Kiko Ventures launches GBP 375m cleantech investment platform

Jamie Vollbracht, Robert Trezona and Arne Morteani co-founded the platform. Vollbracht and Trezona previously worked in the cleantech division of IP Group, while Morteani previously spent 14 years with ETF Partners.

IP Group has previously made investments in cleantech companies including UK-based fuel cell firm Ceres Power, as well as UK-based nuclear fusion developer First Light Fusion.

According to a statement, the firm plans to deploy GBP 200m over the next five years. The platform has a 10-year mandate.

The team felt that now was the right time to launch given the need for investment in the sector, Morteani said. "All three of us have been in the climate tech and cleantech space for 15 years or more and we have seen the need for evergreen money," he said. "The idea has been made popular by people like Sequoia and this is really needed in cleantech. There is an enormous investment opportunity in cleantech and the drivers are becoming stronger – look at the temperatures we are seeing in Europe, and even forest fires in Germany. The urgency has increased and there is unbroken momentum in our part of the market, but valuations are down, so it’s a fantastic time to invest."

The evergreen structure is an advantage of the entrepreneurs that Kiko is looking to partner with, according to Morteani. "From an entrepreneur’s perspective, we are an investor who does not run out of time and money, in the way a traditional fund does," he said.

"Evergreen investors are fundamentally better aligned with entrepreneurs as we don’t have fixed vehicles or mandates. We want to do big and ambitious things that are not fixed to a three to five year time horizon, be it developing a new technology or creating the next giant energy company.”

Investors
The sole backer of the platform is IP Group. "With evergreen money, we are not competing for money from other VCs," Morteani said. "We may even make a handful of fund investments from this structure. We can be an obvious partner to the ecosystem as we are not a competitor."

Investments
The Kiko Ventures platform will generally invest initial tickets of up to GBP 10m, taking stakes of more than 10% with the potential for more follow-on investment. The VC will look at technologies that will make a significant impact on addressing climate change when it comes to its investment decisions.

The VC’s evergreen structure will allow it to make a broad range of deals while keeping a focus on cleantech, Morteani told Unquote. "In an LP fund, you tend to focus on one stage, going broader in the topics you invest in," he said. "But we can go broader on our stages, with a tighter focus on topics. The structure makes a thematic approach easier." The platform will therefore cover seed, Series A and B, and public markets.

The firm has already made several deals that have not yet been announced, Morteani told Unquote. "There is a boom in climate tech so there is an enormous amount of companies out there with extremely capable people tackling the problem," he said.

Asked about the platform’s potential to make fund investments in the cleantech sector, Morteani said that the firm might consider these investments to strategically add to its direct investment activities, strengthening its reach, footprint, dealflow and knowledge. "Our evergreen structure allows us to think about partnerships in a creative way," he added. "We are for example talking to a number of HNW individuals that we could partner with, too."

When it comes to exits, the structure will also afford the VC the flexibility to "do the right thing at the right time", Vollbracht said. "Let’s say over the next two to three years, the optimisation of renewable energy assets becomes huge. This could involve software, autonomous robots, or business models operating those sites on behalf of other parties, and this might require a different funding structure and might require investing in different countries. If we had a 10-year locked-in mandate with a specified cheque size, we couldn’t iterate and change direction where opportunities arise, which is especially important in a volatile market."

While evergreen structures are sometimes associated with facilitating longer holding periods, this is not a requirement of the structure, Vollbracht noted, citing the example of previous IP Group investment Dukosi, a battery developer that the firm held for four years before selling it to New York-based investment firm KCK.

"Corporates have become very significant acquirers in this space as they look to decarbonise their operations," he added. "In the short-term, public markets are challenging, but they will open up again. There are a range of opportunities out there for exits.”

People
Kiko Ventures – Jamie Vollbracht, Robert Trezona, Arne Morteani (co-founders).

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