Climate Tech Investor Raises $172 Million for Science-Led Fund
- German VC Planet A has just closed its first 160 million euros (around $172 million) fund.
- Planet A wants to back startups with impact potential in areas like climate change mitigation.
- We got an exclusive look at the 20-slide LP deck it used to raise the inaugural fund.
Humans are currently consuming 1.7 Earths worth of natural resources every year.
But tighter regulation across Europe and the US has strengthened the business case for environmentally-friendly products and services that help society mitigate and grapple with the climate crisis.
Planet A, a European venture capital firm, has just closed its inaugural 160 million euros (around $172 million) fund to back startups doing just that. They want to back startups contributing to a world that exists within planetary boundaries, which is a framework the world must operate within to remain stable and resilient.
Founded in 2020, Planet A is looking for market-ready tech startups with significant impact potential in climate change mitigation, waste reduction, resource savings, and biodiversity protection.
Its in-house science team – which it said is a differentiator in a market full of investors chasing big returns on buzzy climate tech – conducts a life cycle analysis of potential investments as part of its due diligence. It has built an internal structure whereby science can “say no” to any deal, even if it’s a good business case, according to one of the fund’s cofounders Fridtjof Detzner.
“I believe we need a cultural shift where science and businesses talk on eye level, and basically you only invest if you get a thumbs up from both sides,” he told Insider.
As part of this assessment, which looks at a company’s ecological and emissions footprint, Planet A compares the startup’s tech with a reference product in today’s economy to figure out an “improvement rate.” The improvement rate is then multiplied by the number of units the startup has sold to establish its overall impact. It also published its assessments for additional transparency and updates these annually as investments progress.
The early-stage investor will write checks of between 500,000 euros to 3 million euros to startups in Europe, the UK, and Israel. It invests across software and hardware, preferring to enter pre-seed and Seed rounds for the former and Series A for the latter. Detzner is also interested in hybrid businesses, or “software-enabled” hardware.
It counts BMW, German investor of funds KfW Capital, trade and tourism group REWE, and the Danish state investment fund Vaekstfonden/EIFO, as limited partners. Entrepreneurs including Rolf Schrömgens of Trivago, Maximilian Backhaus of HelloFresh, and Zalando’s Rubin Ritter also handed the fund checks.
Having reached first close in October 2021, Planet A has already been deploying its capital. Its portfolio includes Makersite, which counts Microsoft and P&G as customers and raised $17.5 million last year; green methanol startup C1; and carbon sequestration company 44.01, which also has the backing of Bill Gates’ Breakthrough Energy Ventures.
Long-duration energy storage and carbon-free buildings are specific interest points for the firm, but Detzner stressed it is guided by science.
“I think biodiversity is often overlooked,” he added. “Also due to the fact it’s harder to measure than carbon, obviously, and it’s hyperlocal. But I think we need to start to measure it, to get it into our economic equations, to really being able to do the same as we do with carbon prices.”
The world’s largest companies have made net zero pledges, including SAP, Microsoft, Amazon, and Apple. Many corporates have also committed money to projects like Frontier Fund, which uses that cash to invest in carbon projects. Detzner wants to see a similar trend emerge for nature restoration and biodiversity.
The Planet A team intended to raise 100 million euros, Detzner said, so the fund was oversubscribed. Its ethos to invest in companies optimizing for life within planetary boundaries took some explaining at first, he said, but it built momentum over time.
The climate and nature crises won’t just go away – and “everyone sees that,” Detzner added.
Check out the 20-slide redacted pitch deck below.