ADIA, APG, Microsoft back EIP’s new European VC fund to fight climate change

Energy Impact Partners – the world’s 13th biggest impact fund manager – has closed a European fund on €390m with commitments from APG, the Abu Dhabi Investment Authority and Microsoft.

Energy Impact Partners has closed its first European venture fund on €390 million, drawing commitments from a handful of classic institutional investors as well as the fount of strategic capital it typically raises from.

The climate-focused venture firm is the world’s 13th biggest impact fund manager, having raised nearly $2 billion over the past five years, not including EIP Europe’s €390 million.

The new fund will invest in “innovative technologies which have the potential to drive the transition towards net zero” emissions of greenhouse gasses, EIP said in a statement.

Matthias Dill, Naso Moosa, Hans Kobler, Energy Impact Partners
Matthias Dill, Naso Moosa, Hans Kobler, Energy Impact Partners

“Europe is leading in the energy transition and is a key market on the road to net zero where we are seeing thousands of investable opportunities,” Hans Kobler, EIP founder and CEO, said in the statement.

EIP has a notable investment model, which involves its corporate LPs advising on potential deals. “We think of them as a GLG [a market data company] on steroids,” said EIP Europe’s chief executive Matthias Dill. “They’re a large group of experts we can tap into. We needed the leading European energy and industrial companies because they know the local markets.”

Among EIP Europe’s LPs are several corporate heavyweights, such as the Microsoft Climate Innovation Fund, Shell Ventures, Électricité de France (EDF) Group’s Pulse Ventures, Japanese electric company Chubu and German electric company EWE. These investors have a strategic as well as financial interest in the fund.

“EWE is engaged with EIP to learn from the best, partner with start-ups and collaborate with other industrial investors for the benefit of our customers,” said EWE’s chief technical officer, Urban Keussen, in a statement.

EIP co-managing partner Nazo Moosa told Reuters, “These incumbents are the ones that own the critical infrastructure, and if we want those to decarbonize, we have to work with them.”

But EIP is now starting to draw pure-play financial investors, too. Dutch pension fund APG is an LP in the new fund, as are the Abu Dhabi Investment Authority, Norway’s Nysnø Climate Investments and another unnamed sovereign wealth fund.

“Financial investors don’t have the same role that the industrials have,” said Dill. “They’re in it for the outsized returns. They’ve realized that climate technology start-ups are the asset class where they’ll find the best risk-adjusted returns. And they appreciate our research and see us as a source of insights into trends in this space.”

Staying local

EIP plans to maintain its separate US and European strategies for the foreseeable future, Dill told affiliate publication New Private Markets. “Dealmaking is very local. Entrepreneurs want board members that can come to board meetings and not just Zoom meetings. We need to serve them locally.” But EIP’s multiple strategies give the firm an advantage in attracting investees, Dill added. “If a portfolio company wants to expand into the US, we have the footprint to find the right corporates to support them there.”

The European fund is EIP’s seventh. Last year it raised $1 billion for the second vintage of its flagship US-focused venture fund. Investors included Microsoft’s Climate Innovation Fund, FirstEnergy, EDF group and other corporates. Earlier this year, EIP launched the Deep Decarbonization Frontier Fund, targeting $505 million for early stage ventures. EIP is also targeting $120 million for Elevate Future, a climate buyout fund for diverse-founded companies and $150 for Elevate Diversity Impact, a growth vehicle.

Founded in 2015, EIP invests globally across venture, growth, credit, and infrastructure with a team of more than 70 professionals based in its offices in New York, San Francisco, Palm Beach, Washington DC, London and Cologne.

Additional reporting by Lawrence Aragon