The Brief | January 13, 2023

The Week in Impact Investing: Catalytic

ImpactAlpha
The team at

ImpactAlpha

TGIF, Agents of Impact! 

🗣 Impact signals. Venture capital plowed $70.1 billion into climate startups last year, up 89% over 2021. Off-grid energy delivers power to roughly 490 million individuals, or one in 20 people on the planet. Mobile banking and digital wallets have helped 1.2 billion previously unbanked adults gain access to financial services over the last decade. Purveyors of patient, flexible and risk-taking capital, which helped build all of these markets, may think their job is done. It’s just getting started. Capital gaps remain for climate technologies that serve lower- and middle-income populations, equity-based conservation and regenerative agriculture. Almost a billion people still live without reliable electricity. And fintech needs more focus on equity and inclusion. “Catalytic capital can serve as a bridge that connects the promising expansion of nascent investment activity to long-term, sustained impact and financial performance,” Courageous Capital’s Laurie Spengler (see Agent of Impact, below) writes in this week’s kickoff to our Scaling Impact series with the Catalytic Capital Consortium

Catalytic capital in the form of pre-development finance to stock the climate project pipeline was on the agenda of this week’s Public Finance Forum in Washington, D.C. The Milken Institute’s new Community Infrastructure Center aims to help underserved communities access once-in-a-generation federal funding opportunities. “The idea is: how do you connect high-demand, highly replicable projects with the experts and capital that can help?” Milken’s Dan Carol told ImpactAlpha’s Amy Cortese (listen to Carol and his colleague Rachel Halfaker on this week’s Impact Briefing). Capital providers must come out of their silos to close wealth gaps in America. “I want to make #takerisk start trending,” Dana Bezerra of Greater Share said at the forum. The mandate: Even as impact scales, keep the catalytic capital flowing. “Pay attention to deals that catalytic capital providers are advancing,” Spengler advises commercial investors. “Their participation signals a level of expertise and opportunity that the broader market has yet to recognize.” – Dennis Price

Elsewhere on ImpactAlpha:

  • Anti-ESG fallout. The GOP has ditched its “pro-business” stance with attacks on ESG that hurt corporations, investors – and red states, argues ImpactAlpha contributing editor Imogen Rose-Smith in her latest Institutional Impact column. The projected added costs to issue municipal bonds in just seven states mulling ESG boycotts tops $1 billion, reports Andrea Riquier for ImpactAlpha.
  • Returns on inclusion. A human rights approach in impact investing can help investors proactively identify and account for social risks, impacts and opportunities, and therefore maximize positive impact at the investment and systems levels, argue Kate Finn of First Peoples Worldwide, Mary Beth Gallagher of Domini Impact Investments, and BSR’s Kindra Mohr in a guest post on ImpactAlpha.
  • Impact management. ImpactAlpha went searching for signals in annual impact reports from Elevar Equity, Veris Wealth Partners, Calvert Impact, Atlas Impact Partners and Runway and other investment managers.

The Week’s Impact Briefing

🎧 On this week’s podcast. Milken Institute’s Dan Carol and Rachel Halfaker join host Brian Walsh to share how they are connecting historically disadvantaged communities with the huge sums of public and private financing looking for actionable green infrastructure projects. Plus, the headlines.

The Week’s Agent of Impact

Laurie Spengler, Courageous Capital Advisors: Structuring and designing finance for impact. A small business lender in the Mississippi delta. A microfinance bank in Uganda. A global development finance institution in London. Laurie Spengler is often the person to call to structure a transaction or design a financial vehicle to move capital toward impact. “I care deeply about alignment between the source and the use of capital,” Spengler tells ImpactAlpha. “Not just the quantum, but the terms and conditions for the capital to enable the impact to be realized.” ImpactAlpha has called on Spengler often as well, for clear thinking and sharp insight in more than a dozen Agents of Impact calls and guest posts, including this week’s kickoff to our Scaling Impact series with the Catalytic Capital Consortium. Last month, Spengler (and co-author George Surgeon) took the unusual step of admitting their mistake in an earlier post mourning a lost opportunity in a pandemic-era fund for community development financial institutions and minority depository institutions. “Boy, were we wrong!” they wrote “Treasury hit the ball out of the park.”

Spengler took a different path from many of her fellow Harvard Law School graduates, spending more than a year setting up legal clinics in Boston homeless shelters. “It was a paradox: we were helping people to win rights to housing, but there weren’t enough houses to go around,” she told one interviewer. “What was missing was the finance element.” The law firm White & Case posted her to Central and Eastern Europe after the fall of the Berlin Wall. From there she launched her first advisory firm, sold it to her management team, and was recruited to lead Shorebank International, the advisory arm of the pioneering community lender. When Shorebank ran aground in the Great Financial Crisis, Dutch bank Triodos bought the unit and merged it to create Enclude, which was acquired by Palladium in 2018. She founded Courageous the next year. Along the way, she has helped community development financial institution Southern Bancorp restructure its balance sheet with $34 million in hard-to-find equity capital (better than deposits!) and helped BRAC convert its microfinance lender in Uganda to a deposit-taking bank. On the board of British International Investment, she has been a prod for gender-lens investing and a more catalytic approach.

When the COVID pandemic dealt a body-blow to small businesses worldwide and to emerging markets lending, Spengler called out the untimely aversion to risk of many impact investors and development finance institutions. “What we are hearing and seeing is not just a hesitation to act, but an unwillingness to price for impact at a time of global pandemic, social unrest and the incontrovertible exposure of deep systemic bias,” Spengler wrote. Decamping from her home in London to care for her mother in Florida, she knocked on doors in the 2020 election. She resolved to ask not just for votes but for how people are doing. Her takeaway: “Meeting people’s real needs, and particularly people we may not know or see, must become an explicit commitment of the impact investing community,” she says. “If our aspiration is to be the default paradigm for investing financial capital, we must be relevant in every community.”

The Week’s Dealflow

Deal spotlight: Climate SPAC déjà vu. Spanish green hydrogen developer H2B2 Electrolysis Technologies this week announced plans to go public via acquisition. The news follows electric vehicle battery tech developer Noco-Noco’s plans to be acquired and taken public by a special purpose acquisition company, or SPAC. At least 17 other climate tech companies announced SPAC listings in December. The fundraising trick, which involves listing a specially designed entity on a stock exchange in order for the purpose of buying a private company, was immensely popular during the boom market of late 2020-early 2021. SPACs have since faltered. One reason for the renewed activity, observes Climate Tech VC, is the Inflation Reduction Act, which is spurring demand for climate technologies. Another driver: the two-year deadline for SPACs that listed during the earlier craze to complete their deals. Unconsummated SPACs may be subject to the 1% buyback tax included in the Inflation Reduction Act.

  • Up, down, up? For “tough tech” companies, like many climate tech ventures, SPACs provide a way to raise money through the public markets without the cost and red tape of a traditional IPO. Listed SPACs, also known as “blank check companies,” have to close deals (known as a “de-SPAC“) or return capital to investors (as a number are choosing to do). Deadlines are looming for more than 600 SPACs announced in 2021, including scores focused on climate tech. Beware: Climate tech companies that hit public markets last year via SPACs are down roughly 70%, reports Climate Tech VC. Then again, these are companies with long-term product development timelines – and impact potential.
  • Share this post.

Low-carbon transition. A passel of clean energy deals to kick off the new year… Castleton Commodities International acquired a majority stake in Netherlands-based battery storage operator S4 Energy… The Emerging Africa Infrastructure Fund invested €25 million to Ivoire Hydro Energy to develop and construct a 44-megawatt hydropower plant in Côte d’Ivoire… Vision Blue Resources raised $61 million to invest in companies procuring and developing materials for battery systems… TPG Rise Climate led a $230 million equity round for German residential solar leasing company Enpal.

Agrifood investing. Nigerian agtech startup Releaf scored $3.3 million to link smallholder palm oil producers to consumer goods manufacturers… Bangalore-based CropIn, which helps farmers analyze crop yields and risks, raised $13.7 million… Aruwa Capital reupped its investment in AgroEknor, which procures and exports hibiscus flowers from farmers in northern Nigeria.

Climate finance. Commerz Real’s Klimavest real assets impact fund crossed the billion-euro mark… Goldman Sachs climate fund hit $1.6 billion… Madagascar secured $19.2 million from the African Development Bank to protect the island nation from climate shocks… Prime Capital Investment Advisors acquired Earth Equity Advisors, a registered investment advisor and B Corp. that offers fossil fuel-free investment portfolios.

Financial inclusion. Bangalore-based Banksathi raised $4 million to connect individuals in India’s second and third tier cities with financial services… Ghana’s Jetstream Africa secured $13 million for its cross-border logistics tech and financing platform… Mumbai-based Jupiter raised $12.1 million in venture debt to allow workers in India to access wages as they earn them… VilCart raised $13 million to digitalize India’s mom and pop shops. 

Fund news. IMPAQTO Capital raised $2 million to make revenue-based investments in early-stage impact startups in Latin America… TPG NEXT secured $500 million from CalPERS for underrepresented alternative asset managers.

Impact products. Apex Group, Mosaic Insurance and Aon are partnering on an insurance product for fund managers that offers better premiums when managers improve their ESG performance… Lithuania’s Walk15 scored €600,000 to help organizations create physical activity programs for their employees.

Gender-lens investing. DBL Group secured a $52 million loan to create a cotton yarn mill that will employ mostly female workers in Bangladesh… 

Investing in health. A Morgan Stanley India Infrastructure fund invested $9.3 million in senior care provider Athulya… Herself Health scored $7 million to provide value-based care to older women.

Waste to value. Generate bet on Sedron Technologies’ municipal wastewater treatment… Pakam raised pre-seed funding to improve waste recycling in Nigeria.

The Week’s Talent

Stefan den Doelder, ex- of Stafford Capital Partners, joined North Sky Capital as a managing director in Rotterdam, Netherlands, the firm’s first office in Europe… Oak HC/FT promoted Eliza Adams and Tess Munsie to vice president and Stephen Dierks to head of fintech talent… Neonu Jewell, ex- of Niyah Center, joined DFC as chief diversity and inclusion officer.

The Week’s Jobs

In New York

The Rockefeller Foundation has an opening for a managing director of operations… Flag is looking for an account director and a senior account director for sustainability reporting… KPMG seeks a community impact manager… Alice+Olivia is looking for a director of sustainability… Propel is recruiting an operations and finance associate… Closed Loop Partners is hiring a director of finance and strategy, as well as a senior associate to the director of circular services investments… Ideas on Purpose is recruiting a senior sustainability and ESG reporting strategist and writer… The ImPact seeks a catalytic capital senior associate.

In Washington, D.C.

Accion is hiring a global investments intern and a director of public relations… The World Resources Institute is looking for a communications and engagement specialist for its land and carbon lab, a greenhouse gas protocol learning program lead and a climate finance research consultant…  The U.S. Economic Development Administration has an opening for a management and program analyst… The U.S. Department of Energy’s solar energy technologies office is looking for two systems integration technology managers…  The World Bank is looking for a financial sector analyst… Calvert Impact Capital is looking for an associate general counsel.

In California

NextWave Partners is hiring a sustainability and ESG vice president in Los Angeles… The Sobrato Organization seeks a director of grants management in Mountain View… Battery materials company Sila is hiring a program manager in Alameda… The University of Southern California seeks a sustainability coordinator… Grounded Capital is hiring a director of talent and a vice president of real estate asset management in San Francisco… The California Health Care Foundation is looking for a senior program investment officer for its innovation fund in Oakland.

In other U.S. locations

Bain Capital is looking for an ESG manager for impact measurement and reporting… Harvard Medical School is recruiting a sustainability manager… MAKE Corporation seeks an ESG reporting and engagement consultant in Chicago… Impact Engine is recruiting a director of investor relations, an investment analyst, and a finance and operations analyst in Chicago… Northeastern University is recruiting an associate director for community research planning and engagement in Boston.

PepsiCo is recruiting a sustainability data steward manager in Chicago… Near East Foundation seeks a senior program officer in Syracuse… The Bill & Melinda Gates Foundation seeks a program officer for digital learning and evidence-based teaching in Seattle…The Cook Inlet Lending Center is hiring a residential lending manager in Anchorage, Alaska… FUSE has several open fellowship positions in San Jose, Calif., Seattle and Los Angeles… Catholic Relief Services is recruiting an impact investing manager and a temporary impact investing senior advisor in Baltimore. 

The Community Foundation of Holland Zeeland is recruiting a president and CEO in Holland, Mich… Climate tech venture studio Marble is recruiting a venture science associate, founders in residence, and interns… The United Nations Foundation has several openings in Washington, D.C. and New York… City Year is recruiting a managing director of impact in San Antonio.

Jobs in Africa

Hivos is hiring a finance officer in Tunisia… Afrika is looking for an economic justice and climate action associate in Kampala, Uganda… Akina Mama wa Dalberg is looking for a project director in Lesotho… Village Capital is looking for an Africa regional lead. 

Jobs in Europe

South Pole seeks an impact investment associate in London… Also in London, the University of Exeter is hiring a part-time senior impact and partnerships development manager for its digital economy research center… The Stockholm Environment Institute is hiring an eastern partnership countries project manager, a sustainable finance expert, and a Western Balkans project coordinator in Sweden… Sustainable Energy for All is hiring a head of finance in Vienna. 

Other global locations

Rally Assets seeks an impact reporting associate and a portfolio administrator in Toronto… The Australian Communities Foundation is looking for a chief operating officer, ideally in Melbourne or Sydney… The U.N.’s Food and Agriculture Organization has several open positions in the Philippines, including an anticipatory action specialist, a project administrative and finance assistant, and a national project coordinator… CBM Global Disability Inclusion has openings for a program coordinator, a program finance officer for Nepal, and an inclusive eye health advisor. 

Remote jobs

Franklin Templeton is looking for a vice president and director of sustainability global markets… Second Nature is looking to fill several full-time and remote positions… The Gordon Foundation is hiring an environmental data specialist… Cardinal Health seeks an environmental sustainability manager… SmartCarbon is looking for a carbon consultant and trainer… ClimateWorks Foundation seeks a data assistant for global intelligence… SOCAP Global seeks a director of content.

That’s a wrap. Have a wonderful weekend. 

– Jan 13, 2022