The Brief | September 13, 2024

The Week in impact investing: Creative edge

ImpactAlpha
The team at

ImpactAlpha

TGIF, Agents of Impact! 

In today’s Brief: 

  • Roundup: A local, sustainable and authentic style of finance
  • Podcasts: Amy Cortese on New York Fashion Week and Urban Institute’s Brett Theodos on community capital flows
  • Agent: Decolonizing Wealth’s Edgar Villanueva
  • Spotlight: Rebound in fundraising – for some

🗣 Fresh look. From Fashion Week in New York to Indigenous villages in Mexico, the ImpactAlpha team this week glimpsed an economy that is local, sustainable and authentic. Cactus-based black leather jackets (see Agent of Impact, below). Artisanal mezcal. Vintage and “pre-loved” ensembles. Hand-woven wool rugs supplied by women- and family-led cooperatives in the Zapotec town of Teotitlán del Valle. Customer demands for authenticity and sustainability are making distributed, local and unique the future of food, fashion and culture more broadly. “Really what we are building is a different kind of fashion system,” Remake’s Ayesha Barenblat told Amy Cortese at the nonprofit’s upcycled fashion show on a rooftop in New York’s Lower East Side. “Everything that we do has to be done with awareness, has to be done with consciousness,” said Rafael Bucios of Los Amantes, an artisanal Mezcal distillery, as Dennis Price reported (and sampled) from Latimpacto’s gathering in Oaxaca. 

The work of building out that economy will no doubt fall to the next generation of impact investors and entrepreneurs. ImpactAlpha’s Lynnley Browning reported on the proliferation of student-led impact funds at colleges and business schools around the world. “It is always by far the most oversubscribed and applied to,” Stanford MBA student Caroline Chen told her of the course that manages the school’s $875,000 impact fund. As founders and VCs, they’ll need a sharp eye for materiality, and the hidden alpha in impact themes such as diversity and good governance, in order to reclaim the promise of ESG in private markets, as VentureESG’s Johannes Lenhard and Hannah Leach wrote in a guest post. And as Jessica Pothering reported, they’ll also need an open and collaborative approach to impact measurement to prevent the growing welter of sustainability regulations from becoming “a neocolonial barrier to capital access for the Global South.” 

Fashion Week now heads to London, Milan and Paris. It takes a global village to shape the fresh new style of finance. – David Bank

Next Week’s Calls

📞 Agents of Impact Call 64: Blending billions. The SDG Loan Fund, which raised $1 billion from German insurance giant Allianz and other institutional investors, could serve as a model for efforts to put private capital to work for inclusive economic growth, reduced income inequality and other Sustainable Development Goals. Blended finance transactions, which leverage guarantees, first-loss reserves and other forms of catalytic capital to crowd in commercial capital, hit a five-year high of $15 billion last year. Billion-dollar-plus deals remain rare. Join MacArthur Foundation’s Debra Schwartz, Nnamdi Igbokwe of Convergence, and other Agents of Impact for practical lessons in blending billions for renewable energy, sustainable agriculture, small business lending, health and education in emerging markets.

  • Answer the Call. Join Agents of Impact Call No. 64, Thursday, Sept. 19, at 10am PT / 1pm ET / 6pm London. RSVP today. See all of ImpactAlpha’s coverage of catalytic capital, produced in partnership with the Catalytic Capital Consortium.

🔌 Plugged In: Inside Wisconsin’s game plan to tap federal financing for the green transition. On Sherrell Dorsey’s next LinkedIn Live discussion, she’ll speak with Forward Together Wisconsin’s Mandela Barnes about how the nonprofit organization is connecting the state’s communities of color, working-class families, Tribal communities and rural areas with once-in-a-generation climate funding under the Inflation Reduction Act. Barnes, Wisconsin’s former lieutenant governor, narrowly lost his 2022 race for the US Senate. Get Plugged In, Wednesday, Sept. 18, at 11:30am PT / 2:30pm ET / 7:30pm London. RSVP today.

The Week’s Podcasts

🎧 This Week in Impact: A near climate-free debate. Host Brian Walsh takes up some of the week’s top stories with ImpactAlpha’s editorial director Amy Cortese. Up this week: The scant attention to climate change and the Inflation Reduction Act in the US presidential debate, the sustainable side of fashion week in New York, and a look at the rising number of student-led impact funds.

🏛️ Capitol Gains: How capital flows shape communities. The size and direction of capital flows can mean the difference between a neighborhood that thrives and one that is left behind. “We need half a billion to a billion dollars in a single neighborhood over 20 to 30 years to really catalyze growth,” Brett Theodos of the Urban Institute says on the latest Capitol Gains podcast. “We’re spending a penny when we need a dollar.” 

The Week’s Agent of Impact

Edgar Villanueva, Decolonizing Wealth Project: Championing Indigenous fashion and finance. Edgar Villanueva is a model – literally – for the principles of reparative finance. On a Soho rooftop at New York Fashion Week, the activist and author of “Decolonizing Wealth” sported a suit made of vegan cactus leather from Mexican retailer Sarelly Sarelly, along with a beaded pendant by Navajo designer Sean Snyder. The fourth annual Celebrating Indigeneity event, hosted by Villanueva and his nonprofit, the Decolonizing Wealth Project, celebrated Indigenous fashion designers including Jantay Kahm, Bethany Yellowtail and Naiomi Glasses, and championed climate sustainability (see, “Ethical and inclusive are in style at New York Fashion Week”). “I see this as a narrative change opportunity,” Villanueva told ImpactAlpha, “but also a wealth building opportunity for Natives in this industry.”  

The runway is a creative, visual and tangible way to communicate the decolonizing wealth ethos, which centers historical racial harm in remaking finance and philanthropy as reparative tools. Fashion “is an industry where there’s a lot of concentrated power, privilege and wealth, and an industry that’s been known to be extractive for my community,” says Villanueva, a member of the Lumbee Tribe of North Carolina. He founded the Decolonizing Wealth Project in 2018 as a model for wealth redistribution and to facilitate the no-strings-attached philanthropy his book calls for. A series of participatory grantmaking funds, supported by a network of donors, cede decisions to Indigenous and Black grantees. “I started from a place of pain,” Villanueva told The New York Times. “I felt like I had to push through to a place where I’m offering a different way of thinking.”

In Soho, Villanueva’s black jacket and shorts were a sartorial representation of one of Decolonizing Wealth Project’s key themes: climate justice. “This little leather outfit is completely sustainable,” he said. The animal-free leather, made from the Mexican-native Nopal cactus, offers a sustainable alternative to traditional leather. The plant requires minimal water and the material can be made with non-toxic processes. Indigenous peoples steward 80% of the planet’s biodiversity and have served as “custodians and guardians of the land for generations,” according to Liberated Capital, the funding arm of Decolonizing Wealth Project. “It’s really intersectional for us,” Villanueva said, looking out over the sea of partygoers and the New York skyline. “I feel like there’s a heightened awareness. It’s a really exciting time.”  

The Week’s Deal Spotlight

Yes, the fundraising environment is improving, even if it doesn’t feel like it. The ice is starting to thaw for private market fundraising after a frigid couple of years. “While not in the numbers yet, we believe that the decline in 12-month fundraising figures began to turn in Q2 2023,” Hilary Wiek reports in PitchBook’s latest “Global Private Market Fundraising” roundup. Fundraising for real assets stood out, reaching nearly $142 billion in the last four quarters, nearly quadruple the previous period. About 95% of the capital committed to real asset funds so far this year has gone to infrastructure funds. Even underinvested sectors like water are seeing interest: WaterEquity this week snagged $100 million for its Water and Climate Resilience Fund for investments in water delivery, treatment and reuse projects in Africa, Asia and Latin America.

  • Climate confusion. The rebound in private fundraising was buoyed by billion-dollar infrastructure funds emphasizing decarbonization strategies, including $10 billion-plus clean energy infrastructure funds from Brookfield and Copenhagen Infrastructure Partners that are expected to close by year end. Some of the marketed sustainability angles warrant close scrutiny. Five Point Energy this week raised $1.4 billion for a “sustainable infrastructure” fund that focuses on water management for oil and gas companies. The fund will also invest in data center and solar projects on 230,000 acres in the Permian Basin in the US Southwest. Houston-based EnCap Energy in May raised $1.5 billion for its second Energy Transition fund to invest in carbon management projects and low-carbon power infrastructure and fuels, including renewable natural gas. “We continue to believe all sources of energy are needed,” said EnCap’s Jason DeLorenzo.
  • Emerging managers. “Allocators are broadening their geographical horizons,” says PitchBook, but fundraising for emerging managers remains an uphill climb. ImpactAlpha has learned that Latimpacto and IDB Lab are launching a Green Catalytic Fund to support Latin American businesses and communities in reducing carbon emissions and sustainably managing natural resources. The InterAmerican Development Bank, IDB Lab’s parent, as well as Coca-Cola and Bayer Foundation are among the fund’s first investors. First Circle Capital, a women-led fintech VC firm in Africa, notched an additional $1 million for its first fund. Technical assistance and working capital would help new fund managers launch and deploy their first funds. “We’re starting to see some dedicated capital for that,” said First Circle’s Selma Ribica, including for impact management and measurement.
  • Share this story, and check out the full roundup of ImpactAlpha’s deal reporting this week.

The Week’s Talent and Jobs

💼 See and share more than a dozen new impact jobs posted this week on ImpactAlpha’s Career Hub and view hundreds of more jobs in impact investing and sustainable finance. Have a job listing to post? Submit it here.

ImpactPHL appointed Kafi Lindsay, former director of Philadelphia’s Office of Strategic Partnerships, as CEO… Patricia Letayf will replace fellow co-founder of Five One Labs, Alice Bosley, as executive director… Inclusive Prosperity Capital promoted Claire Getman to senior associate… Ivy Jack of the Diverse Investing Collective joined Boston Impact Initiative’s investment committee.

Active Impact Investments tapped Sophia Kathryn Khan, previously with Struck Studio, as principal… BlueHub Capital welcomed Jackie Barry Hamilton, previously with Sense Labs, as chief financial officer. Elizabeth Glynn, previously with BlueWave Solar, joined BlueHub as senior vice president of climate lending for the BlueHub Loan Fund… Social Capital Partners added Katherine Janson, formerly with Samuel Centre for Social Connectedness, as communications director.

Groundworks New Mexico added Alanna Phillips, previously with Nusenda Credit Union, as community engagement manager… Sustainable Capital Advisors welcomed university student fellows: Duke University’s Cindy Cai, Samir Chowdhury of Stanford, Charisma Daniel of Stony Brook, and Georgetown’s Jacob Roy… MCJ added Casey Goldstein, previously with Brightmerge, as an investment analyst… Abbe Billings, previously with BlackRock, joined Third Economy as head of institutional consulting.

That’s a wrap. Have a wonderful weekend. 

– Sept. 13, 2024