The latest example is Energy Impact Partners (EIP), an investment firm focused on sustainable energy startups, which announced Thursday the close of its latest flagship fund at more than $1 billion.
Founded in 2015, the firm has made over 75 investments, including those in decarbonization startup Enchanted Rock and Arcadia, which helps enterprises and consumers access clean energy sources.
“Climate tech is now mainstream and the world is starting to realize that climate and ESG is not limited to utilities, energy companies and the automotive industry … it affects everybody,” said Hans Kobler, founder and managing partner of EIP.
The new vehicle aims to advance the global push toward a zero-carbon economy. EIP has more than $2 billion in assets under management across early-stage, venture, growth, credit and infrastructure investments.
“This fund signals a continuation of the climate tech bull market, is visionary and yet highly calculated as climate tech VC delivers five times the average returns and public climate technology companies outperformed the Nasdaq by more than two times this year,” said Svenja Telle, an analyst at PitchBook.
Southern Company, Microsoft, Duke Energy and Xcel Energy contributed to the fund, among others.
It is estimated that existing technologies can reduce up to 65% of emissions needed to reach net-zero by 2050, but we still face a technology gap of 35% to get there, according to a recent Emerging Tech Report by PitchBook. “Venture capital will play a crucial role in this by investing into startups that can scale those technological breakthroughs,” said Telle.
VC investment into the sector through the third quarter topped $30.8 billion across 783 deals, according to the report.
The power grid is an engineering marvel of the 20th century, but recent efforts toward electrification is adding a lot of stress to its aging infrastructure. We need better transmission and distribution infrastructure, smarter buildings, bridge solutions and micro-grids to lay the foundation for the net-zero future, said Kobler.
“While everyone wants to go clean, you need to balance that and ensure it is affordable and reliable … investors that understand this will do well,” said Kobler.
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