The Brief | January 20, 2023

The Week in Impact Investing: Cred

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TGIF, Agents of Impact!

đź—ŁGround truth. As delegates headed to Davos this week to talk climate and collaboration, The New York Times reported from Ecuador on the oil-drilling rigs and access roads under construction in a sensitive area of the Amazon rainforest, inside a national park and near one of the country’s last groups of isolated Indigenous people. The destruction is the consequence of the failure of a 2007 plan to pay Ecuador $3.6 billion not to drill in YasunĂ­ National Park. A grand total of $13 million was raised before the plan was dropped in 2013. That flop foreshadowed a similar shortfall in pledges to Congo to prevent drilling in peatlands that also serve as lungs for the entire planet. Congo is accepting bids through next month for oil and gas exploration on 30 blocks that extend into Virunga National Park. Confabs such as this week’s World Economic Forum face a growing credibility problem, as Amy Cortese and I reported. So do many of the carbon offsets generated by rainforest conservation projects, according to an investigation by The Guardian. Demonstrating the ability to rally public and private investors and to make nature-based solutions (see Deal Spotlight, below) really work at the scale of the Amazon and Congo basins could help restore that Davos mojo.

There are more than enough past mistakes to correct without making new ones. In the 20th century, the GI Bill was stacked against Black veterans; in the 19th century, the Homestead Acts effectively excluded Black families, as Living Cities Demetric Duckett laid out to me in this week’s Impact Briefing podcast. Duckett is readying a third Catalyst fund to back fund managers with strategies to narrow racial wealth gaps in this century. “It’s really a seventh-grade math problem: If white wealth is 225 years ahead of Black wealth, how fast does Train B need to go?” Duckett asks. “Just faster!” Incentives in U.S. legislation such as last year’s infrastructure, Inflation Reduction Act and CHIPS and Science Act could help redress that imbalance, if investments flow as promised to historically excluded communities, as Amy reported from the Milken Institute’s Public Finance Forum. Skepticism is justified. Inaction is not. – David Bank

đź‘‹ Call No. 48: Investable opportunities in high-impact municipal finance. Fiscal justice, community resilience and mispriced risks are creating opportunities for high-impact investments through municipal bonds. Join Ryan Bowers of Activest, Eric Glass of Justice Capital and other Agents of Impact for a showcase of tangible impact opportunities for fixed-income investors, Wednesday, Feb. 1 at 10am PT, 1pm ET / 5pm London. RSVP today.

🎧 Impact Briefing. On this week’s podcast, Living Cities’ Demetric Duckett(this week’s Agent of Impact, see below) tees up the collaborative’s third Catalyst Fund and lays out why it’s time for a new generation of capital decision-makers. Host Monique Aiken has the headlines.

The Week’s Agent of Impact

Demetric Duckett, Living Cities: New decision-makers for the new majority. Building wealth for women and people of color is about numbers as well as equity. By mid-century, there will be a new majority in the U.S.; over half the country will be composed of people of color for the first time. “The reason we are the U.S. and we are at the top of the heap, globally, is because we’ve invested in our prior majorities, which has been primarily white men,” says Demetric Duckett of Living Cities, a banker turned impact investor who joined the 30-year-old collaborative of 19 philanthropic foundations and financial institutions seven years ago. The new majority, he told ImpactAlpha’sDavid Bank on this week’s Impact Briefing podcast, “deserves the very support that we’ve seen in building wealth in this country in the middle of the past two centuries.”

Duckett is seeking to provide some of that support through Living Cities’ third Catalyst Fund, a $100 million fund anchored by a $10 million investment from the Kauffman Foundation. “We’re focused on increasing the number of decision-makers that have an equitable lens around how capital should be distributed and allocated to founders and others in the entrepreneur ecosystem.” The thesis: More capital in the hands of women and fund managers of color will lead to more investments in diverse entrepreneurs. Those entrepreneurs, in turn, can build wealth while addressing the needs of the new majority. Across two earlier Catalyst Funds, Living Cities has seeded innovations such as revenue-based finance (1863 Venture Fund and Founders First), Pay for Success (PFS Fund) social impact bonds (Social Finance), place-based strategies (Central Baltimore Future Fund and Detroit Community Loan Fund), land banks (Land Bank Twin Cities) and impact notes (ICA). By building up a new generation of capital decision-makers and highlighting their performance, Duckett hopes to shift archaic perceptions of risk and value. “That decision-making power is built on an old model that served us for what we believed we needed,” he says, “but it won’t serve us well moving forward.” – Dennis Price

The Week’s Dealflow

Deal spotlight: Nature-based biotech. Forests, oceans and soils play a crucial role in absorbing greenhouse gas emissions – and they could use some help. San Francisco-based Living Carbon has developed photosynthesis-enhanced seedlings that grow into “carbon-guzzling supertrees” that can capture six to nine tons of carbon in a lifetime. That “means more timber, forests and other carbon-storing products sooner and cheaper,” said Chris Sacca of Lowercarbon Capitalwhich backed the company’s $21 million Series A round this week. Living Carbon, launched last year, has raised $36 million to date.

  • Land reclamation. By next spring, Living Carbon aims to produce up to five million photosynthesis-enhanced seedlings for companies and organizations looking to turn land assets into carbon sinks. The company says it has reforestation carbon removal development projects with landowners in Pennsylvania and Georgia on excess and marginal land. The company is aiming to build a commercial model that makes many types of underperforming land profitable, Living Carbon’s Martin Srnatold ImpactAlpha. “This includes abandoned mineland and degraded agricultural land, which have already been affected by human intervention without the ability to easily regenerate forest canopy cover or biodiversity.” The company handles carbon quantification and monitoring for buyers.
     
  • Climate mitigation. In a separate deal this week, TPG’s Anew Climatecommitted $640 million to Terra Global to produce climate-mitigation benefits on up to 20 million hectares of forest and other land in developing countries. The fund will finance nature-based projects in rural communities in exchange for verified credits to be sold to investors and companies.
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Clean energy. Carbon-based storage tech venture Noon Energy raised $28 million in Series A financing to unlock low-cost long-duration clean energy storage… KarmSolar secured $3 million in debt funding from HSBC for a microgrid project it says will extend affordable and reliable solar energy to the inaccessible parts of Egypt… Norwegian cleantech company Hystar raised$26 million in Series B equity funding to deliver larger green hydrogen projects in new markets… Spain’s Iberdrola sold a minority stake in its 1.3 gigawatt portfolio of solar plants and onshore wind farms to Norway’s $1.3 trillion sovereign wealth fund for $650 million… WeLight raised â‚¬19 million to bring solar mini-grids to rural Madagascar.

Clean and climate tech. Latvia’s Aerones raised $30 million for its wind turbine maintenance and inspection robots in a growth equity round co-led by Lightrock and family-owned investor Haniel… Shell USA will acquire electric vehicle charging company Volta in an all-cash transaction valued at approximately $196 million… Sublime Systems secured $40 million to commercialize electrified zero-carbon cement… Summit Nanotech secured$50 million for sustainable lithium extraction. 

Financial inclusion. Australian fintech startup Bloom raised $525,000 in a seed investment round to democratize climate investing for retail investors… Komunal raised $8.5 million to digitalize financial services in rural Indonesia… Nairobi-based fintech venture Kwara scored $7 million in seed financing to digitalize credit unions in Kenya… Mumbai-based NeoGrowth snagged $10 million from MicroVest Capital Management to finance small businesses in India.

Return on inclusion. Amplifica Capital raised $11 million to invest in women tech founders in Latin America… Black woman-led Cake Ventures raised $17 million from investors including Melinda Gates’ Pivotal Ventures, Bank of America and Arlan Hamilton to invest in tech companies addressing increased longevity, the rise of women and the new “minority majority…” Mongolia’s Bogd Bank secured $15 million in debt financing from the U.S. Development Finance Corp. for lending to women-led small and medium enterprises in rural areas.

Investing in health. Mumbai Oncocare Centre scored $10 million from Tata Capital Healthcare Fund to provide low-cost and quality personalized care to cancer patients in India.

The Week’s Talent

John E. Morton, ex-of the U.S. Treasury Department, rejoins Pollination as a member of the firm’s executive committee and as managing director and global head of advisory… Narina Mnatsakanian, ex- of Van Lanschot Kempen, joins UBS Asset Management as head of impact investing… Palatine promotesGreg Holmes to investment director on its impact fund team… Mark Rogerswill become New Forests’ CEO. David Brand is stepping down from the role after 17 years. 

Monique Davis, ex-of YWCA, joins Center Creek Capital Group as social impact programs manager… Peter Cashion, ex-of International Finance Corp., will join CalPERS as managing investment director for sustainable investments… Catherine Soler, ex- of Vista Equity Partners, joins Patient Square Capital’s transformation and growth team… Zohra Zori, ex- of Candid, joins global humanitarian organization Alight as chief marketing and engagement officer… Tim Lord, ex- of Phoenix Group, is named head of climate change at HSBC.

The Week’s Jobs

The Environmental Law Instituteseeks a director for a climate judiciary project in Washington, D.C… New York Life Insurance Co.is looking for a senior associate and impact investing analyst in New York… Resonance has several openings, including a financial controller for its impact labs, a relationship manager for its youth investment fund, and a finance intern… The Newark Academyis hiring a director of sustainability in N.J.

Sustainable Solutions Corp.is recruiting a corporate sustainability operations manager in Royersford, Pa… The U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy seeks a stakeholder engagement supervisor in Washington, D.C… The Hive Fund for Climate and Gender Justice is looking for two climate and economic ju​​stice senior program officers and a strategic partnerships dire​​ctor… Cox Enterprisesis recruiting a director of ESG data and reporting in Atlanta… Sun Lifeis hiring a sustainability strategy manager in Toronto.

Bain Capital is hiring an ESG manager of sustainability in Boston… Also in Boston, CapShift is looking for a director of marketing… BlueMarkseeks an analyst for impact investing & verification in New York… BerlinRosen is hiringa senior vice president of ESG, philanthropy and impact investing in New York… Accionseeks a director of public relations in the Washington D.C.-Baltimore area… Founders First Capital Partnerseeks a remote underwriting associate… CapShiftis looking for a director of product in Boston or Washington, D.C. 

The Fund for Public Interesthas an opening for a canvass director in Denver… The Global Impact Investing Network is looking to fill several positions in New York, including climate solutions directorpeer learning associate director and research associate… The University of Utahis recruiting an impact measurement and evaluation director in Salt Lake City… IDB Bankis hiring a private banking associate in New York… ECMCseeks a remote portfolio and impact acceleration senior associate… Citiis looking for a vice president for ESG stakeholder engagement in New York… ICA is recruiting a director of programs in Oakland… Galvanize Climate Solutions is looking for an acquisition analyst and an asset management associate in New York.

That’s a wrap. Have a wonderful weekend.

– Jan 20, 2022