The Week in Impact Investing: Social value

The team at

ImpactAlpha

TGIF, Agents of Impact! 

🗣 Broadening the scope. You may have heard: Elon Musk is buying Twitter. Before the deal has even been inked, the impact on political power, social discourse and individual rights has generated a weeks-long debate. That the social value of the transaction is now at the core of the discussion is striking. It’s “not a way to make money,” Musk claimed at the TED conference this month. “I don’t care about the economics at all.” Positive or negative, the $44 billion transaction may be the largest social impact investment of all time. 

Broaden it out. What’s the impact, for example, on startup investing in U.S. heartland cities when political winds shift investors’ strategies, as in the case of J.D. Vance’s stint with Steve Case’s Rise of the Rest fund. What are the systemic implications of the biases fund managers of color face in raising institutional capital, despite track records of strong performance, as Fairview Capital’s Larry Morse told ImpactAlpha’s David Bank in a podcast this week? What’s the impact on customers of mega deals in solar energy in Africa (watch this space) or the impact on climate investing of mega funds like TPG’s Rise Climate? What would be the impact if more foundations exercised their proxy voting power to support social justice and climate action, as Amy Cortese highlighted this week in the case of the Gates Foundation’s large stake in Berkshire Hathaway

Agents of Impact are identifying the ways in which the “S” in ESG goes beyond the boundaries of a single company, just as climate impacts extend both upstream and downstream. Companies will need to account for their “Scope 3” for social, as Fran Seegull of the U.S. Impact Investing Alliance laid out in a guest post this week. Social impact is everywhere. And it has real value. – Dennis Price

🎧 Impact Briefing. Host Monique Aiken is joined by Jessica Pothering to explore the, yes, social impact of private investment trends on the African continent. Plus, the headlines. Listen to this week’s episode, and follow all of ImpactAlpha’s podcasts on Apple, Spotify or wherever you listen.

👏 Agents of Impact Call No. 42: The rise of alternatives to venture capital. An explosion in alternative startup financing such as revenue-based financing and crowdfunding (er, community rounds) is broadening access to capital and diversifying who and what gets funded. Join Kim Folsom of Founders First Capital, Wefunder’s Jonny Price and other Agents of Impact to learn how new funding structures are changing startup investing for good, Tuesday, May 10 at 10am PT / 1pm ET / 6pm London. RSVP today.

The Week’s Agent of Impact

Farmerline’s Alloysius Attah: Helping farmers in Africa produce and sell more food. The climate disruption is spurring a long overdue upgrade for 500 million smallholder farmers worldwide, who produce up to 80% of the world’s food. To weather shocks, farmers need high-quality seeds and fertilizer, training and data, and access to markets and finance. Farmerline, based in Accra, Ghana, is “using digital tools to aggregate demand and working with third-party logistics companies to make sure that the chasm between farmers and these very valuable resources is  bridged,” says Alloysius Attah, who co-founded the company in 2013 with $600 and 800 Ghanaian farmers. Farmerline now works with partners in more than two dozen countries to reach a million farmers. This week it closed on $12.9 million in equity and debt financing to expand operations. “When you get farmers fertilizer and seeds at the right time, and when you provide them with the training, they could increase their income by 40%,” Attah told Bloomberg TV. “That makes a lot of impact in the life of a farmer.”

ImpactAlpha first profiled Attah back in 2013. The youngest of three children, he was raised by his aunt and helped her tend a small cassava plot. He and business partner Emmanuel Addai built a system to deliver simple voice messages via phone in Twi, Ga, Fanti, Nzema, Ewe and other languages, with tips for agriculture and aquaculture best practices. With data from the farmer network, Farmerline now supplies vital market intelligence to food traders and manufacturers to forecast fertilizer demand, trace products and score credit for lending. Climate change has brought a sharper investor focus on services and financing for smallholder farmers. Last month, Apollo Agriculture in Nairobi raised $40 million, and ThriveAgric in Abuja, Nigeria raised $56.4 million, to boost farmers’ productivity and incomes. The common thread: integrated services for smallholder farmers, from inputs to training to markets to finance. “Technology and more phones don’t solve all the problems,” Attah says. But the data that can be collected “gives us a starting point to make sure that we reach the farmers with good information and to work with them to get them all that they need.” 

The Week’s Dealflow

Dealflow spotlight: Investing in Africa. Venture capital investing in Africa is on a tear (see, “Energy access and financial inclusion ride Africa’s swell of private capital“). Startups on the continent raised $1.8 billion in the first quarter of the year. About half of that funding went to fast-growing fintech startups, but startups in other sectors are attracting growth capital as well. This week, off-grid energy company Sun King, which has been selling solar lanterns and small home systems to low-income, energy-poor Africans for 15 years, scored $260 million in a Series D round led by General Atlantic’s climate investing group, BeyondNetZero. Also notable: Off-grid solar venture BBOXX is in talks to acquire Ghana-based peer PEG Africa. At the smaller end of the deal spectrum, Swedish government-backed Beyond the Grid Fund for Africa invested $2.5 million in Oolu to expand home solar sales in Burkina Faso.

  • Hot themes. Ghana-based Farmerline raised $12.9 million for its agri-marketplace that connects farmers to training, data, inputs, buyers and financing (see, Agent of Impact above). Dakar-based B2B e-commerce venture Kwely closed $1 million in pre-seed funding to connect African makers and small businesses to buyers in international markets. BluePeak backed Africure to bolster pharmaceutical production in Africa. And Egyptian EV battery maker Shift secured early-stage funding from Union Square Ventures, Algebra Ventures, the Oman Technology Fund and Wamda Capital.
  • Fundraising news. The African Development Bank rolled out a €4 million ($4.2 million) African Circular Economy Facility to finance smart agriculture, renewable energy, sustainable waste management and water efficiency. Thematic funds in Africa have had the most success in raising private capital as fundraising rebounded from 2020’s slump.

Circular economy. Circularity Capital closed its second fund at €215 million to invest in growth-stage businesses in Europe that “decouple business growth from intense resource utilization”… Air Company raised $30 million to turn carbon into vodka and other products… Circular Innovation Fund secured €50 million from L’Oréal… Carbon Upcycling Technologies raised $6 million to produce carbon-enhanced additives for the concrete industry… Spring Lane Capital raised $50 million to invest in sustainable solutions in energy, food, water, waste and transportation. Spring Lane also backed Andion, a renewable natural gas producer.

Agrifood investing. Upside Foods scored $400 million, one of the biggest rounds for a lab-grown meat venture… Alternative protein ventures CellMEAT in South Korea and Nowadays in San Francisco also raised funding… Florida-based Anuvia raised $225 million to produce bio-fertilizers for commercial agriculture… India’s indoor farming tech venture Eeki Foods raised $6.5 million in a round led by General Catalyst.

Carbon tech. Energy tech company Baker Hughes acquired Mosaic Materials, which makes materials that can capture carbon… Greenly secured $23 million to help small businesses cut carbon emissions… Klima secured €10 million to help companies educate and empower workers to be more climate-minded and offset personal emissions.

Clean energy. The U.S. Department of Energy’s Loan Programs Office committed more than $600 million to hydrogen storage in Utah and battery graphite production in Louisiana… Munich-based Twaice raised $30 million to enhance the transparency and predictability of batteries… Palmetto, which aims to democratize solar energy access for homeowners, secured an undisclosed amount of investment capital from Main Street Advisors.

Climate finance. TPG sealed its Rise Climate Fund at $7.3 billion… Mitsubishi Corp. committed $100 million to Breakthrough Energy Catalyst, becoming its first key partner in Asia… Elon Musk’s $100 million XPRIZE awarded $15 million to scale carbon removal… BlackRock was among the investors in electric-vehicle charging startup FreeWire’s $125 million funding round.

Green commerce. Tive raised $54 million to provide supply-chain visibility for shippers, logistics providers and carriers… Indian e-commerce venture OneGreen raised an undisclosed amount of capital to connect consumers to clean, organic and sustainable essential products.

Inclusive fintech. Foundations are joining the crowd to invest in creative startups through Honeycomb Credit… Pakistani fintech Abhi scored $17 million to offer emergency loans to individual borrowers and working capital loans to small and mid-sized businesses.

Investing in health. The Autism Impact Fund backed Cortica’s care model focused on autism and other neuro-diverse conditions… Mumbai-based Truemeds secured $22 million to help chronic disease patients save on healthcare costs through tele-consultations and generic drug prescriptions.

The Week’s Talent

Laura Gonzalez is promoted to senior program manager at Los Angeles Cleantech Incubator… Elena Pons is promoted to chief investment officer at MCE Social Capital… Brant Richards is named managing director of climate tech accelerator Third Derivative… Erin Komorowski is promoted to head of ESG at M&T Bank.

David Frank, ex- of Cummins, is named chief productization officer at Twelve. The company also appointed former Linde executive Anne Roby to the board… Scott Litzelman, ex- of the Energy Department’s ARPA-E, joins Stripe as program lead for climate… Lourenco Miranda, ex- of Societe Generale, joins EisnerAmper as managing director of environmental, social, governance and sustainability solutions.

The Week’s Jobs

AHL Venture Partners is hiring an investment associate/manager in Nairobi… Global Partnerships seeks an investor relations officer in Seattle… Calvert Impact Capital is hiring a senior loan officer, impact analyst, and strategy and new product development officer… Helena is recruiting a chief operating officer in New York… BlackRock seeks a sustainable investing climate and sustainability research lead in New York… Palladium Impact Capital is looking for an associate in Washington, D.C.

The Miller Center for Social Entrepreneurship is looking for a manager of impact investing, a director of corporate and foundation relations, and a senior manager of campus engagement, in Santa Clara, Calif… Project Drawdown is hiring a remote chief scientist and several senior/associate scientists… Evergreen Climate Innovations seeks a strategic partnerships manager in Chicago… Rockefeller Foundation is looking for a director of strategic learning and impact in New York.

Truist is looking for an affordable housing and impact investments relationship manager in Atlanta… Pacific Community Ventures is on the hunt for a director of marketing and communications in Oakland… Greenbacker Capital is hiring a manager of portfolio accounting in Portland, Maine… The Impact Investing Institute seeks a place-project coordinator in London.

That’s a wrap. Have a wonderful weekend. 

– Apr. 29, 2022