“I’m convinced the next 1000 unicorns will be green tech companies in the broadest sense.”
(Photo: Better Ventures)
Frankfurt The venture capital market has come under pressure with rising interest rates and the collapse of the Silicon Valley Bank (SVB). Start-up valuations are falling, investments are becoming scarcer and new venture capital funds are taking longer to set up.
However, this apparently does not apply to the area of sustainable investments, says Tina Dreimann, co-founder of the investor club Better Ventures. “Today, investors can almost choose strong start-up teams in sought-after impact fields because almost every financier wants to invest in impact.”
In fact, the demand is high: the impact investing market in Germany has experienced a large increase in investors and volumes, according to the Federal Initiative Impact Investing in its market study for 2022.
Industry observers consider sustainable investments to be crisis-proof because several trillions of dollars will be invested worldwide in the coming years to achieve the climate goals, for example as part of the US Inflation Reduction Act or the EU Green Deal.
Areas for impact investments include, for example, renewable energies, the circular economy, alternative food production or bio-substitutes for plastics. The co-founder of Better Ventures believes that consumer issues are no longer so popular at the moment. According to industry observers, delivery services and B2C platforms had peaked during the pandemic years.
The start-up Ecoplanet, a B2B energy manager, has now successfully collected 2.6 million euros from the network in a financing round. The financing was led by venture capitalist HV Capital. Investors like Gerhard Cromme, former chairman of the supervisory board of Siemens, were involved.
Areas for impact investments include, for example, renewable energies, the circular economy, alternative food production or bio-substitutes for plastics.
(Photo: AP)
By using smart meter data generated by digital measuring devices, Ecoplanet helps medium-sized industrial companies to save costs and achieve their sustainability goals. And the solar service provider Infravoltaic has, according to Better Ventures, in an early So-called pre-seed financing of over one million euros was collected during the company phase.
“I’m convinced that the next 1000 unicorns will be green tech companies in the broadest sense,” said Dreimann in an interview with the Handelsblatt.
Industry hopes for returns similar to those in the classic venture capital business – but uniform standards are still missing
According to manager Dreimann, Better Ventures now includes over 60 entrepreneurs who each provide capital for at least five years. So far, the club members have reserved far more than 50 million euros for investments. On average, one to two investments are made per month.
>> Read here: What investors can learn from professionals about sustainable investments
The members of the club are not philanthropists who would forego a reasonable return on their capital. They want to achieve similarly high returns as traditional venture capitalists. In the venture capital industry, double-digit returns on funds have been common up to now.
Analyzes by the federal Impact Investing initiative show that investors expect sustainable investments to perform no worse than traditional equity funds.
The sponsors of the initiative are the Bertelsmann Foundation, the BMW Foundation Herbert Quandt, the Association of German Foundations and the impact consultancy Phineo.
There are still no uniform standards for measuring the impact of impact investments.
(Photo: dpa)
Danger of greenwashing – financiers see themselves as responsible
Impact investments have become a hot topic, says Tina Dreimann. There is therefore a risk that the term will be misused. You have to be careful that the success of the impact idea is not endangered by the boom – similar to greenwashing with green mutual funds.
“That’s why I like Spider-Man’s line: ‘With great power comes great responsibility”,” says Dreimann. As the inflow of funds grows, so does the responsibility of money managers to actually make an impact on society. High demand harbors the risk that dubious providers will be called into action. In addition, there are still no uniform standards for measuring the impact of investments.
Investors’ club invests an average of 250,000 euros in the early start-up phase
Club members are planning 20 more investments over the next 12 months. In recent months, teams have been supported in the areas of energy and energy efficiency, circular economy, food and agricultural technologies, such as 42Watt (energy consulting), Oxyle (water purification) and Magnotherm (cooling systems).
On average, Better Ventures members invest EUR 250,000 in the early start-up phase. Significantly higher sums were also provided for follow-up investments or if there was strong interest from the club. In addition to capital, the investors also pass on their entrepreneurial experience.
>> Read here: Billion dollar deal for Munich biotech start-up Tubulis
Investments in sustainable business models are among the few bright spots in the European venture capital market. According to new figures from Pitchbook, the transaction value in the first quarter fell by 32 percent compared to the previous quarter to 11.8 billion euros, popular fields for investments such as financial service providers and IT companies came under pressure.
According to Pitchbook, deals in the clean energy sector are increasing because investments are being made in renewable energies worldwide.
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