A new EU cleantech growth investor: Alantra's pan-European energy transition fund Klima joins Cleantech for Europe

Today we’re proud to introduce a new Cleantech for Europe leader: Alantra’s pan-European energy transition fund Klima is looking to invest in B2B scaleups working on decarbonising the energy mix, or applying digitalisation techniques and energy efficiency techniques to heavy industry. Klima is also backed by Spanish industrial Enagas. We spoke to Klima’s Managing Partner Lucille Bonnet about what’s needed to scale the EU’s vibrant early-stage innovation, enabling pan-European success stories, and finding talent in under-developed ecosystems.

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The EU is now a nest of early-stage innovation, but that innovation needs to be scaled up. There aren’t enough independent early growth investors in the market: from Series B onwards, corporate investment is the primary option.

“We’re interested in software and hardware plays and focus on B2B business models” says Lucille. “At the growth stage, pace depends more on the market segment than the technology: it can be slower to sell and integrate a software for grid operations than commercialize an end-to-end battery solution.”

Klima had a first close in May 2021 with €80m commitment, and expects final close mid-2022 to reach a total fund size of €150 to 200m. The early commitment of Enagas and the support of the Alantra asset management platform have been crucial in the fundraising. The fund already has a presence in Spain, France and Germany, and plans to add Nordic representation next year.

Lucille sees good deal pipeline in many parts of the EU. How can we increase involvement from Southern and Eastern Europe? “In Spain, the early-stage financing ecosystem is less mature than in other countries. There is a lot more bootstrapping, so a bottom-up approach is needed. Our strategy is to be in touch with accelerators and incubators, early-stage and corporate funds, but also directly with start-ups, and to connect them to the wider EU ecosystem.”

Lucille’s top three policy wishes:
Change market design to increase the impact of the carbon price: there are solutions in development which could have a much greater impact with a stronger framework and more appropriate pricing.
Make the EU taxonomy more flexible: an investment Klima is evaluating has great potential to contribute to energy sector decarbonisation, but the solution is not eligible for taxonomy inclusion. “We will make the investment anyway, because it has a great positive impact on the energy transition, and hope for the taxonomy to catch up. Otherwise we may end up being penalised in terms of fundraising.”
Harmonise tax rules and regulatory frameworks across the EU: a general, EU-wide tax framework would make cross-border scaling much easier for startups. And, specific to the energy sector, harmonising regulation in the different energy markets: “with the current situation it’s difficult to see an EU grid storage leader emerging, because of the disparity between different energy systems.”

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