The climate technology sector has proven to be one of the most resilient during the tech industry slowdown and at the end of 2022, a number of new climate investment funds emerged. The trend is expected to continue in 2023, as Planet First Partners recently unveiled a €450 million fund for post-Series B companies, with funding from the IKEA group.
Another fund is expected to be announced soon. Meanwhile, Berlin-based Planet A has successfully raised €160 million in its first fund, attracting investments from a diverse group of LPs, including BMW, a Danish pension fund, and the co-founders of HelloFresh and Zalando.
Planet A’s newly raised fund will target investment opportunities across Europe and Israel, providing capital in the range of €500k to €3m, as well as participating in follow-on rounds. The firm’s focus on science-based investing sets it apart in the climate tech industry. Since its launch in 2021, Planet A has established itself as a leader in the movement towards scientifically assessed investments in the sector.
The firm has an in-house science team of three people, who conduct lifecycle assessments as part of its due diligence process. The team thoroughly examines all aspects of a product or service, from raw materials, supply chains, and transportation to end-of-life considerations. The results of this analysis, which typically spans 50 pages, are made publicly available.
Some VC firms use impact metrics, such as a set amount of CO2 emissions avoided, to guide their investments, but Planet A’s approach to due diligence offers a more comprehensive evaluation of a product’s impact on the environment.
Instead of pursuing a specific impact metric, Planet A evaluates a product by comparing it to the reference product it aims to replace. This methodology provides a comprehensive understanding of a product’s environmental impact, including its carbon footprint, land-use, and water-use. The firm’s current portfolio includes bio-based materials, ebikes, and an environmental metrics platform for businesses.
Next, Planet A is particularly interested in hydrogen solutions for decarbonizing transport, decarbonizing heavy industry, water technology, and biodiversity solutions. Thiede sees a challenge in making nature protection investable, but notes that investment in biodiversity and nature is on the rise. Despite the large amount of dry powder in the climate tech sector, Thiede cautions against a ‘fear of missing out’ mentality and emphasizes the need for proper climate assessment tools.
She also calls for more investment in areas like regenerative agriculture, biodiversity protection, and water, rather than just transport and micromobility.