The Week in impact investing: Smarter

The team at

ImpactAlpha

TGIF, Agents of Impact! 

🚦 Smarter infrastructure. It could be the largest climate investment in history. With commitments to energy, water, transport and other climate-related systems in the infrastructure bill passed by the U.S. Senate this week, and even greater ambitions in Democrats’ pending $3.5 trillion budget package, “we have an outside shot at avoiding the most disastrous impacts of climate change,” Donnel Baird of Brooklyn-based BlocPower tells host Monique Aiken on this week’s podcast (see Impact Briefing, below). “That’s something to celebrate.” Among the private investors piling on to the government’s investment plans is Bill Gates’ Breakthrough Energy, which pledged to invest $1.5 billion in climate technologies alongside the federal government and mobilize 10-times that amount from other investors (see No. 1). “Leaders are stepping up all over the place,” Baird says. If we can come together, he adds, we can execute “smart, innovative, creative, scalable solutions to respond to the crisis.”

Agents of Impact are offering smart, scalable solutions across the landscape. Enterprise Community Partners is updating risk underwriting practices, beginning with its own, to back diverse real estate developers able to address community needs (No. 2). LISC’s Annie Donovan says it’s time to scale community development financial institutions, which over the last 18 months have become a pipeline for racial equity investments (No. 3). WEPOWER in North St. Louis is part of a wave of new fund managers driving community-centric investment decisions and local governance (Agent of Impact). Family offices like Ceniarth are joining forces with faith-based investors to deploy catalytic – including concessionary – capital (No. 5). And impact investors increasingly are engaging public policymakers to create an enabling environment for positive-impact investing (No. 3). Infrastructure for impact is getting an upgrade. – Dennis Price

🎧  Impact Briefing. On this week’s podcast, host Monique Aiken connects with BlocPower’s Donnel Baird about infrastructure opportunities and climate emergencies. We also hear from Lori Chatman, head of the Enterprise Community Loan Fund and this week’s guest on The Reconstruction podcast. Plus, the headlines. Tune in, share and follow us on Apple, Spotify or wherever you listen.

The Week’s Agent of Impact

Charli Cooksey, WEPOWER. Charli Cooksey has lived most of her nearly 35 years on the same block in North St. Louis. After decades of systemic racism and disinvestment, crime and poverty rates in the predominantly Black neighborhood are significantly higher than national averages. Growing up, it felt like “the tale of two worlds within a single city,” Cooksey tells ImpactAlpha, “compared to other parts of St. Louis, where resources and access were so normal, it was as simple as breathing.” After years of teaching, launching an education nonprofit and activism following the 2014 police shooting of Michael Brown in nearby Ferguson, she knew it was time to try a new approach. “It’s my responsibility,” Cooksey says. She founded WEPOWER to “reconcile the disparity between my part of St. Louis and other parts of St. Louis” by building an ecosystem of Black and Latinx entrepreneurs and innovators to build and take control of their own wealth and wellbeing.

This week, WEPOWER neared its $1.5 million target for its inaugural impact fund, Elevate/Elevar Capital, after a $500,000 commitment from Living Cities and individual investors (see, “WEPOWER fund will back diverse founders to build community wealth in St. Louis”). The fund will provide entrepreneurs with flexible, revenue-based financing. Community representatives – residents, investors and Black and/or Latinx founders – will reinvest a portion of the fund’s returns in the neighborhood as they see fit. “We really wanted to make sure that we can create a vehicle for communities to self-determine their own liberation,” says Cooksey. “Communities that have been exploited and experienced disinvestment should have the right to control the resources that support them.” Once the model proves out in St. Louis, WEPOWER plans to raise larger funds and help expand resources for communities of color in other cities. “St. Louis is ground zero for change across this country,” she says, “and there’s so much work to do.” – Roodgally Senatus

The Week’s Big 6

1. America’s green infrastructure. The U.S. Senate’s $1 trillion bipartisan infrastructure package is already providing tailwinds to private investment in green infrastructure and climate tech. With an even more ambitious $3.5 trillion Democratic spending bill, government financing for climate action and climate justice could be higher than, well, ever. Here we go

  • Business leaders tag along. Bill Gates’ Breakthrough Energy Catalyst (see, “Breakthrough Energy planning “blended finance” fund to marshal billions for next-gen climate tech”) is committing $1.5 billion over three years to co-invest alongside the federal government to accelerate clean aviation fuel, long-duration energy storage, green hydrogen, direct air capture and other climate solutions. Other businesses are rallying around EV charging. On your mark.
  • Climate’s Big 8. A bombshell report from the Intergovernmental Panel on Climate Change warned that the planet may be warming even faster than current models and conventional wisdom suggest. Think tank RethinkX says aggressive deployment of solar power, batteries, cellular agriculture and five other key technologies could mitigate 75% of greenhouse gas emissions over 15 years. Dial it up.
  • Batteries, batteries, batteries. Technologies to store renewable energy and power electric vehicles are getting cheaper and more diverse. The latest battery deals: Nevada-based battery materials supplier Redwood Materials clinched $700 million. Ambri and Nanotech Energy raised financing to scale green battery technology. 

2. Redressing racial injustice in real estate. Only 2% of real estate development companies are Black-led and just 1.5% of real estate assets are managed by minority-led development firms. Lori Chatman of 40-year-old nonprofit affordable housing developer Enterprise Community Partners joined The Reconstruction podcast to talk about the organization’s $350 million Equitable Path Forward, an effort to change the face of the real estate industry. Chatman tells host Monique Aiken, “We challenged ourselves to say, ‘How are we, as Enterprise, complicit?’” Tune in.

  • Leveling the playing field. In a guest post, Chatman and her Enterprise colleague Rob Bachmann offer ways to counter “long-entrenched underwriting standards” that lock out many minority-led real estate developers. Atlanta-based affordable housing developer Quest, for example, was struggling to access growth capital until Enterprise provided an unsecured revolving term loan. Go deeper.
  • Borrower accountability. On the weekly Impact Briefing podcast, BlocPower’s Donnel Baird said it was easier to raise $50 million from Goldman Sachs than to work with many impact investors (see, “Donnel Baird, Agent of Impact“). As for Enterprise, he said, “I do think that the internal assessment that they’re doing to investigate their own practices is very necessary.” BlocPower has met with Enterprise for years without completing a transaction, he said. Enterprise primarily finances real estate developers rather than energy efficiency project developers like BlocPower.

3. Introducing ImpactAlpha’s Policy Corner. We’re partnering with the U.S. Impact Investing Alliance to keep Agents of Impact on top of key policy developments. From strengthening the Community Reinvestment Act to fortifying critical small business lenders, impact investors must “proactively engage with the public sector to create an enabling environment for truly impactful business and investment decisions,” writes the alliance’s Fran Seegull. Updates and insights.

  • Updating a 1940 law for community impact. In a guest post, Janice Shade of the Initiative for Local Capital explains that a makeover for the 1940 Investment Company Act could spur the creation of community investment funds to create shared prosperity and build local wealth. A handful of community-centric funds like WEPOWER’s Elevate/Elevar Capital fund are charting new models (see, Agent of Impact, above). The fine print.
  • Scaling CDFIs. Over the last 18 months, community development financial institutions have proven to be countercyclical, growing when so many organizations have struggled. In a guest post, Local Initiatives Support Corp.’s Annie Donovan says now’s the time to accelerate investment of patient, flexible, risk-taking capital. Get her take.

4. Twiga Foods tackles Africa’s food inflation. Twiga Foods bit off more than it could chew trying to both streamline Africa’s food supply chains and boost livelihoods for smallholder farmers. The tech-enabled logistics company is doubling down on services for informal food retailers by working with larger agricultural producers. Get the scoop.

5. Ceniarth finds religion. Faith-based institutions were among the original impact investors and pioneers of ‘impact first’ approaches needed to drive deeper change. The family office Ceniarth is increasingly co-investing with faith-based investors. “We hope that as the impact field finds ‘new religion’ that it can also remember some of the merits of ‘old religion,’” write Ceniarth’s Diane Isenberg and Greg Neichin. Their critique.

6. IFC looks on the bright side. A tally from the International Finance Corp. found that impact assets increased more than 25% in 2020 from 2019. Amid the pandemic, however, fundraising and new fund launches tumbled, particularly in emerging markets. By the numbers.

The Week’s Dealflow

The Reconstruction. Northwestern Mutual backs Black fund managers with a $100 million impact fund… Black-led venture Mentor Spaces raises $2.5 million to help diverse candidates build professional networks… Black haircare brand Afrocenchix secures $1.2 million from Google for Startups… Packard Foundation commits $25 million to address racial disparities in credit.

Agrifood investing. South Africa’s Khula raises $1.4 million for farmer-focused marketplace… Australia’s v2Food raises $108 million for global expansion… 80 Acres Farms raises $160 million to scale vertical farming… Innomost secures €5 million to turn timber waste into cosmetics.  

Financial inclusion. Nigeria’s Moove raises $23 million to finance vehicles for Africa’s transit drivers… Rent-to-own real estate company Landis Technologies secures $165 to help working class Americans purchase a home… No-fee digital bank Kuda in Nigeria scores $55 million in Series B funding. 

Frontier finance. Benin issues a €500 million social bond to finance clean water infrastructure and access… The U.K.’s CDC Group loans $50 million to Sri Lanka’s Commercial Bank of Ceylon… Indonesia’s Bukalapak, an e-commerce platform for micro and small businesses, raises $1.5 billion from its initial public offering.

Health and wellbeing. India’s Onsurity scores $16 million to help small businesses provide health insurance benefits for their employees… HCAP Partners invests in medical benefits and healthcare authorization software company Myndshft… MassMutual Catalyst Fund and Boston-based The Impact Seat back The Organic Project to grow organic menstrual product sales.

Impact M&A. Private equity firm Apax lines up a $2 billion acquisition and merger of three software platforms for nonprofits… Rise Fund backs Human Interest’s $200 million round… Piggyvest, a savings platform for low and middle-income Nigerians, acquires peer Savi.ng… FiscalNote acquires Singapore’s ESG and climate data management software firm Equilibrium. 

Skills and education. India’s Skill-Lync raises $17.5 million to teach tech skills online… Mexican edtech venture Crehana raises $70 million to reskill and upskill employees… Chicago-based Avathon Capital invests in ReUp Education to re-enroll adults who didn’t complete their degrees. 

Low-carbon future. LACI makes SparkCharge the tenth investment from its cleantech debt fund… Apollo Projects and Breakthrough Energy Ventures back early-stage carbon tech venture 44.01.

The Week’s Talent

Mary Powell, ex- of Green Mountain Power, becomes CEO of Sunrun, as Lynn Jurich transitions to executive co-chair (see, “Agent of Impact: Lynn Jurich“)Harry Langer, ex- of The Economist Intelligence Unit, joins US SIF as director of research…  Joana Arthur, ex- of Mountain Pacific Group, is named investment director at Boston Common Asset Management… Dorri McWhorter of the YMCA of Metropolitan Chicago is elected to the board of Common Impact… Mission Investors Exchange appoints Nicholas Almeida, ex- of San Jose’s mayor’s office, as chief operating officer. 

Drew Schechtman, ex- of Voya Financial, joins AIG as vice president and head of ESG strategy… Food Finance Institute’s Tera Johnson will become CEO of Iroquois Valley Farmland Real Estate Investment Trust in September. Iroquois Valley co-founder and CEO David Miller will remain on the board, while Sarah Larson will take the helm of the Food Finance Institute on an interim basis.

The Week’s Jobs

Omidyar Network is recruiting a principal for its Reimagining Capitalism team… CalSTRS seeks a portfolio manager and an associate portfolio manager for sustainable investment and stewardship strategies… Activest is recruiting a chief operating officer, an editor and director of communications, and a senior analyst… Mercy Corps Ventures is looking for a venture studio lead in Portland… The Federal Reserve Bank of New York is recruiting a director of community investments.

ImpactAssets seeks a business development associate in the San Francisco Bay Area… Provenance Capital Group is hiring a director of operations in San Francisco… Villgro Innovations Foundation is looking for impact professionals to join its social enterprise incubator in India… Illumen Capital is recruiting an investment director in the San Francisco Bay Area… Surdna Foundation is looking for a director of impact investing in New York. 

Value for Women is hiring a director of finance and operations… Kiva is looking for an investment director for Europe and Asia… Blue like an Orange is recruiting an investment analyst in Washington, D.C… Boston Impact Initiative is hiring an impact investment associate and a director of finance and administrationWefunder is looking for a founder-in-residence.

That’s a wrap. Have a wonderful weekend. 

– Aug 13, 2021