2150 VC Raises $312M for Sustainable City Development

European VC Firm 2150 Closes $312 Million Fund for Urban Climate Tech

In February, the European venture capital firm 2150 initially secured $240 million for its inaugural fund. This fund is dedicated to supporting technologies aimed at reducing carbon emissions within urban centers, which are significant contributors to CO2 output during development and expansion.

Increased Investor Appetite and Final Fund Closure

The ‘Urban Sustainability Technology Fund’ has now finalized its fundraising efforts, reaching a total of $312 million. This demonstrates a growing interest among Limited Partners (LPs) in investments focused on sustainability solutions. The fund experienced a 33% oversubscription, indicating strong demand.

New Investors Join the Fund

The investor base now includes prominent institutions such as Credit Suisse, a client represented by AIMS Imprint of Goldman Sachs Asset Management, Nysnø – the Norwegian sovereign climate investment company – the BMW Foundation, and Woven Capital, the investment division of Toyota’s Woven Planet Group.

Focus on the Built Environment

2150 prioritizes the built environment, recognizing that urban development will continue despite the escalating Climate Crisis. Therefore, technologies that can mitigate or even reverse CO2 emissions resulting from this development are crucial.

Portfolio Investments and Impact

Since its launch, 2150 has invested in companies like CarbonCure Technologies, which reduces the carbon footprint of concrete production. These investments have enabled the fund to report that the total footprint of real estate developed, constructed, or managed by its investor network has more than tripled, reaching 430 million square feet.

Expanding Investment Scope

This represents an area 25 times larger than Canary Wharf in London. Further investments include Normative, a company tracking supply chain carbon footprints, which recently secured €10 million in funding with participation from 2150.

Additional Portfolio Companies

Other portfolio companies include Aeroseal, which utilizes a sealant to enhance the energy efficiency of air ducts and building envelopes, and Nodes & Links, offering a software platform to streamline infrastructure projects and conserve energy. Nodes & Links recently raised $11 million in Series A funding.

Potential for Significant CO2 Mitigation

Ampd Energy, a company decarbonizing construction sites with battery-powered generators, is also part of the 2150 portfolio. The firm estimates its current portfolio has the potential to mitigate over 1.6 Gigatonnes of CO2, exceeding the combined annual emissions of Germany, the UK, and France.

Scaling Impact and Addressing Climate Change

Considering global CO2 emissions currently stand at 51 Gigatonnes annually, achieving reductions of 18 to 32 Gigatonnes is essential to limit warming to 1.5 degrees Celsius. Scaling investments like those made by 2150 could contribute significantly to alleviating the most severe effects of Climate Change.

Re-evaluating Green Growth Theories

Success in this area might prompt a re-evaluation of theories suggesting that ‘Green Growth’ is unattainable, as proposed by thinkers like George Monbiot.

Vision for Urban Transformation

Christian Jølck, Partner and co-founder at 2150, stated: “Our goal at 2150 is to be a major contributor to achieving the goals of The Paris Agreement, with a specific focus on the urban environment, which accounts for 70% of GHG emissions. We aim to be both an investor and a catalyst for urban transformation through our platform and strategic partnerships.”

Fundraising Success and LP Interest

According to 2150 Partner Christian Hernandez, the fund initially targeted €200 million, but fundraising exceeded expectations. “We raised one of the largest climate tech funds in Europe, attracting substantial investment from entities like Credit Suisse clients of Goldman Sachs and several of the world’s largest sovereign wealth funds,” he explained.

Attracting Large Investors

Hernandez attributes the interest to the fund’s capacity to handle large investments and its focus on the substantial built-world sector. One LP reportedly commented that 2150 offered an “institutional-grade built-world Fund” that complemented their existing investments in energy and food technology.

Future Investment Areas

The fund is now exploring opportunities in heating and cooling technologies, recognizing that cooling demands will increase globally. They are also investigating waste management solutions and sustainable materials, including those derived from nature or synthetic biology.

Critique of Carbon Offsetting

Hernandez also expressed skepticism about the current effectiveness of carbon offsetting, citing price volatility and a lack of transparency. He believes focusing on reducing emissions within the built environment is a more viable approach.

Climate Tech Investment Trends

The 2150 raise occurs within a broader trend of increasing investment in climate technology. While representing 6% of the venture capital market, investment in climate tech startups rose from $418 million in 2013 to $16.3 billion in 2019 – a rate three times faster than investment in artificial intelligence.

Embedding Sustainability into Company Culture

2150 is committed to integrating climate values into its internal operations, conducting its own carbon accounting and offsetting its footprint. Team members have also made individual commitments to sustainable practices.

Commitment to Diversity

The firm has also achieved a ‘Level One’ ranking from Diversity VC, the highest level, and is dedicated to building a diverse team. Further announcements regarding team expansion are expected later this year.

Fund Anchors

2150 is anchored by Northern European real estate private equity platform NREP, as well as Chr. Augustinus Fabrikker, Novo Holdings, and Denmark’s Green Future Fund.