A pair of new venture capital funds aims to raise around $1 billion to promote sustainability, with one fund targeting clean energy and infrastructure, and the other focusing on decarbonization.
One of the funds, VC Fuel, was founded by Ahmad Atwan, the former managing director of Morgan Stanley. The Houston-based fund looks to invest in companies that can advance the transition to lower-carbon energy sources such as renewable fuels, hydrogen, electric vehicles, carbon capture and storage, sustainable manufacturing, and clean agriculture. It also plans to invest in related infrastructure.
The other fund, which closed in June, is the second offered by G2 Venture Partners, a California-based VC firm that is committed to transforming traditional industries into cleaner ones. This fund aims to support entrepreneurs who are unlocking new paths to environmentally and socially responsible economic growth.
VC Fuel plans to raise $100 million for its debut venture fund, which will provide early-stage and growth capital to companies across the energy transition spectrum. Additional plans are to raise around $500 million for a separate infrastructure fund, Bloomberg reported. That fund, called VC Infrastructure, will put money toward building the kind of infrastructure needed to bring companies funded by VC Fuel to scale.
“While there has been a proliferation of capital that has entered the energy transition sector, to date there is no investment firm capable of investing in the earlier, venture capital stages of development and helping provide the necessary capital required to scale through infrastructure financing,” Atwan said in a press release. “This disconnect led to failure of many renewables firms during what is commonly referred to as Cleantech 1.0 during the late 2000s. VC Fuel aims to be a pioneer in providing this integrated offering to companies seeking financing when it’s most needed.”
As of mid-June, VC Fuel had already invested in four companies across its target energy sectors. One of them, Hardee Fresh, is a certified organic vertical farming company and industry leader in decarbonization and sustainability.
Atwan has more than two decades of experience as an investor and entrepreneur in the energy sector. His previous energy-focused roles included stints with New York-based investment firm BlackRock and Morgan Stanley Infrastructure Partners. He told the Houston Business Journal that VC Fuel began investing in the sector on a deal-by-deal basis in November 2020 before officially launching the VC Fuel and VC Infrastructure investment funds this summer.
G2 Venture Partners was founded in 2017 by former Kleiner Perkins Green Growth Fund partners David Mount, Brook Porter, Ben Kortlang, and Daniel Oros. G2 launched with an initial fund of $350 million devoted to investment in energy, manufacturing, logistics, transportation, agriculture, and other sectors. Its portfolio companies include electric vehicle technology manufacturer Proterra, digital renewable energy utility Arcadia, and agricultural supply chain platform ProducePay.
The firm’s second fund will target many of the same market sectors, but with an increased emphasis on sustainability.
“This new fund places us in a stronger position to significantly mitigate the climate crisis while continuing to create value for our investors,” G2 founding partner Brook Porter said in a press release. “With so much new interest in transformative clean technologies from all corners of the public and private sectors, it’s an inspiring time to be doubling down on our firm’s commitment to this field.”
Among the investors in the new fund are Shell Ventures, Mitsui & Co., Daimler AG, ABB Switzerland Ltd., and The McKnight Foundation, TechCrunch reported. G2’s interest in sustainability and cleantech has its roots in the work its founders did at Kleiner Perkins, where they led rounds in industrial data management platform OSIsoft and solar energy company Enphase.
G2 invested in 15 late-stage companies in its first fund and expects to invest in a similar number in its second fund. The firm typically invests $10 million to $50 million per company.
