Climentum Capital targets European startups with $157M fund to reduce CO2 emissions

Climate tech is one of the industries that is seeing continued growth despite the economic downturn.

More than 600 deals have been invested in over the course of the last two years, a trend that is likely to continue into the next few years. Climate-focused companies are well positioned to flourish against a backdrop of scale-back and layoffs elsewhere in the startup world, as a result of a slew of new funds emerging dedicated to the cause.

The first close of Climentum Capital's 150 million fund is designed to help curb CO2 emissions and accelerate Europe's green transition.

We caught up with Yoann Berno to find out what Climentum is trying to achieve and how it distinguishes itself from the competition.

Sustainable investment

Europe's new sustainable finance disclosure regulation came into force last year. SFDR is designed to improve transparency in the sustainable investment sphere so finance companies are more accountable for specific claims they make. Climentum is focused on making sustainable investments and carbon emission reduction as a core investment objective. It gives the fund's backers access to all the data they need to report on their own targets.

Climentum is supported by a host of Nordic pension funds and Europe-based conglomerates. Climentum is seen as a conduit by the venture capital arm of the chemical giant.

Berno said that the company is backed by a source of intel to guide their corporate strategy in the coming decade.

Berno wanted to emphasize that two of Climentum's five founding general partners are female, which he sees as a positive difference in an industry dominated by men.

Berno said that 40% of the workforce is female, which is as good as it gets in the industry.

Climentum Capital has a managing partner, a partner and partners in Berlin. A new partner is to be announced in Sweden.

Climentum expects to close the full fund by the end of the year despite only securing half of the target. It wants to make 25 investments across Europe from late-seed stage to series A with individual figures ranging from 1 million to 5 million.

Three investments which are currently at the due-diligence stage are focused on material recycling, alternative protein production and insect farming.

So far, it's been great. In a field filled with climate-focused investors and a seemingly insatiable appetite for startups promising to help repair Planet Earth, Climentum is emphasizing how they benefit financially from their collective investments. It has to overcome two hurdles in order to be called a dual carry model.

Berno said that the first hurdle was financial with a competitive return target of three- times over the fund's lifetime. There is an ambitious CO2 emissions reduction target which will be measured at the portfolio level at the end of the fund.

Climentum is looking at more than just how much of a return they get for their backers, but how much of an impact their investments have on their climate goals.

Climentum has focused on a number of strategic locations. The policies and attitudes toward green technologies are among the strongest in the world and there is already a significant climate focused tech startup community.

According to Berno, Sweden, Germany, andDenmark are the top five countries in the world in terms of environmental regulations. The three capital cities are home to some of the most active startup hubs in Europe.

A climate of change

The timing of Climentum's fund launch looks good from a variety of perspectives. With growing pressure on the energy markets due to the war in Ukraine and many countries trying to reduce their dependence on Russian gas, this bode well for alternative energy sources and technologies that promise to help nations reduce their energy consumption. There is a shortage of food due to supply chain issues and this places emerging startups focused on insect farming in a strong position.

Climentum is in a good position because of the broader economic downturn and the terms they may now be able to agree with startup companies.

Berno said that the current economic downturn has stopped the euphoria on the VC market. We are a market that desperately needs more liquid to continue financing innovation.

When everything is thrown together into a giant melting pot, it seems like it's as good a time as ever for climate-tech startup to flourish. While governments are cooking up policies that make society-wide green philosophies much more than a "nice-to-have", any business that wants to function in today's world needs to take its climate responsibility seriously.

The climate tech companies that have a solution to some of the world's biggest problems already have a lot of demand. Some of the high valuations will be amplified by the demand for acquisitions from corporates who want to meet their emission targets.