The Climate Fund launched its investment operations in April 2021, and the growth of our investments has been helped along by a number of Finnish private equity investors. Growth companies that offer climate technologies and digital climate solutions play a key role in the efforts to achieve carbon-neutrality. Cooperation will remain key for accelerating the scale-up of climate solutions in the future as well.
The Climate Fund participates in investments where we identify a financial bottleneck, the solving of which will enable, for example, the emissions reduction potential or other climate impact to be realised earlier or in a wider scope.
Since April 2021, we have announced nine investment decisions amounting to a total of 63.8 million euros, and our target for this year is to reach an investment decision volume of 80 million euros. Capital loan has been our primary instrument, and we have also invested in one fund.
We always invest in a minority role, together with private equity investors and other co-investors. Continuous dealflow cooperation with private equity investors is an important aspect of our work. Among other things, we have agreed on practical dealflow distribution with a few funds every 8–12 weeks or so. We also seek to offer the recipients of our financing with other support alongside funding, such as help with the assessment and calculation of emissions reduction potential. We hope that we will increase the credibility of our portfolio companies in the field of climate impact and thus promote their access to further financing.
Our financing criteria emphasise the impact of our investments, such as emissions reduction potential or compliance with the DNSH principle. The investments must have a geographic link to Finland. We invest in domestic and international projects and joint ventures of Finnish companies or companies registered in Finland – or in the projects of international players that focus on Finland.
Concise descriptions of three investment decisions are provided below: Solar Foods as an example of a plant investment, Betolar of digital solution scale-up, and Taaleri Bioindustry I of a fund investment.
Case: Solar Foods
The Climate Fund’s first investment was made in April 2021 in Finnish growth company Solar Foods, which produces low-emission protein. The EUR 10 million capital loan from the Climate Fund will be mostly allocated to the construction of a demonstration plant in Vantaa. When completed in 2023, the factory is meant to be the world’s first commercial plant producing protein from water and carbon dioxide from the atmosphere. In terms of climate impact, Solar Foods’ solution has immense emissions reduction potential – as much as 90% compared to meat production and 80% compared to the production of plant-based protein.
The demonstration plant is intended to confirm the viability of the solution on a commercial scale. This development stage requires significant investments, which still involve risks. By participating in the financing package, the Climate Fund enabled the earlier implementation of Solar Foods’ plant investment and thus a quicker path to emissions reductions.
Solar Foods’ investor base includes Finnish Venture Capital Association members Lifeline Ventures and Voima Ventures.
Case: Betolar
The Climate Fund made an investment decision to grant a EUR 7 million capital loan to Betolar in connection with the company’s listing. Betolar’s solution focuses on enabling the replacement of concrete with various industrial side streams in cement production. In addition to emission reductions, this will help solve the global waste problem and reduce the consumption of virgin natural resources.
The innovation in Betolar’s solution lies in making these cement-replacing side streams, other raw materials and the recipes for combining them available on a digital marketplace platform. Only a fraction of the cumulative emissions reductions could be achieved in the same time span without doing business on the platform. The Climate Fund’s capital loan is thus allocated specifically to the commercialisation of the digital platform.
Before its listing, Betolar’s investors included Finnish Venture Capital Association members Voima Ventures and Taaleri. Keskinäinen Eläkevakuutusyhtiö Ilmarinen, Voima Ventures and Danske Invest Finnish Equity Fund also joined in after the listing.
Case: Taaleri Bioindustry I fund
The Climate Fund made its first fund investment of 15 million euros into the Taaleri Bioindustry I fund. The fund is one of Finland’s first private equity funds to be classified as dark green, that is, funds under Article 9 of the EU’s Sustainable Finance Disclosure Regulation. The fund only makes sustainable investments in projects that, for example, contribute substantially to climate change mitigation.
According to its strategy, the Climate Fund may consider participation in special investment funds if a type of fund in alignment with the Climate Fund’s goals is being brought to market and the impact is realised, for example, on a significantly larger scale or earlier than it would without the participation of the Climate Fund. Such funds and instruments can include special investment funds set up to solve a specific challenge related to the climate or environment, whose primary goal is to achieve significant emission reductions or other environmental impact.
From the Climate Fund’s perspective, the Taaleri Bioindustry Fund combines these criteria for participation. Our investment into the Bioindustry Fund provides a way to provide needed financing for sustainable investments into the bioeconomy and circular economy, for example by catalysing private investors into joining. The Climate Fund’s participation as an anchor investor helps with setting up the fund and thus supports the development of the Finnish bioindustry. As a dark green fund, Taaleri’s fund is also very well aligned with our own mission of combating climate change, and the climate and environmental impact of the investment targets will be assessed carefully in accordance with our preconditions.
In addition to the private equity investors mentioned in these example cases, investors such as Loudspring and a number of other important partners have contributed to enabling the growth of the companies in our portfolio.
Climate work requires investment – let’s keep making them together.
