The Beginning Of The End Of The Fossil Fuel Era
Post COP28, the new net zero economy will accelerate further
Happy Friday!
What a year it has been! A rollercoaster interest rate environment put an end to a decade of cheap money, deflating risk assets and pushing almost $6 trillion in to money market funds by December 2023. Early-stage climate tech has largely followed the broader venture space with 6 declining quarters in terms of number of deals closed in climate tech.
Looking to 2024, climate tech innovation will remain front and centre in a gradually improving macro environment. Our delegation of Systemiq-ers at COP28 witnessed a historical deal brokered by the UAE, the possible beginning of the end of the fossil fuels era. For the first time, the final agreement mentions a call on all 198 signatories to contribute to tangible targets such as tripling renewable energy capacity globally and doubling the global average annual rate of energy efficiency improvements by 2030, abating methane emissions and transitioning away from fossil fuels in energy systems (see full list in Paragraph 28 here). Food has entered the COP agenda with the recognition that the nature agenda cannot be solved without dealing with land use exploitation. Most importantly, COP28 firmly shifted the traditional agenda of dealing with losses from abandoning the old “1.0 economic system”, to the potential unlocked by the new “2.0 economic system”.
At Systemiq Capital, we are incredibly energised by the convergence of the three foundational technologies of our age, namely electrification, biotech and AI/next gen computing – making it possible to transition to system 2.0 in the next decade and avoid the worst effects of climate change.
We wish you a restful holiday season, and a great start to a new year of system change towards net zero.
Read on to learn more about…
Our 5th investment from Fund II into Ren Energy which aims to decarbonise supply chains by unlocking corporate demand for renewable energy
Welcoming Eva Smaga, our first secondee from Systemiq Advisory
Putting together our Value Creation Framework
What we’ve been up to: meeting all of you, working with our portfolio, participating in industry discussions, and fostering our team health
First Secondee: Eva Smaga
We welcomed our first secondee from Systemiq Advisory: Eva Smaga
Eva joined us in October for a six-month secondment from our sister company, Systemiq. At Systemiq, Eva has been working extensively at the nexus of climate finance and the sustainable built environment.
Supporting the investment team, Eva started to deep dive into proptech, fintech to unlock energy transition, controlled environment agriculture and next-gen compute & data-centers decarbonisation. She is also supporting portfolio companies, for example, she will help one to update their impact methodology to ensure it translates into accurate emission reduction potential.
This secondment program is a strategic initiative designed to further strengthen our ties with Systemiq, with Eva acting as one of our 'official' bridges between our two organizations. Eva's role will be pivotal in ensuring that Systemiq Capital continuously leverages the amazing pool of talent and expertise that sits within Systemiq and Systemiq can access latest thoughts on climate innovation once Eva returns.
A reminder, Systemiq is now a >400-people strong pure-play climate consultancy advising corporate pioneers, building industry coalitions and catalyzing large-scale capital to deliver climate solutions across sectors. Eva has been writing a monthly internal blog post to share her experience with her Systemiq colleagues – please reach out if you’d like to read it!
New to the Systemiq Capital family: Ren
We invested in Ren Energy, which aims to decarbonise supply chains by unlocking corporate demand for renewable energy.
In November we made our fifth investment from Fund II into Ren Energy.
Ren is a platform for corporates to streamline their path to 100% renewable energy. Their suite of tools solves the complex financial, technical, and logistical challenges associated with sourcing renewable energy to cover supply chain emissions. Ren can map out corporate supply chain energy exposure and explore the feasibility of different renewable procurement methods. Ren can also generate custom renewable energy portfolios tailored to help corporates meet their decarbonisation targets on time.
Ren has a strong customer base in both the fashion industry and electronics industry, both of which have large supply chains and enormous decarbonisation potential. Our thesis is that decarbonisation of scope 3 emissions in these industries is difficult because of the highly complex and dispersed nature of their supply chains. We believe the solution to this requires powerful software solutions that can handle the data complexity, and strong personal networks within the supply chain. We are delighted to work with co-founders Eric Jen and Morgan West on this mission.
Systemiq Capital's investment, led by Amy Varney and Irena Spazzapan, will help Ren reach a broader network of customers and advisers, particularly in Europe and in fashion, given Systemiq Ltd has a strong fashion team within their Materials Platform.
Ren co-founders Morgan West and Eric Jen
Our portfolio has been busy
Basecamp Research (Fund II) signed their first biocatalysts deals with major pharmaceutical manufacturing companies, including with Johnson Matthey. Basecamp Research also launched a a documentary at COP covering their successful partnership with Costa Rica, a connection originally made through Systemiq.
Hoxton Farms (Fund II) moved into their new pilot production facility, took delivery of new stir tank reactors as they scale up their production, and were showcased in the Economist, Forbes and The Times.
On the back of a successful event at COP28, Apolitical (Fund I) spoke to the Times about the billions of pounds committed at COP28 that would be rendered useless unless civil servants improved their “climate skillsets”. Apolitical is a learning platform and network for the 200 million civil servants in 160 countries. At COP28, 10 federal and regional governments including Brazil, California, UAE announced new pledges towards training government officials.
Ohme (Fund II) – Ohme was chosen as the official home charging partner of Polestar, Mercedes-Benz, Volvo, Norton Way Group and Pentagon Motor Group. Ohme was also named as Fast Track Company of the Year in the 2023 Green Business Awards and as Best Electric Charging Point Provider by Business Motoring
ZeroAvia (Fund I) announced the successful completion of a Series C round of $116m to advance net zero aviation with first of a kind hydrogen retrofits.
Charm Industrial (Fund I) announced the closing of a Series B round of $100m to accelerate its programme of permanent removals of atmospheric carbon dioxide via bio-oil sequestration.
NatureMetrics (Fund I) appointed a new CEO, Dimple Patel, to work alongside founder Kat Bruce to spearhead the global growth and digital expansion, in response to the rapid demand for nature monitoring
Value Creation: Events Hosted
Since Lydia’s arrival we’ve been working hard on putting together our Systemiq Capital Value Creation Framework. This is designed to help us guide our portfolio companies towards sustainable growth, operational excellence, and long-term success. It consists of three phases: Onboarding, Growth and Expansion, and Next Funding Round / Exit. Each phase contains a list of key actions we can take to provide support to portfolio companies and strategically leverage “Ecosystemiq”, the Systemiq network and ecosystem. We are working closely with Systemiq to understand priorities and leverage insights for our portfolio companies. During the diligence process, portfolio companies and our team collaboratively determine the most important and value-add action items to focus on. This approach ensures clear communication of our deliverables and reduces the risk of over-promising and underdelivering.
Alongside advancing the Systemiq Capital Value Creation Framework, our commitment to fostering a vibrant and collaborative ecosystem extends to hosting a series of impactful events throughout the year. In 2023, the Hoxton Farms Lab Visit, Mark Cutifani’s Mining Tech fireside chat, and our roundtables at The Drop brought industry leaders together, fostering insights and meaningful connections. These events underscore our belief that true value creation extends beyond financial success, emphasizing the importance of building a resilient and interconnected community. Looking ahead, we're excited about more events enriching our ecosystem and steering a collective journey towards sustainable growth and shared success.
Where We’ve Been
Photo credit: Techsylvania
Amy spoke on the impact stage at tech conference ‘Techsylvania’. In her talk, ‘Has Climate Tech Graduated?’, she spoke about the financial and impact opportunity of investing in climate tech. Amy also visited founders, investors and the new Systemiq office in Berlin, as well as visiting founders and investors in Seattle whilst on a due diligence trip for the Ren investment.
George visited Boston and NY in July for LP, investor and founder meetings, including holding an informal evening event with our friends at the Homeworld Collective in Boston with climate-tech investors and entrepreneurs. George travelled to Nebraska in October, visiting ethanol facility operators and corn farmers searching for new applications for corn in biobased chemicals, culminating in a dinner with the Governor of Nebraska.
Lydia and Irena attended COP28 in the UAE and co-hosted various events including (1) Ocean Innovation Roundtables with the Prince Albert II of Monaco Foundation, (2) Apolitical event with UAE Prime Minister and Bezos Earth Foundation, (3) “Earth Shots” panel with Deep Science Ventures at the Bahamas pavilion (photo below), and (4) Dinner with Deep Science Ventures and YPO bringing together a broad range of existing LPs, prospective investors, founders and key stakeholders across the climate tech ecosystem.
From left: Thane Campbell, Barbara Diehl, Irena Spazzapan, Gianpiero Menza
Jessica attended SuperReturn COO/CFO in Amsterdam which was a great opportunity to pick the brains of fellow fund managers and service providers on a wide range of topics including fund domiciliation, carried interest, valuations, fundraising, marketing and talent. Next year, she’s looking at joining the VC Platform Community Summit in Miami to be inspired by best practice from US VCs, Invest Europe’s COO/CFO Forum and the Drawdown Ops Leaders Summit. Please do reach out if you’ll also be joining – would love to connect.
Learn and Discover
Urban Partners’ “Decarbonizing the Built Environment, Together” OpEd piece by Mikkel Bulow –Lehnsby (Chairperson, Urban Partners) and Jeremy Oppenheim (Senior Partner & Co-Founder, Systemiq)
Decoding Bio published an inaugural edition of the “Decoding Bio Snapshot”, it profiles several dozen companies operating at the intersection of computation and biology, ranging from pre-seed to publicly traded, including our portfolio company Basecamp Research.
Fascinating podcast episode titled "Why Is It So Hard and Expensive to Build Anything in America?" from Freakonomics – it explores the decline in construction productivity and the failures of disruptors like Katerra in prefab/modular construction.
With the passing away of Charlie Munger, his insights about the flaws in investment judgement are always relevant: 1995 Harvard speech about the Psychology of Human Misjudgement
Insights from our Systemiq Ltd partners
Broader supply-chain background for EVs and energy-transition metals. Advancing Sustainable Battery Recycling sheds light on the environmental and social impacts and risks of recycling electric vehicle lithium-ion batteries and proposes ways forward to ensure a sustainable future – including 10 industry principles.
How businesses can manage nature risk. A white paper for our advisory team on going beyond nature-framework compliance (SBTi, etc) and making ‘nature positive’ part of the corporate strategy conversation and supply chain planning. Bitesize examples from mining, fashion, and food, and a bigger case study – co-developed with Metabolic - on food & beverages.
“Delivering Net Zero for the Food Sector”. A white paper that analyses the challenges that global food companies face in achieving their net zero strategies – and shows how they can overcome them. It also summarises how Systemiq engages in transforming global food and land use systems.
Hot off the press from COP, and with a methane / energy angle, from Capterio CEO Mark Davis: Making the Oil and Gas Industry’s Major COP28 Announcements Truly Impactful
Team health...
Guided by Alan Millard from The Table Group, the team spent time together in the Cotswolds for our bi-annual team retreat. We focused on strengthening our ways of working together, refining our shared purpose and strategic direction, and setting our goals for 2024. Team health remains a top priority and we're excited to carry this momentum into the upcoming year.
Where we will be in Q1
In January Irena and Jessica will be on the US East Coast for startup and Ecosystem meetings and look forward to meeting existing and prospective investors
In February Irena will be on the West Coast, speaking at the Institute for Private Investors Winter Forum 2024 in Los Angeles
In March Lydia will be in Canada and the US East Coast for LP and Ecosystem meetings and looks forward to speaking at Private Equity International NEXUS
In January Amy will be visiting startups in Berlin and Munich.
Thank Yous
A special thank you to everyone who went above and beyond over the last several months with introductions, diligence, advice and help:
Ahmad Butt, Ben Onyemem, Brittany Harris, Clara Luckner, Damien Scott, Dan Nima, Ed Steele, Fiona Howarth, Georgina Flemming, George Polk, Glen Gowers, Jade Cohen, James Bilefield, Jennifer Ring, Jeremy Brewer, Jeremy Oppenheimer, Katherine Stodulka, Lamia Senousi, Mark Cutifani, Max Jamilly, Oliver Vince, Paul Fletcher, Paul Polman, Sebastian Polman, Sophie Herrmann, Taraneh Azad, Thane Campbell