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Industrial LPs get onboard with EIP’s $200m early stage climate fund

Large corporations are working with the firm to find promising climate tech solutions.

Energy Impact Partners has raised $200 million from large utility, energy and industrial companies to back start-ups working on innovative climate change technologies.

The New York-based firm is raising the Deep Decarbonization Frontier Fund to finance early-stage tech ventures that show potential for developing ways to overhaul high-polluting industries engrained in the global economy. EIP is investing up to $15 million per deal in start-ups such as Boston Metal, a company trying to scale zero-emissions steel manufacturing, and Zap Energy, a low-cost nuclear energy developer.

The new vehicle adds to a stable of EIP funds. These include a $1 billion flagship vehicle investing in more mature tech companies that have reached commercialisation; and the Elevate Fund, which was launched last year and which backs diversity, equity and inclusion initiatives.

Targeting $350 million in total for its Frontier Fund, EIP has so far received commitments from investors including Duke Energy and Microsoft through its Climate Innovation Fund, according to a report published by Bloomberg. Both are part of an EIP initiative to research and examine opportunities alongside corporations operating in carbon-intensive sectors. These corporations, which also invest in the firm’s funds, offer advice on potential deals.

EIP operates a model in which industrial LPs, which constitute the majority of its investor base, are involved in the assessment of nascent technology and products. These LPs provide early feedback on whether they would be potential users of such products. This gives EIP a sense of each business’s commercial potential.

At meetings and presentations throughout the year, start-ups will pitch their business ideas to EIP and experts from the cross-industrial network of strategic investors, Shayle Kann, a partner managing the Frontier Fund, told New Private Markets.

The collaborative process offers “differentiated insight and visibility into where needs will arise for our LPs,” he said. In return, EIP opens up access to investment in new companies positioning for long-term growth by focusing on climate tech innovations.

“It’s going to take some time to get there… but our default position is to stay with these companies,” Kann said, adding that the firm is “taking higher technology risk” to hopefully capitalise on opportunities “with the potential for even larger outcomes.”

“We’ve proven we can help connect these [start-ups and strategic LPs] with each other in ways that yield value,” he said.

EIP was launched in 2014 as the latest venture for Hans Kobler, a clean-tech investor and entrepreneur.