Planet A raises EUR 160m for debut greentech fund

The vehicle surpassed its EUR 100m target, Fridtjof Detzner, partner and co-founder at Planet A, told Unquote. It held a first close on EUR 26m in October 2021 and held its final close in January 2023, he added.

YPOG provided legal advice on fund structuring.

The firm’s strategy will give “veto power” to science in its investment decisions, meaning that it can reject investments where there is no significant positive impact.

“It struck me that we were often deploying green tech capital where we did not know the actual outcome of them in the space,” Detzner said. “We are in a time where we need to be specific about the deals that we fund – once they get to scale we need to understand what they will look like.”

This approach means that the science behind any potential investment is as important to the VC as other typical business aspects, Detzner said, meaning that it only acts on deals where both aspects make sense. “Our three-person science team works alongside our three investment partners, and we have the normal VC lens of trying to find the best teams and companies, analysing the IP,” he said. “But we also need evidence that the tech and ideas will make the difference they say they will make.”

The VC’s science team produces and publishes a lifecycle assessment to analyse the impact and scalability of each company. “Our lifecycle assessment helps our portfolio companies on different levels,” Detzner noted. “Some are able to win huge deals with corporates, and the evidence we provide helps them to get to the next funding round, get the best talent, and to lobby and push for regulatory change.”

The VC’s in-house science team considers climate change mitigation factors, as well as biodiversity protection, resource savings and waste reduction. “We tend to just focus on climate, but this is not the only crisis we are facing at the moment,” Detzner said. “We use the planetary boundaries model from the Stockholm Institute, which means we identify issues including loss in biodiversity, land use change, and loss of freshwater reserves. This model allows us to understand the effect of new technologies on a bigger scale.”

Although the vehicle is an Article 9 fund under the EU SFDR, the VC typically refers to its strategy as “greentech” as opposed to “impact”. “Greentech includes green technologies and nature-based solutions, which all need to come together,” Detzner said. “We are in an ‘all hands on deck’ situation – we need tighter regulation, political accountability, activism and corporate investment, alongside startup founders who are working on new technologies. It makes sense to build up our internal knowledge to judge whether a company really is part of the solution.”

In addition to Detzner, Planet A’s founding team comprises investors and business angels Tobias Seikel and Nick de la Forge, entrepreneur Christian Schad, Tomorrow Bank co-founder Christoph Gras, and climate and biodiversity expert Lena Thiede.

Investors
The fund has attracted commitments from a range of corporates, institutional investors and institutional investors. These include BMW, KfW Capital, REWE and Danish investment fund Vaekstfonden/EIFO, according to the press release. Entrepreneurs including Trivago’s Rolf Schrömgens, HelloFresh’s Maximilian Backhaus and Zalando’s Rubin Ritter have also backed the fund.

“We were lucky in that the change that we are bringing to the industry opened a lot of doors for us – putting science first and giving it a veto right meant that people saw that we were doing something different, and a lot of LPs want to learn how we do our lifecycle and impact assessments,” Detzner said. “So we’ve been able to raise an oversubscribed fund in really difficult times.”

Investments
The fund will invest in software and hardware companies, investing initial tickets of EUR 500,000-EUR 3m. Planet A will typically invest at seed or pre-seed stage for software companies and at Series A for hardware, Detzner said.

The VC also invests in companies with hybrid software and hardware models, he noted. These include Carbon Re, a software platform that aims to reduce energy consumption and carbon emissions in industries including cement, steel and chemicals by producing models for plant operators and engineers. He also cited C1, a business that is developing a catalysis model via computing and quantum chemistry to mass-produce green methanol for use in the shipping and chemicals industries.

One third of its capital will be used for initial investments, with two-thirds reserved for follow-on rounds, Detzner said. The VC invests alongside greentech and generalist VCs, with whom it can share its lifecycle assessments and due diligence, he added.

The firm has invested in 14 green-tech startups to date and expects to back 30 in total from the fund, with its next investments planned over the next two to three years, Detzner said.

As its portfolio companies grow, Planet A expects that they will be able to access further funding. “Most of the funding gaps that we see are actually later on, in the scale-up phase, like building factories,” Detzner said. “Lots of our companies are getting into government funding programmes and banking as they grow, including Traceless Materials, which is working on creating a bigger facility and has got debt financing to do this.”

Although the VC is in the early stages of its portfolio development, it will consider a range of options for exits, Detzner said. This will include sales to corporates looking to acquire new green technology, he said.

People
Planet A – Fridtjof Detzner, Tobias Seikel, Nick de la Forge, Christian Schad, Christoph Gras, Lena Thiede (co-founders).

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