Optimizing for Impact: Why We Invested in CNote
Meeting the CNote Team
We’re so excited to announce our investment in CNote, alongside a number of other great investors, such as the Artemis Fund and H/L Ventures This is a perfect example of an investment profile we love, where we can back an amazingly impressive team who has built products that can both generate exciting commercial success AND help a lot of different underserved stakeholders in the process — doing good while doing well!
As a certified B corporation, CNote had to meet rigorous standards of social and environmental performance, accountability and transparency. To that point, CNote is using one of the industry’s most extensive databases on environment, social and governance (ESG) relevant community financial institutions and nonprofit organizations in the U.S. Using this database, the company has helped construct financial products that enable corporations and mission-committed institutions to place their treasury deposits with mission-aligned FIs and place balance sheet capital with yield-generating, mission-aligned NGO fixed income structures.
Let’s pause for a moment though, to recognize our path to getting involved with CNote. While we had heard about the company many times over a few years, we were first introduced in June of 2021 by an impressive FinTech veteran, Aimeelene Gaspar. Aimeelene was early to FinTech, having held a number of product and technology leadership roles at Broadridge, Yodlee and Sindeo. We spent time with her while she was exploring launching her own startup in the data privacy space (LionX), at which time she also introduced us to Cat Berman, the CEO of CNote (Thanks, Aimeelene!!). Today, Aimeelene is the Chief Product Officer of CNote, so we’re very grateful to be in business with her as well!
While we haven’t known Cat that long, it really didn’t take long to be wowed by her vision, poise and network with the people that matter for CNote’s success. What’s more is that anyone who you ask that has worked with Cat isn’t just positive, they tend to be effusively positive. Moreover, it’s clear that she feels a tremendous sense of devotion to doing good and expanding access for those who have the least of it. Her company helps steer capital to organizations on the front lines of this effort, but she has also lived this by creating a killer team that is truly women-led. We are so excited to be working with her, Yuliya (her tremendous Co-Founder), and the entire CNote team.
So What Does CNote Do?
CNote is the capital pipeline between F1000 treasury reserves and top-performing Community Development Financial Institutions (CDFIs) and Low-Income-Designated Credit Unions. These large corporations have generally deployed ESG cash by manually searching, deploying, and tracking their investments, which is inefficient, often ineffective and challenging for reporting. Not only does CNote manage the selection and deployment of capital, but they provide customers with automated reporting and investment tracking. CNote’s partner institutions benefit from a significant increase in deposits, which allow them to increase funding and support underserved communities in clearly articulated ways. These institutions are federally insured, so the deposits are as safe as if they were held at a top 5 treasury bank, BUT because these CDFIs are hungrier for deposits, they’re actually willing to pay more yield than the larger treasury institutions. Said simply, corporate treasurers generated more interest for the same risk-less bank deposits while having an ESG impact that is well-defined and easily reportable (win, win, win).
Our Market POV — Why Does It Matter?
- ESG is exploding. ESG is of increasing importance to modern day treasury management. In fact, corporations have pledged over $50B in ESG commitments, although less than 1% of those commitments have been deployed to date. By 2025, total global ESG assets are projected to exceed $53T.
- Infrastructure needed. ESG interest is outpacing the practical ability to deploy capital into ESG investments today. Despite the increased commitments from large corporations towards ESG investments, the process for identifying, underwriting, executing, and auditing these investments is still slow, manual and mostly non-standardized. This is particularly challenging for reporting, which is an essential requirement for delivering on corporate commitments. CNote creates a scalable platform enabling corporations and institutions to expand ESG investment activity using standardized databases and automated reporting — this should help convert interest into action.
- CNote opens up an overlooked ESG opportunity. While notable direct indexing players like Ethic and OpenInvest were pioneers in enabling ESG-relevant investments in the public equities ecosystem, few startups have tapped into debt and fixed income securities like student loans, green bonds, and SMB loans — all of which have the potential to be highly impactful with easier earnings to project. These are also enormously large markets.
In summary, we’re super excited to be partnering with Cat, Yuliya and the whole CNote team as they enable many of the world’s biggest corporations to help the consumers and small businesses who need it the most!
