Prithvi Ventures aims to support twice as many underrepresented founders with second fund

Impact investor Prithvi Ventures is seeking $50 million for its second fund that will back companies that have some positive benefit to the climate, and the potential to make money.

Fund II, which plans to hold a first close by year-end, has already made three investments.

Roughly 33 percent of the companies Prithvi’s $35 million debut fund invested in were women-led start-ups. The firm plans to target closer to 60 percent of its Fund II investments in women and underrepresented founders.

“There’s a fair amount of rubbish around ESG, call it greenwashing, whatever,” firm founder and general partner Kunal Sethi told affiliate title Venture Capital Journal. “We are focusing on where we are confident there is scope for a life cycle analysis (LCA) to establish the climate solution and where there’s a potential price parity roadmap to be achieved where your product over time is going to be cheaper than what’s available out there using fossil fuels. If those conditions are met, we’ll invest.”

Founded in 2020 by Sethi and operating partner Vivek Soni, New York-based Prithvi invests in everything from biotechnology to aerospace and defence, as long as the company’s success will lead to positive outcomes for the climate. Sethi believes that the impact must come before returns for a firm to truly be an impact investor, but that doesn’t preclude profits.

“My personal opinion is you can do good and make money at the same time, but if your main focus is making money, and you want to do good on the side, I don’t think that works,” he explained. “We tell our investors, ‘come for the impact, stay for the returns.’”

As proof of his commitment to the quality of the portfolio, Sethi told VCJ that he waived the management fee for just under 75 percent of the investors in his debut fund, relying primarily on the fund’s carried interest to generate profits.

Fund I invested in 36 companies including lithium-ion battery manufacturer Amprius Technologies. Prithvi led the company’s Series E round in February 2018, invested again in its Series E2 round in January 2021 and has since exited its investment via a reverse merger that saw Amprius listed on the NYSE under the ticker symbol AMPX in September 2022.

The firm’s sophomore fund employs a 2 percent management fee and 20 percent carry, with an LP base of mostly high-net-worth individuals and family offices. Sethi said the firm has not taken any institutional capital yet but is “in discussions” with a few such investors and will look at others, provided they are committed to protecting the climate.

Its three new investments include the pre-seed round of a company decarbonising heavy industries like steel and cement production and two other deals in companies engaging in plastic upcycling.

Soni said he and Sethi are in a unique position to succeed in part of the climate tech market where other VCs either won’t or can’t engage.

“There are others that are trying to do climate and cleantech funds, but there’s two things that differentiate us: the LCA and technical analysis approach, and our technical abilities,” he told VCJ. “A lot of times people are not in a position to do deep due diligence, a lot of the large funds pay consultants to go and do the work. Many of the smaller early-stage funds like us can’t afford to do that, so having the deep expertise in these areas like we do gives us an edge.”

Soni spent two years early in his career as a research engineer at Shell before spending nearly 15 years at Polaroid, most recently as the director of science and technology. He has also held multiple senior positions at manufacturing companies in India and the US. He has a PhD in polymer science and engineering from the University of Massachusetts Amherst.

Sethi said he and his partner have a slightly different approach to their investments than the majority of climate-investing VCs.

“Most VCs couldn’t tell you when the last time they went and spent half an hour with a founder in the lab was,” he said. “You’ll find most VCs at a coffee shop or a bar, not geeking out in a lab with the founder, that’s what we love to do.”

The firm’s name comes from the Sanskrit word for planet earth, though Sethi admitted he had a few other ideas before settling on Prithvi.

“I’m a big believer and reader of ancient Greek and our own Indian mythology,” he explained. “Storytelling is very important, science alone is not enough to inspire. We chose Prithvi because some of the Greek translations just didn’t drive home the message.”