Category Archives: Finance

Rabo’s Food & Agri Innovation Fund

In an interview with CleanTech News, Senior Investment Associate Daniëlla Vellinga outlined the driving forces behind Rabo’s Food & Agri Innovation Fund, their most exciting cleantech projects, and imparted invaluable advice for entrepreneurs in the current climate.
In light of COVID-19, Food and Agri innovation has never been more important. With farmers struggling to recruit labour, and global shipment networks strained, pioneering creative solutions are essential to ensure worker safety, and food security moving forward.

Recognised as an international leader in Food and Agri financing, these issues are at the heart of Rabobank’s operations. Founded by a group of Dutch farmers in the nineteenth century, Rabobank’s unique co-operative structure sets its operations apart from other large financial bodies, with innovation, collective growth, and sustainability firmly at the heart of its agendas.

Founded in 2017, the Rabo Food & Agri Innovation Fund is a crucial part of this. Investing venture capital in high-potential, early-stage Food & Agri companies, the fund complements Rabobank’s wider ‘Banking for Food’ strategy, marking a significant step towards accelerated agricultural improvements. The Food & Agri Innovation Fund invests between EUR 1mand 7 million in equity from Seed to Series B, with a geographic focus on Western Europe, North America and Israel.

“We consider investments anywhere along the Food and Agri value chain, with particular focus on ambitious companies that operate in sectors where we can optimally leverage the bank’s knowledge and expertise, network, and position to help create shareholder value.”

In an interview with CleanTech News, Senior Investment Associate Daniëlla Vellinga told us more.

Motivations
“The mission of the bank is growing a better world together,” Vellinga begins. “Because we’re founded by farmers we really have strong roots within the food and agriculture sectors,” explaining the bank’s longstanding focus in these spaces.

Following the success of their pioneering pitch and pilot platform ‘FoodBytes!’, the fund was created after the bank began to recognise the need for active investment in Agri innovation to accelerate solutions, and support start-up efforts directly.

Backed solely by Rabobank, “the Fund really focuses on food security and making sure we tackle the challenges that the Food and Agri industry is now facing,” Vellinga explains.

This is accomplished through “supporting the start-ups with capital, but also with the wide network and the knowledge that Rabobank has, so to open that up for them and make sure we can help them grow.”

Current Portfolio
When asked about the portfolio developments she is particularly excited about, Vellinga notes two companies in particular; BeeHero and Vence.

“I think all of the companies in our portfolio are exciting, but they’re all very different,” she begins.

“The last investment I worked on was BeeHero… so that’s a really exciting one because you see different things come together. You have the impact side where you see the bee populations are in danger, which is a thing that people seem to care about from a nature and environmental perspective.

But, then again, it’s so important for our food security because what people don’t know is that almost 70% of the crops we eat are dependent on bee pollination… so it’s super important for the bees to be supported to help them get to successful pollination.”

However, at present enormous barriers exist to effective pollination in agriculture.

“There are major issues in that industry because the demand for bees is higher than the supply, which puts a lot of pressure on how the bees are treated but also on pricing for pollination,” Vellinga explains. “For the farmers it’s quite a challenge to get pollination, so for them it can be devastating because if they can’t get pollination, this immediately effects their crop yield. This is particularly true for instance for almonds.”

Harnessing pioneering hive sensors, algorithms and monitoring systems, BeeHero aims to alleviate these issues, building healthier hives, maximising pollination and improving crop yield.

“With our investment, and hopefully by connecting them to several of our big growers, for instance in almonds, we can really help the company in their mission to re-stabilise the bee population and help in successful pollination.”

The second example she gives is Vence – a virtual fencing and autonomous animal control system. Explaining the product’s role in sustainability, Vellinga explains it “helps in what we call rotational grazing.

So, normally you’d see physical fences around a plot of land, where the cows stay and keep on grazing which can be damaging for the soil when done in excess. By using rotational grazing, they can be moved around a plot of land which is then better for the soil composition and health.

There is also some research that supports the idea that it also helps in carbon sequestration, so again that’s an example where you see an overlap between impact, sustainability and food security.”

COVID-19 – deal flow and investment focus
Addressing the impact of COVID-19 on the daily operations of the Food & Agri Innovation Fund, Vellinga says: “It obviously has an impact on everyone, so it has had an impact on us.” However, it also represents an opportunity for start-ups to grow and improve, “specifically those a bit earlier on, who don’t have so much commercial success yet – they can really focus on their products and trying to build that.”

“For start-ups that are a bit further advanced, it’s more difficult because sometimes they are restricted in seeing clients, [and] shipping products.”

“So, really for us, the focus over the last few months has been supporting our current portfolio companies,” focusing particularly on liquidity cycles, and valuations in light of potential negative adjustments.

“In terms of new projects, we see a lot of deal flow still and I think that’s also because start-ups realise they don’t know how long this is going to take, or how the economic climate will develop so maybe we’ll just start early – which is a wise idea. We still have the capacity to support them.”

Although their focus remains firmly on food security and Agri innovation, looking to the future Vellinga says remote management technologies will likely experience accelerated growth as a result of COVID-19.

“We had invested already in some IoT companies and remote monitoring, but we’re now looking into robotics for instance, and I think that’s definitely going to take flight because of COVID.

Citing recent labour shortages in UK agriculture, and the potential for remote harvesting, Vellinga continues: “I think the technologies are quite far advanced and these market circumstances will definitely push those solutions.”

Advice for Entrepreneurs
Despite opportunities for improvement, the current climate remains tumultuous, creating uncertainty amongst the start-up community. Helping entrepreneurs navigate these challenging waters, Vellinga offers some advice for seeking investment.

The first point she emphasises is to seek investment in the early stages of development, taking advantage of the time afforded to many at present to do so.

Secondly, Vellinga stresses the importance of selective applications. “It’s always important to seek the right investors, and the right investor group – and I think now it’s even more important. Don’t send an automated email to 100 people, that’s not going to work. Especially now because for investors the deal flow may have even increased.

So, try and get a warm introduction from someone you know and do your homework – make sure they’re the right fit. For instance, we try and open up our networks to start-ups, so think ‘what’s the type of corporates we want to work with, and are they clients?”

Finally, advising women in ventures specifically, Vellinga explains that: “What we see is that a lot of female entrepreneurs struggle to get funding, and there are several reasons you can think of as to why that happens – of which one is that there are a lot of investors that have male employees or male partners, and I think there is wide evidence that we are biased towards people who resemble ourselves.”

“I think female entrepreneurs aren’t as good at saying to the world what they accomplished – we’re always sort of modest in a way. I think it’s really important to show the world what you can do and what you can offer.”

Amazon Announces $2Bn Climate Pledge Fund

Investing in companies building products, services, and technologies this fund aims fundamentally to decarbonize the economy and protect the planet.
On June 23rd, international e-commerce giant Amazon announced the creation of a ground-breaking Climate Pledge Fund. With an initial $2 billion in funding, this venture investment program will encourage sustainable innovation, developing products and services that aim to accelerate the transition to a zero-carbon economy.

Helping support and scale these new technologies for widespread use, the fund ultimately works to help Amazon, alongside other corporations, meet its Climate Pledge: a commitment to reach the Paris Agreement ten years early, becoming net-zero carbon by 2040.

Co-founded by Amazon and Global Optimism in 2019, Verizon, Reckitt Benckiser (RB), and Infosys have recently joined the Pledge, signalling to the global market demand for cleantech is on the up. This growth trajectory is a trend Amazon’s Climate Pledge Fund is set to accelerate, with direct investment in sustainable technologies leading the way towards the low carbon economy of the future.

The Climate Pledge Fund
“The Climate Pledge Fund will look to invest in the visionary entrepreneurs and innovators who are building products and services to help companies reduce their carbon impact and operate more sustainably,” said Jeff Bezos, Amazon founder and CEO.

“Companies from around the world of all sizes and stages will be considered, from pre-product startups to well-established enterprises. Each prospective investment will be judged on its potential to accelerate the path to zero carbon and help protect the planet for future generations.”

Investment will span multiple industries, including transportation and logistics, energy generation, storage and utilization, manufacturing and materials, circular economy, and food and agriculture. As the Fund develops, Amazon also plans to seek opportunities to involve other Climate Pledge signatories in this cleantech venture program.

“Amazon has demonstrated its leadership in adopting low carbon technologies at scale,” said Rivian CEO R.J. Scaringe of the Fund.

“Their investment in Rivian and subsequent order of 100,000 electric delivery vans will substantially shrink the carbon footprint of Amazon’s package delivery network. We’re excited about a future of decarbonized delivery services.”

2019 Sustainability Report
Alongside announcing its Climate Pledge Fund, Amazon released its 2019 sustainability report, providing an update on the company’s sustainability goals and programs.

As summarized on Amazon’s ‘Day One’ (their online blog forum), since the acceleration of the company’s sustainability initiatives in 2016:

“…our bold commitment to integrating sustainability across the company has not changed, and it will not change another five or ten years from now. What has changed, however, is the way in which we are conducting our business, running our operations, funding and implementing new technologies and services that decarbonize and help preserve the natural world, along with the ambitious goals we have set, starting with The Climate Pledge. We’re all in on our goals and our work to build a better planet.”

This commitment is reflected in their annual results:
Amazon announced it’s on a path to run on 100% renewable energy by 2025, five years ahead of schedule. As part of The Climate Pledge, Amazon had previously committed to reach 80% renewable energy by 2024 and 100% renewable energy by 2030.
To date, Amazon has announced 91 renewable energy projects around the globe. Together, these projects totalling over 2,900 MW of capacity will deliver more than 7.6 million MWh of renewable energy annually, enough to power 680,000 U.S. homes.
Amazon made two investments from its $100 million Right Now Climate Fund in nature-based solutions and reforestation projects around the world, including a reforestation project in the Appalachians in the U.S. and an urban greening initiative in Berlin, Germany.
Since 2015, Amazon has reduced the weight of outbound packaging by 33% and eliminated more than 880,000 tons of packaging material, the equivalent of 1.5 billion shipping boxes.
To find out more of Amazon’s continued commitment to green practice from CleanTech news, please use the link here.

Greenbackers – Pitching up to the mark

In an interview with CleanTech News, Managing Partner, Robert Hokin discussed Greenbackers driving forces, their new virtual pitch, cleantech developments to watch and how best to seek investment in today’s climate.
The effects of COVID-19 on the world of venture are only beginning to be understood. Although reports vary across different sectors, the competitive nature of the industry seems to have only intensified, with the majority of firms reporting increased deal-flow whilst challenged in due diligence due to the unpredictable nature of contemporary markets.

As a result, for cleantech SMEs (small and medium enterprises), raising growth capital from the right investors on competitive terms has never been more important, leaving many in need of support, and introductions to funding sources.

Specialists for climate, cleantech and circular economy investment, Greenbackers Investment Capital offers some thoughts. As summarized by Managing Partner Robert Hokin:

We [Greenbackers] are professional fundraisers, and introducers of entrepreneurs to capital. Usually that’s equity, sometimes its debt, and occasionally its asset or project finance. But securing the capital is the last step in our process.”

First founded in 2013, Greenbackers is a partnership between Hokin, John Steedman (previously at BP Ventures) and Andrew Smith (previously at Scottish Investment Bank), driven ultimately by a desire to accelerate the positive impact on the environment from technology initiatives.

Drawing upon over 4000 funding sources, Hokin explains:

“What we do primarily is catalyse investment and introduce capital into our sector. Although we focus on entrepreneurs within UK and Europe, our base of investors is truly international, and comprises corporate venture funds, VCs that are either in our space or would like to be, angel syndicates, family offices, impact funders, and institutional investors.

We don’t tend to focus on the individual angels, as we’re generally trying to help companies that are raising Series A funds or higher get into the market, but we’ll listen and work with all who express an interest.

We are approached by and always looking for exciting cleantech companies that are well led so that we can shape their offering and ensure it is investor ready.”

A Pitch with a Difference
Alongside brokered introductions, what has evolved into a central part of their operations is The Greenbackers Investment Pitch: a twice-yearly, by-invitation only investment event traditionally held in London.

Addressing the driving forces behind its creation, Hokin explained:

“We went to a lot of pitches ourselves, normally between 20 and 30 a year pre-lockdown, and were frustrated with our personal experiences. There were some great entrepreneurs there, but we didn’t always see a lot of investors in the room. We also wondered what was happening the day after the pitch – pitches can be hit or miss and we didn’t see many follow-ups happening by the events organisers hosting them, their commercial model seemed to be focused more on filling seats than making deals.

So, having already adopted an approach of ensuring the companies are fit for investment, we decided to start our own pitch two years ago – a pitch with a difference, and that difference is that we tightly qualify those who apply for the pitch on both sides of the program, i.e. entrepreneurs and funders. It’s really more of a deal flow event. We also rehearse the entrepreneurs a lot, to make sure that they’re stacking the deck in their favour too.”

With cycles running in both May and November, their last pitch attracted over 60 applications, of which 10 were chosen to present. However, their May 2020 pitch was unlike those that came before it – a change prompted by COVID-19 and the need for social distancing.

“With COVID-19, because of lockdown, we lost the venue so we had to decide whether to scrub it and focus on our November pitch or not,” Hokin began, explaining the effects of COVID-19 on Greenbackers.

“We wound up doing the whole two-and-a-half-hour program online – and it took off. Usually we get 50 investors in the room, but our May webinar had almost 250 participants, mainly funders. It was such a successful program, I would be surprised if we didn’t get at least half of the entrepreneurs funded as a result.”

Aside from the overwhelming increase in traffic, the feedback they received from investors on the May event fell roughly into three camps:

“Many loved the online format and also suggested we make it a little bit shorter. Others still wanted the networking lunch format. I think there’s a strong social need for investors to meet with the teams face to face to test for chemistry and that’s an important aspect to note moving forward. The third camp said they wanted BOTH –the option to have the usual lunch, but if they couldn’t make it on the day, the online process would allow them to catch-up.

So we’ll be aiming to provide just that, both a live event with lunch and as well as an online webcast on the 12th of November at our next Pitch. We’ll start our open call for entrepreneurs in early July.”

Advice for Entrepreneurs
Drawing on 25 years of industry expertise, Hokin continued on the subject of pitching, imparting valuable advice, and insight, for entrepreneurs seeking funding in today’s difficult climate.

“Either side of COVID, investors have been busy,” he began. “They have loads of deals coming at them from a variety of sources. One of the reasons I feel that Greenbackers has been successful is because we’ve been very careful on how and when we approach investors and they appreciate it, so I would suggest founding entrepreneurs, whether they’re using an advisor or not, should do the same.

Really research investors, and not just make scattergun approaches – seek to engage, seek to understand what deals work for an investor and have as professional of a pitch deck as possible.

On the subject of pitchdecks, I think a lot of content is moving towards video and audio, so at the very least I would suggest any pitch deck should have an audio recording. This might be being driven by crowdfunding platforms which are very content-rich. I think a lot of lessons can be learnt from crowdfunders for larger raises.

I think ultimately, it’s about communicating many elements: what their value proposition actually is, the team, the addressable market, why the solution is going to work, how they know, how they validate, how they make or will make money. For investors, it’s all about understanding and mitigating risk so entrepreneurs need to be conversant with how the business plan will be risk managed and risk minimised.

Above all, do your homework, especially on the investors before approaching, and surround yourselves with the best business and strategy advisors you can afford. If you’re UK based there is a lot of financial support right now, like the Bounce Back loan, definitely something to look into.”

CoolTech & the Keys to Successful Investment
With Greenbackers at the cutting edge of cleantech development, when asked about the developments that excite him the most, Hokin explained:

“Sometimes amongst climate tech and cleantech you come across a company that has what you can almost call ‘cooltech’, and one of them is a company called Electro Aero. They were one of our May finalists and they’re electrifying aviation and marine transport.

They don’t build electric aeroplanes or electric boats, but what they do is provide the propulsion systems for those and obviously for a craft of that nature, reliability, longevity, and power to weight is important, and they seem to have really gotten a toe hold in that.

They’re operating the first, and as far as I know the only, commercial small craft flights in Australia. Australia has a very robust aviation regulatory regime, and to have the first operating license to do so – we thought that was quite remarkable. We think these guys are ones to watch.”

Alongside current developments, Greenbackers boasts an impressive completion portfolio, including Naked Energy, Engenie and Minibems. When asked the secret to their success, Hokin said:

I think there’s a triangle between the quality of the core team, the technology and its scalability, the size of the addressable market and how they execute their plan of attack – a bit of a magic soup, but these are just some of the ingredients that made those investments and business models compelling.”

Venture Investment & COVID-19
Discussing the effects of the pandemic on investment practices, Hokin explains that:

“We have seen a number of venture funds hold back some dry powder (funds) to support existing projects under management, so I think there was a bit of a knee jerk reaction when lockdown really started to bite, with investment firms not necessarily withdrawing but pausing their investment activities while they digested the impact on their portfolio companies. I think that’s starting to relax a bit.

I don’t think that the corporate funders have done anything other than just slow down their process a bit, I haven’t seen too many withdraw from the arena.

I think Angels have been the most noticeable ‘pausers’ on opportunities, and– I’m speculating here – it could be because the exchange-traded market (stocks and shares) has had a strong correction – but it’s hard to know how that’s impacted our particular sector. I think that family offices and impact funders are unlikely to be affected by this. Bottom line is we are still seeing deals get done.”

Looking to the future, Hokin says of Greenbackers:

“One thing that we strongly believe in is that post COVID there will be a strong green bounce, with higher prioritisation by corporates on ESG.

Overall, we are optimisitc. We are bullish on the sector by nature – we believe in it, we’re passionate about it – and as far as we’re concerned climate, cleantech, and the circular economy is the only game in town.

Reflecting on their own approach over the last three months, Hokin was clear that:

“We’re not pausing our support program for a second – we’re coming out fighting, we’ve been investing in our back-office systems and streamlining things so we can be even more efficient on behalf of our current clients and clients to come. We’re very strongly committed to this sector, and if anything, we’re accelerating.”

For more information on Greenbackers November Pitch and application process, see the Greenbackers website here.

Shadow Ventures: Building a cleaner future

In an interview with CleanTech News, Senior Associate Nick Durham discusses the healthy buildings movement, start-ups to watch, and the impact of COVID-19 on Shadow Venture’s mission to build a better future.
Shadow Ventures
Investing in start-ups that bring innovation to the built environment, Shadow Ventures operates in two distinct capacities. “We’re first and foremost a seed-stage venture capital firm,” Durham began, referencing the traditional venture investment side of their operations.

However, emphasising the importance of executing substantial due diligence, Durham explains: “over the last two years we’ve really been focusing on building our incubator program, and that’s why you see the incubator companies outnumbering our investment portfolio.”

The riskiest part of seed investing is team and execution risk – both things an investor can vet. Our new model is to use the incubator to de-risk our investments. We work with these companies for 6-12 months and then when we feel comfortable with their ability to execute, and we get to know their teams, we can then say they’re venture investable directly out of the incubator.”

Confident in this new structure, Shadow Ventures has recently launched their newest fund – Shadow Fund 3 – which will be invested directly into start-ups from their incubator program.

“We about to do our first investment from the incubator, which will close in July,” Durham reveals, “so that’ll be our approach from here on out.”

Emerging Trends & Start-Ups to Watch
Although at first glance Shadow Ventures’ thesis may not seem centred around sustainability, its presence is implicit for the majority of their portfolio companies.

“Every tech company we’re looking at in real estate and construction is making advances towards sustainability”, Durham explains, “It’s a prerequisite. They must be eliminating waste, improving inefficiencies, engineering new environmentally conscious materials or methods.”

Speaking to recent trends he’s noticed within the built environment, Durham continues:

“At the forefront of the real estate and construction industries at the moment is the healthy buildings movement, which is a key trend we’re seeing as a result of COVID-19. I think there are nine different qualities you’d look for in a building, but there is a more pronounced focus now are air quality, space utilization, spatial measuring / contract tracing.”

What I think what that’s going to do is pull in this broader trend of thinking more seriously about our own personal health, and quickly that expands to our living space on earth. So, over time we believe that these issues will come more and more to the forefront, and we’re trying to get ahead of that and encourage people to invest in it now.”

As an investor on the ‘front line of sourcing’, Durham then went on to discuss the cleantech projects that excited him most within Shadow Ventures’ portfolio.

“We have a ton cleantech solutions in our incubator but my favourite project is actually Icon, which is in our investment portfolio. They can print a 3D home in a matter of weeks (ultimately for half the cost) with sustainable concrete. They are solving the affordable housing crisis and also solving massive waste issues in construction, which at scale could have a huge environmental impact.”

“On the smart building side, we’re also seeing a strong cluster around net zero buildings: smart windows, green roofs, circular heat, cooling, and water systems, distributed energy and storage, advanced automation (push systems that modulate energy activity on their own).”

Impact of COVID-19
Speaking to the impact of COVID-19 on Shadow Venture’s operations, Durham didn’t beat around the bush.

“Admittedly, the built environment was hard hit,” he began. “If you look at the most affected industries in the world in terms of COVID – supply chains, retail, restaurants – they’re all underpinned by real estate, so commercial, office and retail environments were all severely affected.

“In terms of SMEs, for anyone who was already creating a solution and building a business, the economic climate is a bit uncertain,” Durham explained. “So, from a fundraising perspective, most are active and understanding the need to put an extra cushion under their cash position to make sure they’re covered from a long-term perspective.

At Shadow Ventures, we’re probably upping our initial investment by at least 30% in most cases, just to make sure they have that extra available in case that uncertainty persists.”

At the same time, difficult environments like this tend to ultimately accelerate creativity and drive entrepreneurs to go out and do what they do best, which is to enhance the ways we live. So, in our sector, we’ve seen a lot of activity in terms of deal flow come from the sheer number of people who are now raising who hadn’t been before.”

In terms of securing investment, Durham says “we’ve seen a lot of VCs experiencing pressure from their LPs to stay active in the last few months, finding hidden opportunities and doing deals to stop pools of capital stagnating.

But there’s no doubt a lot of investors are being cautious. The amount of time it takes to fully vet a deal given the macro environment is something that a lot of entrepreneurs are really feeling, especially given the valuation decreases we’ve been hearing from other VCs and in the media.”

However, this value decrease is not a phenomenon that has affected Shadow Ventures.

As Durham explained: “For later-stage deals – Series A, Series B – they’ll definitely see a decrease because they’re not hitting their numbers as they should be, and value is dependent on metrics. But seed deals aren’t in sales mode; they’re still building their products and maybe inching into market, and as a result nothing really changed for them. So, for us, there hasn’t been a noticeable decrease in valuation.

I think we’re moving past the initial shock of COVID-19, I think on the whole people are feeling a lot more comfortable about what this is, and can now get more predictive as a result.”

Said Durham, addressing venture as an industry.
Advice for Entrepreneurs
Closing our conversation with advice for entrepreneurs raising in today’s climate, Durham is quick to emphasize the importance of industry connections.

“Leverage your network, it’s much easier. Everyone knows that, but I think the reason it doesn’t happen as much as it should is because people are afraid to ask for introductions. So, be forward about asking for introductions, and if it’s not the right fit for one investor they will probably know a host of others who would be interested in the deal.

If you are doing cold outreach, make it as personal as possible, so do your research upfront.

“Also be ultra-transparent – everyone likes to skew traction and write a narrative that serves them well, but be real about where you are in your journey. It’s just going to help your case in the long run because a serious investor is going to dig into the company, and will have questions which you can either address upfront, or make the investor address themselves.”