Stockholm (NordSIP) – Sustainable investment funds, like the rest of the global economy have been rocked by the effects and fallout from the Russian invasion of the Ukraine. However, not all activity has come to a halt. At the beginning of July, Copenhagen-based Climentum Capital, announced the first close of its inaugural Venture Capital fund, designed to invests in European start-ups focusing on achieving scalable and measurable CO2 emission cuts.
Following the closing and on the occasion of the appointment of the first Swedish General Partner (GP), NordSIP spoke with Climentum Capital to understand this market better.
The fund targets late seed and Series A investments into the six sectors that demonstrate the largest CO2 reduction potential, including Industry & Manufacturing, NextGen Renewables, Food & Agriculture, Buildings & Architecture, and Waste & Materials.
Climentum is building a portfolio of 25 companies and keeps 50% in reserve capital to continue backing its investee companies. The first closing of the inaugural €150 million (US$157 million) Venture Capital fund saw initial ticket sizes ranging between €1 million and €5 million.
The fund is managed by Morten Halborg from Copenhagen, as well as by Yoann Berno (in France), Stefan Mård (in Denmark), Dörte Hirschberg (in Germany) and Malin Carlström (in Stockholm).
This is the first fund of what the founders hope will be several more over the coming decades focused on climate change. “At least for the next 2 funds, we expect to maintain our current investment focus, with only minor variations. Looking further down the line we need to see how various trends play out,” Halborg explains.
For Carlström, whom the firm announced had joined as the fifth and last GP this week, the appeal of Climentum Capital was to join “the founding team of a future-proof climate tech fund.”
The Swedish GP has an 18-year track record of venture capital investments in the Nordic region, including as acting Head of Ventures at ABB’s Electrification division, where she oversaw global investments on industrial digitization and electrification, mobility and energy sectors.
“I always invest in what I define as ‘future proof’ growth stories. I believe our approach and reporting will create significant value to both founders and LPs, as the requirements on impact accounting just keeps getting increasingly complex and demanding”, Carlström says.
“There are three keys by which to control companies; the board membership, the ownership agenda and the funding capabilities. Representing large capital gives an influence on all these measures. I expect not least public LPs to lead the way when it comes to supporting diverse fund teams; why should public funds be allocated in the conspicuously skewed way it is now,” she adds
Standing Out Among VC Funds
According to Halborg, Climentum Capital is the first Venture Capital fund operating in Denmark to qualify as Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR). “Our goal is to show that climate investing can reap outsized returns and that being best-in-class on ESG (incl. article 9) is a long-term benefit to fund managers,“ he explains.
“We want to help companies mature on their sustainability journeys, and leverage their credentials for fundraising and growth,” Halborg adds. One of way that Climentum Capital claims to add value to its investee companies is through its network of vertical experts, strategic corporates and partner Climate Tech funds and investors that investee companies are able to tap following the fund’s investments.
“We have numerous sector-specific experts that we engage with regularly in our sourcing and due diligence activities, including senior consulting profiles and ex-executives of large corporations. Some of our investors, such as BASF, are also staffed with experts whose experience we can tap,” he continues.
“Beyond these resources, we also have a group of specialist consultants that we bring into companies, not least for impact assessment, sustainability reporting, regulatory environment assessment, and non-dilutive capital fundraising purposes. We connect our portfolio companies with such experts when we see a good fit,” Halborg says.
The VC fund has a target of 25 investments for the full funding. “Besides the obvious requirement that they be highly commercially and financially attractive, we need to see that the companies we invest in are capable of delivering significant emissions reductions in the next few years, and aligned with the EU Taxonomy,” he explains.
Future of Sustainable Finance
Despite the turmoil of the past three years, and the ongoing supply shocks caused by the Russian invasion of the Ukraine, Halborg remains optimistic about the future of sustainable finance and climate investing in particular.
“This is a theme with high growth prospects starting from a low base. Demand for high-performing Article 9 fund managers will exceed supply in a few years,” Halborg concludes.