Just Climate closes its first fund at $1.5B for hard-tech

Just Climate, the low-carbon venture firm launched by Al Gore's Generation Investment Management, has closed its first fund at $1.5 billion.

Why it matters: The institutional-backed fund is structured to focus on hard-tech instead of software, enabling Just Climate to address a funding gap that's frustrated startup founders and venture LPs.

Zoom in: The fund will make investments of $50 million to $150 million, with bigger checks spread across tranches.

• It will likely back 10 to 15 companies.
• Current portfolio companies include Swiss electric vehicle charging provider ABB E-mobility, decarbonized steel producer H2 Green Steel, and gasification startup Meva Energy.

How it works: The fund will have a 15-year timeline — five years longer than a conventional 10-year alternative investment fund.

• The firm's compensation will be tied to whether the portfolio achieves certain decarbonization goals.

What they're saying: "You can’t decarbonize steel, concrete, aviation fuels, unless you build real plants," Just Climate chief investment officer Shaun Kingsbury tells Axios.

• "That means the check sizes are too big for venture capital, too asset-heavy for growth capital, and too early for infrastructure capital. So they fall between the buckets effectively, and you fall in the valley of death that’s hard to finance."

What we're watching: To what extent other firms follow in Just Climate's hard-tech footsteps. It initially targeted $1 billion for the fund before upsizing another $500 million.

Of note: Investors include Microsoft's Climate Innovation Fund, the IMAS Foundation, the Ireland Strategic Investment Fund, Harvard Management Company, Goldman Sachs' Imprint Group, and Hall Capital Partners.

• The California State Teachers’ Retirement System, PSP Investments, AP4, Colonial First State Investments, Builders Asset Management and AP2 also signed on.