Investing in Climate: VCs announcement | L. Coppey, R. Belkahia, A.-C. Colomb | ChangeNOW2023

Hi, so maybe it'll be great if we start with a bit of an introduction. Can you tell us a little bit more about your fund and since when have you been starting to look at climate Tech? Maybe? And clear, we start with you, sure pleasure. So I hello everyone. I'm Ann Claire. I'm a partner at Lis. To tell you a little bit about Bliss, who was funded in 2014 by entrepreneur Alex on Mars. I've had the pleasure to join in 20 in 2019. Since 20- sorry, since 2014- we've invested more than 450 million dollars across 23 companies. Show more

These companies were more focused on consumer tax, so we invested in Spotify, Pinterest, headspace- too good to go. And what one of our characteristic, distinctive characteristic when we invest is that we put sustainability at the core. The way we've been investing is sustainability is at the core for decision making and at the core of the investment lifecycle as well, and, finally, at the core of what we do as a management company, because we give back 20 of our carry to charitable causes. Fantastic, tomorrow, maybe you can share a little bit more on the growth side as well. Yeah, of course. So hey, everyone, my name is Tomah and I work for ekiti ventures, which is a Swedish Venture Capital firm. We're part of the big Equity Group that you probably know. It's one of the biggest PE firms in in Europe. Long story short, we've We've launched equative interest in 2016.. Since then, we've raised the three funds. The last one was announced six months ago. It's a. It's a pretty big one. It's 1.1 billion euros that were. We're going to try to invest in 40 companies over the next three years, ranging in four sectors: B2B, fintech and obviously, climate, but also consumer, which which I look after. And yeah, we invest in companies from C to series B and we've invested roughly 180 million euros in venture over the last five years in climate tech companies. Show more

Louis, glad to be here, my name is Louis. I'm a partner. Refund call 0.9, which for some of you, might look like the most traditional, if not boring, seed funds. So we started about 12 years ago. We've invested in about 170 different companies in 30 different countries, and we started at a time where, like you know, software was new and our job was to support companies that had a chance to become generational company, mainly in B2B software. Show more

And yeah, look fast forward 12 years, we've invested in. 80 of what we do is, you know, B2B software at seed and some of the companies that we've backed are, you might know, like zendesk, like algolia here in Paris, type from Loom and a few others, and 20 of what we do is either consumer or hardware, and that's how we were one of the First Investors in revolut, one of the First Investors in tier- the mobility is good company- and also one of the First Investors in two, you know, lab grown meat businesses- amazing. Show more

I guess I would like to start with the current situation on the market. Are you guys investing at the moment? Yeah, yeah, yeah, making sure to make the commitment on stage so people can come after and ask you: when it comes to climate, has the current economic situation changed? Show more

You're thinking about the industry- or has it accelerated your wish to support climate companies or maybe made you check twice? Yeah, I'm happy to take that. I think it's actually even more interesting to look at it with a longer perspective, reflectional 10 or 15 years ago, when you know there was this first wave of climate Tech Investments, like Green Tech Investments, and that way was actually not very successful, meaning most of the people lost money investing in the startups and not a lot of, you know generational companies emerged. A few did like Tesla, but done that many. So the question that we have in the question that our investors have, is, like, what has changed today that would justify investing in climate, although it didn't work before? And and then you know the you know the macro environment today, meaning versus two years ago, doesn't change that much because at the end of the day, we're supposed to invest in, you know, companies that will develop in the next five, if not rather 10, and then five years, and you know the economy Works in Cycles, so that doesn't really impact us, especially as a seed fund. Now, when it comes to climate Tech specifically today, there are a bunch of arguments beyond the fact that there are, you know, a lot of people building startups in this room at that justify investing in climate. Show more

And and you can actually look at it based on like three components: which is technology? Like is the technology available today to build generational company? Is the regulation pushing you know companies and Technologies to be developed? And what do the market expects? And for each of these components, we can see that like things have changed dramatically in the past 10 years. So like, if you look at technology specifically, like the cost of solar request of batteries, the cost of a lot of foundational technologies that drop dramatically by roughly 10x in the case of, you know, solar and batteries, and we've invested in a few companies that are linked to this sector. Show more

Specifically. When it comes to regulation, I mean I'm not a politician but like there are a lot of politicians actually at this conference, you know explaining how they're changing policies and you know the price of carbon as well, increasing is actually pushing people to, you know, be more sustainable in their practices and develop, as consumers and as individuals, better practices, which then link to the third point, which is more and more companies and more and more individuals as consumers are expecting, you know, more sustainable practices, which creates, you know, generational changes in terms of consumer habits. And so this tri-factor of, you know, Market regulation and consumer is expectation is creating, we think, a very fertile ground for building really significant companies within the next five to ten years. The the hope I guess we all have is that, after this wave of instability economically, there's a clear understanding that the companies that need to be funded should be building viable solutions for the future. So climate sits on this trend also, in alignment to what you're saying. Are you investing in climate? I'll go to you because you guys have developed quite a comprehensive thesis on climate. When did they start and how did you kick off this kind of excitement? Yeah, so it started very early on. We're a nordics fund and I think that's sustainability and incline. Show more

It is, has always been, you know, in our, in our, in our values. It's not a trend that we follow, it's something that is deeply rooted within, within what we do, right? I joined Equity two months ago, by the way, and and and when I joined, I was, I was told, two things like. Your job is, of course, you know, to return money to your investors, but also is to invest money in companies that are sustainable, and these two things go together for us. And now, the way we do that is that usually we try to to have a thesis. You know around what needs to be solved in terms of problems right now in the world, and once you identify like big problems- electric electrification was one, and therefore we invested in companies like iron ride, which is electric trucks, verca, which are batteries, Hearts, electric planes, Candela, electric boats. Show more

I can go on, but I'll stop here. Then you start to try to to find Solutions, right, so what I do and I want to try to find solutions that I spend, like lots of time with experts once I identify the problem, like right now, a problem I'm looking at is is industrial heat, which is creating lots of lots of carbon right, and I'm trying to understand which is the best solution, you know, to tackle this issue. So, spending time with experts to actually, you know, create a belief, and once you have a belief, you can start to look at companies and Founders that have, like the the right approach to solving this, this pane and Clay. I would love to ask you a little bit more about the approach that you have taken, which goes outside even of the scope of climate but focuses on this impact element. I think it's incredibly important for all of us to be building sustainable businesses, but sustainability is not only the ecological side of it. Can you explain a little bit more how you've been thinking about this as a fund? Sure, so there's there's a question about what is responsible or sustainable business, and that's what we've been thinking about for the past years, and our view on this was: we can't allow ourselves to exclude in a very narrow Vision all of the business that are not, per se, sustainable, but whether be an actor of the change within those businesses. So, for example, we've taken headspace. It's a headspace- I don't know if you guys know headspace- very amazing mental health soft software company- not software, sorry- app. And we came into this company saying we're going to help you build your theory of change. So theory of change, you guys know this it's. Show more

It's usually used by ngos to to Really build their. Why are they here, why do they exist and what are they going to bring to the community. And that's what we're doing. So when we say headspace, it's pretty easy we say, well, Mental Health, social, their system, sustainability in here. But then we reviewed all of their businesses practices and we have an amazing head of sustainability who does that very well. She went into headspace, reviewed all of their processes and built from the ground their theory of change and how they could improve, not only in terms of social, which is at the core of their business, but also in the term of environmental approach. Show more

And, for example, to give you a little bit of of intel on what we do, last year, 38 of our portfolio companies were measuring their carbon emissions. This this year it's 70. So, building this, we feel we're having a great impact and making General and regular business businesses, more responsible and sustainable businesses. I would love for us to go based on also what you were saying in a little bit of a discussion about the maturity of the market. Show more

I've been in the space for the last six years and when I joined kind of it felt like a desert. There was no climate tech companies and there was barely an interest from the investment side. Maybe. First, starting with, where do you think the investment Community is from your perspective and how many of the funds that maybe you collaborate with, alongside, of course, yours, do you feel have gotten to a mature level in investing in climate? Show more

I open it to the floor. Yeah, happy to take this. So we met six years ago. You told me about climate risk. I knew nothing about climate risk. I was like what the is this? I think this has changed dramatically. There is a quantitative answer to this, which is that you know, if you look at the number of countries in the world with more than a billion invested in climate, it's like five already and more than 30, more than 100 million, it's 13 countries. So bottom line, the amount of money that's flowing into the market is it's growing and you know people adopt different approaches to investing in climate, and I guess we represent different approaches to you know what's the best way to play this, so that's that's one. Then on you know what are people interested in. I guess you can look at the job of diseases. Like some people say, our job is to time market. Show more

So what's the likelihood that within the next five to ten years, which is the investment duration that we have, you can build massive businesses and then you can adopt some kind of a holistic approach when it comes to you know what are the big problems to be solved and on that path, I actually like the framework that you know Bill Gates has to, which is more or less to say you have 25- 25 when it comes to, you know, decarbonizing building, decarbonizing food and the cannabising the grid, like electrification, and then remains transportation and building- 15 and 10, and you know people go after each, have these opportunities and and start investing more and more. Yeah, I guess I'll stop there, and does anyone want to add something with regards to how mature do you feel the investment Community is? I I can give you a little anecdote. So five years ago, I worked at entrepreneur first, which is a talent investor, company Builder, and we were creating many, many companies that were climate companies back then, but we were like branding them as biotech companies, because when we pushed them on the market to VCS and it was branded as climate tech, people were like, no, it's not for us. You know, while biotech was was a bit better. Now it's the opposite, like when, when you have creates biotech companies, all of a sudden they're called climate because everybody's is crazy about climate companies today. So I think it's not a quantitative analysis at all, but I think it's a little nice story to show you that mindsets are evolving, switching maybe to the startup side. What are the domains within climate Tech that you see evolving, maturing and eventually you would like to back? Maybe I start with you, Louis, given you on the seat side. Yeah, so we invest very early. Show more

So we invest anywhere between Alpha million and 5 million euros, and which means that most of the time, the companies that we back are really early in their Journey, with like maybe five to ten people, the beginning of a product and some ideas as to what the customers will look like. Show more

And if we look at the climate related Investments that we've done in the past three to four years now, a lot of them are actually energy related. So, you know, going back to the framework I was discussing just before, so, like I work with a company between Netherlands and Nigeria that's, you know, adding batteries and solar panel to diesel generators to create more sustainable Utilities in Nigeria, last year we backed a company that's building an operating system for wind and solar, solar Farms, which is actually a combination of the software and a hardware company, and we just backed a company that's doing, you know, Sim relation for energy consumption in production on Industrial sites, and in that case we think that the market timing is great because also the price of, yeah, the price of Solar and the price of batteries has decreased by 10x, such that, you know, the level of competitiveness of the kilowatt hour that you generate through this technology is now very competitive, especially in the past two years because of the Ukraine war and, yeah, therefore, we think that this change will happen fairly soon. Show more

On the food deck side of things, we back two companies: one four years ago called Mission barns, which is one of the first lab grown mid business out of the us, and one in Paris actually that's building fake fogger or like club actually, and in that case we also think that there is an interesting convergence of Trends in between consumer habits, but also regulation, like fogger is now being banned in New York and in San Francisco. That will push these companies to, you know, become significant within the next five to ten years. Show more

Yeah, there's, there's a shift in the, in the technology and the way we're financing this low carbon economy and I agree there's a lot of maturity on the market on the energy side and I think some of the startups that are a little bit left out to me are the ones that are financing agricultural transition, which is a huge leverage on the fighting against climate change. Show more

This is actually something that we are working on backing by developing our first reforestation fund and where we're gonna phone regenerative agriculture. So there's still a lot of Leverage to be done on the food side and- and on the industry side as well, I think we're there is a lot of opportunities still for startups to grow on this front and with the companies like too good to go and misfits that you've backed, you also clearly feel confident to support food already before, or like the transition of the food sector already before the reforestation fund, I guess, yeah, yeah, too good to go became one of our main line of investment. Show more

We invested 85 million in this company, so it's very pretty positive and pretty bullish on the on the foot Tech and how it's gonna contribute to fighting climate change. What would be interesting to hear a little bit more about is: what is the difference between a traditional fund and a climate Tech fund? I mean, we know that VC speak to each other quite a lot because of deal flow, because of other topics, and it feels at least I can speak on behalf of all the companies that I know that have spoken to me about them getting funding. There was a moment in history where the climate Tech funds were feeling the safest space to go to, because you would not be treated, so to say, badly, because your business just has a different cycle of development. Maybe I would start again, Louis, with you just asking: on the side of, like 0.9 has been known for marketplaces, SAS. Now, all of a sudden, food grown foie gras- I mean first, I don't think it's sudden because you know this- like Mission bounce way back four years ago. Show more

I started working with this company called amp in between Nigeria and the Netherlands about four years ago. I I think the the right way to look at it is like you know, each of these firms have different investment physicists. Ours is to invest in- primarily in, B2B software at seed and you know, year after years you have a new kind of significant trends that justify building really, really loud software businesses. Show more

And the premise of 0.9 at the beginning was to say there will be software in any industry and therefore let's go look at industry one after another and try to find the company that has a chance to become really large over the next five to ten years. Today we're at a point where we know we need to decarbonize the whole economy and therefore the amount of markets that need to be completely reshaped, with software or without software, is massive, and therefore we believe that it's like an incredible opportunity for us to learn more and more about specific markets, be they energy, be they food, be the transportation, and see where they are interesting. Show more

You know opportunities to build software companies, but we don't go at it with the approach of being a climate fund. We go at it with the approach of being a software focused fund that understands the magnitude of the climate change problems and want to be play a small part with our expertise, which is software. Show more

But if you ask a climate focused fund, you will have a different perspective. But I also want to say: we treat everyone well. Be the climate companies on that, climate companies, just to show offense. How many people here are founders of companies, startups? Who's fundraising at the moment? Okay, so what about you? Because you guys have been, you have a foundation which is obviously sitting on the side of the large front. What was the the reason to have, like, all these big vehicles for funding, but then also Foundation? Yeah, yeah, good question. So, like, when we invest in a company from the, the domain fund this, this company needs to have the potential to return the fund within the next seven or ten years. Show more

Right, and and and. Now there's, there are, there are many projects, many companies that you know can't do that. You know the science is too heavy, you have to do some, some research in the lab before you can go to market and therefore it doesn't fits into, like the, the lens of the fund, and therefore we've created, like this, this Foundation, the equity Foundation, that can do like smaller checks, without Equity, I think, which is under the form of Grants, basically that we can basically, you know, like, give the, the give some Capital, some free Capital to, to Founders that are in need. Basically, we have one minute left and I want to use it for a little bit of a fire question. Show more

Can you say, with one or two sentences, what is the reason that a company impresses you and you end up investing one sentence? It's going to be a combination of the founders and the science, Mission driven and purpose. I would say relentlessness of the founder and the size of the opportunity. Thank you so much. I think this was a really fruitful foreign. [music]. Show more