💡Investment Notes: Why We Invested in Systemiq Capital Fund II
Backing exceptional climate tech founders in Europe and the US
What makes an investor great?
One piece of advice we often give founders is that it’s important to do reverse due-diligence on funders. Can they introduce you to the right networks you need to grow your business? Are they familiar with navigating the forks along the road? Will they stay in your court when times get tough?
The investor-founder relationship is often underestimated in a start-up’s journey, but it can be one of the factors that makes or breaks your journey. That could not be more true in the nebulous world of nature- and climate-tech deals, where startups have to navigate complex, demanding industries, and experience can make the difference. And although climate tech investments have not been unaffected by increasing interest rates and rising costs, a whopping $51B flowed into the space in 2023.
One fund manager that has stood out to us is Systemiq Capital (SC) which was spun out of SYSTEMIQ and invests in climate tech innovations underpinned by climate science and rapid technology advances.
Here’s more on why we invested into their second fund:
1. An ability to create portfolio value, as demonstrated by their record in Fund I.
SYSTEMIQ, which was founded by a group of ex-McKinsey consultants in 2016, seeks to bring speed and scale to transforming five systems: energy, nature and food, materials, urban areas, and finance. The advisory firm leverages on extensive in-house research on the above topics to pioneer and implement creative solutions with clients, through coalition building, specialist advisory services, leadership transformation and policy development. SC’s strong connections with SYSTEMIQ allows the fund to leverage on its brand, expertise, and network create value for their portfolio companies, and to also to source deals, and conduct thorough technical due diligence.
Above: A portion of BaseGraph™, a product of Systemiq Capital’s portfolio company Basecamp research, which creates a foundational dataset for biological AI and nature-inspired biodesign. Credit to Basecamp Research. This is a 6x improvement from Google DeepMind’s AlphaFold.
The impact of these advantages is demonstrated in Fund I, which achieved strong TVPI within four years. In total, their portfolio has been able to raise over $730M in additional capital following their investment rounds, exiting from 3 of them. SC proved its ability to amass an interesting portfolio of companies, including eDNA company Nature Metrics, bio-oil sequestration company Charm Industrial and climate-friendly cement company Brimstone Energy, despite often oversubscribed investment rounds. Their deal pipeline for Fund II remains robust, and co-investor relationships they can continue to leverage on for dealflow with Breakthrough Energy Ventures, Lower Carbon Capital, Andreessen Horowitz, and more. We are confident in their ability to continue to execute.
2. Experienced, women-led team with a focus on entering deals at the right valuation.
The investment team came with years of experience in climate tech and carbon markets; Irena Spazzapan, Managing General Partner of SC, previously led gas & power origination at Goldman Sachs Commodities, bringing deep expertise and networks in global power and carbon markets, commodities supply chains. During her 13 years there, Irena led some of the most innovative deals in the European gas, power and carbon industry. Jessica Stewart, COO, started her career at McKinsey where she worked across the public and private sector, from Melbourne to Lincolnshire, and has also done work on plastic waste and sustainable forestry and land use. George Darrah, Principal, began his career at BP, working in operational, strategic and commercial roles, primarily focused on environmental markets.
Pictured above: The Systemiq Capital team
Given that only 3% of the VC fundraising in 2023 went to women-led VC firms, we are proud to be supporting Systemiq Capital’s women led team. They’ve proven their discipline in ensuring that they invest in companies at the right entry points to achieve the targeted multiples, with a calculated and balanced approach to projecting a company’s success.
3. Insights and network into opportunities in Europe.
With policies such as CSRD and the Biodiversity Strategy for 2030, as well as public funding opportunities like the EIF, Europe has a strong enabling environment for green startups to succeed. We view Systemiq Capital as a strong partner in the region that can provide with on-the-ground market intelligence in terms of policies, as well as insights into new innovations and market trends. The team also welcome the exchange of deal flows and insights with LPs for co-investment opportunities, which is something we value as a force multiplier for the work we do.
Thanks for reading! And thank you to Mana Impact Senior Investment Manager Clive Ye for his insights and due diligence for this piece. If you’re keen to learn more, visit the Systemiq Capital website and Linkedin.