis O’Brien, also ex- of Actuate Climate, joined Prime as the program’s senior lead. 

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 Rockefeller Foundation seeks a program strategy associate… Veris Wealth Partners seeks a wealth manager, an impact investing senior research analyst, and a senior wealth managerNY Green Bank is on the hunt for an investment administration and portfolio support associate… Milken Institute has an opening for an innovative finance director… Cambridge Associates is looking for a sustainability and impact investing analyst.

Other East Coast locations

Cambridge Associates is looking for a sustainability and impact investing analyst in Boston… Milken Institute is looking for an associate for its Center for Financial Markets in Washington, DC… LISC is hiring for several roles, including an impact reporting and data management director, an investor relations analyst, and an asset manager… Community Capital Management is hiring an impact investing and financial services business development associate in Ft. Lauderdale, Fla.

West Coast

In the San Francisco Bay Area: CDC Small Business Finance is recruiting a senior business advisor, Tides has an opening for an impact investing senior director, and Enterprise Community Partners is hiring a senior asset manager… SoLa Impact is recruiting a finance and accounting intern in Los Angeles.

Global locations

Finance in Motion has an opening for a sustainable finance senior officer in Frankfurt… VentureESG is hiring a program director in London… Triodos Investment Management is recruiting a product manager in the Netherlands… Inyova Impact Investing is looking for an equities portfolio manager in Berlin… ResponsAbility is hiring a sales and business development manager in Zurich, an office manager in Tbilisi, Georgia, and a climate finance investment officer in Bangkok… Fidelity Investments seeks an ESG research lead in Bangalore.

That’s a wrap. Have a wonderful weekend.

– May 5, 2022