The Brief

The Week in impact investing: Unavoidable opportunities

ImpactAlpha ¡ October 4, 2024

TGIF, Agents of Impact! 

🔌 PluggedIn: Financing resiliency with Natalia Arjomand of SecondMuse. On Monday’s Plugged In, ImpactAlpha’s Sherrell Dorsey speaks with Natalia Arjomand, head of SecondMuse Capital’s Future Economy Lab, which is designing creative models to finance climate resiliency around the world. Join the LinkedIn Live conversation, Monday, Oct. 7, at 9am PT / 12pm ET / 5pm London. RSVP today.

In today’s brief:

  • Roundup: Folly and fortune in the low-carbon transition
  • Podcasts: The week’s top stories and Impact Community Capital’s Jeff Brenner on the affordable housing imperative
  • Spotlight: Betting on authenticity in food

🗣 Folly and fortune. In this week’s US vice presidential debate, one candidate bragged about the country’s record levels of oil and gas production. The other candidate argued for even more drilling for fossil fuels. Even leaving aside JD Vance’s cryptic comment about the “weird science” of climate change, this was a weird exchange to be having as North Carolina and other parts of the Southeast were reeling from Hurricane Helene. Given the rapidly warming waters of the Gulf of Mexico, the disaster fell into the category of what futurist Peter Schwartz calls “inevitable surprises.” In Nepal last weekend, the worst flooding in half a century killed 200 people; weather disasters fueled by climate change constitute a tax on the global economy that could reach $38 trillion per year by 2049, according to a study in Nature. “We need to stop reacting to predictable crises and be proactive in preparing for resilience,” Invest Appalachia’s Andrew Crosson wrote in a deeply personal post on LinkedIn. 

The climate crisis represents a set of “unavoidable opportunities” for adapting to increasingly extreme weather patterns while trying to mitigate further warming. In the US, the first disbursement from the Inflation Reduction Act’s Greenhouse Gas Reduction Fund went to an Arkansas-based solar power developer in the form of a $31.8 million pre-construction loan. In cargo shipping, a notoriously difficult sector to decarbonize, investments in energy efficiency are yielding to alternative green fuels, as Azolla Venture’s Amy Duffuor and Alexandra Steckmest of Wallem Steckmest & Co. explain. Ethiopia is among the countries crafting policies to nudge the low-carbon transition along, as Lucy Ngige reports. The country’s ban on imports of gas-powered cars, and Addis Ababa’s rejection of gas-powered motorcycles, are buoying the country’s EV startups. Jessica Pothering scooped out key details of British International Investment’s new catalytic capital facility to mobilize commercial investments in renewable energy, battery storage, water and waste-to-energy opportunities. 

A growing number of women- and diverse-led funds are spotting and funding climate and other opportunities that other managers may miss. Mumbai-based Ankur Capital and AiiM in California are just two such emerging managers featured by Jessica and Lucy in this month’s Liist of actively raising funds. Strategies including “equity-like debt” are on rise, as catalytic investors push to attract commercial capital to high-impact deals, as Dennis Price spotted in new research from the Global Impact Investing Network. The broken market for homeowners insurance presents one of the biggest unavoidable opportunities. As Ryan Jones details for ImpactAlpha, as insurers retreat from climate risks, new models are emerging for communities to pool resources to cover storm-related damages to homes and infrastructure. Private equity giants talk a good game and have raised billions of dollars on the low-carbon transition. But as Lynnley Browning reports, they’re still sinking billions more into oil, gas and even coal, largely out of public view. That duplicity is entirely avoidable, especially with so many unavoidable opportunities at hand. – Amy Cortese and David Bank

Sponsored by SOCAP Global

SOCAP24 opens in three weeks! This year’s gathering, from Oct. 28-30 in San Francisco, features intentionally designed opportunities for direct connections between funders and founders. SOCAP24 is focused on increasing impact deal flow, with facilitated matchmaking programs, funder and founder pitch sessions, and dedicated 1:1 meeting spaces that attendees can schedule through the event app (for more on the thinking, see “Designing actionable and inclusive impact convenings,” by Sorenson Impact’s Robert Munson). 

ImpactAlpha is looking forward to seeing the thousands of Agents of Impact at SOCAP24. Subscribers can receive the biggest discount on tickets by registering with code S24_ImpactAlpha. Save $250 – that’s the lowest-priced ticket available – and join us at impact investing’s largest annual convening. Get your ticket.

The Week’s Podcasts

🎧 This Week in Impact. Host Brian Walsh takes up ImpactAlpha’s top stories with editor David Bank. Up this week: new insurance models that aim to climate-proof homes and towns, enhanced efforts to support diverse emerging fund managers, and how private equity is quietly funding fossil fuel investments.

Agents of Impact: Jeff Brenner on building institutional-grade strategies to create and preserve affordable housing. Increasing the supply of new affordable housing is important. Preserving existing housing units for low-income families is existential. “We can’t afford to lose access to affordable housing,” Jeff Brenner of Impact Community Capital says on the latest episode of ImpactAlpha’s Agents of Impact podcast, which explores the fund manager’s strategy to preserve affordable housing by helping developers compete with buyers intent on flipping those units and raising rents

The Week’s Deal Spotlight

The key ingredient in Siete Food’s $1.2 billion exit to Pepsi: Authenticity. Authentic food products can drive a whole lot of authentic demand. That’s the food industry buzz after this week’s news that PepsiCo will acquire Siete Foods, the Austin, Texas-based maker of grain-free tortillas, better-for-you chips and dairy-free queso. In a decade, the Mexican-American Garza family built the company from an Austin favorite to a national brand with $500 million in annual revenue and distribution from Whole Foods to Walmart. By the time actress and entrepreneur Eva Longoria joined as an investor earlier this year, Siete had become the fastest-growing Latino food company in the country. The deal from PepsiCo, which faced competition from private-equity firms as well as other food companies, values the company at $1.2 billion, according to The Wall Street Journal. “It’s possible to build a thriving brand that honors our heritage and celebrates our culture,” said Siete’s Miguel Garza. From food to fashion, authenticity is winning. 

  • Family first. Family first, family second, business third, became Siete’s ethos. When Veronica Garza, Miguel’s sister and co-founder, developed an autoimmune condition that left her unable to eat most Mexican foods, the whole family took up the paleo diet, cutting out grains, legumes and sugar. Veronica produced the company’s first product (approved by her Mexican grandmother): a paleo-friendly tortilla made with almond flour. Today’s slate of products contain less sodium, saturated fat and sugar than most of their competitors. “We had been producing this tortilla, and it was authentic because this is what we grew up eating,” Miguel told Guy Raz on the How I Built This podcast. 
  • Iconic brand. By the time they started to meet with investors, the mission was clear. “We are building a billion-dollar, iconic Mexican-American food brand,” Miguel said he told private equity firm Stripes Group, which invested $90 million in 2019. Stripes Group’s response, according to Miguel: “That’s exactly why we want to partner with you because we also see that opportunity.” PepsiCo “believes in the spirit and authenticity of the Siete brand,” said PepsiCo CEO Ramon Laguarta.
  • Lucky seven. The deal sent signals to food, consumer and impact startup markets. Siete is “an amazing success story for so many start ups – scaled heavily but kept authenticity,” Justin Yeager of beverage startup Good Idea told ImpactAlpha in Austin. The wide distribution “is a signal of the brand’s wide and diverse audience,” Stealth’s Martin Forde wrote on LinkedIn. Siete is “a great example of a family coming together to build around a great product that appeals to an ever-growing healthier consumer habit,” added Andy Vargas-Hernandez of El Paso-based No Border Ventures, and “an even better example of a growing consumer base from the Mexican-American market in the US.” Why Siete, Spanish for “seven”? That’s the number of people in the Garza family – all of whom work at the company. 

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.

LISC welcomed Rob Lockett, previously with Rocket Community Fund, as executive director of its Detroit office… WORC’s Ellen-Frank Miller joined HCAP Partners as an operating advisor… Acre Impact Capital added Tshepiso Moahloli as an investment committee member… Sarida Scott, previously a program officer at the Kellogg Foundation, joined the Skillman Foundation as program vice president.

BlocPower co-founder Donnel Baird stepped down as CEO and passed the torch to co-CEOs Hanan Levin and Brian Lindsey… North Sky Capital appointed Danny Zouber, who has been at the firm since 2006, as co-CEO alongside Scott Barrington… Rafe Monteiro joined Impact Capital Managers as an analyst of finance and operations… Accion appointed Paulo Silva, previously with UNICEF, as chief financial officer.

Sustainable Capital Advisor added Caitriona Cobb, previously with Tesla Government Inc., as project manager… Duke University’s Chibuzor Biosah joined SJF Ventures as a venture fellow… Impact Principles elected Accion’s Kathleen Yaworsky, Schroders’ Catherine Macaulay, Quona Capital’s Monica Brand Engel, Incofin’s Dina Pons, and Secil Yildiz of the Development and and Investment Bank of Turkiye to its advisory board. 

Bella Landymore and Sarah Teacher stepped into the role of co-CEOs of the Impact Investing Institute. Former CEO Kieron Boyle was appointed to chair and will join 100x Impact Accelerator as CEO and director… Sandpiper Ventures tapped Lauren Ledwell, former CEO of Discoverygarden, as investment principal… Elizabeth Nguyen, previously with Village Capital, joins Draper Richards Kaplan Foundation as a senior associate… Illumen Capital added Femi Olonilua as an investment intern.

Blume Equity added four new members to its team: Raxita Kapashi, previously with Playfair, becomes as chief financial officer; Kirby Lam, previously with KKR, joins as director; Tejas Choudhary, formerly with Verdane, joins as principal; and Francesco Orlando, previously with the European Investment Bank, joins as an analyst… Sustainable infrastructure investor and operator Generate Capital appointed Nancy Tsang, formerly of Morgan Stanley, as chief risk officer. Jonah Goldman was promoted to head of external affairs and impact.

That’s a wrap. Have a wonderful weekend. 

– Oct. 4, 2024