The Brief | March 27, 2023

The Brief: Texas’ choice on climate, smart water-tanks, breast cancer screening in Latin America, AI for food waste, foundations and net zero

ImpactAlpha
Solar Power Plant in Texas Hill Country
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Greetings, Agents of Impact!

Call No. 50: Metrics Madness. If what gets measured gets managed, which metrics make the most sense for managing investment strategies to build racial wealth and bridge racial gaps? The Southern Reconstruction Fund’s Napoleon Wallace put out a call; Agents of Impact have answered with dozens of submissions for this week’s Metrics Madness finale. A sampling: The percentage of BIPOC businesses that own business-purpose real estate (from Partners in Equity’s Talib Graves-Manns). Changes in the ownership and control of land, especially in rural areas (Mikki Sager, formerly with the Conservation Fund). The mean racial pay gap for full-time employees (Nuveen’s Roberta Lobo). And the number and quality of jobs created for the extremely poor (Upaya Social Ventures’ Shruti Goel). 

Featured: Climate Race

Don’t mess with Texas’ lead in the low-carbon energy transition. Everything’s bigger in Texas. That goes for the state’s role in the transition to a greener and cleaner economy. The Lone Star state already leads the U.S. in wind power. Within a few months, Texas will surpass California in total solar-generation capacity. And Texas is padding its lead, with more solar and wind capacity in development than any other state. An oil-pumping, Republican-led state seizing the lead in the U.S. clean energy race? Texas’ green gold poses a quandary for conservative leaders in the state and across the country who have ratcheted up their rhetoric against climate action and lined up against federal clean-energy policies. “Texas is as well suited or better suited than any place in the world to lead the energy transition,” Austin-based energy consultant Doug Lewin tells ImpactAlpha at the University of Texas’ Global Sustainability Leadership Institute. “If,” he adds, “we have the will to do this.” 

  • Climate tech. Texas’ climate leadership goes beyond energy. Climate tech startup Solugen (carbon-free chemicals), Quidnet Energy (pumped storage) and Fervo (geothermal) call Texas home. Access to the state’s oil and gas talent and large corporate customers “is what explains the speed of Solugen,” founder Gaurab Chakrabarti tells ImpactAlpha. Texas is also setting the pace on battery storage, EV fleets, heat pump deployment, and even virtual power plants. And then there’s Tesla, which moved its corporate headquarters to the state in 2020.
  • Energy economics. Economics, not politics, are driving the expansion of green energy. Texas’ competitive energy market means that generators seeking the cheapest power have largely deployed renewables as the costs of wind, solar and storage have fallen. Last year, wind and solar reduced wholesale energy costs in Texas by nearly $1 billion a month. Renewables are also a large and growing source of tax revenues for Texas communities.
  • Choices ahead. Texas has moved to ban investment firms with environmental, social and governance, or ESG, investment principles or policies. New Republican-led bills would add restrictions and fees to clean energy development and mandate new natural gas plants, in a roll-back of the state’s competitive electricity market. “We’re an energy state,” says Lewin. “We should be going, ‘Look at this opportunity.’” Instead, he says, “People are trying to hold it back and fight it.”
  • Keep reading, “Don’t mess with Texas’ lead in the low-carbon energy transition,” by Dennis Price, in Austin, for ImpactAlpha.

Dealflow: Energy Efficiency

Mixergy raises £9.2 million to convert hot water tanks into energy storage systems. Individuals wanting to lower their carbon footprints – and energy bills – are adopting solar panels, electric vehicles, heat pumps and induction stoves. Oxford-based Mixergy wants to add hot water systems to the list. Hot water tanks “are a pragmatic, low-cost solution for energy storage—one that already has an established supply chain,” Mixergy’s Pete Armstrong told ImpactAlpha. “They’re a resource that’s not really being used.” Mixergy’s smart tanks heat only the water that is needed, using technology developed by Armstrong and co-founder Ren Kang at the University of Oxford. Mixergy’s funding round will finance R&D for its smart water tanks and other products, like a combined smart tank-heat pump. The round was backed by the venture arm of Portuguese utility EDP and U.K. social innovation nonprofit Nesta.

  • Smart heat. The smart hot-water tanks can switch between oil and gas boilers as well as electric inputs, solar panels and heat pumps. “If there’s a surplus of wind or solar anywhere in the grid, it can switch off the gas boiler and go electric,” Armstrong said. That can save customers as much as 40% on costs, he added.
  • Better than batteries? The tanks effectively operate as energy storage systems for the home. “They’re 10-times cheaper than batteries and last way longer,” about 25 years, Armstrong said. Hot water tanks require fewer materials to produce than battery storage systems. They can’t, however, store surplus energy to flow back into the grid.
  • Home energy upgrades. In Birmingham, Mixergy is helping retrofit 300 properties as part of the city’s goal to make its housing stock carbon neutral by 2030. The company is also getting a boost from the U.K.’s policy to ban gas boilers in new properties, starting in 2025. Separately, Denmark-based Lun raised €10.3 million ($11.1 million) in seed funding for its software that helps heat-pump installers find customers and complete installations. 

Mamotest secures $3.3 million for breast cancer screening in Latin America. Breast cancer survival rates are significantly lower in many emerging markets than in high-income countries. Mamotest uses AI-based diagnostics to interpret mammogram results and telehealth services to deliver results to patients. The company says it has screened 650,000 women since launching its digital health system last year; 87% of cancer-positive patients were diagnosed early enough for treatment. The company’s pre-Series A round was backed by Johnson & Johnson Impact Ventures, Merck, Sonen Capital and venture capital firm Sky High. (Disclosure: J&J Impact Ventures sponsors ImpactAlpha’s coverage of Investing in Health.)

  • Remote diagnosis. Patients use Whatsapp to book appointments at a network of health centers in Argentina and Mexico. The mammography is uploaded to Mamotest for interpretation by its specialists. The company delivers test results to patients within 24 hours and provides ongoing care support. Mamotest’s Guillermo Pepe said aggregated patient data is informing the treatments the company recommends to individual patients.
  • Women’s health. Separately, Amboy Street Ventures said it closed on $20 million for its first fund, which invests in startups addressing sexual health and women’s health.
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Dealflow overflow. Other investment news crossing our desks:

  • Munich-based IntegrityNext raised €100 million ($108 million) from EQT Growth to help organizations track and audit their suppliers’ ESG compliance. (EQT Growth)
  • Dutch impact investor Pymwymic led a €2.8 million ($3 million) seed funding round for OneThird, which uses AI to predict the shelf-life of food to curb food waste. (Pymwymic)
  • Alcove raised $3 million in a round led by Seven Seven Six for software that enables companies to track and manage their carbon credits. (Axios)

Impact Voices: Philanthropic Assets

Four steps to set foundations on the path to net zero. More than 40% of Fortune 500 companies have set targets for zeroing out emissions. Foundations, which in the U.S. hold more than $1 trillion in assets, have been slower to commit. “As foundations, we have the flexibility of [using] philanthropic tools like grants, investments, communication and convenings that are highly valuable in aligning mission-oriented pools of capital to a common goal, like net zero,” Kathleen Simpson of the Russell Family Foundation writes in a guest post on ImpactAlpha. TRFF late last year made its own commitment to reach net zero by 2030. Since then, it has invested $500,000 in Carbon Direct, which supports growth-stage climate tech, and helped Confluence Philanthropy convene net zero workshop for foundations. It also signed on to the Net Zero Asset Owner Alliance. “It was an important first step to align with as we build the playbook,” writes Simpson. 

  • Learning is the first step. Invite key stakeholders into the learning and due diligence processes early to examine what committing to net zero will look like, advises Simpson. TRFF reached out to investment managers and foundations, including Terra Alpha, Capricorn Investments, the David Rockefeller Fund and the McKnight Foundation.
  • Review your investment strategy. A net zero commitment might require shifts, especially for foundations not already investing in sustainable solutions. “There is an opportunity to help build the ecosystem by using philanthropic capital in a way that has the potential to intersect with market-rate approaches,” writes Simpson. TRFF started with a baseline audit of its grantmaking and investment portfolios.
  • Keep reading, “Four steps to set foundations on the path to net zero,” by the Russell Family Foundation’s Kathleen Simpson on ImpactAlpha. 

Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

  • May 1-2: ImpactPHL’s Total Impact in Philadelphia, Pa. Use code IMPACTALPHA for $500 off.
  • May 1-5: The African Private Equity and Venture Capital Association’s annual conference in Cairo. 

Stifel Financial Corp. scooped up three former Silicon Valley Bank bankers with deep climate tech connections. Jake Moseley, Matt Trotter and Ted Wilson, will join the St. Louis-based investment bank as managing directors… ELIXR’s Catalina Valentino joins UnaTerra Venture Capital Impact Fund as an advisory board member. 

In New York, New York Life Investments seeks an impact investing senior associate, and Rethink Education is recruiting a senior associate… Quantified Ventures has an opening for a controller in Washington, D.C… In Los Angeles, Ares Management is hiring a private equity and ESG vice president, and ECMC’s Education Innovation Ventures has an opening for a senior associate.

Tides is on the hunt for a senior contract analyst in San Francisco… The IFC is looking for an investment officer… Vontobel Asset Management seeks an impact implementation portfolio manager in Zurich… Temasek is hiring a sustainable solutions assistant vice president in Singapore… NESsT is looking for a country director in Brazil. 

Phenix Capital’s Impact Summit Europe takes place in The Hague, March 28-29… The Investment Integration Project is hosting an in-person and virtual event on systems-level investing, Tuesday, April 18… LinkedIn co-founder Reid Hoffman donates $1 million to B Lab Global.

Thank you for your impact.

– March 27, 2023