2024 Summer Newsletter: Resilience and Growth
Nothing contained in the newsletter is intended nor should anything included herein be considered a guarantee of future performance of any industry, asset class, or any security.
In June, we co-hosted an event with Foundation House on “Unlocking the Next Trillion for Impact” (see below). This event keyed off data from GIIN estimating impact assets under management to be $1.164T – a “significant psychological milestone for an industry still maturing and growing in sophistication.” Impact investing has deep roots that go back decades or even centuries with the current industry taking clearer shape some two decades ago when an increasing number of investors and entrepreneurs explicitly pursued strategies that merged financial, social and environmental return objectives.
Gratitude Railroad was founded in 2013, and our trajectory has in many ways followed the path of the field overall. Our early days were marked by learning and experimentation, and our work was guided by the insights of a forward-looking and committed network. Today, we continue to embrace learning and experimentation, but our work has also crystallized and matured. We started 2024 with an expanded professional team, innovative new governance structure, a refined investment thesis, and new investment vehicles that reflect our core strengths and unique place in the market.
To unlock the next trillions, the entire industry needs to scale. Business literature on what it takes to scale covers a lot of ground, but we consolidate the learnings into four necessary ingredients: 1) people 2) organizations/structure 3) commitment and 4) capital. The impact field is rife with talented and committed people, and organizations, investment vehicles and advisory institutions are in place to scale. Notwithstanding some headwinds in terms of anti-ESG rhetoric, the commitment to mobilize impact capital is growing, driven by an increased sense of urgency about our planet and people as well as generational shifts in investor preferences.
When the $1T invested in impact capital scales to $10T, we will start to see real change toward a more sustainable and equitable future.
As is touched on in the “Soul of Impact” film, we are here to support investors wanting to move from intention to action, to expand the capital they are deploying, and/or to multiply their personal impact by joining a community. We’re scaling right alongside the impact industry overall, having increased our assets under management 32% and the number of investors formally involved in our network 25% in the first half of 2024. We have a multitude of ways to get involved in our work, and we hope you will join us!
With Gratitude,
Thomas Knowles and Rebekah Saul Butler
Table of Contents
Diversity, Equity, and Inclusion
What’s New at Gratitude
Grew Our Inclusive Capital Fund Investment Committee. We are thrilled to have Regina Green join our IC to guide fund investments and portfolio support.
As the former head of Launch with GS, Golman Sach’s $1B strategy to invest in underrepresented founders and fund managers, Regina Green brings her expertise in investing in diverse-led companies and funds to enhance our Inclusive Capital strategy. While leading Launch with GS, Regina oversaw 60 investments to women, Black, Latinx, and other underrepresented growth-stage entrepreneurs and GPs globally. Regina is also an advisor to Catalyze and is helping to develop their GP Runway Fund to provide operating capital for emerging managers. If you are interested in learning more about our Inclusive Capital Strategy, reach out to Jessie Tang ([email protected]).
Launched a New Strategy to Invest in Community and Commercial Solar: We entered into an exciting joint venture with Plankton Energy.
Gratitude has formally launched a new partnership with Plankton Energy, a solar developer with a track record in community and small commercial solar. Gratitude and Plankton are working together to leverage our joint capabilities in solar development and financing, asset management, and impact to support the expansion of community and commercial solar projects in the northeastern United States and beyond. Our initial project is a 345 kw solar installation on an office building in Massachusetts. To learn more about this work, reach out to Rebekah Saul Butler ([email protected]).
Established the Gratitude Impact Foundation to Activate DAF Capital: In partnership with LOHAS we have created new ways to invest our funds.
We are pleased to announce the Gratitude Impact Foundation, a nonprofit organization aiming to grow the impact investing ecosystem and the financial and social capital that sustains it. This new fiscally sponsored nonprofit is tailor-made to work with DAFs and philanthropic entities and provides a new way to support Gratitude’s community work and invest in Gratitude’s funds. If you would like to learn more, please visit the Gratitude Impact Foundation’s web page where you can also learn more about our partner in this work, LOHAS.
Welcomed an MBA Fellow: Abby Gritter, a recent graduate of UC Berkeley Haas, is supporting our team for the summer.
As an international social enterprise start-up operator and later as Chief of Staff at climate finance firm Blue Forest, Abby Gritter worked closely with the founders to raise over $20M. She spent her last two years earning her MBA from UC Berkeley where she focused on expanding her impact investing skillset. Recent work includes sourcing and diligencing deals for the Autodesk Foundation’s global Health & Resilience portfolio, building financial models, conducting landscape research and developing an emerging markets investment thesis for Jordan Park’s impact fund of funds, and sourcing education and skilling start-ups as Venture Partner at the Haas Impact Fund.
Documented our Investor Community on Film: We partnered with filmmaker Nic Askew to create “The Soul of Impact”.
During our 2023 Gratitude Investor Gathering, filmmaker Nic Askew interviewed members of our community, documenting their motivations and aspirations in impact investing. His film, “The Soul of Impact” weaves together these interviews to illuminate the driving forces behind investors’ commitment to deploying capital into innovative companies and funds.
INVESTMENTS
We invest in early-stage companies and emerging funds with a dual focus on compelling financial returns and authentic impact. Our investments address at least one of our core themes: Planetary Health [renewables and natural systems], Social Wellbeing [health, education, and wealth equity], and Intersectional Innovations [food systems and climate justice].
Portfolio Insights
In June, we hosted our mid-year portfolio review for our investment Partners and LPs. We reviewed the status of our investments under our three core categories (direct company investments, funds in which we are a GP or LP, and strategic partnerships/JVs).
Our 25 portfolio companies are showing resilience and growth in 2024, as venture activity is rebounding after having declined some 50% in 2023 compared to 2022. Our diversified sector and thematic approach benefitted our portfolio overall, as did maintaining our discipline around fundamentals-based valuation, which was challenging but necessary in the midst of a very frothy market in 2021 and 2022.
We took a deliberate approach in the first half of this year as valuations realigned and fundraising resumed more normalcy in dynamics and terms. We now have what we believe to be a very healthy investment pipeline and are energized by the opportunity to invest in a post-bubble period.
Fund managers we collaborate with also showed resilience over the past two years. While emerging managers and impact managers both experienced an even greater decline in fundraising than did the venture industry overall, we noted that portfolio GPs remained steadfast in their work and hit key milestones.
Recent Investments
Company: itselectric
We participated in itselectric’s Seed Round in June, which was co-led by Uber and FailUp. Itselectric produces Level 2 EV chargers designed for vehicles parked curbside in the urban environment. Itelectric’s EV charging platform utilizes the electrical distribution of buildings, creating a revenue sharing opportunity for property owners. This innovative business model allows low- or moderate-income (LMI) communities to benefit from the health and financial benefits of EV ownership.
Fund: Common Trust Groundwork Fund
We committed to participating in Groundwork Fund, a mezzanine debt vehicle focused on financing the transition of middle market businesses to an employee ownership trust structure. The Fund was created by Common Trust, a platform that streamlines employee ownership buyouts. General Partner Zoe Schlag, who spent two years at Eric and Wendy Schmidt’s family office exploring the alternative financing and shared ownership space after leading impact investing at Techstars, is joined by Derek Razo, with deep expertise in employee ownership trusts, to lead the fund. We are excited about the ability for increased employee ownership and governance to generate wealth and believe Groundwork brings a unique approach to embedding purpose. To learn more about this topic, see this webinar Thomas Knowles participated in (hosted by Transform Finance).
Fund: Cherryrock Capital
We made an LP commitment to Cherryrock Capital, our sixth VC fund through our Inclusive Capital strategy. The Black female-led VC firm, founded in 2023 by Stacy Brown-Philpot and Saydeah Howard, addresses a critical gap in the venture landscape by investing in U.S.-based Black and Latine-led technology companies at the Series A and B across a range of sectors, including FinTech, Digital Health, B2B2C, and Future of Work. The firm’s investment strategy involves leading rounds and securing board seats and voting rights to actively influence key governance issues. The team’s deep bench of operating and investing experience, combined with its impressive networks, positions Cherryrock Capital as a go-to fund for Black and Brown founders seeking growth capital.
Portfolio Updates
Goodr
Goodr is a sustainable food waste management company that leverages technology to combat hunger. Goodr onboarded several new customers, including the City of Atlanta, the City of Birmingham, and Chick-fil-A. The company also recently launched a pilot with Lowes Hotel Group. The company has continued its commitment to sustainability, with over 6M pounds of food and organic material diverted from landfills last year. For a deeper dive into their innovative approaches to hunger solutions and food waste, explore Goodr’s 2024 Impact Report.
Smartlam
SmartLam is a Mass Timber Solutions Company creating better spaces, innovative buildings, and stronger communities. SmartLam secured two significant projects with Microsoft Data Center and the University of Maine, contributing to nearly double-digit revenue growth and putting the company on track to achieve double-digit profitability. SmartLam also received a $1 million grant from the USDA Forest Service, further supporting its growth, which you can read about here.
Twentyeight Health
Twentyeight Health is a women’s health platform focused on increasing reproductive and sexual health care access to underserved communities. Twentyeight Health is launching a new subscription model and introducing four new over-the-counter products on their platform. The company recently announced its expansion into six new states and will continue to donate 1% of its revenue to nonprofits dedicated to enhancing access to reproductive and sexual healthcare. A recent survey showed that out of their 90,000 active users, 50% are on Medicaid and 58% identify as BIPOC.
Posigen
PosiGen is the nation’s leading residential solar and energy efficiency provider on a mission is to make solar energy affordable for homeowners of all income levels, while helping customers achieve greater fiscal autonomy and energy independence through lower utility bills. PosiGen was recently featured in USA Today for its unwavering commitment to renewable energy equity and making solar accessible to all. This year, PosiGen partnered with DC Green Bank to deliver over 300 solar installations for low- to –moderate-income residents in Washington, DC. These installations not only support hundreds of clean energy jobs in the area but are also expected to prevent over 2,500 tons of CO2 emissions annually. This partnership plans to expand into additional areas, including energy efficiency upgrades for LMI homeowners, further impact on the community and the environment.
Portfolio Job Board
- Senior Manager of Clinical Operations at Twentyeight Health
- Field Service Engineer at Glacier
- Multiple Roles at Therma
- Vice President / Senior Associate at The Builders Fund. This person will be a full member of the investment team and play an integral role in new deal and portfolio monitoring. Reach out to Thomas Knowles ([email protected]) if you know of any great candidates!
COMMUNITY AND EVENTS
Since January, we have convened over 500 unique investors, fund managers, entrepreneurs, thought leaders, and academics.
We hosted networking and shared learning events in Boston, Palo Alto, Austin, Santa Fe, Greenwich, and New York. Our programming featured a variety of both in-person and virtual events, including investment meetings, portfolio company site visits, dedicated founder hours, and virtual roundtables on investment topics such as investing in climate equity, supporting early-stage founders, and pathways to inclusive leadership.
Upcoming Events
We will host a variety of virtual and in-person events in late summer and early fall, including a virtual roundtable on the State of the Impact Venture Market and a monthly investment meeting. We are also hosting an Investor Dinner in Philadelphia and an Impact Happy Hour in Washington, DC in early September. This fall our primary focus will be on our annual Gratitude Investor Gathering and Partner and LP Summit in mid-November.
Join Us! 2024 Gratitude Investor Gathering
Our annual convening of investors, thought leaders, fund managers, and entrepreneurs will take place at 1440 Multiversity, from Tuesday, November 12 – Friday, November 15. The Investor Gathering is designed to curate meaningful connections and collaboration with the goal of moving more capital into investments that generate compelling returns and enduring impact.
This year’s theme Community, Capital, Change considers the growth trajectory of impact investing and explores three interconnected components critical to achieving scale.
If you are an accredited investor interested in learning more, please email Olivia Kronemeyer [email protected].
Past Events
Unlocking the Next Trillion for Impact Summit
Last month we partnered with Foundation House to co-host the Unlocking the Next Trillion for Impact Summit. Organized around two key questions, the Summit brought together over 90 attendees to learn and consider 1) How do we take a systems approach to unlocking the next trillion for impact? and 2) How do we catalyze solutions to bring about positive systemic change? To learn more about the speakers and content, we invite you to read the event recap.
Emerging Impact Manager Update and Practicum
We hosted an Emerging Impact Manager Update & Practicum in May, where we largely focused on important factors that help drive differentiation within the venture market and how impact-focused investors and emerging GPs are navigating the current venture fundraising environment. While funding peaked in 2021 and has since slowed down for both emerging managers and the venture space broadly, we remain committed to the Inclusive Capital thesis. Data continues to show that emerging venture managers consistently outperform established managers and funds with diversified ownership outperform comparable funds. Attendees had the opportunity to hear from ICF investment committee member Regina Green and portfolio fund managers Maureen Boyce, Ashley Bittner, and Lenore Champagne Beirne about their approaches to resourcing founders in a capital constrained environment and the innovative companies they are investing in to drive positive outcomes and strong returns.
On Climate: Understanding the Inflation Reduction Act as an Impact Investor
In April, we convened a virtual discussion on the Inflation Reduction Act (IRA) and its impact on climate investing. Gratitude Railroad’s Managing Partner, Rebekah Saul Butler and Principal, Emma Leavy shared insights on how key provisions of the law are affecting investment opportunities, and how we underwrite for those, sharing case studies from our portfolio. Guest speaker, Ivan Frishberg, Chief Sustainability Officer at Amalgamated Bank shared recent IRA-related developments, including with regard to the Greenhouse Gas Reduction Fund, as well as the outlook for the law under various future scenarios.
Diversity, Equity, and Inclusion
Our commitment to Diversity, Equity, Inclusion, and Justice (DEIJ) remains integral to both our investment initiatives and community programming. Of our three new investments this year, all have at least one female founder, and two have at least one BIPOC founder. We continue to focus our Inclusive Capital Strategy on first-time emerging managers, with an explicit gender and racial equity lens.
Earlier this year we co-hosted a virtual webinar Pathways to Inclusive Leadership, in collaboration with How Women Lead, The WIE Suite, and AlTi Tiedemann Global, convening cross-sector leaders to explore where we are in our collective effort to create more inclusive leadership. We explored various strategies to expand governance, ownership, and management throughout business sectors including on Boards of private and public companies, in C-Suites, and among founders, managers and owners of early-stage companies and emerging funds. We selected quotes from each of our guest speakers to share their perspectives on key takeaways from our conversation.
The Fearless Fund lawsuit and ongoing attacks on DEIJ have created numerous setbacks toward funding for diversity-centered investment firms. One resource we wanted to share is the Freedom Economy, a new online community and resource center for justice and sustainability investors. The organization will provide proactive legal resources and other supports for values-aligned investors, reflecting the sentiment of the majority of Americans who believe DEI, ESG, and impact investing provide a critical path toward equity and justice for all.
Links to Inspire
Impact Investing Should Be Hard: Striving for value-adding impact means demanding additionality
How the Inflation Reduction Act’s “direct pay” option can create wealth and resilience in underserved communities
State of the Impact Investing Market: Doubling Down and Expanding Horizons
Join Us
We invite you to join us in transforming capital to create a thriving world.
There are multiple ways to engage in our community, learn, and invest. We look forward to partnering with you this year!
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