Redwheel has partnered with Turquoise to create the Climate Tech Growth Capital fund, a venture fund for UK companies tackling environmental issues through tech and services.
Investment activities in the fund will be managed by Turquoise, which has specialised in climate tech since 2002 in private markets. Redwheel will be the fund manager, focusing on the infrastructure and connectivity of investors and have a portfolio manager with a public markets focus on the investment committee.
Tord Stallvik (pictured), CEO of Redwheel, said: “There is great benefit to be had if you understand both private markets and public markets. There tends to be a real split between private market and public market investors. And we think that gives you a competitive advantage if you can understand both and do it in such a way that there is an integration of that knowledge on both sides.”
See also: – The growth of climate investing in private markets
The strategy will look at investments primarily across energy, transport, mobility, and resource efficiency within clean climate tech companies. Ali Naini, managing director of Turquoise, said while these companies are incentivised early on through tax breaks and government and university support, as they grow, this changes.
“The frustration all of these years has been that the moment a company succeeds, gets the product and gets customer interest, and they have to grow, that’s where the funding seems to dry up for some reason,” Naini said.
“The government stops providing grants, and as for investors, there are not that many funds and the funds that there are, are corporate. A lot of corporate funds have emerged, but they prefer to have someone else lead. There’s a lack of a lead investor acting in the cost revenue growth stage for climate tech companies, and that’s what this is trying to do.”
Naini said previous holdings for Turquoise under the climate tech umbrella include Connected Energy, a company which creates a second life for electric vehicle batteries as energy storage systems; and Advanced Electric Machines, which increases the efficiency of electric motors.
“Earlier stage investing is not something you can do as a tourist. In public markets, you can probably learn a new industry if you put your mind to it relatively quickly. I think in venture, it is all about having been there and having the connections, being able to source transactions, being a firm that entrepreneurs know to go to,” Stallvik said.
“For us to be able to find someone who had been investing in this space, but equally importantly had been operating as an advisor in the space for over 20 years, it just meant that they were in that sweet spot where they can see all that deal flow, where they have all the connections with the people to create this network effect.”
This article first appeared on ESG Clarity’s sister title Portfolio Adviser.
