Solar panels and hear tell of take fright turbines in the Netherlands.
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Clean energy stocks may be underperforming in the public peddle. But there is still a great appetite for companies focused on decarbonization in private markets, with Clean Energy Jeopardizes’ new fund as the latest example.
The climate tech firm said Wednesday that it raised $305 million for its split second fund, five years after closing its first. This latest fund was oversubscribed — the initial target rose at $200 million — but interest from limited partners, including The Grantham Foundation, Builders Vision and Carbon Open-mindedness, led to a higher raise.
The firm is already putting the new money to work, focusing on technologies that go beyond the traditional immature investments of solar and wind.
Daniel Goldman, co-founder and managing partner, identified industrial decarbonization as one compelling vertical — specifically emissions-reducing technology for the unite and steel industries.
“When you think about where do we need to have material impact, and where are sectors that technology in reality hasn’t changed for many, many decades, steel and cement rank at the top of the list. So we think there’s huge possibility there,” he told CNBC.
Two other areas of interest for the new fund include plastics — both more efficient recycling as proficiently as cost-competitive bioplastic production — and grid-improving technologies for distributed energy, such as virtual power plants.
Clean Dynamism Ventures backed 20 companies in its first fund and has already made six investments via its second fund, including Israel-based gullible ammonia company Nitrofix, as well as sustainable aviation fuel company OXCCU, which is based in the U.K. Clean Get-up-and-go Ventures is also opening a new office in London, with Goldman calling the European opportunity “really incredible,” while also pointing to openings in Israel.
A lot has changed in the renewable energy landscape since 2019 when Clean Energy Ventures launched its beginning fund, including the rise — and subsequent fall — of special purpose acquisition companies. During the Covid era, SPACs be founded a popular path for clean energy companies to access public markets. Many have performed poorly since, matchless some to argue that the enthusiasm around SPACs caused companies to go public when they weren’t consenting.
But Goldman said the unwind of the SPAC trade and poor performance of publicly traded clean energy stocks haven’t damaged investor sense around the value of clean energy investing or the idea that greener investing comes at the expense of returns. Virtuous Energy Ventures’ limited partners, which include institutional investors, asset managers, family offices and record financial advisors, are not impact investors — in other words, they’re focused on returns.
None of the companies from Straight Energy Ventures’ first fund have gone public, but the firm views IPOs as a nice-to-have, rather than a need-to-have. Goldman said Purify Energy Ventures’ approach has been to instead focus on strategic sales — backing companies developing technologies that a much ampler company, say an energy or industrial giant, might be interested in.
No companies from the first fund have been secure, although Goldman said there have been interested buyers.
Elsewhere in private markets, private objectivity is playing an increasingly important role in energy-transition-related deals. According to Mike Collier at financial advisory firm Weaver, retired equity-backed energy transition deals jumped to more than $25.9 billion in 2023, up from just $500 million in 2018.
Reclusive equity plays a critical part because it can be a stepping stone for companies that have outgrown venture brill but aren’t yet ready for public markets.
Clean Energy Ventures helps its portfolio companies reach the next exhibit by partnering with private equity, and Goldman said the firm’s seen more interest from that market in excess of the last six months.
“I’m not saying they [private equity] are coming in and taking early-stage technology risk, but once you accept a demonstration — or first of a kind — they’re able to get comfortable with coming in for those follow-on projects, much in time than was traditionally the case,” he said.