The energy transition could be hampered without dedicated capital for diverse and under-represented founders in the climate space, says Energy Impact Partners’ Anthony Oni.
That is why EIP – the biggest impact fund manager focused on venture capital – has raised a fund to address this issue. The Elevate Future Fund has closed at $111.9 million in LP commitments after launching in March 2021.
EIP had originally targeted $120 million, according to a press release from the firm in 2021.
The fund will take a three-step approach to promoting diversity in the energy ecosystem, the firm said, “providing capital to under-represented founders, supporting diversification and minority-owned businesses in the supply chain and investing in all parties along the ecosystem to achieve the mutual goal of accelerating the clean energy transition while increasing diversity, equity and inclusion in the broader venture capital network”.
Investors include energy and technology corporates such as Fortis, Southern Company, Xcel Energy, PPL Corporation, Amazon’s Catalytic Capital and Climate Pledge funds, Microsoft’s Climate Innovation Fund, CenterPoint and General Electric.
EIP is 13th in New Private Markets’ list of the 30 biggest impact fund managers by capital raised in the five years up to 2022 – and the highest venture-focused manager in the list. The firm is notable for its large roster of corporate investors: several LPs in the Elevate Future fund also invested in EIP’s second flagship fund, which closed in 2021 $1 billion. EIP gives its founders access to and mentorship from the energy and technology sector experts from its LP base, said Oni.
“These LPs realised early on that it’s really important to create environments where diverse founders and entrepreneurs, minorities and those with different lived experiences have a seat at the table,” Oni told New Private Markets.
The Elevate Future fund’s strategy is “to create more diversity and equity in the energy transition”, investing in venture-stage companies developing decarbonisation solutions or low-carbon alternatives for the energy sector. “We’re trying to normalise Black and diverse founders having access to capital,” said Oni.
As well as the positive social impact of helping to level the playing field by channelling capital to diverse and under-represented founders, this strategy can have a unique contribution to climate impact, said Oni. “Climate change is a complex problem and requires diverse perspectives, different experiences.”
The underfunding of diverse and minority-owned businesses in venture capital meant that “not many people of colour were able to participate in the digital transition”, said Oni. Venture capital must correct this for the energy transition, the “largest economic shift that we will see in our lifetime”, he said.
“The survival of our planet” requires every community to participate in the energy transition. Diverse and under-represented founders are often uniquely positioned to identify problems and solutions for their communities to participate in the energy transition. “We’re looking for founders that are thinking differently around the affordability of electric vehicles or [residential] solar,” said Oni. “Diverse entrepreneurs… will solve these challenges framed by the communities they come from and lived experiences.”
Moreover, Oni added, “the effects of climate change disproportionately impact marginalised communities, and investing in diverse founders and entrepreneurs can help to address these inequalities”.