TGIF, Agents of Impact!
🗣 Positive externalities. What’s in a name? When we launched ImpactAlpha almost a decade ago, we wanted to cut against the assumption that positive social and environmental impact always required a tradeoff in financial returns. We looked for examples where positive impact drove financial outperformance, or alpha, through expanded access to underserved populations, the tapping of undervalued talent, better understandings of mispriced risks and many other savvy strategies. Later, when we saw impact investing being pulled by the inexorable gravity of “risk-adjusted, market rates of return,” we reminded investors that deep impact sometimes requires concessionary, er, catalytic capital, to bridge market gaps, prove a novel thesis, create an evidence base or serve disadvantaged communities. Catalytic investors, we demonstrated, simply choose to take their alpha returns in the form of outsized impact.
Oddly, practitioners in both camps validated the advantage, or alpha, in impact investing. The drumbeat of examples, and the simple logic of the case, has contributed to a revolution in finance that is still unfolding. Positive social and environmental outcomes have historically been considered “externalities” to a firm or fund. Now, operators and managers are noticing the intangible value of such positive externalities. They appreciate reduced risks, both direct and systemic. And they’re eager to grab tangible advantages in increased revenues, reduced costs and more productive talent. In Latin America, investors are using a gender lens to spot opportunities for alpha, as Dennis Price writes from the GLI LatAm Forum in Medellín, Colombia. Financing transitions to employee ownership delivers employee wealth-creation, business growth and attractive returns, as Roodgally Senatus and I report. Local capital providers in Africa are “proving both the financial and impact case for rethinking small business finance,” argues Susan de Witt of the Collaborative for Frontier Finance.
Another data point, in our humble opinion: the endorsement of ImpactAlpha by a group of dedicated impact investors, who this week staked us to $3.3 million in equity to grow our media and data platform. The Ford Foundation’s Roy Swan noted “the rotation toward a new global economy centered on positive social and environmental change.” ImpactAlpha is essential infrastructure “as the industry pivots towards social and environmental impact,” said Jim Sorenson of the Sorenson Impact Foundation. Added Common Future’s Sandhya Nakhasi, “Our era is challenging mainstream perceptions of ‘investability.’” Among the coverage we appreciated is George Anders’ article on LinkedIn, which declares, “There’s a fascinating, against-the-odds success story happening at ImpactAlpha.” It’s not that surprising. Investors seek alpha, and they’re finding it in impact. – David Bank
- Special note for Agents of Impact. “Dancing with the ones who brought us.”
The Week’s Podcast
🎧 Impact Briefing. David Bank joins host Monique Aiken to share ImpactAlpha’s big news. And David catches up with Graham Singh to discuss the financing mechanisms that Trinity Centres Foundation in Montreal is developing to repurpose surplus church properties for nonprofits and affordable housing. Plus, the headlines.
- Listen to this week’s episode, and follow all of ImpactAlpha’s podcasts on Apple, Spotify or wherever you listen.
- ICYMI. “Surplus church properties in Canada get new life as community hubs and affordable housing.”
The Week’s Dealflow
Deal spotlight: Building investment pathways in the world’s most neglected markets. “Mobilize” may be the word of the year for emerging markets investments. Africa alone needs an additional $100 billion annually for infrastructure development to meet climate and sustainable development goals. Some markets grapple with a too-slow flow of capital; others have none at all. “It’s hard to imagine, but there are places where capital markets really don’t exist,” says Mariana Graca of the Emerging Africa Infrastructure Fund, which provides debt for infrastructure projects in Africa’s least developed countries and conflict zones.
- Pilot projects. In the Central African country of Chad, just one private-sector led, utility-scale renewable energy project is in the works – the 60-megawatt Djermaya Solar Project, which will deliver power to more than 430,000 people. “To do a deal in Chad is a milestone. It’s very difficult to actually bring it to financial completion,” says Graca, who’s firm funded the project in 2021. Just one startup in Chad has raised funding. Ziz Energy this week closed a €1.5 million loan from the French development agency Proparco to support development of renewable mini-grids for 500,000 people.
- Dealflow deserts. More than a dozen African countries have no startups with notable funding rounds, including Burundi, Eritrea, the Central African Republic, Liberia, South Sudan and Somalia. Chad, along with Mozambique, Guinea, Lesotho, Sierra Leone and Burkina Faso, have had one or two in recent years. In Africa’s more favored markets like Kenya and Nigeria, investment managers are coming up with creative workarounds to unplug the flow of capital, including derisking mechanisms and blended finance. They’re also turning their attention to local investors, who share both risk perceptions and impact objectives. Impact Investing Ghana is raising a fund from local pension funds to back local fund managers.
- Keep reading.
Agrifood investing. Lithuania’s HeavyFinance clinched €1 million to allow retail and large investors to provide loans to farmers switching to regenerative practices… UK-based Agronomics led the $33.5 million Series B financing for San Diego-based BlueNalu and its lab-grown bluefin tuna.
Catalytic grants. Mackenzie Scott donated $12 million to Locus Impact Investment’s Community Investment Guarantee Pool… The Tipping Point Fund awarded $950,000 to five organizations that are pushing public policies for better corporate disclosure and community investing… The US Department of Energy selected proposals from seven regional hydrogen hubs to share $7 billion to jumpstart domestic hydrogen production, storage and transportation… The Wells Fargo Foundation awarded $11 million in grants to 28 Native-led and -focused organizations.
Climate + gender. MCE Social Capital notched $41.6 million for its sustainable agriculture fund.
Climate tech. Elemental Excelerator backed 15 climate tech startups… Hydrogen tech developer Elcogen raised €45 million to boost manufacturing capacity at its factory in Estonia and partner on hydrogen-based marine propulsion systems… Bogota-based Bia raised $16.5 million for its smart energy meter.
Energy transition. Skoon Energy raised $5.6 million for clean generators in Europe… Sweden’s Cloover raised €7 million to help providers of solar, battery storage, EV charging and heat pumps offer their systems on a subscription basis… NextEnergy Capital’s solar investment group raised £600 million to acquire solar plants in the UK… Hyderabad-based Freyr Energy raised 580 million rupees to provide rooftop solar for India’s households and small businesses… Skeleton Technologies scored €108 million to ramp up production of its “SuperBatteries”… Copenhagen Infrastructure Partners clinched a combined €2 billion for its clean fuel and renewable energy funds.
Impact measurement. Austria’s Inoqo is helping grocery stores report Scope 3 emissions.
Independent media. The Media Development Investment Fund acquired a minority stake in Poland’s Wirtualna Polska.
Investing in health. Women’s health startup Allara secured $10 million to provide virtual care to women dealing with chronic hormonal conditions.
The Week’s Talent
Social Finance names Karen Anderson, formerly with the University of Chicago’s Becker Friedman Institute for Economics, to lead its new Social Finance Institute. Christopher George, ex- of Abt Associates, joins Social Finance as corporate controller… Latanya Mapp Frett of Global Fund for Women will become president and CEO of Rockefeller Philanthropy Advisors in January; founding CEO Melissa Berman is stepping down.
Denise Scott will step down as president of the Local Initiatives Support Corp. at the end of the year; Michael Pugh, ex-of Carver Federal Savings Bank is LISC’s new CEO… Conrad Pentaleri, ex- of CleanCapital, joins SJF Ventures as a senior analyst… Mark Manning will step down as the UK Financial Conduct Authority’s sustainable finance strategist at the end of the year… Ownership Works promotes Sarah Shoup to executive and operations associate.
The Week’s Jobs
US East Coast
In New York, Deutsche Bank’s community development financing group seeks a vice president; UBS is on the hunt for a head of social impact and philanthropy programs; and Advantage Capital is looking for a renewable energy analyst.
Research Triangle Institute in Durham, NC is looking for short- and long-term technical climate experts to work on USAID funded programs… Wells Fargo is on the hunt for an equity optimization and social impact investing director in Charlotte… Social Finance has an opening for a senior associate of impact finance operations in Boston… Halcyon is recruiting a finance and bookkeeping manager in Washington, DC.
US West Coast
Enterprise Community Partners is hiring a Low-Income Housing Tax Credit investor relations analyst in Los Angeles… Melinda Gates’ Pivotal Ventures is looking for a director of equity and belonging in Seattle… Also in Seattle, Mast Reforestation is hiring an investment analyst.
Other US-based jobs
The Colorado Gives Foundation seeks a vice president of community impact… Ceres has an opening for a Midwest state policy manager… Austin Community Foundation is looking for an investment and treasury manager… Tides is on the hunt for a remote impact investing vice president… Phillips Foundation is looking for a part-time impact investing advisor.
The Tony Blair Institute for Global Change seeks a director of climate and energy policy in the UK… Oikocredit is recruiting an innovation specialist in the Netherlands… Novo Nordisk seeks a director of climate and nature in Denmark… Gaia Impact is recruiting a pair of spring interns in Paris… Accion seeks a Bogota-based global investments officer.
That’s a wrap. Have a wonderful weekend.
– Oct 20, 2023