Pollination launches $150m early-stage eco technology fund to encourage energy transition

This article was first published in The Australian Business Review.

The Queensland Investment Corporation is coming in as a foundation investment in the firm’s new Climate and Nature Impact Fund.

Climate change advisory firm Pollination is launching a $150m fund to invest in early-stage tech companies in Australia aimed at facilitating the energy transition.

The Queensland Investment Corporation is coming in as a foundation investment in the firm’s new Climate and Nature Impact Fund, which will make investments of between $4m and $12m in early-stage companies “providing technology solutions” for the move to net zero.

Pollination chief investment officer Diana Callebaut said the fund would target the increasing number of investment opportunities in small tech companies emerging in Australia focusing on the energy transition and the new focus on companies being “nature positive”.

She said the big increase by Australian companies on the need to be more focused on climate change and the transition to net zero was encouraging the development of an emerging group of small companies providing technology solutions for the change.

“We are targeting segments which have the greatest potential impact on climate and nature because we have conviction that companies which operate in those areas will also be the most commercially attractive,” Ms Callebaut said.

She said potential investment included companies focusing on renewable and energy management, clean energy, transport and food, as well as nature management and the “circular economy”.

“We have observed an increasing momentum in the adoption by companies of technologies and ­solutions to help them achieve their net zero commitments,” she said. “That is what accelerates the commercialisation of technologies – when customers are wanting to adopt them.

“With 2050 fast approaching and the increasing net zero commitments being made by companies, there is going to be an increased momentum in the sector allowing the commercialisation of technologies.”

While Pollination, which was launched in 2019, has its own ­direct investments in some small companies involved in servicing the climate change transition, she said the new fund would allow for a much greater financial backing for the emerging companies servicing the climate change sector.

Its existing portfolio of direct investments in Australian early-stage climate tech includes stakes in FlintPro, Sea Forest, Goterra, MGA Thermal and Ruminati.

Ms Callebaut said the new fund would have a preference for taking board seats in the companies it invested in to help drive value in the companies.

Pollination chief executive Martijn Wilder said the new fund was a “significant development that comes at the right time”.

“We have created the first early-stage fund in Australia to seamlessly combine climate and nature solutions, making sure that the opportunity for investors matches emerging market demand as the world mobilises to address the twin climate and nature crises,” he said.

The fund will make investments in the range of $4m-$12m in companies at Series A and Series B stage, offering investors a 10-year term and five-year investment ­period.

“The fund targets innovative solutions to the high-value challenges across industry sectors,” Ms Callebaut said.

“Australia has an active and growing base of emerging climate tech companies and has natural advantages in areas such as energy markets, carbon measurement and land regeneration.

“We will be working hard with our investees to accelerate the development of high-value solutions and connect them early to customers in global markets that are actively seeking to adopt proven solutions.”

The fund, which will focus on Australian and companies based in selected OECD companies, is expected to begin making investments late this year.

The new fund follows the establishment of the larger Climate Asset Management, a joint venture between Pollination and HSBC that has funds under management of about $US1bn, with a focus on investments in natural capital and nature-based carbon.