Soccer is a game of momentum. In the World Cup Final between Argentina and France, the momentum and energy shifts during the last 40 minutes of play produced arguably one of the most compelling, engaging, and exciting sporting events of all time. Fans were riveted. In fact, the entire world was riveted. And like in many great struggles – the prize ultimately was awarded due to the efforts of a few individuals, shooting for the goal.
We can’t help but notice the similarities between momentum in impact and momentum in sports. When a team, or a cause, or an investment theme has momentum – it gains supporters. It gains visibility. It becomes the thing everyone wants to be part of. And when that same team, cause, or theme loses momentum – it can de-rail years of hard work. But the efforts of a few dedicated, focused, and committed individuals can help turn the tide, and push the momentum in the opposite direction.
As we look at what’s to come in 2023, we want to spotlight a few thematic areas of the impact arena that are also either benefitting from, or are in dire need of some, momentum.
Landmark legislation and global commitments have created a unique opportunity to invest in climate solutions in 2023 and beyond
The Inflation Reduction Act and the Infrastructure Investment and Jobs Act have created once in a generation incentives for climate entrepreneurs and visionaries to build and scale solutions to our climate challenges. And the money is beginning to flow. PwC reports that 1 of every 4 dollars of venture capital funding went to climate tech ventures in 2022. On top of that, the wealthy philanthropists donated $12.5 billion to climate focused organizations in 2022. And 29% of the assets mobilized by CapShift over the past few years have gone to support climate solutions. These are great tailwinds to bring us into 2023 – yet not even close to enough to meet our net zero goals. Just the investment in physical assets alone to meet our net zero commitments will cost $19 billion per year – and that doesn’t take into account the resources needed for mitigation and adaptation projects as well as ensuring the transition is a just and equitable one. The all-in costs for this transition are expected to be in the trillions.
For 2023 – we expect to see increased urgency and momentum in climate investing. The United Nations (UN) is targeting a 45% decrease in emissions by 2030 to put us on track to hit our goals – and to meet it, we’re going to need all funders working together. Philanthropic dollars can play a critical role providing seed funding for early-stage climate tech as well as funding social and environmental projects not well suited for the capital markets. Investors can help existing climate solutions iterate and scale. And governments can continue to provide incentives to ensure companies and entrepreneurs have the runway to invest in new solutions and technologies.
Food and agriculture is having a moment
Many of us don’t spend a lot of time thinking about how our food gets from farm to table – but the impact the global food and agriculture industry has on our planet, people and animals is wide ranging and complex. This industry both contributes to and will be severely impacted by climate change and we expect to see increased investment in solutions in 2023. With the help of impact investors, startups in sustainable food and agriculture are estimated to raise between $10-$11 billion in 2022. Yet again, this doesn’t come close to bridging the gap. An estimated $140 billion per year is needed to build a sustainable food and agriculture system – and that’s just focused on production. Ensuring that people have adequate and affordable access to food and that the animals we rely on for protein are treated humanely will cost billions more.
This is another area where philanthropy and investors can work in concert to build a more sustainable food and agriculture system. Philanthropists can direct their grant dollars toward today’s urgent needs while investors can help build the technologies and systems to move us toward a future with adequate and humane access to food for all.
Investment in Black entrepreneurs slipped in 2022 – time to make up ground in 2023
In 2021 we celebrated a banner year for fundraising for Black entrepreneurs; 2021 represented a fourfold increase on 2020 fundraising. However, due to the economic instability in 2022, that funding dried up. Black entrepreneurs raised a staggering $913 million less in Q3 2022 than in the same period in 2021, TechCrunch reports. This represents .43% of all venture funds deployed during that same quarter.
Donors and investors can help Black entrepreneurs get back on track in 2023. Individuals can make simple changes from changing their bank to a community development finance institution so that their deposit dollars are put back into their local communities; to large changes like providing early-stage seed funding to Black entrepreneurs to help them scale their businesses to a point that more traditional funders will consider them for funding.
The poor aren’t getting any less poor, and the vulnerable are more vulnerable.
COVID-19, inflation, and supply chain issues have greatly impacted the more than 3 billion people around the world in a vulnerable economic situation. The UN has noted that in 2022, four years of progress towards their goal of no poverty has been erased by the COVID-19 pandemic.
Donors are uniquely positioned to use their recoverable grant capital to build momentum in the right direction. Donors can fund education programs to give people better on-ramps to prosperity, help women in rural and marginalized communities build small businesses, and provide social programs designed to strengthen safety nets for the vulnerable. And the list goes on. The impact of this capital is immense, and the $1.5 billion set aside in donor advised fund and private foundations is ideally situated to help fund this UN goal.
2023 has the potential to be a year of acceleration and momentum building in some of our most critical battles for the planet and the people who live on it. We’re excited to work with you to help achieve your goals and put momentum behind creating the world you’d like to see.
