SyndicateRoom's latest fund, in partnership with Carbon13, gives investors the opportunity to build a portfolio of six promising climatetech companies that have passed through climatetech-focused Carbon13's prestigious venture builder programmes.
We spoke to their Head of Marketing, Sara Jones, for more insight into what makes Carbon13 and its companies special, and why investors should take advantage of this opportunity while they can.
Please note, the Carbon13 Fund VII closes this Friday, 7 March. Be sure to stop by the fund page before then if you'd like to make an investment, and benefit from SEIS tax reliefs.
1. Syndicateroom: What sets Carbon13 apart for investors?
Sara Jones, Carbon 13: We build our own deal flow, internally. We don't compete for it. Because we're climatetech, we are diversified across industries and technologies, so we invest in so many different sectors.
We are a top-class talent magnet; that's one of the biggest things that sets us apart. An SEIS fund or angel investment depends on accessing the very best talent and we are a magnet for that. About 55 percent of our founding teams have already done a startup before, about a quarter have a PhD and the average age is 37, so that's an incredibly important differentiator for the fund.
Finally, it's carbon credibility. 10% of our portfolio is EarthShot Prize nominated and our startups' impact strategies are very credible. So they are actually going to make a difference to climate change.
The current potential of the portfolio that they're working towards is about 500 million tonnes of carbon reduction per year. So to summarise what sets us a apart, it's talent, diversification and carbon. We've grown out of Cambridge, we also operate in the EU.
2. What three climate tech innovations do you feel will be definitive over the coming years?
SJ: Innovation can mean a new technology or a new way of using that technology. A lot of the challenges in climatetech are around the deployment of technologies. So instead of, for example, a slightly more efficient petrol engine, it's actually an electric engine that would be the leap forward.
I would say the three definitive technologies would be synthetic biology, AI, and then materials science.
3. Are there deployments you have in mind for those three things that particularly leap out?
SJ: We can combine materials and AI. For example, one of our startups, MatNex, has a platform powered by AI that's used to discover new materials. Last year they used this platform to discover a new permanent magnet, free of rare earths. It's the first permanent magnet discovery for decades, let alone without free earths, so that is a good example of what can be achieved in materials and AI.
I would also say the intersection of AI and hardware, so for example robotics, is a very important innovation as well. An example company in our portfolio is Samudra, which uses robotics and AI for seaweed farming.
If you're looking at the intersection of climate and dual-use, robotics and AI is very popular in VC in general because of the dual use applications.
Synthetic biology (synbio) is important for creating, for example, new chemicals or oils and displacing oil and gas and also for carbon capture potentially as well. So new ways of making chemicals; AI is used in that process. An example of that from our portfolio is Deepblue Biotech, which uses AI to speed up the discovery process for their biotech which uses cyanobacteria.
Demand side response, which is the process of balancing the power grid and electricity consumption, also stands to make a big impact. The IPCC did an assessment and said we could address around 40% of greenhouse gas emissions through demand side responses.
3. What are your expectations around the EU climatetech investing landscape following the change in US administration?
SJ: At the moment I feel like climatetech is extremely intertwined with the industrial future of Europe, where we can't talk about one without the other. There’s a move towards more self-sufficiency, particularly around energy production and manufacturing. Rather than considering it strictly climate, on a more granular level it’s about resource security – food security, energy security and so on.
If you take China as an example, its electrification, its move into solar. They're going full steam ahead because they knew that they were always going to need energy security.
The big difficulty with EU climate tech investing though is we're not seeing a lot of exits. It means that a lot of VCs aren't sure that they can invest in climatetech and get a decent exit like an IPO out out of it, so it's still wrestling with what does a good exit look like.
4. Which companies should investors look into for an idea of what Carbon13 does, and what its companies go on to achieve?
SJ: The big companies would be, MatNex, because they just announced they're going to build the world's biggest super computer for materials. Nium, which is decentralising the production of ammonia and using a fraction of energy costs to create the ammonia which feeds half the world; it can also be used in the hydrogen economy and to potentially power things like shipping. So that's an incredibly exciting company. There’s also Kita, who do insurance for carbon removal. Cocoon Carbon are decarbonising steel and cement, and they are the fastest from three people meeting each other to raising $5 million. It took them about 18 months. Their initial market is America, and they don't rely on green premium; their proposition to the steel industry works on price alone. With cement, they are cost and performance comparable to the emissions-heavy Portland Cement.
Another good company is Bluemethane. Methane accounts for something like 25% to 30% of global warming to date, but receives less than 1% of climate related investment and they are methane removal and the more methane you remove now because of its short life, you have an outsized impact on reducing temperature. So if you reduce methane, you have an outsized effect if you do it sooner rather than later.
(For more on Cocoon and Bluemethane, listen to our interviews with these companies on the links below)
You can listen to our interview with Cocoon here:
You can listen to our interview with Bluemethane here:
5. What are your predictions for the climate tech sector in 2025 and beyond?
SJ: In 2025 the cost of inaction is going to exceed the cost of action. That's a very important commercial driver. Governments and companies are beginning to realise this, and are increasingly motivated to invest in climate. Insurability is suddenly a big topic – climate change is a problem for insurance companies. Think about the wildfires in America. They are increasingly motivated to do something to adapt.
For investors, I think they should be looking at exciting materials companies that are relevant to high tech manufacturing in particular. If last year saw a lot of circularity startups, which emphasised reuse, repurposing and so on. Now there there is definitely more high tech manufacturing. When you look at somebody like Nanoplume – which is a really new company of ours, they're doing aerogel insulation. That's going to be very important for high tech manufacturing. So I would encourage investors to look for the IP-led, deep science startups in climate where it's to do with the manufacturing, or reuse of high-tech manufacturing, particularly for electrification.
And then AI across hardware. In VC, and more broadly, I’m seeing AI agents everywhere. I didn't hear that at all last year, but this year I predict a third of our applications are going to be look at AI agents. I think we just have to see where that goes because SaaS is not that useful in climate.
I think there's a shift where people are just being cautious and trying to find technologies which are quite proven, but you're finding novel places to apply it or the deployment of it is novel in some way. For example, you might be combining X technology with Y technology, which are already fairly established, but the combination in deployment and use of them is new. While moon shots may be falling out of favour a little bit because people are feeling nervous about backing something unproven.
When you look at the golden triangle of green cost and performance, unfortunately at the moment, there's not a lot of investor confidence that companies will pay a green premium for things so I would advise investors to really ask: is this performance and cost parity, or is it superior to the incumbent technology or company?
The Carbon13 Fund VII closes this Friday, 7 March. Be sure to stop by the fund page before then if you'd like to make an investment, and benefit from SEIS tax reliefs.
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