The Week in impact investing: Showing up

TGIF, Agents of Impact! 

👋 Join the conversations. We’ve got two exciting call opportunities lined up for ImpactAlpha subscribers next week:

• Build your network, and ours. As part of the ImpactAlpha community, you have access to an incredible network of professionals putting finance to work for good. Join us Tuesday, Aug. 13, for an hour of facilitated introductions to other Agents of Impact who are pushing the boundaries of impact investing. Register today.

• The Call: Mapping an impact investing path through the new legal landscape. Adasina’s Rachel Robasciotti joins next week’s Agents of Impact Call to offer strategies for protecting critical impact priorities following this year’s Supreme Court decisions gutting “the administrative state.” The Call’s stellar lineup includes Better Markets’ Dennis Kelleher, B Lab’s Jorge Fontanez, The Shareholder Commons’ Rick Alexander, and Fran Seegull of the US Impact Investing Alliance. Zoom in on Wednesday, Aug. 14. RSVP now. 

In today’s Brief:

• The business case for inclusive prosperity
• Podcast: Blended finance in Africa and popular revolt in Bangladesh 
• How EPA’s Jahi Wise designed a green bank
• The ethical fashion of Black VCs

The Week in Impact Investing: Showing Up

🗣 Inclusive prosperity. Into an uninspired, divisive US presidential campaign, Kamala Harris has injected a powerful, positive and inclusive vision for an economy that works for all. That energy has captivated voters, according to polls, but also investors that are placing bets on diverse consumers, empowered workers, and a green transition that creates more wealth for more people. Impact VCs from across the country, including Bronze Capital’s Stephen DeBerry, Rarebreed Ventures’ McKeever (Mac) Conwell (see Spotlight, below) and Emmeline Ventures’ La Keisha Landrum Pierre showed up on this week’s “VCs for Kamala” call and made the business case for the vice president. ImpactAlpha’s Lynnley Browning helped moderate the call. The takeaway: A healthy, bottom-up economy is better, not only for families, workers and communities, but also for investors and businesses themselves.

Microfinance pioneer Muhammad Yunus has spent decades demonstrating the value of such inclusive prosperity. That agenda has captured the imagination of Bangladesh’s youth, who were instrumental in bringing down Sheikh Hasina, the country’s former prime minister who fled to India this week. The young protesters effectively anointed Yunus to lead Bangladesh through the political crisis, as Jessica Pothering reports. As global finance fails to deliver for Africa, Africa-led development finance institutions, including the Development Bank of Rwanda and the African Development Bank, are beginning to step up with first-of-a-kind blended finance models to rally capital for development, as Convergence’s Aakif Merchant discusses in a special report for ImpactAlpha. To stand out in a difficult fundraising environment, fund managers like Beyond Capital Ventures, Raven Group and Renaissance Partners are coming to market with funds that incentivize impact and share profits with communities and founders, as Jessica and Lucy Ngige highlight on this month’s Liist of funds actively raising capital. Inclusive growth and shared prosperity are showing up on the agenda, because Agents of Impact are showing up as well. – Dennis Price

Other must-reads on ImpactAlpha: 

• “A primer for investors branching into employee ownership,” by Transform Finance’s Curt Lyon and Julie Menter.
  
• “Local community foundations go regional to tackle climate change,” by Lillian Kuri of Cleveland Foundation, Lisa Schroeder of Pittsburgh Foundation, and RT Rybak of Minneapolis Foundation.
  
• “Climate adaptation bonds can pay off for investors – in reduced risks from extreme weather,” by Climate Proof’s Louie Woodall.
  
• “The ‘perfect storm’ of climate risks that is sinking your net worth,” by As You Sow’s Andrew Behar.

The Week’s Podcasts

🎧 This Week in Impact. Host Brian Walsh discusses ImpactAlpha’s top stories with editor David Bank. Up this week: Impact VCs embrace Kamala Harris’s economic vision. African financial institutions blend finance for development. And microfinance pioneer Muhmmad Yunus steps up to lead Bangladesh out of its political crisis.

• Listen to the new episode of This Week in Impact. Get the podcast in your feed by subscribing on Apple or Spotify.

• Capitol Gains: Climate, insurance and risk management. The 2017-2018 wildfire seasons in California wiped out more than a quarter-century of cumulative underwriting profits for the homeowners insurance industry in the state. “That’s just not a profitable business model anymore,” Carolyn Kousky of the Environmental Defense Fund tells hosts Matt Posner of Court Street Group and municipal finance expert James McIntyre on the Capitol Gains podcast, part of the ImpactAlpha Podcast Network. Read Posner’s recap on ImpactAlpha and listen to the podcast on Spotify.

The Week’s Agent of Impact

Jahi Wise, US Environmental Protection Agency: Architecting a green bank for the US. When the $27 billion in Greenhouse Gas Reduction Fund starts rolling out any day now, it will kick off an inclusive green energy transition that promises to reach deep into long-neglected communities. Jahi Wise was instrumental in making that happen. Wise was an advisor to a newly elected President Joe Biden when ideas began to take shape for a “green bank” to spur lending for energy retrofits, heat pumps, community solar and other green projects. The Inflation Reduction Act, passed two years ago next week, carved out $27 billion for such a bank, to be overseen by the Environmental Protection Agency. Wise, appointed director of the GGRF in December 2022, was tasked with designing the program to leverage up to $7 in private capital for every $1 in government money. Wise had worked for the Coalition for Green Capital, led by former Federal Communications Commission chief Reed Hundt. The Coalition had long pushed for a single national green bank to work with the private sector on green loans. 

Community development financial institutions, or CDFIs, worried that their organizations and the disadvantaged communities they serve would be cut out of the action. Wise, also a veteran of the community-focused energy retrofitter BlocPower, was ideally suited to bring the camps together, if not always cordially. “I always found him to be somebody who was really in the room listening to us at the CDFI level and trying to understand what our motivations were for wanting to be a part of it,” Amir Kirkwood of the Justice Climate Fund tells ImpactAlpha. That listening, and hundreds of public comments, led Wise to set aside the idea for a single national entity in favor of a competitive grant program for a distributed, community-centered model. When the grants were awarded in March, Hundt’s green bank group, which had angled for $10 billion, got just half of that.

The process enlisted the full range of organizations needed to move money to communities and businesses that have been underserved by traditional lenders (see, “Investors ready products to amplify US ‘green bank’ funding”). In addition to the Coalition for Green Capital, the conduits for the GGRF’s main program, the $14 billion National Clean Investment Fund, will be two coalitions of community-based nonprofits. The biggest chunk, $7 billion, will go to Climate United, a partnership of the financial nonprofit Calvert Impact, affordable housing funder Community Preservation Corp, and national CDFI Self-Help. Late last year, Wise passed the reins to David Widawsky, a longtime official at EPA and other agencies, to implement one of the biggest expansions of community-based lending in the nation’s history, in service of one of the biggest-ever upgrades in community infrastructure. The longest lasting impact of the $27 billion Greenhouse Gas Reduction Fund may be the distributed, inclusive, collaborative network of green lenders it will leave behind. 

• Keep reading, “Jahi Wise, EPA: Architecting a green bank for the US,” by Amy Cortese on ImpactAlpha and share the story on Instagram.

The Week’s Deal Spotlight

Black VCs carve a niche at the intersection of fashion and sustainability. Before the big names moved in, Baltimore-based RareBreed Ventures provided seed funding to Oakland, Calif.-based Unspun to develop its 3D textile-weaving technology. The startup hadn’t yet deployed the technology then and was “just selling jeans to show these big apparel brands what the device could do,” RareBreed’s Mac Conwell told ImpactAlpha. “My immediate reaction was that every Black woman on the planet needs to hear about this, because they finally have a company that can actually make jeans that fit.” The company’s on-demand production also reduced textile waste. 

This week, Unspun raised $32 million in a Series B financing round, backed by Lowercarbon Capital and DCVC. The fresh capital will help the startup expand beyond its microfactory in Oakland and enter the international market. By weaving yarn directly into fabric and skipping the cut-and-sew process, the technology enables smaller orders, reduces transport emissions and slashes production lead times to days from months. The company has raised just over $58 million from more than two dozen investors. The goal: license its technology to enough clothing brands and manufacturers to reduce human-caused emissions by 1%.

• Hair and beauty. Black-led RareBreed Ventures has carved out a niche at the intersection of fashion, hair, beauty and sustainability. Conwell says he was “trying to make a case of how I can use my cultural competency along with my business acumen” to show why Unspun’s business made fashion and environmental sense, especially to Black female consumers. The firm also is an investor in Thousand Fell, a New York-based company that makes sneakers from food waste and recycled materials. Other portfolio companies include Halo Braid, which has built an automated hair braider for Black hair; and Rebundle, a plant-based hair extension company that aims to reduce health and environmental disparities in the hair extensions industry (see, “The role of plant-based hair extensions and Black beauty brands”). Rebundle is also backed by M25, a Black-led venture firm in Chicago.
  
• Gender lens. Venture capital firms led by Black women are also pitching in. Serena Williams’ Serena Ventures is an investor in New-based Parfait, which uses AI to customize and make wigs that complement the wearer’s head shape and skin tone; and Calico, a Toronto-based, “smart production” management company that works with fashion brands to limit costly production errors and vet sustainable factories. Calico says it has helped Sonderhaus, an “ethical, sustainable” clothing brand, save $150,000 in inventory costs. Kesha Cash’s Impact America and Williams were early investors in Mayvenn, a hair extensions and wigs marketplace that later raised $10 million in a round led by Andreessen Horowitz.

• Keep reading. Cordes Foundation is a sponsor of ImpactAlpha’s coverage of sustainable fashion. 

• 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.

Robert Wood Johnson Foundation’s Kimberlee Cornett, Invest for Better’s Janine Firpo and Ellen Remmer, Grameen America’s Andrea Jung, SDS Capital’s Deborah La Franchi, Resilience Capital Ventures Gillian Marcelle, Calvert Impact’s Jennifer Pryce and Green Century Funds’ Leslie Samuelrich are among the Agents of Impact on Forbes’ “50 Over 50: Investment” list. MacArthur Foundation’s Debra Schwartz, Kellogg Foundation’s La June Montgomery Tabron and Pivotal Ventures’ Melinda French Gates made Forbes’ “50 Over 50: Impact” list.  

Maya Chorengel of TPG Rise Fund, Nathan Taft of Jonathan Rose Companies, Jacob Haar of Community Investment Management, Radhika Shroff of Nuveen Private Equity Impact Investing, and Aligned Climate Capital’s Peter Davidson joined Impact Capital Managers’ board of directors… Amy Weinreich, formerly with Argentinian think tank IDESA, joined Sonen Capital as a research associate… Taarika Gopinath, formerly with Prudential, joined Social Finance as an impact investing associate… Sorenson Impact Foundation named Eliza Roady, formerly with Sorenson Impact Institute, as managing director. 

US SIF named Sireen Hajj, previously with Morningstar Sustainalytics, as its director of investor outreach… The Bezos Earth Fund appointed Eric Wilburn of consultancy NatureBridge as program officer for nature finance… Gulf International Bank named Victoria Barron, previously with BT Pension Scheme, as chief sustainability officer…  Mariletzy Venegas, formerly with Boston Consulting Group, joined Social Finance as impact advisory associate…Tony Berkley, previously with FII Institute, Prudential and Kellogg Foundation, joined Opportunity Finance Network as chief development officer.

That’s a wrap. Have a wonderful weekend. 

– Aug. 9, 2024