These days climate investing is hot — if you will pardon the awful pun — but the days of just raising a fund and calling it “climate focused” are well and truly over. The market is sorting out the “wheat from the chaff” and if a VC fund can’t prove that it can back up its thesis with hard science — I mean, this is about the climate, after all — then it would be much less likely to see the success or the returns it is setting out for.
That’s essentially the thinking behind new European climate fund Planet A Ventures.
The firm has now has closed its first fund at €160 million to back founders tackling the world‘s largest environmental problems. The Germany-based VC aims to take a novel “science-based” approach. It has engaged a full science team, to which it will hand the power of veto over investment decisions.
The in-house science team will conduct “life cycle assessments” as part of its due diligence into a startup. If startup the fund is looking to back doesn’t have a significant positive impact on the environment, then the deal won’t go through.
Investors in the fund include BMW, KfW Capital (a large development banks), REWE (one of the largest German retailers), the Danish state’s investment fund Vaekstfonden/EIFO and serial entrepreneurs such as Rolf Schrömgens (Trivago), Maximilian Backhaus (HelloFresh) and Rubin Ritter (Zalando).
So far the fund has already invested in 14 early-stage green tech startups to date.
By comparison, the first fund for Pale Blue Dot (in Sweden) was €87 million, Norrsken VC has €100 million to play with, and 2150 VC launched in 2021 with a $240 million fund.
That means Planet A Ventures has come out with one of the strongest offerings in European climate VC to date.
The founders of Planet A are former Angle investors Tobias Seikel and Nick de la Forge, former entrepreneurs Fridtjof Detzner and Christian Schad, and Christoph Gras, who previously co-founded the Tomorrow Bank. Additionally, Lena Thiede is an expert in climate and biodiversity research and policy.
Fridtjof Detzner, founding partner at Planet A told me via email: “It’s early stage and it’s hardware and software. We do we have a full fledged science team on board. We will only do things which are scientifically proven to be better, and we will also publish those findings.”
“We will look at two angles: The normal VC angle and the scientific angle and only if both sides give us thumbs up will we invest. This will hopefully win us a lot more deals because that evidential approach is obviously also helpful to generalist funds,” he told me.
He says the climate emergency is getting worse: “We do have an all-hands-on-deck situation, right, regarding the climate. We see there is an enormous opportunity to shape future industry, so we will only invest in companies which will make a really significant difference.”
The in-house science team will look at things such as material flows, emissions, but also biodiversity protection, resource savings and waste reduction.
“Our scientific assessments allow us to understand how much better an innovation is compared to the status quo. This in turn enables us to identify the winners of the massive economic transformation that we are seeing,” said Lena Thiede.
Some sectors Planet A will look at will include agriculture, forestry and food; construction and real estate; energy and heat; manufacturing; transport and mobility; water, waste and remediation. Initial ticket sizes range from €0.5 million-€3 million.
The current portfolio includes Makersite (decarbonisation tech, used by Microsoft and P&G; GA Drilling (plasma drills); C1 (green methanol production); 44.01 (carbon storage technology, backed by Breakthrough Energy Ventures).
Source @TechCrunch
