Women in PE: Earth Capital's Bezuidenhoudt and Hockley on 2024 fund launch progress and co-investment pipeline

Its co-investment syndicate strategy alongside family offices remains a priority for the next 12 months, as the firm seeks to build a strong portfolio and establish relationships with current investors ahead of launching its next fund.

The GP expects to launch a new fund in autumn 2024, said Bezuidenhoudt. The fund is likely to raise between GBP 60m-GBP 75m and will target technology growth companies to accelerate the transition to Net Zero and mitigate climate change effects, as reported.

The new vehicle will hone the GP's current investment strategy, which is focused on co-investments across the energy, food and water sectors. The sustainable investing specialist is currently planning to make three more deals this year, on the back of its investment in aquaculture technology company Ace Aquatec in June. It has another two deals currently at more advanced stages and a good pipeline for the rest of the year, she said.

Ideal targets are early-growth stage companies with GBP 1m-plus turnover in the UK and across Europe. 

The firm typically collects GBP 1m in commitments per deal from its cornerstone partner family office and deploys GBP 5m per deal for the first round, with additional contributions from its network of family offices. It usually deploys GBP 10m-GBP 15m in total over two to three financing rounds with a time horizon of three to five years.

Supporting sustainable growth
"Early-stage growth is our sweet spot because it signals the acceleration point for businesses, where we know there's a product and a market already and we join in to add real value and expertise to help them scale," Bezuidenhoudt said, noting that the firm typically contemplates an exit after a three to five year investment period. "It's also a great area for investment that is often overlooked because the majority of VCs and PEs dominate the early stage and mid-market areas respectively but companies need to navigate the difficulties of this early growth stage if they are to be successful in the long term, she added.

The approach is well-received by family offices, which can access bigger deals with small contributions, said chief operating officer and head of investor relations Elise Hockley. Earth Capital's investment team typically takes a seat on the board of its portfolio companies, allowing its LPs to be closely involved with the syndicated investments, she said.

"We have a level of influence and partnership with our investments, so are able to offer more value-add to our investors than simply the quarterly reporting they may otherwise get from investee companies," said Hockley.

The firm is also supporting the sustainability development of its portfolio and measures its sustainability impact through its proprietary Earth Dividend™ tool, which provides a holistic overview of an investment's contribution to sustainable development, while taking into consideration the commercial value.

"Although we have focused more thematically on the environmental side, we also cover all aspects of ESG not only in our companies, but along their supply chains as well," said Bezuidenhoudt, noting that a well-managed company that considers environmental factors is likely to be more valuable in the long term.

Diverse teams
With women taking up key leadership roles internally in the firm and having gender parity at its board level, Earth Capital is committed to promoting gender diversity across its portfolio companies.

The firm is a signatory of the UK government's Women in Finance Charter Treasury and Investing in Women Code, and is also a member of the non-profit organization 100 Women In Finance. Less formally, the firm is also involved in several other initiatives that promote gender diversity, such as the Global Women in VC community.

"I hope to see more change in the industry with more women at board level, leading investment teams and in senior management," said Hockley, citing several academic and market surveys, including a Harvard Business Review VC study Finally, Evidence That Diversity Improves Financial Performance (hbr.org), outlining the benefits of gender-diverse teams in investments and results overall.

[Editor's note: The article has been amended to clarify that ideal targets for Earth Capital are in UK and across Europe.]

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