The Brief: Family offices warm to climate investments

Greetings Agents of Impact!

In today’s Brief:

• Catalyzing climate capital at family offices
• Building Black wealth with vertical farm franchises
• Digital infrastructure in underserved markets
• “Decarceration index” highlights leaders in fair-chance hiring

Featured: LP / GP

Family offices warm to investment opportunities in the climate transition. As much as $200 trillion in investment is needed by 2050 to reach net-zero greenhouse gas emissions, according to BloombergNEF. That’s many multiples of today’s level of climate investments. The more than 4,500 family offices globally that manage $6 trillion in wealth are poised to play a critical role in getting philanthropic and investment dollars off the sidelines and into climate solutions. “These are trillion-dollar issues,” writes Bruce McNamer of Builders Initiative, the grant and catalytic investment arm of Walmart heir Lukas Walton’s Builders Vision. “To move these transitions forward faster, we need to attract and unlock additional capital.” The family office makes R&D grants for promising innovations, investments to bring technologies down the cost curve, anchor investments in early stage companies and funds, and it engages with public companies and its family office peers. Says McNamer, “It is the ability to engage in these kinds of wide-ranging capital deployment and influencing activities that make family offices potentially important players.”

• Capital spectrum. Builders Vision invests across oceans, energy, food and agriculture to help drive the climate transition. The group’s assets include over $2 billion in its investment arm S2G Ventures, $2 billion in philanthropic capital, and billions more in its asset management firm, Builders Asset Management. Family offices, McNamer writes, can provide different types of capital to support nonprofits, venture startups, companies, and funds in public and private markets. That makes them “uniquely positioned to fund climate solutions in innovative and flexible ways, to operate in the seams, and to help other partners with the flexible pieces they need to bring their own capital to bear.”

• Catalytic family offices. Builders Vision is among the still-small number of family offices deploying capital into climate and impact investments. Among them: Omidyar Network (Pam and Pierre Omidyar), Ceniarth (Diane Isenberg), Spring Point Partners (the Berwinds), RS Group (Annie Chen), Vala Capital (Jasper Smith), Tripple (Bec, Adam and Jake Milgrom) and PRC (the Marzottos). The Creo Syndicate of family offices has deployed over $5 billion for climate and sustainability investments. More than 85 families and family offices in 20 countries have joined The ImPact, founded by Justin Rockefeller, Liesel Pritzker and Ian Simmons, and the Scodro family. And Toniic, one of the earliest networks of impact investing foundations, family offices and high net-worth individuals, has grown to more than 500 asset owners.
  
• Diverse portfolio. With grants, Builders Vision supports crop-breeding research at The Land Institute and Forever Green Initiative. To signal confidence to the market, it has anchored early-stage ocean companies, including Matter and Coral Vita, and fund managers like Ocean 14 Capital. Builders Vision invests directly in startups building first-of-a-kind facilities, like Inventwood, which is working to displace structural steel and aluminum. Funds pushing the boundaries of innovation include Mad Capital’s second Perennial Fund, which de-risks the transition to regenerative agriculture. Builders Vision participates in coalitions like Climate Action 100+ and Food Emissions 50 to leverage its influence as a shareholder in large public companies.
  
• Keep reading, “The climate transition and investment opportunities for family offices,” by Bruce McNamer of Builders Initiative. Join McNamer for “Unlocking all assets for impact,” at Mission Investors Exchange’s 2024 National Conference in Los Angeles, May 7-9. ImpactAlpha is the media partner for the event. Register today.

Podcast: Agents of Impact

Franchising indoor farms to build a billion dollars in Black wealth (podcast). Two years ago, Loren Taylor missed out on becoming mayor of Oakland, Calif. by 677 votes. “But who’s counting?” jokes Taylor on this week’s Agents of Impact podcast. The biomedical engineer-turned-city council member has turned to business to tackle racial wealth gap. As CEO of Zarû Systems, he has the ambitious goal of growing Black wealth by a billion dollars through 1,000 businesses worth at least $1 million each. “We’re focused on bridging the racial wealth gap – unapologetically,” Taylor says. Zarû’s first business application: modular, turnkey indoor farms run by local owner-operators.  

• Infrastructure-as-a-Service. Zarû plans to provide entrepreneurs with the financing to buy one of its ready-built shipping containers, kitted out to grow high-value produce. The company helps arrange financing, establish the operating playbook, provide back-office services, and line up customers, collecting a royalty in the process. “Those key points address the typical pitfalls and access barriers for minority, Black-owned businesses,” Taylor says. One shipping container can produce the equivalent of two acres of farmland. Zarû has demonstration projects in Colorado and South Carolina and plans to launch its first commercial farm in the Bay Area.
  
• Keep reading and listen to Taylor’s conversation with David Bank, “Franchising indoor farms to build a billion dollars in Black wealth,” on ImpactAlpha’s Agents of Impact podcast. 

Dealflow: Inclusive Communities   

Next Billion raises capital to invest in digital infrastructure and services in Latin America, Asia and Africa. The investment firm Next Billion Capital Partners funds tech ventures supporting access to basic services in emerging markets. It reached a first close for its debut Digital Growth Fund with backing from Impact Engine, Capricorn Investment Group, responsAbility and other investors. The fund provides up to $15 million in growth equity to companies delivering financial services, insurance, healthcare and education to women, low-income households and small businesses in Asia, Latin America and Africa. Next Billion is looking to raise $250 million.

• Generational opportunity. Next Billion’s first investment is in Qoala, an affordable insurance company in Southeast Asia. The current funding slowdown and low valuations, alongside rapid digitalization in emerging markets “represents a generational opportunity to deliver outsized financial returns and impact,” said Next Billion’s Ken Toyoda.
  
• Go deeper.

Connect Humanity pioneers rural broadband in Appalachia. Households in the Appalachian region of the US have had limited access to job and educational opportunities, essential services like healthcare – and broadband. Fewer than one in five households have broadband Internet connections, creating obstacles to the provision of digital services. “Public investment is necessary but insufficient,” said Brian Vo of Connect Humanity, which is raising a $25 million to $50 million fund to accelerate Internet access in Appalachia. 

• Digital equity. The nonprofit impact investor is offering low-cost loans to community-focused internet service providers expanding into underserved communities. Microsoft is backing Connect Humanity’s IDEA Fund (for Investing in Digital Equity Appalachia) with first-loss capital. Said Vo, “With the right partners, it’s possible to build gold-standard internet in every rural and low-income community in Appalachia.”
  
• Get up to speed. 

Dealflow overflow. Investment news crossing our desks:

• Patagonia invested $20 million to launch Home Planet Fund for Indigenous-led climate and conservation work in politically-risky and remote areas. (Patagonia)
  
• Belgium’s AmphiStar raised €6 million ($6.4 million) from the European Circular Bioeconomy Fund, Belgian investor Qbic and others to repurpose agrifood waste into bio-surfactants – key ingredients for cosmetics, chemicals and construction materials typically made from fossil-fuels. (Qbic)
  
• Israel-based Greeneye Technology notched $20 million to reduce the use of chemicals in agriculture through precision spraying. (AgFunderNews)
  
• TLcom Capital closed its second fund for early-stage African tech ventures at $154 million, securing backing from the European Investment Bank, Visa Foundation, Allianz and other investors. (Disrupt Africa)

• Summer Health secured $11.7 million in Series A funding to provide 24/7 online pediatric services to parents and their children. (Summer Health) 

Signals: Inclusion Alpha

FreeCap’s ‘decarceration index’ highlights companies that are outcompeting with fair-chance hiring. The US economy is generating more jobs than there are workers to fill them. To address shortages and compete for talent, companies like Walmart, Apple, Alphabet and JPMorgan Chase are recruiting, training and hiring from a pool of more than 70 million formerly incarcerated workers, who have faced rampant discrimination in the job market. A new “decarceration index” from FreeCap Financial helps investors identify companies with leading fair-chance hiring practices. Companies “able to hire people with arrest records are going to be in a better position to compete in the labor market in the future,” says Tanay Tatum-Edwards of FreeCap. The data provider that helps quantify the prison industrial complex for investors. 

• Fair chance. Walmart has programs to reduce discrimination in hiring and intentionally recruits formerly incarcerated workers. Apple and Alphabet begin recruitment in prisons with coding training programs. JPMorgan has benchmarks to drive hiring of adults with arrest records. Only 39% of companies on the S&P 500 are even willing to consider someone convicted of a felony. “There’s a whole workforce that they’re not even considering,” says Tatum-Edwards. “That’s why so many of these companies are starting to try to figure out how they can hire these workers.”
  
• Indexing decarceration. The best way to reduce incarceration is to reduce recidivism, says Tatum-Edwards, whose brother has struggled in the job market after being convicted at 16 for grand theft auto. To arrive at the top 50, FreeCap positively screened the 500 largest companies against best fair-chance hiring practices, such as active recruitment and bias reduction, and negatively screened for prison risk, including prison vending contracts. The index creates “a pathway for companies to be leaders in this space,” says Tatum-Edwards, and “incentivizes the companies to be able to engage in these practices.”
  
• Share this post – and join the online launch of the decarceration index, this Friday, April 26.

Agents of Impact: Follow the Talent

Economist Lawrence Summers joins the advisory board of residential solar provider Palmetto… Runway is hiring a chief lending officer… Gavi is hiring a head of private sector partnerships and innovation in Geneva… Also in Switzerland, Impactful Business Networks is recruiting a global CEO.

American Bird Conservancy is looking for an impact investing officer for migratory bird habitats in Latin America and the Caribbean… Platinum Pacific Partners seeks a manager for responsible investing and impact in Sydney… “The Social Justice Investor,” a book by Andrea Longton, is out. Check out our preview, get your copy today, and RSVP for a book tour event.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– April 24, 2024