TGIF, Agents of Impact!
The Week in impact investing: Dueling Narratives
🗣 Split screen. Covering the climate beat means holding opposing storylines in your head (and occasionally curling up into a fetal position). On the one hand, seven years after the Paris climate agreement, “the path has narrowed” to meet the goal of keeping global warming to 1.5 °C, a key tipping point, according to the latest Net Zero Roadmap from the International Energy Agency. Funding to help vulnerable countries green their economies and adapt to a changing climate remains woefully inadequate. On the other, there has never been more innovation, capital and policy focused on climate solutions. The deadline-driven exponential-breakthrough narrative was on full display at Climate Week NYC and this week’s Deploy23 conference, hosted by the US Department of Energy’s Loan Programs Office. “We’re fired up and thinking about how we can move faster,” Tim Hade of Scale Microgrids told me. The loan office, flush with $400 billion to catalyze the deployment of climate solutions, made a $3 billion loan guarantee to Sunnova Energy to bring “virtual power plants” to disadvantaged communities.
Dueling narratives are not limited to climate change. Racial gaps in home ownership rates, for example, have barely budged in more than 50 years (and have even widened). But strategies for boosting Black home ownership and “buying back the block” fired up the crowd at the Congressional Black Caucus Foundation’s annual gathering, as ImpactAlpha’sRoodgally Senatus reported from Washington DC. The number of employee-owned companies has been similarly stalled for decades. But investors from private equity giant KKR to emerging fund managers Apis & Heritage and Common Trust are finding an edge in financing companies’ transitions to worker ownership, as we explored on this week’s Agents of Impact Call (see below). Community foundations are finding ways to stretch their grant dollars and boost local impact by adding impact investing to their toolkits, contributing editor Andrea Riquer reported. The ability to hold two opposing ideas in mind and retain the ability to function is the test of a first-rate intelligence, as F. Scott Fitzgerald famously wrote. Agents of Impact will need all of that intelligence in the next few years to determine which narrative prevails. – Amy Cortese
⚡ Plugged In, with Sherrell Dorsey. On the next live call in ImpactAlpha’s Plugged In series, host Sherrell Dorsey will check in with Olivia Watkins of Black Farmer Fund, which is reimagining US agricultural finance, on farmers’ terms. Join live on LinkedIn, Wednesday, Oct. 4 at 10am PT / 1pm ET / 6pm London. RSVP today.
The Week’s Call and Podcast
🎙️ Call Recap: Labor and capital align in new movement for worker ownership. It’s the age-old struggle: labor vs capital, workers vs. owners. But what happens when employees get a stake in the companies they work for? The evidence suggests motivation, retention and productivity all improve. Now investors are getting on board, seeking the worker ownership edge in buyout funds that finance company conversions to employee ownership (for background, see, “Financing transitions to employee ownership delivers wins for workers – and investors”). This week’s Agents of Impact Call featured investors who are betting that worker ownership is not only good for labor, it’s good for capital, too. The highlights:
- Employees to owners. Todd Leverette of Apis & Heritage views employee ownership as a pathway to wealth creation for Black and brown communities. Eight in 10 of the 250 employees at his first two portfolio companies are people of color. “Prior to the Apis transaction, they were employees in their companies and they’re still employees in their companies,” said Leverette. “They also now are owners in their companies.”
- For institutionally owned companies, too. Employee ownership conversions aren’t just for family-owned companies. Ian Mohler of Mosaic Capital Partners, a private equity employee-ownership buyout fund, says half of the more than a dozen conversions Mosaic has financed were previously owned by financial institutions. Says Mohler, “That just opens up greater opportunities.”
- Planting seeds. Smitha Das, who heads the impact investing arm of the non-profit social enterprise, World Education Services, has built a portfolio of worker ownership funds “to plant many seeds and try to demonstrate these models with a particular lens around racial equity,” said Das. WES’s portfolio includes Project Equity, Apis & Heritage, Common Trust, and Obran Cooperative.
- Impact thesis. As a venture investor at Techstars Impact, Zoe Schlag began to question the outcomes of exits for impact-oriented startups. Given the ownership of those companies, would even successful social-impact companies exacerbate wealth inequality? “I felt like we really had to explore the role that ownership plays in theory of change,” says Schlag, who founded Common Trust to finance conversions to employee ownership trusts.
- Winning deals. Big private equity firms, led by KKR, are making a push into employee ownership, discovering that what’s good for workers can be good for winning deals and creating value. Ownership Works has mobilized two dozen private equity firms, which have stood up programs at 79 companies that now reach over 100,000 employees. “Employee ownership can be great for the business, too,” said Ownership Works’ Anna-Lisa Miller.
- Keep reading The Call recap, “Labor and capital align in new movement for worker ownership,” on ImpactAlpha – and watch the replay on Youtube.
The Week’s Dealflow
Agrifood investing. Complete Farmer scored $10 million to connect Ghana’s smallholder farmers to funders… Impact investment fund Cuna del Mar backed LocalCoho, an Auburn, NY-based indoor salmon farming venture that supplies fish to high-end restaurants… Kern Tec snagged $12.8 million to make dairy alternatives from upcycled produce… Scottish seaweed grower and processor Oceanium raised $2.6 million from Builders Vision, the World Wildlife Fund and other investors… StretchDollar secured $1.6 million in pre-seed funding to help small companies in the US set up healthcare plan stipends for their employees.
Battery storage. EV battery recycler Smartville, battery management software maker ReJoule, and Italian energy storage venture Energy Dome are among nine companies to receive funds from the US Department of Energy… The US Department of Energy’s Loan Programs Office approved a nearly $400 million loan guarantee to Eos Energy Enterprises to produce eight gigawatts of zinc-bromine battery storage in Turtle Creek, Penn.
Climate Finance. Environment Bank is offering biodiversity credits to catalyze corporate investment in nature restoration… Fifty Years invested in Elicit, which is using AI to “automate the brute force task of plowing through the world’s compendium of scientific knowledge” on climate change, health and other challenges dependent on science and engineering solutions… Omidyar Network, Open Society Foundations, the Skoll, Hewlett and Kellogg foundations, and other philanthropies committed $50 million to BuildUS to make grants to accelerate state and local efforts to utilize federal climate investments… Tanzania’s NMB Bank issued the first tranche of a 10-year, $400 million multi-currency bond to finance climate change adaptation initiatives and sustainable development projects.
Energy transition. Green hydrogen producer InterContinental Energy raised $115 million to expand its portfolio of projects in Australia and the Middle East… Infravision scored $23 million for drone-enabled grid upgrades… Pexapark raised €20 million ($21 million) for its software that helps renewable energy investors gauge market dynamics and assess project risk.
Fund launches. Canada’s SVX helped launch an early-stage venture fund, with backing from the Canadian government, to invest in women and non-binary founders… Former President Bill Clinton and Ziv Aviram, billionaire founder of Israeli autonomous vehicle company Mobileye, launched EcoBridge Impact, which is looking to raise $1 billion to invest in late-stage climate tech ventures.
Inclusive economy. Common Future invested $1 million in Philadelphia-based Kensington Corridor Trust and New Orleans-based Jane Place to advance community-owned real estate and access to affordable rental housing… San Diego school bond is targeting green improvements and equitable access… Secha Capital inked $15.8 million to back South Africa’s growing businesses… Untapped Global closed $14 million to provide electric vehicle and other asset-based financing for climate-smart products to companies serving gig workers and micro-entrepreneurs in emerging markets… Vernier Science Education transitioned to a perpetual purpose trust.
Insurance tech. Kenyan insurance tech company Turaco acquired MicroEnsure Ghana, which provides affordable, small insurance products, primarily to low-income customers… LeapFrog joined insurance tech venture Bolttech’s $246 million equity round.
The Week’s Talent
JUST Capitalpromoted chief strategy officer Alison Omens to president… Anne Cushing, ex- of ACMC, joined BlueHub Capital as senior vice president of marketing and engagement… Generation Investment Management’s Just Climate namedEduardo Mufarej, ex- of Good Karma Ventures, co-chief investment officer at and head of the firm’s newly launched natural climate solutions.
Christian Friend, ex- of Thrive Chicago, joined Tides as senior director of justice, equity, diversity and inclusion… Cynthia Herrera, a former climate justice fellow with University of Maryland, joined Green & Healthy Homes Initiative as senior director of climate, energy and equity… Anuj Shah, ex- of Close Group Consulting, joined Stax as managing director and ESG and impact practice leader.
The Week’s Jobs
In California: Jobs for the Future seeks an associate vice president focused on workforce and regional economies… Obvious Ventures is hiring a principal in San Francisco… Kapor Capital has an opening for a venture partner in Oakland… The International Rescue Committee has an opening for an innovation fund lead in Oakland, Calif.
In New York:The Global Impact Investing Network has an opening for an impact principles director… Soros Fund Management is looking for an impact strategy senior analyst… New York’s Department of Civil Service seeks a senior lead of ESG and sustainable investments… The Nature Conservancy is hiring a sustainable debt associate.
In London:Big Society Capital seeks a policy and advocacy manager… Opportunity International is recruiting an innovative finance manager… BP has an opening for a sustainability and ESG finance advisor.
Carbon Equity is looking for a head of sales to lead commercial operations in Belgium, the Netherlands and Luxembourg… Impact Investing Kenya is recruiting a program manager in Nairobi… 60 Decibels is looking for an India manager in Bangalore… ABC Impact is on the hunt for an intern in Singapore… SVX is recruiting an impact fund services senior associate or manager in Ontario.
That’s a wrap. Have a wonderful weekend.
– Sept. 29, 2023
Get ImpactAlpha for Teams. Save with substantial group discounts. Start here.
Partner with us, including by sponsoring this newsletter. Get in touch.