The Week in impact investing: Opportunity

TGIF, Agents of Impact! 

Impact Briefing. On this week’s podcast, host Brian Walsh welcomes back Imogen Rose-Smith and David Bank to discuss truth in advertising around impact and ESG claims (see No. 2, below). Plus, the headlines. Tune in, share, and follow us on Apple, Spotify or wherever you get your podcasts. 

Clubhouse conversation. We’ll be back on the drop-in audio app today to talk about ESG in private and public equities, $100-a-ton carbon (see No. 1), the week’s headlines and whatever’s on your mind, hosted by ImpactAlpha’s Lyneka Little and Encourage Capital’s Ricardo Bayon. (Or just drop in to wish Lyneka an early happy birthday! Her birthday is Sunday, May 2.) Find us on Clubhouse at 9am PT / 12pm ET / 5pm London. Drop by.

The Week’s Agent of Impact

Alex Flachsbart, Opportunity Alabama. If you build it, they will come. That was the instinct of Flachsbart, an economic development lawyer in Birmingham, Ala., when he discovered the Opportunity Zone provision in the 2017 tax bill. They were the investors with capital, developers with projects and communities with long-term plans that had too often failed to find each other in the marketplace. Flachsbart built Opportunity Alabama with backing from local funders like the Alabama Power, Regions and Protective foundations. With contacts with investors, developers and community organizations in every county, Flachsbart has helped facilitate more than $300 million in financing for senior care facilities, local hotels, workforce housing and historic theaters across Alabama. “Alex and Opportunity Alabama have been a catalyst for growth in our state,” Alabama Power Foundation’s Chris Blake told ImpactAlpha, “bringing needed investments to help revitalize our communities within those Opportunity Zones.” Flachsbart says each investment has community-aligned impact, in some cases because Opportunity Alabama “extracted” impact improvements from commercial developers, like carve outs for workforce housing or dedicated spaces for nonprofits. The Opportunity Zone incentive “was the shiny new tool in the toolkit that was shiny enough to attract people to the table that we set,” Flachsbart told ImpactAlpha. 

To do more, Opportunity Alabama needs capital of its own. Flachsbart brought in Blueprint Local, founded by Ross Baird, ex- of Village Capital, recruited Alabama banker Lindsay Edwards as chief investment officer and tapped local foundations, family offices, individuals and corporations to raise $13 million for the Opal Fund (see, “Opportunity Alabama is combining community and capital to fulfill the potential of Opportunity Zones”). Opportunity Alabama has leveraged opportunities beyond Opportunity Zones, financing projects with tax-credit programs and capital from impact-motivated investors. Through its rural recovery accelerator, Opportunity Alabama has built a pipeline of projects in rural areas. The organization is helping national community development finance institutions like Reinvestment Fund and Hope Credit Union establish footprints in Alabama. “If you have the ecosystem and you’ve got this array built, you can do interesting things,” Flachsbart says. “That’s effectively the network that we wound up building.” – Dennis Price

The Week’s Big 6

1. Investors wake up to the prospect of $100-a-ton carbon. Global commodity traders are standing up carbon trading desks and hedge funds are busy raising funds to corner carbon inventory while prices are still low. Keep reading.

2. Constructing guardrails for ESG in private and public equities. Contributing editor Imogen Rose-Smith dissects a land deal in Hawaii (along with BlackRock’s Carbon Transition Readiness fund) in her latest Institutional Impact column, Sustainability is at risk when asset managers are the judge, jury and executors of the ESG agenda.”

  • Regulating greenwashing. The Sustainable Finance Disclosure Regulation in Europe and the recent ‘risk alert’ from the U.S. Securities and Exchange Commission aim to make investors provide evidence for claims of “impact,” “ESG” or “sustainability.” Dig in.
  • Transparency in ESG. All fund managers interested or engaging in ESG need to prepare for a heightened impact measurement and reporting climate, writes JTC Americas’ Reid Thomas, who traces the mixed history of Opportunity Zones to make the case for impact measurement and regulatory clarity. Plug in.

3. Philadelphia models a collective approach to inclusive real estate. A group of seasoned Black developers, investment professionals and public policy experts is raising a joint real estate fund to attract institutional investors that have too often overlooked individual Black developers. Onward.

4. Dealflow trend: Amid COVID, edtech consolidates in India. Mumbai-based LEAD School, which this week raised $30 million to help schools serving low-income students, is plotting additional acquisitions after buying AI-powered edtech startup QuizNext in December. “The edtech space is seeing consolidation, there is no doubt about it,” Sandeep Farias of Elevar Equity, a LEAD School investor, told ImpactAlpha.

  • Active M&A. Online learning platform Unacademy, which last year snapped up six other edtech ventures, acquired networking startup TapChief in February. Byju paid $300 million last August for kids coding startup WhiteHat Jr. and is in talks with other companies.
  • Deal pipeline. More than 30 edtech startups raised $179 million of the $2.7 billion in venture financing in India in the first quarter, outside of edtech unicorn Byju’s $460 million raise.
  • Crack the books.

5. Paying for success in forest protection. The LEAF Coalition, a global coalition of governments and corporations that includes the U.S., U.K. and Norwegian governments, Amazon, Unilever, Salesforce and Nestle, will pool funds to pay countries and states to protect their forests. Read more.

6. Scrutinizing off-take agreements in conservative finance. Key to mobilizing conservation finance and protecting biodiversity: lock in payors before you line up financing, argue Sean Penrith of Gordian Knot Strategies, Daniel Pike of The Climate Map, and Leigh Whelpton of The Conservation Finance Network. Dive in.

The Week’s Dealflow

Clean energy access. PosiGen scores $27 million to bring low-cost solar energy to American households… Shared solar generates savings and jobs for New York City Housing Authority residents… Nautilus Solar Energy secures $110 million from Credit Suisse to finance 22 community solar projects… Off-Grid Market Development Fund offers results-based financing for solar access in Madagascar… The U.K.’s CDC Group is investing $33.7 million in India’s Fourth Partner Energy… Bloomberg and Goldman Sachs to seed clean energy investments in emerging markets. 

Low-carbon transition. Tikehau Capital launches private equity decarbonization fund for North America… Israel’s IRP Systems secures $31 million for its electric powertrain systems for e-mobility companies… Congruent Ventures raises $175 million for early-stage climate tech… PowerX secures $4 million for its home energy monitoring network… Kenya’s Ecobodaa raises early funding to accelerate e-mobility… Universal Hydrogen scores $20.5 million to green commercial aircraft… Cisco’s philanthropic arm plans to disburse $100 million to early-stage climate technologies. 

Agrifood investing. NEW: Modern Meadow secures $130 million in Series C financing for its lab-grown leather. The company’s last round was a $40 million Series B five years ago… Atlanta-based Goodr, which donates surplus food to people experiencing food insecurity, raises $1.5 million… Chinese agtech EAVision Technologies raises $30 million for its crop-spraying drones.

Fund news. New York-based Neuberger Berman closes $280 million fund to invest for the U.N.’s Sustainable Development Goals… Atlantica Ventures is raising $50 million to invest in seed-stage companies in Africa… Brazil’s Positive Ventures secures $10 million for early-stage impact fund… The U.S. International Development Finance Corp. invests $25 million in WaterEquity’s Global Access Fund. 

Health and wellbeing. Volunteers of America raises $6 million for health-based affordable housing fund… Blue Haven Initiative and Kepple Africa Ventures back Nairobi-based TIBU to enable home-based primary care… Elder-care tech venture Aloe Care Health Systems raises $5 million… Endeavour Vision closes $375 million for its second medtech and digital health innovation fund.

Economic inclusion. Investment Fund for Developing Countries is teaming up with Symbiotics on a $22.5 million impact bond for Africa’s small businesses… Mighty Networks raises $50 million to help creatives build income-generating courses and events… Local Initiatives Support Corp.’s Black Economic Development Fund snags $20 million from DuPont.

Inclusive fintech. Community Investment Management backs Brigit with $75 million in debt to help working Americans manage their finances… Sigo secures $1.5 million to provide low-cost auto insurance for immigrants and Latinx customers.

The Week’s Talent

Harvard Business School’s George Serafeim joins the board of Liberty Mutual Insurance… David Hampton, ex- of Hampton Innovations, is named executive director of LISC Indianapolis… Erika Seth Davies, founder of the Racial Equity Asset Lab, becomes CEO of Rhia Ventures… Jade Floyd, ex- of the Case Foundation, joins Global Strategy Group as senior vice president of communications and public affairs… Thea Lee is stepping down as president of the Economic Policy Institute to join the U.S. Biden-Harris administration.

Blackstone promotes Rita Mangalick to head of global ESG in the hedge fund and credit business lines, and brings on ESG professionals Elizabeth Lewis, ex- of the International Finance Corp., James Mandel, ex- of Rocky Mountain Institute, Caroline Hill, ex- of Lloyds Banking Group, and Nina James, ex- of Investa Property Group… Zachary Carter, ex- of HuffPost, joins Omidyar Network as a writer-in-residence in its Reimagining Capitalism practice.

The Week’s Jobs

London-based Snowball is recruiting a COO/CFO and a senior investment analyst… GAM Investments is looking for a senior ESG analyst in London… EVHybridNoire has openings for a national policy manager and a national communications manager… Yova Impact Investing is hiring a head of impact in Frankfurt, Berlin or Zurich… The University of Zurich’s Center for Sustainable Finance and Private Wealth is hiring a head of training in Zurich. 

Prime Coalition is recruiting a director of impact and an entrepreneur-in-residence open to Black, Indigenous, or people of color candidates… Candide Group seeks a part-time executive assistant and an operations and client services associate in Oakland… Santa Clara University’s Miller Center is looking for an impact investing program manager… The Good Food Institute Europe is hiring a head of policy, location flexible. 

Inclusive Prosperity Capital has openings for a managing director and an investment analyst for clean energy finance… The CGIAR Research Program on Climate Change, Agriculture and Food Security is looking for a climate-smart agriculture researcher in Latin America… Tideline is hiring an operations associate in Portland or San Francisco; its BlueMark unit seeks an impact investing associate in New York or remote.

Generate Capital is hiring a vice president/principal for its investment team and more than a dozen other roles… The U.S. Department of Energy is recruiting a director for its federal energy management program in Washington, D.C… Republic seeks a senior director in New York… Acumen is hiring an associate director of agriculture investments in New York… Social Capital Partners is looking for an associate/senior associate of investments and director of communications in Toronto.

That’s a wrap. Have a wonderful weekend. 

– April 30, 2021

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