In February, new European VC 2150 opened the $240 million first close of its fund. This fund supports technologies that reduce carbon emissions through the medium of cities. Cities produce CO2 at a tremendous rate as they grow and develop.
The Urban Sustainability Technology Fund is now announcing its final close at $312million. This shows that LPs are increasingly interested in this topic. The fund also claims that it was 33% more than subscribed.
Credit Suisse was among the new investors, as was a client of AIMS Imprint, Goldman Sachs Asset Management. Nysn is the Norwegian sovereign climate investment company. Woven Capital, which is the investment arm of Toyotas Woven Planet Group, was also advised.
All this is because 2150s obsession is with the built environment. The equation is simple: Countries are not going stop developing cities, even though the Climate Crisis is raging at full speed. It is crucial to develop technologies that can reduce or even reverse the CO2 emissions.
Since its inception, 2150 has invested in several startups such as CarbonCure Technologies which reduces concrete's CO2 footprint. These types of investments have enabled the fund to claim that its total real estate footprint has tripled to 430,000,000 square feet, which is 25 times larger than Canary Wharf, London.
Normative is another investment. It tracks the entire carbon footprint of supply chain supply chains. This month, it raised 10 million in a round that was partly led by 2150.
Aeroseal, which produces a gum that seals the air ducts and building envelopes, thereby increasing their energy efficiency significantly, and Nodes and Links (which has a platform that helps infrastructure projects run on time and save energy), are two other 2150 companies. Ampd Energy is also a company that can power cranes using a battery-powered generator to decarbonize construction sites.
This portfolio of 2150 claims could reduce more than 1.6 Gigatonnes CO2 annually, or more than all the annual emissions from France, UK, and Germany combined. This is because we emit 51 Gigatonnes annually of CO2, so it would be necessary to save 18 to 32 GT annually to prevent 1.5 degrees warming.
It is believed that if 2150 VCs or any other number can scale their investments in order to reach these numbers, then there may be enough moonshot projects available to mitigate the worst effects of Climate Change. It is unlikely, but it could be possible.
If this is the case, then George Monbiot and others may need to revise their belief that Green Growth does not exist.
Christian Jlck is a Partner and co-founder of 2150. He stated: 2150 wants to be a significant contributor towards The Paris Agreement. We will also focus on the urban environment which accounts for 70% of GHG emissions. Through our platform, we seek to not only be an investor but also facilitate urban transformation by partnering with strategic investors.
Christian Hernandez, 2150 Partner, said over a phone call that the target of 200 million euros was achievable. Then, things started to take off. One of the most important climate technology funds in Europe was raised. It came from big money like Credit Suisse clients Goldman Sachs and some of the largest sovereign funds in the world.
He wonders what attracts these large LPs.
One is a platform which could take an institution-sized check. We are focusing on the built world, which is a vertical but it's a huge vertical. He said that one LP had said to him, "You know, we've done our Energy funds. We've done our Foodtech funds. Now, we're looking for an institutional-grade Built-world Fund."
Hernandez said that the fund now examines heating and cooling. While everyone focuses on heating, cooling uses more energy. This will increase as more people need to cool down in order to survive and not just stay comfortable. We also looked at waste. Not only were we looking for ways to reduce it, but also how to make it more sustainable. We also looked at new materials, including how to use synthetic biology, nature, or other technologies to create sustainable materials.
He also pointed out that Carbon Offsetting is not a viable solution at the moment as the price fluctuates and it is still very opaque. Therefore, it makes sense to address the CO2 problem with the built environment, not offsetting.
This 2150 raise is a reminder that climate investment is outpacing VC investments, even AI. According to PwC's last year report, despite representing only 6% of the venture capital markets, climate technology startups saw an increase in investment from $418m to $16.3bn between 2013 and 2019. This was three times as fast as the increase in investment in artificial Intelligence over the same time period.
Hernandez also wants to infuse climate values into company behavior and team behavior. We do our own carbon accounting, offset our carbon footprint. Each of us has made our own commitments about what actions we would take. My goal is to eat less meat. I don't eat steak anymore. What was your approach to taking micro- and macro-actions with the fund? I believe both must be part of the culture.
2150 also announced it was awarded a Diversity VC ranking at Level 1. This means that we are already a diverse group and this will continue. It is a key part of the team we want. We will have more information later this year about how we are building the team.
2150 is anchored both by NREP, a Northern European real estate platform private equity platform, and Chr. Augustinus Fabrikker, Novo Holdings and Denmarks Green Future Fund were the anchors of 2150 in February this year.