Beyond Black holds first close for Pledge Fund I

Harriet Matthews
02 March 2021

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Venture capital firm Beyond Black has held a first close for Beyond Black Pledge Fund I, its first fund focused on carbon-emission reduction technology.

"Our strategy is to go into this market and make deals, to build a track record, since our previous track record is in digital, not climate tech," Sebastian Heitmann, co-founder at Beyond Black, told Unquote. "We started investing with our own money from 2016 onwards and took the learnings from these, which led us to begin this fund. We began preparing for the fund around February or March 2020, but we launched it officially in October 2020 and started communication about it in January 2021. Pledge I is our first fund on a longer journey."

Berlin-based Beyond Black is led by Yair Reem, Joern-Carlos Kuntze, Sebastian Heitmann and Oliver Schwarzer. Reem has experience in both GP and LP roles, including as a managing director at Hasso Plattner Ventures.

Poellath is providing legal advice for the fundraise.

"Our initial goal was to raise a fund in the €5-6m range, with deals in the €500,000-2m range," said Heitmann. "We now have approximately €20m to invest in this year, but it's not a typical 10-year lifecycle fund and we will not roll these deals over in to the next fund. We expect that we could still add additional capital as there is a lot of demand right now. If there should be any follow-on rounds, it would be a new investment that we would happily do, but it would be a new decision by the LPs to invest again."

Following the first close of Pledge I, Beyond Black intends to launch a larger fund, Heitmann told Unquote. "We will start raising the next fund in Q2 2021, which will have a classic 10-year lifetime and hence more capital. Our overall goal is to mobilise institutional capital to come into the sector, which has potential for great innovations and great returns."

The firm is aware that institutional investment in such topics is currently not widespread, but hopes to change this, said Heitmann. "Institutional investors would probably want to see some exits first before committing. But we have been in contact with some who think it is an interesting market and want to learn more."

Asked about the returns that the firm is targeting, Heitmann said: "We would expect a standard 3x money multiple in returns; we are not looking to be a charity or philanthropic organisation. We want to show the financial industry that climate tech can generate venture returns in the years to come. We are aiming to pave the way for bigger funds."

Investors
"We are pretty much exclusively backed by families and private individuals, including successful entrepreneurs," said Heitmann. "It's very much DACH-centred at the moment, but we have some British and Swedish individuals, too." Beyond Black's founding team have also contributed to the fund's €20m total volume.

Investments
"We focus exclusively on technology that can significantly decrease carbon emissions. It's an impact-first fund and we have specific criteria – for example, the technology needs to be able to reduce UK emissions annually by roughly 0.5 gigatons," said Heitmann.

This focus covers a wide range of sectors and topics, he added. "The technologies in which we invest focus on energy production and storage, novel food and agriculture, advanced building materials (green steel, ammonia and cement), the mobility space, and also smart cities and smart buildings. Those are the most emitting industries, and more or less in that order."

"In addition, the fund will make investments in carbon capture, storage and draw-down technology that aims to remove carbon from current emissions. These can be used across all industries, and can be used, for example, in creating fizzy drinks, as well as biotar, and for granular use in thermoplastics," said Heitmann. "Those are carbon-negative processes, to reduce carbon from the atmosphere and the normal carbon cycle."

The fund will make investments in the €500,000-3m range and intends to make 8-10 investments in its one-year investment period. The fund has made two investments and expects to close its third and fourth deals in the coming weeks.

"We are looking primarily at companies based in Europe, but we can be opportunistic, we are looking at some US deals, too," Heitmann said when asked about the fund's geographical focus. "It's often easier to see if they fulfil the impact criteria if they are a little closer to home. The UK and the EU have some great schemes – there is a lot of public money in the area already – so there is a strong tailwind."

"We are happy to take the lead but we will always look to syndicate and look for partners – we are looking for diverse and complementary skill sets," he added. The fund's investments include France-based biomass business Bloom Biorenweables, which raised a €3.9m seed round in February 2021, led by Bill Gates' Breakthrough Energy.

People
Beyond Black – Yair Reem, Joern-Carlos Kuntze, Sebastian Heitmann, Oliver Schwarzer (co-founders).