There’s a new addition to the growing crop of sustainability-focused VC funds, and it wants to use its cash to clean up cities across Europe.
With offices in Copenhagen, London and Berlin, 2150 launches today with €130m in the bank to fund startups building sustainable technologies that construction firms and city planners can use. It’s hoping to close the fund at €200m by mid-2021.
2150 has a raft of strategic backers, including Danish biotech investor Novo Holdings and Denmark’s Green Future Fund. The fund was initially incubated by Danish real estate company NREP before being spun out as an independent firm. NREP now serves as the fund’s anchor investor.
Its investment thesis revolves around what it calls the “urban stack” — anything from new construction materials and algorithms that make buildings more efficient to manage, to micromobility and other city infrastructure solutions.
It has already invested an undisclosed sum in CarbonCure, a Canadian startup that turns CO₂ into concrete, for use in the construction industry.
“Our goal is to ensure the urban environment is liveable, healthy and sustainable in 2150,” says Mikkel Bülow-Lehnsby, one of the fund’s cofounders, who is also the chairman of NREP.
Construction companies, meet startups
It’s an ambitious — if slightly esoteric — scope for a VC fund, which is driven by a desire to “move the needle quicker” and invest in companies which can affect big, systemic changes,says Christian Hernandez, 2150’s cofounder and a former Facebook executive in Europe.
The urban environment has an enormous carbon footprint: 70% of the global greenhouse gases can be attributed to cities, while the building and construction industries are thought to be responsible for 39% of the world’s carbon emissions. The majority of this impact comes from the heating, cooling and lighting of buildings.
But while the construction industry accounts for 13% of global GDP, Hernandez says it is a “laggard” when it comes to adopting technology and finding sustainable solutions.
2150’s mission, therefore, will be to connect the construction industry with startups that can solve its environmental issues. “The promise to entrepreneurs is that we have a ready customer base for your technology,” says Hernandez. This comes in the form of LPs and also NREP’s industry connections. “The [pitch] to the LPs is: ‘Let us be your innovation arm and go find the technologies that solve your big problems’.”
Alongside NREP, 2150 will be working with “an ecosystem of partners” managing a total of 16 million square metres of real estate between them, while its advisory board (all of whom are investors and have carry in the fund) will also provide insights on the solutions the industry most urgently needs. Members of the advisory board include architect Bjarke Ingels, the Obama administration’s former chief sustainability officer Christine Harada, and Princeton University’s Andlinger Center for Energy and the Environment director Dr Lynn Loo.
Other LPs include Denmark’s Green Future Fund, biotech investor Novo Holdings and Chr. Augustinus Fabrikker, a Dutch family-owned investor.
A key challenge for 2150 will be to find a way to measure the impact its investments are actually having on cities. There are limited options out there for VCs who want to track their investments in this way — and 2150 plans to hire an environmental scientist who can check the maths when it comes to measuring CO₂ reductions.
At a fund level, 2150 plans to report back to LPs on two key metrics: the amount of CO₂ mitigated, captured or used, and how many millions of tons of waste have been saved, recycled or upcycled by companies in its portfolio.
On a more granular level, 2150 will also assess individual investments on metrics relevant to that specific business — for example, litres of clean water saved or improvement in health outcomes. These KPIs will be discussed with founders at investment stage, and 2150 says it will support them to find ways to measure these specific impacts.
Hernandez acknowledges that this will be easier for some investments than others. CarbonCure, for example, already has these numbers readily available (being able to demonstrate how much carbon its product can remove from the atmosphere is a key selling point). “It will be more challenging with other [businesses] that have a sustainability impact but might not be measuring it, and we will have to work with them to do that,” Hernandez says.
The first two months of 2021 have seen a flurry of sustainability-minded VC funds launch, with Robert Downey Jr unveiling his ESG-focused fund FootPrint Coalition Ventures in January, and Berlin’s Revent and France’s Founders Future launching just last week.
This new fund’s name is also reminiscent of 2050 — the patient capital fund launched by French VC Marie Ekeland in November 2020. “It sounds like maybe we are going to be a bit slower than them,” Bülow-Lehnsby jokes. “It’s about having a long-term focus.”
Hernandez says the “regulatory and financial tailwinds” that follow sustainable solutions are what this crop of VCs are particularly interested in tapping into. In 2020, a record $300bn of green bonds (which provide financing for sustainability projects) were issued according to Bloomberg BNEF data. Meanwhile, the EU has announced it will be investing €1tn in projects that support net-zero ambitions. In other words: there’s money to be made.
“Impact has been a dirty word,” says Hernandez. “Good for the world, but you’re not going to make any money on it. But we are capitalists — we are in this to make venture style returns, and along the way have an impact on the planet. There’s enough proof points now that those two can coexist. These companies are going to outperform.”
He adds: “The trend that’s accelerating now is around people realising that you can do that day job — that I love — that is backing people that want to change the world, while properly finding people that want to change the world.”