These days climate investing is hot – if you’ll excuse the awful pun – but the days of just setting up a fund and calling it “climate focused” are really over. The market is separating the wheat from the chaff and if a venture capital fund can’t prove that it can back up its claim with hard science – I mean, this is about the climate after all – then it would be much less likely to achieve success or returns to see what it is looking for.
That is essentially the idea behind the new European Climate Fund Planet A companies.
The company has now closed its first €160 million fund to support founders tackling the world’s biggest environmental problems. The German-based VC strives for a new science-based approach. It has engaged a full scientific team, to which it will transfer veto power over investment decisions.
The in-house science team will perform “life cycle assessments” as part of a startup’s due diligence. If the start-up of the fund that is being looked back on does not have a significant positive impact on the environment, the deal will not go through.
Investors in the fund include BMW, KfW Capital (a major development bank), REWE (one of the largest German retailers), the investment fund of the Danish state 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 greentech startups.
In 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 fund of $240 million.
That means Planet A Ventures has come up 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 Tomorrow Bank. In addition, Lena Thiede is an expert in the field of 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 have a fully-fledged scientific team on board. We will only do things that are scientifically proven to be better, and we will publish those findings.”
“We will look from two angles: the normal VC angle and the scientific angle and only if both sides give us the thumbs up will we invest. This will hopefully bring us a lot more deals, because of course that evidence approach is useful for generalist funds as well,” he told me.
He says the climate crisis is getting worse: “We have all hands on deck when it comes to climate. We see that there is a huge opportunity to shape the future industry, so we will only invest in companies that will really make a significant difference.”
The in-house science team will look at issues such as material flows, emissions, but also biodiversity protection, resource conservation and waste reduction.
“Our scientific assessments allow us to understand how much better an innovation is compared to the status quo. This, in turn, allows us to identify the winners of the massive economic transformation we are seeing,” said Lena Thiede.
Some sectors that Planet A will look at are agriculture, forestry and food; construction and real estate; energy and heat; manufacturing; transport and mobility; water, waste and sanitation. Initial ticket sizes range from €0.5-3 million.
The current portfolio includes Maker site (decarbonization technology, used by Microsoft and P&G; GO drilling (plasma drilling); C1 (production of green methanol); 44.01 (carbon storage technology backed by Breakthrough Energy Ventures).