Brightcore Energy: Why We Invested

By Chris Wu and Clara Purk

Emissions from residential and commercial buildings account for 29% of total US greenhouse gas emissions. Total energy consumption by this sector makes up 40% of total US energy consumption, with 60% of utility-scale electricity generation coming from fossil fuels. As a result, any successful climate mitigation strategy must focus on reducing emissions from the built environment. Energy efficiency programs and onsite renewable energy installations are some of the most cost-effective ways for buildings to cut emissions, as they also reduce energy costs for building owners. Many cities and states are committing to ambitious climate action plans, implementing stricter building energy efficiency and clean energy standards and offering incentive programs for energy efficiency and renewables, providing strong regulatory tailwinds for companies driving improved energy efficiency.

Solution

Brightcore Energy (“Brightcore”) is an “efficiency as a service” company providing project development, implementation and funding for a range of energy efficiency and renewable energy retrofits for commercial and institutional (“C&I”) customers. Its product offerings include LED lighting, solar PV, and geothermal, with targeted growth in battery storage, EV charging, and other renewable solutions. Brightcore's implementation services include project development, engineering and design, permitting, interconnection, procurement, installation, maintenance and service. In addition, the expansion of its sustainable financing capabilities enable Brightcore to act as a capital provider for customers and finance efficiency and clean energy projects at $0 upfront cost.

Why We Invested

Since it began operating in 2016, Brightcore has built a strong reputation for delivering efficiency projects with over 150+ projects completed and 76,100 metric tons of GHG avoided. The company’s leadership team has a proven track record of executing in this market, with co-CEOs Rob Krugel and Konstantin Braun having worked together for 20+ years running a C&I solar PV developer and working in structured finance. We believe Brightcore’s strategic positioning in the Northeast will enable it to take advantage of the growing market for efficiency and renewable energy projects in key states. For example, New York City’s Local Law 97 sets increasingly stringent limits on carbon emissions for approximately 50,000 buildings in order to meet NYC's required 40% citywide emissions reductions by 2030 (from a 2005 baseline). New York state’s RPS (Renewable Portfolio Standard) requires that 100% of the energy that utilities sell must come from renewable resources by 2040 and New Jersey must reach 50% by 2030. Similarly, RPS policy goals have been set in many states throughout the country, including MA, PA, CT, CO, and CA. Brightcore’s sustainable financing strategy, enabled by this funding led by SER Capital Partners, will further its competitive advantage in this increasingly crowded market.

Impact

We believe that Brightcore has the ability to make a positive impact on climate change and the environment by improving energy efficiency and reducing fossil fuel consumption within the built environment. LED lighting projects reduce electricity usage by about 60-70% while also addressing waste, as the lifespan of an LED light is 50-100x that of an incandescent bulb. Solar PV reduces the reliance on fossil fuels and offsets the emissions required to create and install a project within a year of operation, on average. Continued expansion of geothermal energy will replace old boilers that burn fuel oil or gas with a clean, renewable energy source by drawing heat from below ground. Installing more battery storage systems will help make the energy grid more resilient by shifting load to off-peak hours and displacing dirty gas and oil-fired peaker plants, enabling further reduction in GHG emissions within the built environment, helping cities meet their sustainability goals.

Traxen: Why We Invested

By Elizabeth Coston McCluskey and Tasha Seitz

More than 70% of goods shipped in the US are transported via truck, representing 11.84 billion tons. Long haul trucking is a massive source of fuel consumption: the International Council on Clean Transportation estimates that tractor trucks represent 71% of all fuel consumed by heavy-duty vehicles. Fuel also represents a significant portion of the operating cost for trucking and logistics, at 24%, second only to labor costs. As engines and aerodynamics have become more fuel efficient over time, driver behavior has become a more significant factor determining fuel consumption. A study conducted by the American Trucking Associations’ (ATA) Technology and Maintenance Council found a 35% difference between most efficient and least efficient drivers based on speed, acceleration, braking and route selection. 

Solution

Traxen provides a cloud-connected intelligent cruise control system that assists drivers to reduce fuel consumption during highway driving while improving safety & drivability. Using sensors that can be retrofitted onto existing trucks combined with data on weather conditions, high definition maps, estimates of internal loads, and projected traffic, Traxen can manage a truck’s speed from end to end to optimize for safety and fuel efficiency. 

Why We Invested

The founding team and board at Traxen is steeped in the industry and the problem they are addressing, with backgrounds in autonomous driving, electrification and connected vehicles. The team’s vision is to enable a pathway for trucking and logistics companies to realize the benefits of autonomous vehicles as technology and policy evolves. While it is early, there are strong indications regarding the effectiveness of the technology: a third party study verified by the North American Council for Freight Efficiency (NACFE) showed an average 7% improvement in fuel efficiency in a side-by-side comparison for trucks carrying identical loads along a typical long haul route. 

Impact

There is potential for compelling environmental impact given that long haul trucking is such a significant means of freight transportation and consumer of fossil fuels, and long haul is likely to be the last segment in trucking to adopt electric vehicles given challenges related to charging infrastructure and range. A conservative, “back of the envelope” analysis suggests that a 5% improvement in fuel efficiency would translate to reducing greenhouse gas emissions by 25 million metric tons/year in the US, or the equivalent of taking more than 5 million cars off the road. 

OnlineMedEd: Why We Invested

By Ander Iruretagoyena and Priya Parrish

Medical doctors and other healthcare professionals play a vital role in society, as COVID-19 has reminded us all. While the United States is a leader in educating doctors, there is a global need for well-trained physicians and healthcare infrastructure to deliver high-quality care. At the same time, the medical field offers prospects of high quality, well paid, and stable jobs for those who can break into the competitive job market through rigorous academic training. However, due to the systemic limitations of the current medical education model, there is a significant lack of diversity among medical professionals. In the U.S., for example, 6% of active physicians are Latino, 5% are Black, and 36% are Female. Specifically, the lack of diversity among faculty (predominantly White (63.9%) and Male (58.6%)) and unequal resources across schools to support students with rigorous coursework, disadvantages students of diverse socio-economic backgrounds. Compounded with the detrimental effects of implicit bias in delivering care to racial and gender minorities, there is a meaningful opportunity to help narrow the disparities in health outcomes.

Solution

OnlineMedEd (OME) is a global digital healthcare learning platform for aspiring and practicing healthcare professionals. Currently, more than 86% of medical students in the United States use OME to supplement knowledge needed to pass their board exams, as well as in their clinical practice. 250,000 monthly active users learn from the platform, while an average of 50,000 are global users in 191 countries. 

Growth among international users has grown 50% as OnlineMedEd has proven its ability to create effective supplementary curriculum beyond medical school walls. Over the past year, OME launched its Crash Course suite of free online video tutorials to more than 30,000 redeployed health care providers helping during the pandemic. The company has also transitioned medical school faculty online, and is a natural partner to support institutions in the transition towards active digital-enabled learning. 

Built by founders with medical education experience, the platform is centered around the PACE (Prime, Acquire, Challenge, Enforce) pedagogical method. For each lesson, students have access to: 

• Prime: Lesson overviews, companion notes, diagrams and key takeaways

• Acquire: Peer-reviewed video lectures comprehensively covering the topic and contextualizing within the broader curriculum 

• Challenge: Board-style questions or quizzes; additional video-based explanations for Q&A 

• Enforce: Digital Flashcards for review, automatically set to a study calendar based on memory science

Why We Invested

OnlineMedEd’s platform has attained a leading market share, strong user engagement, and favorable brand preference in the traditional medical school market for supplementary education. With its freemium business model, the company is already democratizing access to medical careers by helping students graduate from rigorous programs and succeed as practicing physicians.

The Company originally served 3rd and 4th year medical students, but in the past two years, OnlineMedEd has invested to expand content to address 1st and 2nd year students, creating a full digital medical curriculum. This foundational success positions OME well to expand into a multi billion-dollar addressable market across adjacent verticals (e.g. Nurse Practitioners, PAs, and Dental), geographies, and the complete student lifecycle.

We also see an opportunity for OnlineMedEd to support the development of the next generation of healthcare providers that more fully represent the populations they serve. To do this, OME is partnering with medical schools and other educational institutions to provide its premium content to all students. With effective supplementary content, students from all backgrounds and in schools across tiers and geographies will enter the job market to serve rural and urban communities globally.

Impact

Given its reach, Impact Engine believes OnlineMedEd has an immense opportunity to help increase representation in the medical field in order to actively combat widening health outcome disparities. In addition to its intentionally accessible product, OME is also ensuring diverse representation in patient and practitioner case studies to create more inclusivity within medical schools. Impact Engine’s involvement will focus on strengthening these efforts and exploring new drivers of impact, such as implicit bias training curriculum and programs to increase the diversity of students enrolling in medical school.

A Recap: Session #3, Investing in Health Equity

By Chris Wu

The third and final session of Impact Engine’s 9th annual Chicago Impact Investing Showcase wrapped up our series with a great discussion on health equity in Chicago, moderated by Elizabeth McCluskey. In reference to our 5P Framework, this session focused on Product-based impact where the product or service a company is providing will directly create impact and connect growth and revenues with positive social and environmental impact. Joining Elizabeth for the event were panelists Justine Mitchell (SVP of AtHome at Array Behavioral Care), Nate Pelzer (the CEO and Co-Founder of Clinify Health), and Will Boeglin (the CEO and Co-Founder of TimeDoc Health). 

To frame the day’s discussion, Elizabeth referenced a study on life expectancy published by the NYU School of Medicine. According to their findings, Chicagoans who live in Streeterville have a life expectancy of 90 years, while 9 miles to the south in Englewood the average life expectancy plummets to just 60 years. The researchers studied life expectancy in America's 500 largest cities, and that 30 year gap represented the nation’s largest disparity. Clearly there are acute problems around both health care delivery and health equity when people only a train ride away are living 30 fewer years. More recently, the Black and Latinx populations in Chicago were disproportionately affected by COVID-19. During the fall, majority Latinx zip codes in Chicago were experiencing the highest rates of infection and Black residents were experiencing death rates 2x that of White residents. Here are some highlights from the discussion:

Q: What is driving disparities in health and why is values-based care so important for serving underserved for providers to facilitate their care?

Nate Pelzer: The simple answer is it’s historically systemic racism at its core. Over the last few centuries through things like redlining, busing, Jim Crow, you have had disinvestment in certain geographic areas in the country. And as these areas have had less investment in health care and fewer employment opportunities, the result is that people have less access to primary and preventive care. Over time, those things that were once just social factors begin to impact their health outcomes. Moving to values-based care is important in Medicaid because it shifts the focus from patients coming in when they need something acute in nature to instead putting the onus on physicians to be more aware of what the population health needs of their patients are in general. 

Q: What are you seeing in terms of disparities in conditions that patients are suffering from and ways you’re finding to intervene?

Will Boeglin: We see a high incidence of both chronic medical conditions and behavioral health conditions in the dual eligible population (people that qualify for both Medicare and Medicaid). But even more so than clinical intervention, often what is needed is social work to address social determinants of health. In this patient population, 40% don’t have a smartphone and 25% don’t have access to WiFi. When you think about the transition to telemedicine that the pandemic has necessitated, that creates some really serious barriers to receiving care. A significant percentage of the dual eligible population don’t have a caregiver at home, they live alone. That means no one is advocating for them, encouraging them to stay on track, reminding them to pick up their prescriptions, or helping them get scheduled for vaccines. In one instance, one of our care managers was speaking with a patient that was homeless and currently living in their car. They didn’t have the paperwork or authorizations from the health center to get admitted to a local shelter. So the care manager worked with the health center to make sure they completed all the correct forms, shared that with the patient and the shelter, and was able to get the patient admitted. There are lots of examples like that of our care manager engaging to help ensure positive interventions, whether it’s connecting someone to Meals on Wheels, trying to find discounts on medication to make their meds more affordable, or referring patients to resources the local community centers on aging. 

Q: What have you seen in terms of mental health throughout the pandemic? What populations have seen an increase in need?

Justine Mitchell: It’s well documented that there is a widespread increase in need for mental health services because of COVID. Social isolation, anxiety, lack of control, job loss, disruption in the home and grieving over loss of loved ones have really driven people to need and utilize behavioral health services more. From a forced adoption point of view, at CMS (Centers for Medicare & Medicaid Services) a lot of federal regulations have been relaxed this year around telehealth and licensure across state lines. Also, hospitals and health systems who may have had some utilization of telehealth, and comfort with it, have been forced to move to telehealth and accept it as a standard of care. We’ve been seeing an increase across multiple business lines. On the direct-to-consumer (D2C) side, utilization has grown month-over-month sometimes as much as 18%. It reflects an increase in need for behavioral health services which is a negative, but on the other hand it’s good that people have access to the behavioral care they need via telehealth – it’s broken down some of the old barriers. In behavioral health there is a supply/demand problem, there simply aren’t enough licensed clinicians to meet the needs of the patient population. Given that, telehealth and video bridges that gap and increases access to care for patients in underserved areas, both urban and rural, even in their home in a more effective way. Combining a D2C product plus more access in clinical settings has been the way to take a bite out of behavioral health deserts.

The entire Impact Engine team is grateful to Justine, Nate, and Will for taking the time to share their perspectives on these important issues that affect all of us. We’re glad that the talented teams at Array Behavioral Care, Clinify Health, and TimeDoc Health are all so passionate about health equity and working hard to develop solutions that address these disparities in health. We’d also like to thank the MacArthur Foundation for their continued support of this annual Chicago showcase event. See you next year!

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A Recap: Session #2, Any Company Can Be an Impact Company

By Roger Liew

This session was moderated by Jessica Droste Yagan, Impact Engine’s CEO, and the intention was to demonstrate how any company, through being intentional and positive in their business practices, can be impactful. Jessica’s own career has focused on the overlaps between making money and social good, and she used this experience to explore how three different organizations of very different scales apply process-based impact. The discussion illustrated that no matter the product or service of the organization, processes can be modified to produce benefits for society or the planet. 

The basic question posed was “how do you find the win-wins where what’s better for the planet or better for society can be better for the bottom line?”. Our goal was to inspire, educate, and offer ideas anyone can apply in their workplace.

The three panelists were: 

Steven Dyme, Co-Founder & CEO, Flowers for Dreams

The company, based in Chicago, offers floral bouquets where a portion of proceeds are donated. Thus far, $750k has been donated to 130 causes in the communities that they serve. An additional positive impact is introducing Flowers for Dreams customers to the beneficiaries, ultimately growing the following of their non-profit beneficiaries by 1.5x.

Jenny Farver, Co-CEO, 8th Light

8th Light is a consultancy which helps companies build software. Known for high quality work, the way they’ve built their workforce is by hiring primarily through an apprenticeship program. This hiring technique has produced a much more diverse workforce than is typical in the technology industry.

Jenny McColloch, Corporate Vice President of Sustainability, McDonald's Corporation

McDonald’s operates 40k restaurants across 140 countries, with a focus on feeding and fostering communities while maintaining both local and global perspectives. The sustainable sourcing team is most proud of their climate work, as McDonald’s is one of the first companies that set science-based targets to reduce greenhouse gas emissions. Their global scale has created a focus on the resiliency and strength of the global food supply chain.

Some key impact examples from our panelists included:

• A focus on carbon management for grazing cattle has yielded improvements in the efficiency of raising beef.

• Climate thinking is inherently long term, which has prepared the company to manage supply chain disruption.

• Lower cost per hire via apprenticeship programs.

• Diverse teams build better software because the users of software are diverse.

• Differentiating between a “buy to give” model that’s tacked on versus integrating the giving program into the core product offering.

Other questions addressed included:

• How do you deal with tensions between a social or environmental pressure and financial returns?

• How do you engage your employees in the process of evaluating the company’s performance towards their impact goals?

• How do you communicate your impact to customers?

• How do you address the tensions between types of social impact, such as paying your employees more or lowering your prices?

The session closed by addressing the question of “can you be an impact company if your product or service is not solving a societal problem?,” which included concrete suggestions from the panelists:

• Be authentic.

• Iterate work in progress. 

• Be intentional and prioritize; don’t spread yourself thin.

Lastly, two book recommendations surfaced during this session:

Small Giants by Bo Burlingham, which is about companies that choose to be great by staying small. 

Six New Rules of Business by Judy Samuelson, which includes ways to think about business holistically.

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A Recap: Session #1, Investing in People and Place to Close the Racial Wealth Gap in Chicago

By Ander Iruretagoyena

On Wednesday, February 10th, Priya Parrish kicked off Impact Engine’s 9th annual Chicago Impact Investing Showcase. In this session, we explored the various forms of racial wealth disparity in Chicago and how different types of investment capital and approaches are intentionally creating more equity. Specifically, the session focused on the People and Place P’s of our 5P Framework. Through opening remarks by Debra Schwartz (MacArthur Foundation) and a moderated conversation with Dr. Helene Gayle (The Chicago Community Trust) and local business leaders Jim Casselberry (4S Bay Partners), Julian Posada (LiftUp Enterprises), and Don Thompson (Cleveland Avenue), participants listened in on how businesses with underrepresented founders and operations that create opportunity for people historically underserved lead to powerful and lasting change for individuals and their communities. The speakers are real life examples of businesses that purposely base their operations/investments in areas with little upward mobility and who inspire each of us to act. Impact can be optimized by focusing on the root cause of so many of the problems (lack of access to high quality education, health disparities, violence, etc.) that plague this country. We cannot expect the country to move forward when we are holding close to ⅔ (the Latinx and Black communities) of it back. In spite of its virtual format, the session maintained the high energy spirit and rallying call to action that has come to be expected at Impact Engine’s showcase events.

Notwithstanding all of the increased attention, closing the racial wealth gap is not a new issue. Institutions like the MacArthur Foundation have been working to close the racial wealth gap and make financial systems more inclusive for over 35 years. Chicago has been a key battlefield in this war, with innovations like Community Development Financial Institutions (CDFIs), programs like Benefit Chicago ($100M in capital to support impact enterprises throughout the Chicago region looking to enhance job readiness, create jobs, or build wealth) and studies like Next Street’s (for Black and Latinx entrepreneurs in Chicago, 80% of their equity capital needs go unmet and that there is a gap of at least $146M between the supply and demand for equity capital for these communities). It's a case study for the power of combining traditional grants, donations, and public-private partnerships, with impact investing across all the P’s. 

During the session, we heard from Cleveland Avenue and their efforts to bridge the gap for underrepresented entrepreneurs in the food and beverage space by giving them the support to overcome perceptions attached to them. Key to these efforts is utilizing structures that are aligned with the interests of those founders. Creative structures like convertible debt or bridge loans help avoid unnecessary dilution. Equity should only be used when there is a reason for it and to create alignment for long term success; it should not be the de facto structure. 

LiftUp Enterprises explained how implementing best-in-class diversity and inclusion practices can be a source of competitive advantage. Furthermore, they shared some of their recent operational improvements like establishing weekly payroll and setting up a company sponsored emergency funding lender so workers do not have to go to payday lenders. These practices are not only solving liquidity issues for workers but become the foundation for paradigm-based impact by ensuring the creation of wealth at all worker levels (senior, middle, and entry). 

Lastly, we heard from 4S Bay Partners, which strives to eliminate prejudice and inequities by helping create useful, wholesome economic opportunities for marginalized communities and amplifying their stories through private capital investments. As a single family office, 4S has the flexibility to engage in multiple different funding strategies like opportunity zones or setting up vehicles like Chi-Town Impact to drive wealth creation, which in their view is not a zero sum game. 

The summer of 2020 was a rollercoaster for the city of Chicago, and not exactly the fun kind. Amidst a pandemic, election uncertainty, and racial equity marches, the city fluctuated from desolate streets to packed ones to desolate again in a matter of days. As a fellow Chicagoan, it was shocking to see empty streets due to numerous store and small business closings, packed streets filled with peaceful protesters, and again empty ones with the exception of National Guard patrols demanding to see identification. No amount of snow will make us forget the events that transpired this past summer in Chicago. Now more than ever, we know that systemic racism is unrelenting in our country. The events of the past months have crystallized how frustrated, saddened, and angry we all are. Despite some progress, we know that the stories of George Floyd, Ahmaud Arbery, Christian Cooper, and Breonna Taylor won’t be the last. With spring just a couple of days away, it is time to come out of hibernation, join Chicago’s vibrant impact community, and support efforts aimed at closing the racial wealth gap. Be loud, be bold, think outside the box, be impactful, listen to those who you are trying to impact, take the time to collect feedback, and above all: 

“Just open your eyes, your paradigms, your perspectives, and increase the possibility to folks that are black, brown and women in this field...don’t make us overprove ourselves.” 

— Don Thompson, CEO & Founder, Cleveland Avenue

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