How Europe is recalibrating tech, one ESG step at a time. A crisis is usually followed by learning. If in 2022 tech private markets were defined by the crashes of some of the highest-valued and most-hyped companies, “2023 will be a year of recalibration,” write VentureESG’s Johannes Lenhard and Hannah Leach for ImpactAlpha. Take crypto. Enforcing the most simple governance principles – transparent leadership structures, conflicts of interests, board oversight, rigorous accounting (all of which FTX was missing) – would have helped to prevent some of the crashes, Lenhard and Leach argue. Lax governance has long been brewing across startups and private markets. That makes the “G” in ESG especially pertinent for VCs who find it hard to "get started" with ESG. “Installing boards, HR processes, grievance procedures and conflict-of-interest checks should always have been part of VC practice and due diligence,” write the authors.
Dealflow: Financial Inclusion
MNT-Halan raises $200 million to expand access to financial services in Egypt. MNT-Halan’s evolution into an Egyptian “super-app” is long and complex. The quick version: In 2019, founder Mounir Nakhla merged his microfinance and digital wallet businesses with his ride-hailing business Halan after seeing the writing on the wall for Halan’s growth opportunity. “I told my co-founder this ride-hailing business is not going to go very far. What we need now is to really focus on digitally banking the unbanked—it's a huge market in Egypt,” Nakhla told ImpactAlpha last year. MNT-Halan now offers business loans, digital payments, consumer finance and e-commerce services to five million Egyptians. The company uses its own banking software to reach customers who are both online and offline and handle transactions in multiple currencies. MNT-Halan is on a fundraising tear to finance its growth. Chimera Abu Dhabi invested $200 million for a 20% stake. MNT-Halan has also raised $140 million by securitizing loans on its book through two bond offerings.
Signals: Energy Transition
S-curves and tipping points are accelerating the low-carbon future. The future of energy is S-shaped. Adoption of technological innovations is typically slow until hitting a tipping point, typically at 5% to 10% of market share, after which they grow like gangbusters until they become mainstream. “S-Curves by their nature are disruptive and rapid,” writes CarbonTracker’s Harry Benham. In a research note exploring growth patterns in the energy transition, Benham explains that manufacturing technologies (think EVs, batteries, solar and wind systems, and heat pumps) benefit from declining costs as knowledge and expertise grow with scale. Extraction projects like fossil fuels, says Benham, “are almost the opposite: one-off, large-scale, complex efforts that are difficult, potentially impossible, to replicate and improve.”
Agents of Impact: Follow the Talent
Julie Gorte of Impax Asset Management and Neuberger Berman’s Daniel Hanson will join US SIF’s board of directors and its foundation board… Noel Kinder, chief sustainability officer at Nike; Stacy Kauk, head of sustainability at Shopify; Emma Stewart, chief sustainability officer at Netflix; Vanessa Miler-Fels, vice president of climate at Schneider Electric; and Nate Gorence, chief of staff at Impossible Foods, will join Collaborative’s sustainability board.
Editor’s note: This article is sponsored by Johnson & Johnson Impact Ventures, which supports ImpactAlpha’s Investing in Health coverage. In partnership with J&J Impact Ventures, ImpactAlpha is exploring the …