The Brief | March 25, 2022

The Week in Impact Investing: Sunlight

ImpactAlpha
The team at

ImpactAlpha

TGIF, Agents of Impact! 

🗣 Spring cleaning. Sunlight is the best disinfectant, as Supreme Court Justice Louis Brandeis famously wrote. Which is why Russian President Vladimir Putin is attempting to keep his citizens in the dark about what is happening in Ukraine, and why a vibrant and independent press is key to political risk mitigation (cf. next week’s Agents of Impact Call). The same principle applies to climate, and the SEC’s proposed rules for disclosure of climate scenarios, transition plans, carbon offsets, internal carbon pricing and more could give investors and other stakeholders insight into the practices of more than 6,000 publicly traded U.S. corporations (see, “SEC disclosure rules signal the arrival of climate accountability,” and, for a contrarian take, “How the SEC’s rules will – and won’t – solve climate change”).

Sunlight can nudge other actors toward impact as well. Data on investments by quasi-government development finance institutions show that the DFIs insist on standard commercial terms in three-quarters of their deals (see, “Risk-averse development finance institutions are more often catalyzed than catalytic”). But that means that in 25% of cases, DFIs demonstrate models for catalytic capital that can help crowd in more private capital, as Dennis Price reports. Data on impact outcomes can drive lower-cost capital or higher revenues through a growing variety of “impact-linked” financial structures that, as Bjoern Struewer of Roots of Impact writes, even major corporations can adopt (see, “How incentives can steer capital toward impact”). 

Amy Cortese explains how Open Road Alliance helps keep the lights on at high-impact businesses, enabling Hala Systems to deploy in Ukraine its advance airstrike warning system that has saved lives in Syria. The image of our blue marble, lit by sunlight, that Stewart Brand put on the cover of The Whole Earth Catalog more than 50 years ago helped inspire a kind of planetary consciousness. As Brand’s biographer John Markoff says in our podcast conversation, “the symbol is more important now than it has been for decades.” – David Bank

🎧 Impact Briefing. On this week’s podcast, ImpactAlpha’s David Bank joins host Brian Walsh to discuss the surprising breakthrough in the SEC’s new rules on corporate climate disclosure and preview next week’s Agents of Impact call on political and country risk (see below). We also hear from Stanford’s Alicia Seiger, who has a contrarian take on the hot issue of Scope 3 accounting. Plus, the headlines.

👋 Next week’s Call: Running toward, not away from, political risk. Not investing is sometimes not an option for impact investors. Countries at risk are often where civil society and social and environmental progress are needed most. Join Open Road Alliance’s Caroline Bressan, Daniel Kozlov of Moscow and San Francisco-based Global Venture Alliance, Media Development Investment Fund’s Harlan Mandel, and other Agents of Impact for a timely discussion on impact investing in challenging environments, Tuesday, Mar. 29 at 10am PT / 1pm ET / 6pm London. RSVP today.

The Week’s Agent of Impact

John Holdsclaw IV, Rochdale Capital: Advancing co-ops and community ownership. “I’m a horrible banker,” admits Holdsclaw, who served as director of strategic initiatives at the National Cooperative Bank. Holdsclaw was drawn to high-mission deals: A black-owned grocery store in a food desert in Waterloo, Iowa. A community-led initiative to purchase and redevelop a mall in downtown Los Angeles. Those kind of deals don’t fly at a regulated bank, even one with a mission to support cooperatives. Frustrated, Holdsclaw suggested to NCB’s longtime CEO, Chuck Snyder, that they create a new community development financial institution, or CDFI. “So that’s what we did.” With $5 million from NCB, Rochdale Capital will have the flexibility to do small but high-impact deals that would not pass muster at a bank. Holdsclaw regrets that Snyder passed away in November without seeing their idea come to fruition. “He’s still the wind behind my sails and everything that we’re doing,” he says.

As a child, Holdsclaw attended a Head Start program in North Carolina; later, he worked at Head Start in government affairs. He spent 13 years at Capital Impact Partners, working with Agent of Impact Ellis Carr, then chief financial officer. At NCB, Holdsclaw developed relationships and products supporting community development finance. He’s now building Rochdale’s infrastructure (and seeking CDFI certification) to begin lending later this spring. The Arlington, Va.-based lender will focus on cooperative housing, worker co-ops and other deals that advance community ownership and asset building in distressed urban and rural communities. The name comes from the Rochdale Principles that guide many cooperatives. Holdsclaw already has his first deal in mind: a food co-op and incubator in Maine serving a mostly Somali, Black and Latino community that needs a new space. “Those are the kind of deals that will come across my desk a lot,” he says. “Now I can move them forward.”

The Week’s Dealflow

Deal spotlight: Low-carbon transition. The Securities and Exchange Commission approved new climate disclosure rules earlier this week (see above). Enhanced disclosure is expected to drive demand for technology solutions to directly reduce carbon emissions, in addition to carbon offsets. In the meantime, Cambium Carbon snagged $3.2 million to recycle wood waste for carbon sequestration. Heirloom raised $53 million for low-cost carbon capture technology. Kimmeridge deployed $200 million to launch Chestnut Carbon for nature-based carbon offsets. NIO Capital raised $400 million to invest in the digitalization and decarbonization of mobility, energy and logistics in China. Planetary Technologies raised $7.8 million for ocean carbon capture. 

  • Decarbonizing India. Mumbai-based EverSource Capital acquired a majority stake in Lithium Urban Technologies, the largest operator of passenger EVs in India. EverSource recently closed a $741 million green infrastructure fund. Ola Electric, an Indian manufacturer of EVs, is investing in Israel’s StoreDot to bring its ‘extreme fast charging’ EV batteries to India.
  • Advisory services. Lune scored $4 million to help businesses report and reduce the carbon footprint of their products and services. U.K.-based Palatine Impact Fund acquired Cura Terrae to build an environmental services and consultancy business. Kayrros snagged €40 million to help French public and private organizations with sustainability goals, such as managing climate risks and implementing decarbonization strategies. 

Agrifood investing. AgFunder Asia and SDG Impact Japan jointly raise $10 million to invest in early-stage agrifood tech deals in Japan and Southeast Asia… India-based Aquaconnect raises $8 million in debt funding to help fish and shrimp farmers manage their farms, reach customers and access credit and insurance… Apollo Agriculture raises $40 million to bank smallholder farmers in Africa… ThriveAgric scores $56.4 million in debt to help smallholder farmers build income… Komaza scores $10 million to help smallholder farmers plant trees and adopt sustainable wood harvesting practices to combat deforestation.

Financial inclusion. BLOC Smart Africa, a fund managed by Bamboo Capital Partners, will invest €300,000 in Digitech to digitize insurance and reinsurance in Côte d’Ivoire… Bazaar raises $70 million in Series B funding to digitalize and provide financing to unbanked and offline retailers in Pakistan… Kenyan fintech venture 4G Capital raises $18.5 million in equity from Lightrock to provide unsecured loans to micro-businesses in Africa… Powered by People, also in Kenya, snags $5 million to connect local artists and artisans with large global retailers like IKEA and Crate & Barrel.

Fund news. SteelSky Ventures raises $47 million to back women’s health ventures… Impact Engine secures $34.2 million for its second private equity fund, which is looking to raise $150 million… Tikehau Capital’s impact debt fund secures $110 million from Dutch pension fund… LISC says it has deployed $122 million of its $250 million Black Economic Development Fund in investments for Black-owned banks and businesses in the U.S. 

Circular economy. Denmark’s LastObject scores €2.7 million to create reusable alternatives to single-use items like cotton swabs, tissues and cotton pads… TemperPack raises $140 million to insulate cold chains.

Clean energy. D.light secures $7 million in equity from OP Finnfund Global Impact Fund to expand pay-as-you-go solar in Africa… SPAN raises $90 million to upgrade the lowly circuit panel and ‘electrify everything.’ 

Education and skills. Reach Capital, which last year raised $165 million for an impact edtech fund, backs Stellic to help college students navigate degree requirements.

The Week’s Talent

Adam Ozimek, ex- of Upwork, joins the Economic Innovation Group as chief economist… Mandela Schumacher-Hodge Dixon, ex- of Founder Gym, is named CEO of All Raise… Cubico Sustainable Investments promotes David Swindin to CEO… Zeke Hausfather, ex- of The Breakthrough Institute, joins Stripe as climate research lead… EcoTrust’s Amrita Vatsal, Vibrant Future’s Robin Wang, and Georgette Wong of Correlation Consulting join the investment and audit committee at The Russell Family Foundation… Aqua-Spark’s head of dealflow, Tom Prins, takes the helm of the firm’s new Bangkok office.

The Week’s Jobs

Media Development Investment Fund is hiring a remote investment officer in India… The Global Impact Investing Network is looking for a manager of IRIS+ / IMM thematic content in New York… Stacey Abram’s campaign for governor of Georgia has multiple openingsAlexis Ohanian’s 776 Foundation is accepting applications for climate fellows… Decolonizing Wealth Project is looking for paid summer interns… Unreasonable seeks a chief people officer and a chief financial officer.

ImpactAssets is recruiting a director of strategic marketing communications and for other roles… Wellington Management is looking for an associate director of ESG for private investments in Boston… Galvanize Climate Solutions seeks a vice president of market development… Kauffman Foundation is looking for a director of capital innovation and a program officer for “heartland” strategy in Kansas City, Mo.

CrossBoundary is hiring a deputy head of natural capital investment advisory in Washington, D.C., London or Nairobi… The Nature Conservancy seeks a manager of investment fundraising, preferably in New York, San Francisco or London… Shift Capital is hiring a senior vice president of asset management in Newark, N.J… Catena Group seeks a director of finance and accounting in Marin, Calif.

That’s a wrap. Have a wonderful weekend.

– Mar 25, 2022