CEFC-backed Virescent Ventures entrenches position as Australia’s largest specialist climate tech VC

CEFC-backed Virescent Ventures entrenches position as Australia’s largest specialist climate tech VC

Australia’s pioneer climate tech VC Virescent Ventures today confirmed its specialist portfolio is over $260 million, having backed 33 innovative climate tech businesses and funds/incubators.

The breadth and size of the portfolio reinforces Virescent Ventures’ leadership position in driving critical new investment in a diverse range of Australian businesses who are set to play a key role in the achievement of Australia’s net zero ambitions.

Virescent Ventures was established by the Clean Energy Finance Corporation (CEFC) in 2022 to manage its specialist early stage climate tech portfolio (initially comprising the Clean Energy Innovation Fund Fund I).

With the backing of the CEFC, Virescent Ventures is looking to raise a new fund (Fund II) targeting c. $200 million to further catalyse private sector investment in Australian climate tech opportunities, with a particular focus on sophisticated/wholesale investors. The new fund is expected to be corner-stoned by the CEFC and continue a similar investment mandate.

The goal of Fund II is to deploy a further $200 million or more into climate technologies over the next five years, with an investment strategy that focuses on four key thematics aimed at addressing global climate transition and decarbonisation challenges.

At 23 January 2024, the Virescent Ventures’ managed CEFC portfolio included commitments across these thematics to:

  1. Clean energy transition (with ~$115 million, 44 percent of the portfolio)
  2. Food and agriculture (~$28 million, 11 percent)
  3. Circular economy and industry (~$53 million, 20 percent)
  4. Mobility and smart cities (~$48 million, 18 percent)

The remaining ~7 percent of the portfolio (~$18 million) includes exposure to specialist seed funds and incubators.

The sub sectors, technologies, and processes underpinning these four thematics span a broad spectrum of software and hardware, infrastructure, chemical-industrial processes, and biologicals, across the following priority focus areas:

  1. Decarbonising Transport: 20 percent of committed capital, across JET Charge, MicroTau, Carbon Revolution, Zoomo, OmniTanker, and SEA Electric
  2. Decarbonising electricity generation: 21 percent across Sunman, Relectrify, Sundrive Solar, and Redback
  3. Decarbonising sustainable food and agriculture: 11 percent across Loam Bio, Agriwebb, All G Foods, and Downforce Technologies
  4. Enabling technologies including industrial IoT and energy efficiency: 9 percent into companies such as Morse Micro, Thinxtra and Powour
  5. Decentralised grid management: 8 percent across Gridcog, WattWatchers, GreenSync and Zen Ecosystems
  6. Green hydrogen: 15 percent across Hysata and Hydgene.
  7. Circular economy: 5 percent in Samsara Eco, Renewable Metals, and WorkbenchX
  8. Resources: 5 percent in Novalith and SoNiA Green Tech

One of the recent investments was $2.6 million in battery recycling startup Renewable Metals, supporting the scaling and commercialising of its lithium-ion battery recycling technology.  The proceeds will be used to establish a pilot plant in Perth, WA, bring forward the construction of a larger scale demonstration plant with the capacity to recycle up to 1,5000 tonnes of battery waste per year, and expand the team as the company builds a recycling industry in Australia and establishes a global presence.

Virescent Ventures believes the burgeoning Australian climate tech industry provides investors with one of the most attractive sectors from which to achieve outsized returns and portfolio alpha.

Virescent Ventures’ focus has been on Series A or seed stages (with just a few late stage investments). The Virescent Ventures active investment philosophy can add significant value to founders and teams by helping them grow and scale their solutions.

Kristin Vaughan, Managing Partner of Virescent Ventures, said, “Ben Gust, Blair Pritchard, and I are very proud to have built such a robust and high-performing portfolio after actively investing in climate tech together as Partners for almost six years.

“We are also proud of our heritage with the CEFC and appreciative of the continued support and investment from one of the world’s largest ‘green banks’. It has played an important role in advocating for, and catalysing investment into, climate transition and decarbonisation solutions. Our combined depth of experience and talent in climate tech, combined with the 140+ experts within the CEFC, is an important and unique advantage.

“We are also particularly excited to work towards doubling the size of this portfolio with the support of additional local and global institutional and private investors into our upcoming Fund II. The valuations within our current portfolio remain resilient, with portfolio companies continuing to grow and outperform through difficult market conditions. This validates our investment strategy and belief that climate tech VC is a commercially attractive alternative investment.”

The CEFC has a minority shareholding in Virescent, with CEO Ian Learmonth leading as non-executive director and Investment Committee member.

CEFC CEO Ian Learmonth said, “The climate tech sector has enormous potential to accelerate the transition to net zero. With no single solution to the complex challenge of economy-wide decarbonisation, the diverse range of sectors covered by CEFC climate tech investments will be critical in our race to net zero. Homegrown innovators can also help Australia capitalise on the sustainable economy of the future.

“The Virescent Ventures team has an outstanding track record developing and managing an exciting portfolio of climate tech companies. We look forward to continuing to work with them as they pursue their first close and bring much-needed capital and expertise to the sector.”