Seaya’s founder Beatriz González is optimistic about prospects for the sector, despite the current tough investment environment and political uncertainties surrounding the pace of the energy transition.
Madrid-based venture capital investor Seaya has closed its Andromeda climate-tech fund at €300m, having attracted investment from a number of European institutions.
Investors in the fund include Iberdrola, Nortia, Santander, BNP Paribas Group, Next Tech Fund and Bpifrance.
Seaya says Andromeda is the largest fund of its type in southern Europe and that the firm is now the largest VC investor in Spain, with assets under management totalling over €650m across five early-state venture funds. It is one a handful of Spanish VCs offering Series A+ funding, the company says.
The fund was set up to invest in impact-driven companies focused on the energy transition, decarbonisation, the sustainable food value chain, and the circular economy. It invests only in companies seeking to improve sustainability by reducing waste and pollution, and has a geographical focus on Europe, the US and Latin America. Andromeda is an Article 9 fund, the greenest classification under the EU ‘s Sustainable Finance Disclosure Regulation (SFDR).
Andromeda makes first investments in companies in the €7-€40m range and retains capital for follow-on investments. It has already made five investments since 2022 and expects to make a further five this year. It plans to make a total of 25 investments between now and end-2027.
Meeting the hardware challenge
Seaya was founded by managing partner Beatriz González in 2013. The company had developed a strong background in climate tech and was having success investing in areas where some other VC firms were reluctant to go, according to González.
Pure software companies in the climate tech field have found raising capital to scale up relatively easily, being popular with both climate tech-focused funds and generalist funds alike. But those with a hardware component to the business, which often require more investment and more time to develop a working product, tend to find fundraising more of a struggle.
“Many VCs are reluctant to invest in hardware-enabled companies, but we at Seaya Andromeda are keen to do so and have the track record to keep doing it,” González told Impact Investor.
“Hardware-enabled” firms in which Seaya has invested include UK-based waste management startup Recycleye, which uses an AI-driven robot to sort recyclable waste, and Barcelona-based EV charging firm Wallbox, which now trades on the New York Stock Exchange.
Seaya has also had success in the more liquid software-based sector with investments in firms such as sustainability analysis provider Clarity.ai, offshore wind intelligence firm Aegir Insights and Madrid-based digital solar tech firm RatedPower, which was sold to Enverus.
Other climate-tech investments made by Seaya include Spanish-based 011h, a green construction firm which aims to cut building-site CO2 emissions by 75%, and US-based Pachama, a verifier of the carbon credit quality and developer of new carbon credit projects, whose clients include Amazon and Microsoft. The company was also an investor in soil analysis firm Biome Makers.
Gonzalez said investments in firms that require costly new physical plants to be built for industrial production – so-called first-of-a-kind facilities – along with higher-risk “moonshots” based on still-to-be-proven technologies remained at the more challenging end of the spectrum for VCs, compared to the software and hardware-enabled investment categories.
She said investment in all four types of companies was crucial to tackle climate change, but that this needed more than just VC capital, requiring “other parts of the capital stack, such as project finance, corporate offtake agreements, bank debt, and even grants”.
Reasons for optimism
While acknowledging that VC investment in climate tech in Europe had fallen since its peak in 2021, González stressed the decline was lower than that in the broader venture capital sector overall and that she was optimistic about the outlook.
“Not only are investors very interested in climate tech, we are also seeing top talent choosing to launch climate tech companies. This combination of talent and funding is very promising for the future of European climate tech,” she said.
Political moves to deprioritise climate change initiatives in the face of short-term economic challenges in some parts of the continent were a worry, but other factors may offset the impact of this.
“We believe this headwind will be mitigated by the geopolitical need for Europe to become independent in energy and industry and not depend on volatile supply chains and trade agreements. This view is held across the political spectrum, so we expect continued support to achieve this independence and therefore an indirect boost to climate tech sectors,” González said.
