Carbon Equity has received additional financial backing, bringing total funding to €9m. It now plans to grow distribution through a variety of different channels, including targeting high net worth and mass affluent investors.
Amsterdam-based Carbon Equity, an alternative investment platform for private market climate investments has secured €6m in a funding round led by BlackFin. Capital commitments have also come from existing investors 4impact, as well as several angel investors who invested in previous rounds.
The platform, which was launched in 2021, allows mass affluent individual investors (those with between €100,000 and €1m in liquid assets) and high net-worth investors to invest into climate-focused venture capital and private equity funds whose minimum investment thresholds would otherwise make them inaccessible. It does this by bundling their capital together.
Carbon Equity said it would use the investment, which brings its total funding to €9m, to scale up international expansion. It plans to grow distribution through neobanks, traditional banks and wealth management platforms, and lower the minimum investment threshold through the launch of an European Long-Term Investment Fund (ELTIF) .
Jacqueline van den Ende, co-founder and chief executive of Carbon Equity, said: “We are seeing a generational shift in our perspective on money, from money purely as a goal in itself to money as a means to help solve global challenges and generate financial returns.”
“Carbon Equity unlocks the capital of individuals so they can help fund the innovations needed to solve climate change and become part-owners of the net zero economy,” she added.
The company maps and tracks climate-focused private equity funds globally based on a proprietary climate impact assessment and financial due diligence, and states that only 5% of climate funds make it through its screening process. To date it says it has sourced more than 1000 funds, screened over 200 and approved 12 for investment through its platform.
ELTIF fund launch
Investors using the Carbon Equity platform can choose to invest into a portfolio fund, offering access to a diversified selection of 5-10 funds and exposure to 100-200 climate companies, or to make a direct investment into a single venture, growth or buyout fund, with the typical fund giving investors exposure to 20 to 40 climate companies. Minimum investment thresholds for both range between €100,000 and €190,000.
The company also announced the launch of an ELTIF in Q1 or Q2 next year, a type of collective investment framework established by the EU to help improve the financing of EU companies and projects that need long-term capital, such as infrastructure, to help stimulate the real economy. Carbon Equity explained that ELTIF regulations were being updated early next year to facilitate the creation and marketing of fund of funds across the EU to retail investors, allowing them to access long-term investment opportunities in non-listed investments traditionally aimed at institutional investors.
Speaking to Impact Investor, van den Ende explained: “The ELTIF label fund will allow us to actively market our climate fund of funds to retail investors throughout the EU from lower minimums, bringing on board our mission to democratise investing in the energy transition.”
Carbon Equity’s ELTIF will have a minimum investment threshold of €25,000.
According to research published by Bain & Company earlier this year, individual investors hold roughly $150trn, or 50%, of global assets under management (AUM) but account for less than 16% of AUM in alternative investment funds. The research finds that one of the reasons for the low participation rate is the “steep investment minimums and high fees [that] have worked with regulatory restrictions to put funds out of reach for most investors.”
Latest fund addition
The most recent fund added to the Carbon Equity platform in Q3 of this year was the At One Ventures Fund II, an early-stage climate fund managed by a team based on the West Coast of the United States.
Wiebe Visser, managing director in the investment team at Carbon Equity, explained that the fund focused on backing early-stage start-ups with disruptive technologies that could improve planetary health, such as food and agriculture, buildings and construction and energy and transportation. He said his team were attracted to the fund because of its “highly intentional and impact-driven investment strategy mostly focused on decarbonisation impact and hardware, combined with a strong focus on unit economics to ensure scalability”.
“The universe of investment funds in the EU and the US focusing on this area is significant and growing rapidly, making overview, selection, and access challenging,” said Visser. As a result, “numerous family offices” have opted to invest through the firm’s portfolio funds, according to Visser.