Jul 13, 2023 - Energy & Environment

An ambitious climate fund aims to break the mold

Illustration of the Earth as a piggy bank with coins falling into it.

Illustration: Aïda Amer/Axios

A $239 million climate tech investment fund brings an atypical structure — and ambitious goals — to the startup arena.

Driving the news: Azolla Ventures, launched out of the nonprofit Prime Coalition, focuses on early-stage hardware startups with outsized impact if their tech scales.

  • It's designed to back firms that can "significantly alter the trajectory of climate change, but are overlooked by traditional capital sources," they said.
  • Thursday brings the first details about Azolla's size and structure.

How it works: It blends "catalytic, charitable capital" — think grant-making arms of philanthropies and corporations, to name two — with traditional sources like endowments and family offices.

  • It's focused on "impact-first" investing, which has more risk tolerance and a longer time horizon for commercial success.

Zoom in: Prime works with Azolla to assess potential investments' emissions-cutting potential and the (low) likelihood of attracting support from conventional investors. Then, it helps bring in philanthropic capital.

  • Capital amounts will vary, but Azolla co-founder Johanna Wolfson says initial investments will average in the $1 million to $2 million range.

Why it matters: Azolla is thinking big as it stakes very small players. Investment criteria include solutions that can ultimately cut or remove emissions at the gigaton scale.

  • Plus, attracting finance can be tough for hardware firms.

Catch up fast: The first six investments include Heaten, which is developing high-temperature heat pumps to drive industrial processes without fossil fuels; and Funga, which is "optimizing the forest microbiome for improved carbon storage."

The bottom line: “We have a lot of solutions out there that are supported by finance-first investors, but what are we leaving on the table by not bringing that impact-first mindset?" Wolfson tells Axios.

  • "That's what we're here to identify, nurture and support."
Go deeper