Venture capital firm Climentum Capital from Copenhagen has released Climentum Capital Fund II, a new fund for climate tech startups to invest in early stage climate tech solutions in Europe with a focus on minimising greenhouse gas emissions. The fund has raised €60 million (USD 68.4 million) at its initial closing and plans to raise up to €100 million (USD 114 million). The launch is another sign of ongoing investment in climate tech, VC, early-stage startups, industrial decarbonisation, and clean energy, despite the tough fundraising climate.

The new fund under the Article 9 category will fund Seed and Series A startups working on technologies that can further bolster energy security, enhance energy efficiency in industry and speed up the decarbonisation of important industries. Climentum Capital will invest primarily in companies operating in Denmark, Sweden, Germany, Austria and Switzerland. The strategy focuses on promoting innovation in deep technology and hardware across the energy, industry, transport and agriculture sectors, and on bolstering Europe's shift towards a lower carbon economy, in the areas of climate technology, industrial decarbonisation, clean energy, VC and early-stage startups.

Give special attention to ‘High Impact Climate Technologies'.Pay special attention to ‘High Impact Climate Technologies'.

Climentum Capital was established in Copenhagen in 2022 to focus on early stage investments in companies that are working on technologies that can accelerate the transition to a carbon neutral economy for industrial sectors contributing to large portions of the European GHG emissions.

The company will focus on companies that create practical solutions with measurable climate impact, and not only software solutions, with Fund II, the company said. Investment opportunities involve hardware innovations and deep technology solutions that offer improvements to industrial processes, energy systems, transportation and agricultural production systems.

The portfolio companies facilitated through the fund are projected to have a combined market impact of the reduction of approximately 1.5 million tonnes of CO2 emissions per year if deployed on a large scale, according to Climentum Capital.

Challenging Market for Climate Investment

In the environment of greater economic uncertainty, investors have become more particular about their investments in early-stage climate technology, which has made it more difficult to raise capital for the sector, Climentum Capital said.

Climate hard-tech is facing a tougher fundraising environment with longer investment timeframes and enhanced investor expectations, Climentum Capital General Partner Morten Halborg said during the event.

The investors of Fund II are made up of institutions with experience in investing in climate, which is a sign of confidence, he said, and not of investments winning their momentum.

European Institutions Give Backing Ripe.

The first closing of the fund was led by the European Investment Fund (EIF) of the European Investment Bank (EIB) Group's commitment of €40 million.

There was also support from the export and investment fund (EIFO) from Denmark and the Danish Society of Engineers (IDA) for the fund's investment approach.

Their involvement demonstrates on-going support from the public sector to fund innovative technologies that help achieve Europe's climate and industrial policy goals.

The Funding Gap for Climate Innovation is the issue at hand.The problem is the Funding Gap for Climate Innovation.

One of the main hurdles for industrial climate tech companies is access to early-stage capital, the European Investment Fund said.

Investors willing to invest in companies developing technologies that can help future clean industrial growth are scarce, Europe has strong research capabilities and innovative business ideas, said Merete Clausen, Deputy Chief Executive at EIF.

She noted that Climentum Capital Fund II fills a crucial financing need for entrepreneurs developing solutions in the real economy to fight climate change.

Playing a role in the Decarbonisation Goals of Europe

The launch of Fund II follows a European approach that strongly focuses on investments that improve energy resilience and will cut out emissions in hard-to-abate sectors.

Industrial processes, transport, agriculture and energy production are still important sources of GHGs in Europe. Technologies that can enhance efficiency, reduce fossil fuel use and make the production cleaner are thought to be important to meeting regional climate goals.

Climentum Capital focuses on Seed and Series A companies to finance early-stage companies that are in the early stages of developing their innovations but are struggling to secure growth-stage funding.

The company's hardware and/or deep technology focus also signals growing investor demand for scalable solutions which can also provide tangible emissions reductions and economic competitiveness.

Climentum Capital Fund II joins a growing number of climate focused investment funds aiming to support Europe's fledgling clean tech ecosystem; the initial €60 million raised sets the target of €100 million to be raised. The fund is anticipated to support the businesses developing new technologies to tackle industrial emissions, and enhance energy systems and help decarbonise the region in the longer term.