The Brief | June 10, 2022

This week in Impact Investing: Out

ImpactAlpha
The team at

ImpactAlpha

TGIF, Agents of Impact!

Coming up and coming out. The backlash to stakeholder capitalism and environmental, social and governance investing, or ESG, has gone oddly mainstream. That’s a sign of progress. “When I see the likes of Ted Cruz, Marco Rubio, Greg Abbott, Mike Pence, and Elon Musk railing against ESG, I know ESG must be doing something right,” writesMorningstar’s Jon Hale. His observation recalls the saying, often attributed to Mahatma Gandhi (but likely from a 1914 speech by trade unionist Nicholas Klein): “First they ignore you. Then they laugh at you. Then they fight you. And then you win.” That progression is also used to describe the movement for LGBTQ+ rights. This week, ImpactAlpha reported on the launch, timed for Pride month, of Megan Kashner and Bill Burckart’s Colorful Capital, which is bringing together a network of investors and advisors who are proudly gay and mission-driven. The merger of GenderSmart and the 2X Collaborative is similarly lifting the community of gender lens investors. For immigrants more used to slights and barriers, Elyse Cherry has draped BlueHub Capital’s One Percent for America loans in patriotic symbolism and common purpose (see Agent of Impact, below). 

Such efforts add up. In one of the week’s underappreciated stories, the U.S. Federal Reserve reported that America’s economy has become a little less unequal in the past two years, as the wealth of the bottom 50% of households has nearly doubled and now represents the biggest share of the nation’s wealth in two decades. Cleantech not long ago was written off as a bust in Silicon Valley; now, top talent is clamoring to work on climate solutions. The bipartisan infrastructure bill presents an opportunity to give communities a voice in allocating resources, argues Helen Chin of the Communities First Fund. Elite universities like Stanford are touting their ability to educate professionals to combine finance and social impact. The laughing is over and the fight is on. Agents of impact are coming up, coming out and, we daresay, winning.

– Dennis Price and David Bank

The Week’s Podcast:

🎧 Impact Briefing. David Bank joins host Brian Walsh to talk about “coming out” and trace the parallels between the LGBTQ+ impact investing communities. We hear from the Kellogg School of Management’s Megan Kashner who, with TIIP’s Bill Burckart, is launching Colorful Capital, a new LGBTQ+ focused venture capital firm. Plus the headlines. 

The Week’s Agent of Impact

Elyse Cherry, BlueHub Capital: Creating equity for healthy communities. Payday loans. Car loans. Student loans. “One way to describe our economy is that it’s about draining every ounce of equity out of the neighborhoods that you possibly can,” says BlueHub Capital’s Elyse Cherry, “while complaining about people who don’t pay.” In contrast, BlueHub’s mission is to build healthy communities by putting equity back into them. The Boston-based community development financial institution this week launched One Percent for America, a portal for simple, unsecured 1% loans to cover the naturalization fees for immigrants eligible to become citizens. It’s Cherry’s latest effort to tweak tools that have created wealth for middle- and high-income people to solve problems for low-income communities. Among her many practical innovations are mortgages that have helped nearly 1,000 families facing foreclosure stay in their homes. The initial reaction of traditional capital markets players? “They said, ‘Let me get this straight. What you want to do is lend money to low-income borrowers who have been in default or foreclosure?’” Cherry told ImpactAlpha several years ago. “And I said, ‘Yeah.’”

As a second-year associate at the law firm of Hale and Doerr in 1985, Cherry did the legal work to establish BlueHub, then known as Boston Community Capital, and chaired its board. At a rough patch in 1997, she agreed to become CEO and in the last quarter-century has built its assets to more than $1 billion and $2.5 billion in cumulative investments. She has been dogged in building up the nonprofit’s own balance-sheet equity so it can launch programs like foreclosure relief and immigration loans on its own. “You can’t do anything if you don’t have money,” Cherry says. Attracting talent has become a bigger challenge than attracting capital. She reminds recruits, “The most successful deal we do is not going to get you a $3 million bonus on Wall Street.” And she chides some impact investors for building “castles in the air,” even as she recognizes the power of such narratives. “Once you sketch that castle you have to run like the devil and shove the bricks underneath, or the thing falls down,” she says. “What we’ve done over time is to put in the bricks, one by one by one by one.”

The Week’s Dealflow

Deal spotlight: Upskilling workers. Half of the global workforce will need new skills by 2025. From healthcare to financial services, tech firms are raising capital to fill the training void. Boston-based CareAcademy raised $20 million, led by Goldman Sachs Asset Management, to upskill home health caregivers. The goal: “Empowering one million caregivers by 2030,” says CareAcademy’s Helen Adeosun (see “Agents of Impact: Helen Adeosun”). Denver-based Guild Education raked in $175 million to launch tuition-assistance programs with employers like Disney, Walmart, Target and Macy’s, to help wage workers earn degrees. The round, led by Wellington Management, brings Guild’s valuation to $4.4 billion.

  • Worker ownership. Apis & Heritage last year launched a $50 million buyout fund to help small and mid-sized businesses with large Black and Brown workforces transition to employee ownership. The Maryland-based investment firm has inked its first two deals: Denver-based Apex Plumbing and El Paso, Tex.-based Accent Landscaping Contractors.
  • Share.

Waste-to-value. Black-led Rheaply secured $20 million to help companies reduce waste and limit emissions… Closed Loop Partners secured $200 million for a private equity buyout fund that will invest in businesses working to advance circular supply chains… Food to Save, a startup fighting food waste in Brazil, raised 1.3 million reais ($272,000) from 211 investors via crowdfunding platform CapTable (see, “Deal Spotlight: Climate-smart food”)… South Korean chemical company Hanwha Solutions co-led plastic upcycling startup Novoloop’s $10 million Series A extension round with Tokyo-based VC firm Mistletoe.

Small and growing businesses. Carolina Community Impact scored $250,000 to lend to small businesses in North Carolina, especially those that are underserved and owned by people of color and women… San Francisco-based Untapped Global raised $10.3 million to provide asset-based financing for small businesses in Latin America and Africa… StrideOne raised $32 million in a round led by Elevar Equity to provide supply-chain financing and other financial services to India’s small businesses.

Financial inclusion. Mexico-based fintech venture Konfio secured a $10 million loan from Citibanamex, the U.S. International Development Finance Corporation and the Ford Foundation to boost lending to women entrepreneurs… Nigeria’s Indicina raised $3 million to underwrite loans for credit bureaus and banks… Pandas raised $6.3 million to provide inventory, credit and other financial services to Latin America’s small shopkeepers. 

Clean energy. Agilitas Energy secured $350 million of equity from CarVal Investors to expand its footprint of renewable energy and battery storage systems in the U.S… Envision Digital raised $210 million to build clean energy and carbon management software for corporations and governments… True Green Capital raised $661 million for its fourth clean energy infrastructure fund. 

Edtech. Achieve Partners acquired a majority stake in Boclips, which provides video and audio clips to publishers, schools, universities and government ministries… South Africa’s FoondaMate raised $2 million to provide cheap, accessible tutoring assistance to students via Whatsapp and Facebook chatbots. 

Agrifood investing. General Mills invested $3 million in the Ecosystem Services Market Consortium to reward farmers for environmental outcomes from regenerative agriculture… Seafood Reboot scored €3.2 million ($3.4 million) in a pre-seed round backed by Beyond Impact to make plant-based seafood from microalgae.

Impact tech. Culina Health snagged nearly $4.8 million in a seed financing round backed by Rethink Impact to build an affordable personalized nutrition platform… Zimbabwe’s FlexID Technologies secured early funding for blockchain-based digital IDs. 

Return on inclusion. Cleantech incubator stood up a debt fund focused on women, Black and Brown founders.

Climate finance. Temasek committed $3.6 billion to accelerate carbon markets and climate solutions.

Milestones. Obvious Ventures crossed $1 billion in assets for ‘world positive’ startups.

The Week’s Talent

Annie Donovan, ex- of Local Initiatives Support Corporation, joins Raza Development Fund as president and CEO… Joohee Rand, ex- of Anchorum St. Vincent and Santa Fe Community Foundation, joins Tideline as associate partner… 1st Course Capital, Burnt Island Ventures and cKers Finance are among a half-dozen fund managers selected for Confluence Philanthropies’ emerging managers program… Green bank Aspiration appointsOlivia Albrecht, ex- of TCW Group, as chief sustainability officer… R.L. Condra of National Cooperative Bank is elected to serve as vice-chair of the board of the Consumer Federation of America.

Bukie Adebo Umeano, ex- of WomensVCFund, joins Anthemis to focus on early-stage fintech investments… Bernadette Clavier is stepping down as director of the Center for Social Innovation at Stanford’s Graduate School of Business. The center is recruiting its next director… French President Emmanuel Macron and Michael Bloomberg, U.N. Special Envoy for Climate Ambition, form the Climate Data Steering Committee “to monitor business climate actions and commitments in the global fight against climate change.”

The Week’s Jobs

Rippleworks is hiring a marketing manager and learning and growth partner… The Conservation Innovation Fundseeks an analyst… Regen Foundation is looking for a director of development in Boston…The Federal Reserve is accepting applicants to join its Community Advisory Council… The U.S. Treasury Department is accepting applications for its first-ever chief of diversity, equity, inclusion and accessibility… 60 Decibels is recruiting a chief of staff.

That’s a wrap. Have a wonderful weekend.

– June 10, 2022