The Brief | September 1, 2023

The Week in impact investing: Second looks

ImpactAlpha
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ImpactAlpha

TGIF, Agents of Impact! ImpactAlpha is taking a Brief break for the Labor Day holiday in the US. We’ll be back in your inbox on Tuesday, Sept. 4. 

🗣 Course corrections. This fleeting moment between the end of summer and beginning of fall provides an opportunity to reflect on changing storylines as well as seasons. ImpactAlpha’s Jessica Pothering and contributor Lucy Ngige traced the paths of logistics tech startups like Twiga, Copia and Sendy in East Africa from disruptive darlings to cautionary tales. The shakeout may be part of the natural cycle for first movers in tech solutions for underserved populations (see, for example, off-grid solar). Or it could signal the shift in investor tastes from hypergrowth to actual profits. Some storylines need changing, such as the continued willful ignorance of major financial institutions, asset owners and business leaders in the face of an accelerating climate crisis. As Imogen Rose-Smith wrote in her latest column, “Things are not alright.”

Agents of Impact are fine-tuning other storylines in hopes of happier endings. To drive real change with Europe’s Sustainable Finance Disclosure Regulation, mandatory since January, asset owners need to step up pressure on asset managers by “rewarding top performers and sanctioning those whose disclosures do not demonstrate a credible commitment to sustainability,” as AlphaMundi’s Pekka Halla calls for in a guest post. In the US, impact investors might give affordability-focused single-family rental investment strategies a second look as part of the solution to the affordable housing crisis, argues Dan Magder of Center Creek Capital. For the fall season, ImpactAlpha wants to know: what storylines are you reflecting on? What adjustments are you making? Drop us a line. – Dennis Price

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The Week’s Podcast

🎧 Impact Briefing. Pro Mujer’s Carmen Correa joins host Monique Aiken to share how the pioneering Latin American microfinance institution’s bonds are democratizing gender lens investing in Argentina. Plus, the headlines. 

The Week’s Chart

Impact investors look to shift allocations to emerging markets. Climate, Covid and political uncertainty have had impact investors hiding out in developed markets. Perceptions of risk and volatility are changing, according to the Global Impact Investing Network. Over the next five years, many impact investors plan to boost their allocations to emerging markets.

  • Risk, adjusted. Asset allocations over the last five years grew fastest in the US and Canada at a compound annual growth rate of 53%. Going forward, investors surveyed by the GIIN are eyeing increases in Africa (56%), Latin America and the Caribbean (48%), and Southeast Asia (42%). At least part of the capital may come at the expense of Eastern Europe, Russia and Central Asia – 18% of investors say they plan to decrease their allocations to those markets.
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The Week’s Dealflow

Deal spotlight: Catalytic lending from the US Department of Energy. To grab the lead in climate innovation – and regain control of key technology supply chains – the Biden administration’s Inflation Reduction Act earmarked a fresh $100 billion for the Department of Energy’s Loan Programs Office. The purpose: to build a “bridge to bankability” for climate technologies with commercial potential. The mechanism: loans and loan guarantees (listen to ImpactAlpha’s podcast conversation with Jigar Shah, head of the Loan Programs Office). This week’s $1 billion equity raise for Redwood Materials is a sign the program is doing its job. The Loan Programs Office announced a $2 billion direct loan commitment to the Nevada-based battery recycler in February to help the company build a “battery materials campus” near Charleston, SC. Redwood has a pilot project in Nevada up and running. With a clear path to commercial-scale production, Redwood drew significant backing from Goldman Sachs Asset Management, Capricorn’s Technology Impact Fund, and T. Rowe Price, which led the company’s $775 million Series C round two years ago.

  • Domestic production. US battery makers source most EV battery components from companies in Asia. Redwood extracts anode copper foil and cathode active materials from battery waste and repurposes them for new batteries. Its campus stands to be the first such production facility in the US. The Energy Department loan is part of the Loan Programs Office’s $55 billion Advanced Technology Vehicles Manufacturing program to ramp up domestic production of fuel-efficient vehicles in the US. More funding is coming: the Biden administration just announced $15.5 billion for domestic EV production and workforce development.
  • Enabling innovation. Redwood Materials is a rare startup building and testing a new technology in the loan office’s portfolio. Most other companies are bringing proven technology to the US, like Korean-company SK Innovation, which is partnering with Ford Motor Company on battery manufacturing facilities; or scaling up capacity, like Texas-based Sunnova, a residential solar and storage provider that has traded on the New York Stock Exchange since 2019. The nearly 20-year-old Loan Programs Office has issued more than $38 billion in direct loans and loan guarantees. After a slow start, the office has closed more than $9 billion in deals and inked an additional $17 billion in commitments since the passage of the Inflation Reduction Act.
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Circular economy. Refiberd raised $3.4 million for AI-driven textile waste sorting… Rubio Impact Ventures backed Valyuu, an online marketplace for buying and selling refurbished electronic devices… Sortera secured $30.5 million to commercialize upcycled aluminum.

Climate finance. Women-led Greencode Ventures, based in Finland, reached a €40 million first close for its first fund.

Electric vehicles. Canada-based Kite Mobility secured $3.5 million for its shared electric vehicle subscription service… Electric Era raised $11.5 million for high-speed EV charging at convenience stores.

Energy transition. Elemental and Schmidt Family Foundation back Allume Energy’s rooftop solar for renters… French utility ENGIE acquired Houston-based battery storage producer Broad Reach Power… ResponsAbility provided $20 million to CME Solar for commercial solar in Vietnam… Sweden’s DREM secured €2 million to make it easier for European households to scout, price, purchase and install heat pumps.

Financial inclusion. Canada-based LemFi raised $33 million to make it easier and cheaper for immigrants to send remittances to friends and families… MFast scored $6 million to finance and insure Vietnam’s underbanked communities… Nairobi-based MarketForce launched a $1 million equity crowdfunding campaign on WeFunder… Peruvian digital small business lender Prestamype raised $5 million from ALIVE Ventures, Oikocredit and others.

Green biotech. Chile’s Botanical Solutions closed $13 million to make green compounds for use in the agriculture and pharmaceuticals industry… Kentegra Biotechnology in Kenya scored $15 million for organic crop treatments.

Impact in real estate. Real estate developer Internacional de Inversiones issued an 800 million-peso green bond to support green construction projects in Mexico… Wisconsin agency issued $185 million social bond for affordable homeownership. 

Return on inclusion. FVLCRUM Partners closed a $302 million fund… Growth Partners Arizona invested $100,000 in Community Investment Corporation’s BIPOC Community Managed Loan Fund… Immigrant-led Geek Ventures closed its first fund with $23 million to back immigrant-founded startups in the US.

The Week’s Talent

RSF Social Finance promoted VP of operations Michelle Bruno to chief operating officer… Emily Zhen, ex- of New Enterprise Associates, joined Zeal Capital Partners as principal… Canadian carbon removal and storage venture Deep Sky appointed Damien Steel, ex- of OMERS Ventures, as CEO. 

Eliya Imtiaz, ex- of Oppfi, joined Impact Capital Managers as an analyst… Inspiration Mobility appointed Claire Broido Johnson, co-founder of SunEdison, to chief operating officer; the electric mobility accelerator named Mark Richardson, ex- of Cox Automotive, as head of sales and fleet managing director.

Aadil Sulaiman, ex- of Year Up, joined Root Capital as director of the Next Generation Jobs Initiative… The Colorado Housing and Finance Authority appointed Santhosh Ramdoss of Gary Community Ventures to its board of directors… Rethink Education’s Andre Benin joined Building Hope’s board of directors.

The Week’s Jobs

💼 Share the week’s impact jobs. Views dozens of other jobs on our new job board. Want to post a listing? Submit it here.

In the US

Bezos Earth Fund has an opening for a sustainable finance associate director in Washington, DC… Social Finance seeks an impact investments director and an impact finance operations senior associate in Boston… US Bank is hiring a senior sustainable finance product strategist in New York… The Packard Foundation seeks a democracy rights and governance program officer… Common Future is hiring a remote impact initiatives vice president.

In Europe

Shell is recruiting a social investment advisor in The Hague, Netherlands… Carbon Equity has an opening for a compliance manager in Amsterdam… Impactable Investment Group is looking for an impact investment analyst in the UK… ThomasLloyd is recruiting an impact investing and renewable energy investment associate and managing director in London… Yunus Social Business Fund has an opening for an investment manager in Madrid.

Other global locations

Groyyo seeks an ESG management specialist or consultant in Bangladesh… Asha Impact is looking for an associate in Mumbai… Symbiotics is recruiting investment analysts in Cape Town, Nairobi and Dakar, Senegal… BlueOrchard Finance is hiring an associate impact manager in Lima, Peru.

That’s a wrap. Have a wonderful weekend. 

– Sept. 1, 2023