The Brief | April 28, 2023

The Week in Impact Investing: Maturity 

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ImpactAlpha

TGIF, Agents of Impact! 

🗣 Growing up. You know the market for impact and sustainable investments is maturing when CEO succession becomes a hot topic. Succession strategies (recruit for values) and structures (perpetual purpose trusts) were the talk of this week’s MO (for momentum) Summit in Austin, Texas. In climate tech, solar and wind are mature industries; early stage investors are seeding solutions in fusion, direct air capture and advanced nuclear power, including in back-to-back $40 million deals for Avalanche Energy and Radiant. A decade ago politicians couldn’t mention climate change. Now climate industrial policies are reshaping the US economy and are set to be central planks of President Biden’s reelection campaign, as Amy Cortese reports. Other signs of maturity: the use of bonds for community development finance, cultural arts and green academic buildings; follow-on emerging-market impact funds; and “net zero” alliances among leading venture capital firms. 

Mature may be another way to say mainstream. With impact investing well-established, Kevin Jones, who co-founded the SOCAP conference 15 years ago, is building Neighborhood Economics “to help get the money that’s needed to the folks that don’t get impact investments,” he told David Bank in Jackson, Miss. (listen to this week’s Impact Briefing, below). Similar gaps remain in emerging markets. Development finance institutions are missing an opportunity to build an ecosystem of local fund managers investing in small and growing businesses, says Drew von Glahn of the Collaborative for Frontier Finance. Root Capital and World Resource Institute are tailoring loan structures and providing grants to fill the financing gap for regenerative agri-businesses (see Dealflow Spotlight, below). Maturing business models are letting investors dig deeper. Fintech lender Community Investment Management is taking lessons from US-based fintech to increase its lending in the Global South, CIM’s Jacob Haar tells David on the Agents of Impact podcast. “The opportunity that exists today, because of some fundamental shifts in the way that underlying credit-worthy customers are being reached, understood, lent to without as much risk – it’s very compelling.” – Dennis Price

🎥🍿 Instant replays. Missed this week’s ImpactAlpha calls? Watch the launch of Suzanne Biegel’s Heading for Change climate + gender fund and Jobs for the Future’s green jobs challenge with Taj Eldridge. 

👩🏽‍🦱🧑🏼‍🦱👨🏾‍🦲👩🏻‍ ImpactAlpha for Teams. A warm welcome to the teams of Agents of Impact at Omidyar Network, USAID, Impact Capital Partners, Inclusive Prosperity Capital, New Growth Innovation Network and One Small Planet, who have saved with substantial group discounts. Raise your team’s game. We’ll onboard your colleagues with a customized welcome page. Start here.

The Week’s Podcast

🎧 Impact Briefing. As the Neighborhood Economics conference wraps up in Jackson, Miss., Kevin Jones speaks with David Bank about startup capital for sole proprietors, Black churches as engines of economic development, and how strangers can become unlikely allies. Host Brian Walsh has the headlines. 

The Week’s Agent of Impact

Su Sanni, Dollaride: From dollar-van commuter to urban-mobility entrepreneur. A first generation Nigerian-American, Su Sanni grew up in East New York, Brooklyn and Jamaica, Queens. The low-income neighborhoods, with large populations of immigrants and people of color, are transit deserts where convenient public transportation is scarce. “I often found myself as young as seven years old walking a mile just to get to the nearest subway station,” says Sanni. The buses were “always overcrowded and came infrequently, so I couldn’t really rely on the service. I ended up relying on dollar vans to bridge that gap.” Sanni later worked as a research contractor for one of his two uncles, Nigerian immigrants who started out as dollar-van drivers in the late 1980s and early 1990s and became fleet owners. “That’s where I got insight into the operations and the unit economics of dollar vans, and the problems that I was uncovering actually became an opportunity for me to build a solution,” Sanni tells ImpactAlpha. 

Sanni used that experience to launch Brooklyn-based tech startup Dollaride in 2018 with Chris Coles to digitalize payments and transit routes for dollar van drivers and their customers. The goal was to help drivers improve their service and increase their income. More than 400 dollar van drivers use the mobile app, and report income increases by at least a third. But high gas prices have cut margins for the gas-powered shuttle services. When he saw a request for proposals issued by the New York State Energy Research and Development Authority for low-carbon transportation solutions, “I was like, ‘Man, this has Dollaride written all over it,’” says Sanni. With a $10 million grant from NYSERDA, Sanni launched the Clean Transit Access Program to help drivers electrify their fleets. With partners BlocPower, Enduring Planet, Build Edison and HEVO, the initiative will electrify at least 100 dollar vans in Brooklyn and Queens this year. 

Dollaride secured a $500,000 investment this week from Elemental Excelerator. Sanni says the investment is catalytic, “as it’s designed to unlock additional capital that’s already in our pipeline.” It will support the electrification of a half-dozen vans and chargers. Sanni says the company is on track to put the first three electric dollar vans and charging stations on the road by the summer. Sanni’s family connections have informed his efforts to bring digitalization and sustainability to the informal transportation network. But his passion, he says, is “really rooted by my experience as a passenger, as a rider taking dollar vans.”

The Week’s Dealflow

Dealflow spotlight: Financing farming and small-business leaders in regeneration. Root Capital calls them “climate action leaders.” World Resources Institute calls them “regeneration champions.” Pioneering small farmers, agri-businesses and cooperatives are implementing critically needed and highly-localized land regeneration and climate-adaptation techniques. What they lack is access to capital for financial sustainability and scale. “These businesses in super remote places, with very limited resources, are already doing so much work to invest in climate action,” says Root Capital’s Elizabeth Teague. “They’re innovating so much without access to significant external financing.” Just 1.7% of climate finance goes to smallholder farmers. Data from Root Capital’s portfolio show that many farmers and farmer organizations are carbon negative.“They’re teaching regenerative agricultural practices that are critical for us,” said Teague. “If we could get them more money, and more incentives to do that work, they’ll really be able to show the way forward.”

  • Climate roadmap. Root Capital is 2.5 years and $240 million into its six-year Climate Resilience Roadmap for driving more capital to reforestation projects, regenerative agroforestry and climate-ready crops. Last year it deployed $100 million and piloted five new loan structures aligned to organizations’ climate adaptation needs. One financed solar panels for a macadamia nut processing business in Kenya. Another provided credit to cooperatives to on-lend to their members to make or buy compost. “We’re designing these loans to allow businesses to invest in new climate action activities,” said Teague. 
  • TerraFund. World Resources Institute is tackling similar challenges with its TerraFund grant and loan facility. The partnership between WRI, One Tree Planted and Realize Impact funds community-based landscape restoration in Africa. TerraFund disbursed $15 million to 100 businesses and nonprofits last year with backing from the Bezos Earth Fund, Meta, the DOEN Foundation, Caterpillar Foundation and others. “The theory of change is to finance these underinvested communities that are doing fantastic work but don’t have the investment and technical support to scale it,” said WRI’s Venkat Iyer. TerraFund is looking to deploy an additional $12 million this year. Its current funding window is open through May 5.
  • Natural capital. Also this week: L’Oréal backed three companies from its Fund for Nature Regeneration: French biochar producer NetZero, Amazon reforestation venture ReforesTerra, and Mangroves.Now, which is restoring mangroves in South Asia. Oxygen Conservation secured a £20.1 million ($25 million) loan from Triodos Bank UK to acquire, restore and conserve 23,000 acres of peatland and woodlands in Scotland. BTG Pactual will receive $50 million in debt from the DFC to protect and restore forests in Brazil, Uruguay and Chile.
  • Much more.

Clean energy. Altech raised $18 million in debt and grants to provide off-grid solar and clean cookstoves to Congolese households… Avalanche Energy raised $40 million to build modular fusion micro-reactors… Legal & General Investment Management and renewable energy company NTR raised €390 million to invest in clean power infrastructure in Europe.

Climate tech. Paris-based Woodoo raised $31 million to make low-carbon and wood-based materials… Ebb Carbon raised $20 million to enhance the ocean’s natural ability to capture and permanently store carbon… Novalith Technologies raised $15.4 million to commercialize its cheaper and greener lithium extraction technology. 

Education and jobs. Raxio Group secured a $33 million sustainability-linked loan to build inclusive data centers in underserved African job markets… Elleve in Brazil raised debt capital to extend credit to lower-income students seeking online vocational training… EcoSoul Home raised $10 million to create rural jobs making eco-friendly home goods in India.

Fund news. Capria scored backing from Gates Ventures and others to invest in the Global South… BlueOrchard’s Green Earth Impact Fund secured $25 million from Luxembourg’s ministry of finance… Incofin scored funding from Degroof Petercam Asset Management and Korys to expand its impact in emerging markets.

Green mobility. Canada’s Braya Renewable Fuels secured a $300 million preferred equity investment to produce renewable fuel for aviation and heavy-duty transportation… Dollaride scored $500,000 from Elemental Excelerator to electrify urban mobility… French mobility venture Kate scored $7.6 million from individual investors to make small electric vehicles. 

Impact tech. Bangalore-based Lokal raised a Series B equity round to expand access to local-language content across India… Nigerian plastic waste collection and recycling venture Wecyclers raised $2 million… London-based Floodlight snagged seed funding to streamline small businesses’ finances and accounting. 

Supply chains. Brazil’s Arado raised $12 million to give smallholder farmers a tech edge… 

Chargel in Senegal clinched $2.5 million to match small and mid-sized truckers with companies needing transport… Ghana’s Chekkit secured fresh funding for its blockchain platform that verifies the authenticity of pharmaceuticals and consumer goods.

The Week’s Talent

Clarence Edwards, ex- of the Friends Committee on National Legislation, will join independent climate think tank E3G as executive director in May… Turner Impact Capital hired Gary Rodney, ex- of Tishman Speyer, as managing director of multifamily housing initiatives… The Copia Group named Beata Kirr, ex- of Bernstein Private Wealth Management, as chief impact officer… Ryan Edwards, ex- of Silicon Ranch Corp., joined Monarch Private Capital as renewable energy manager. 

New Forests made four appointments to its Africa team: Eva Warigia, ex- of the East Africa Private Equity and Venture Capital Association, joins as associate director of investor relations; Kuda Phairah, ex- of York Timbers, joins as associate director of operations; Moses Kimani, ex- of Phatisa Group, joins as associate director of investments; Stephanie Bishop, ex- of Miro Forestry and Timber Products, joins as environmental and social associate director; and Sean Lloyd, moving from New Forests’ Singapore team, becomes manager of operations.

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 Center of Innovation for Diversity, Equity, and Inclusion in Finance is looking for an executive director… Closed Loop Partners is hiring a project director for the Center for the Circular Economy… The Global Impact Investing Network is hiring a director of the operating principles for impact management… Quona Capital has an opening for a head of fundraising and investor relations… Morgan Stanley’s Next Level Fund is recruiting a vice president.

Other U.S. locations

In Washington, DC, Capital One is recruiting a social impact program execution director, and the Strada Education Foundation is hiring a strategic investments platform manager… In the Boston Area, Sunwealth is looking for a project development associate, and State Street Global Advisors has an opening for a senior ESG quantitative and data analyst… The Santa Fe Community Foundation is recruiting a controller in New Mexico… The Great Lakes Protection Fund seeks a vice president of programs in Evanston, Ill. 

Global locations

A.P. Moller-Maersk has an opening for a head of sustainable procurement in Denmark… The Children’s Investment Fund Foundation seeks a climate analyst in London… Symbiotics seeks a temporary portfolio manager in Switzerland… Schroders seeks a sustainable credit analyst in Frankfurt… ResponsAbility is recruiting a payment and administration officer in Mumbai.

Remote jobs

2X Global is on the hunt for a fundraising and partnerships lead… OpenInvest has an opening for a fixed income ESG associate… Seedstars is on the hunt for an impact data manager… World Impact Foundation is looking for an investment officer… ISF Advisors seeks a strategy associate… Tides is looking for a temporary development manager for its Advancing Girls Fund… Kiva is hiring an impact content manager.

That’s a wrap. Have a wonderful weekend. 

– April 28, 2022