The fund manager will invest in businesses with scalable solutions to tackle climate change and biodiversity loss in partnership with UK academic and other research institutions.
Greensphere Capital, a UK-based fund manager, has launched a £150m (€173m) fund based on partnerships with academic and scientific institutions to invest in and scale up businesses seeking to commercialise products and services that mitigate climate change and biodiversity loss.
The fund will invest in startup, spinout and scale-up businesses linked to a number of institutions within partnerships under its Gaia Sciences Innovation strategy. Those companies will benefit from access to scientific expertise in areas such as plant, fungal and animal sciences, ecology and hydrology, soil and microbiomes, and engineering biology. Partner organisations could benefit from the development and growth of spinouts through profit share via co-ownership and license fees.
The partnerships include various UK institutions, which are home to over 4,000 scientists, researchers, and conservationists, according to Greensphere. They include the Royal Botanic Gardens at Kew in London, conservation charity and zoo owner ZSL, the University of York, the UK Centre for Ecology & Hydrology, the Earlham Institute, John Innes Centre, Norfolk and Norwich University Hospitals NHS Foundation Trust, Quadram Institute, The Sainsbury Laboratory, and the University of East Anglia.
Divya Seshamani, managing partner at Greensphere Capital, told Impact Investor the fund had been created to invest in companies or ventures with a solid business proposition already in place that could be commercialised and scaled up fast.
“We want to be able to invest for impact, and that impact has to be made now. The world just doesn’t have time for purely blue-sky ideas. We want to help scale the great, commercially applicable science in these institutes for impact,” she said.
Greensphere has identified three focus areas for the fund. The first is greening real assets, making agriculture and forestry more sustainable and enhancing or restoring land and water-based ecosystems. The second is “green fintech” that provides technology and expertise to unlock green financial markets, such as biodiversity measurement. The third is investing in solutions to improve the resilience of human supply chains, such as those for food and medicine.
Seshamani said nature-based solutions on offer to tackle the world’s climate and biodiversity problems sometimes lacked an adequate underpinning of scientific expertise or a coherent science and technology supply chain, preventing them from being implemented successfully at scale.
“We have effectively been using the equivalent of gardeners, not scientists, to terraform our planet, and that’s not necessarily a good thing when nature-based solutions play such a significant role in mitigating carbon emissions,” she said.
Besides supporting solutions developed within research institutions, the fund also seeks to match that institutional know-how with technology being developed by external companies to maximise its potential of their innovations.
Improved marriage of technology with science would lead to greater flows of private capital into climate and biodiversity funding by creating more accurate and detailed impact measurement, providing both end users and investors with data they needed to make investment decisions and improve sustainability reporting, according to Seshamani.
For example, a company developing drones or other sensing equipment may not have data-gathering expertise, but could partner with institutions to provide more accurate and functional data on agricultural land use or ecosystem change. That, in turn, should boost funding prospects for the venture by creating a more useful service with stronger intellectual property credentials.
She said there was a large market of end-users, including major multinational retailers, that urgently needed solutions to problems such as accurate verification of the sustainable origins of timber of foodstuffs, which had yet to be solved satisfactorily.
The ten-year fund is similarly structured to other venture funds in terms of returns expectations. “We’re looking for standard venture returns – this is not a ‘please invest in us and take a lower return’ impact fund,” she said.
Greensphere Capital was founded by Seshamani and Jon Moulton, a partner in the firm, in 2011. It has previously launched three funds as part of an “engineered climate strategy”, under which it invested in sustainable technology, companies and projects to mitigate climate change and biodiversity loss. The company was the first fund manager appointed by the UK Government’s Green Investment Bank, winning that mandate in 2012.