In a significant development in the European climate tech sector, Climentum Capital has successfully raised €60 million in its first closing round for its second fund, aimed at supporting early-stage startups. The initiative is substantially backed by the European Investment Fund (EIF), Denmark’s Export and Investment Fund (EIFO), and the Danish Society of Engineers (IDA). With this funding, Climentum Capital plans to invest in businesses engaged in developing innovative climate technologies across Europe, addressing both environmental and industrial challenges.
In previous updates, Climentum Capital’s first fund, which was also set at €60 million, laid the groundwork for their current expansion into a second, larger fund targeting up to €100 million. Past experiences have indicated that investing in hard tech and deep tech within the climate space requires not only specialized knowledge but also continued financial backing to foster successful outcomes. The firm’s prior focus countries include Denmark, Sweden, and Germany, which will continue to play a pivotal role.
What Challenges Does Climate Tech Funding Face?
The route to raising capital for early-stage climate hard tech companies remains fraught with difficulties, as General Partner Morten Halborg notes. The selectivity of investors has heightened, with timelines extending and the threshold for proof rising. This landscape demands a strategic composition of investors, with Climentum Capital’s fund reflecting considered decisions rather than opportunistic investments. The investment strategy emphasizes Seed and Series A companies engaged in energy, industrial, transport, and agricultural innovations.
How Will Fund II Impact Climate Goals?
Climentum Capital’s second fund commits to significant climate impact objectives, targeting a reduction of approximately 1.5 million tonnes of CO₂ annually once fully operational. These reductions equate to emissions from around 350,000 gasoline cars in a year, underscoring the fund’s potential in driving substantial environmental benefits. The EIFO’s participation underscores the aim to accelerate the green transition while bolstering Europe’s energy independence. The fund targets specific geographical areas, including Denmark, Sweden, Germany, Austria, and Switzerland, where industrial transformation is crucial.
According to Merete Clausen, EIF Deputy Chief Executive, Europe is home to excellent research and innovation, yet it requires key investors to realize impactful industrial technologies. The second fund addresses a significant financial gap by supporting ventures set to contribute to Europe’s clean growth through deep tech solutions. The synergy between EIF’s vision and Climentum’s objectives could enable robust development and deployment of climate technologies.
As reiterated by EIFO’s Chief Investment Officer Erik Balck Sørensen, investing in Climentum Capital Fund II is crucial to scaling underfunded yet essential climate technologies. This aligns with the broader strategy to enhance regional strategic autonomy and meet ambitious climate targets. Such cooperation serves to boost a resilient investment ecosystem in Europe, paving the way for sustainable industrial advancements.
The Danish Society of Engineers (IDA) aims to overcome capital constraints that hinder European climate-tech entrepreneurs. Their commitment hopes to lead by example, encouraging additional sectors to invest in competitive technological developments propelled by Danish innovation and talent. This unusual move by a professional association underscores a broader call to actionable investment in climate solutions.
With backing from the RCR-REPowerEU mandate, the EIF’s contribution to Climentum Capital Fund II progresses the EU’s ambition to be climate-neutral by 2050. This investment not only aims to decrease dependency on fossil fuel imports but also complements existing sustainability incentives across Europe, promising significant advancements in regional climate resilience.
