Axios Pro: Climate Deals

April 08, 2022

Axios Pro Exclusive Content

🎉 Happy Friday! We made it through another week. Here's your final helping of deals before heading into the weekend.

1 big thing: Philanthropic capital

Illustration of hands holding money up towards Earth

Illustration: Annelise Capossela/Axios

Philanthropy organizations are putting their money where their mouth is, but they expect a return.

Why it matters: Historically, nonprofits, NGOs and foundations haven't made returns a primary motive of their investments, which are typically grants for expensive and risky projects.

Driving the news: That's changing, Sustainable Capital Partners senior vice president Victor Rojas tells Axios.

  • "Philanthropy is focused on returns in a way they weren't before," Rojas says.
  • Though money from philanthropic organizations is still used to de-risk large complex projects, it comes with terms more similar to other private investors rather than those that accompany grants.

Background: Grants are often the first money in for technically complex climate companies that are unable or unwilling to raise money from private investors.

  • For instance, Leaft Foods relied on grants for years before raising outside capital, some of which also came from nonprofit organizations.
  • Australian reforestation startup Lord of the Trees similarly relied on grants and bootstrapping to get started before taking on $1.25 million in outside funding from a traditional VC firm.

The bottom line: Expect to see more philanthropies dipping their toes into the world of climate investing.

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