GAS launches the Climate Change Fund

8/12/2020

By Antoine Pradayrol

Green Angel Syndicate, the UK’s angel syndicate specialising in the fight against climate change and global warming, has just launched the GAS Climate Change Fund, for EIS and SEIS investors.

This marks an important change in the working life of Green Angel Syndicate. The success of our work over the past three years has convinced us that it is time for a widening of our capacity, so we can make more investments of a larger size, with more people supporting what we do, and hence, crucially, with a larger impact in the fight against climate change.

The GAS Climate Change Fund will draw upon Green Angel Syndicate’s expert specialisation. It will invest exclusively in early stage companies which contribute to the fight against climate change, and which can generate positive investment returns from doing so (see Risk disclaimer below).

For investors, this is an opportunity to diversify your unquoted investment portfolio; to spread the risk across all new GAS investments over the investment period; to benefit from SEIS or EIS tax relief (subject to individual circumstances and subject to change); and, importantly, to enable your money to make a return for you at the same time as making a return for the environment (see Risk disclaimer below).

Since 2017, GAS has invested in 24 companies, building a diversified portfolio of innovative businesses across a variety of sectors. Collectively, these companies are already having a large and rapidly growing impact on greenhouse gas emissions (see here). But we can do more.

With the launch of the fund, we will collectively be able to increase the amounts of money that are put to work into innovative companies tackling climate change - and therefore to accelerate our impact in cutting emissions, and help safeguarding our common future on planet Earth. This is what the Climate Change Fund is about.

Risk disclaimer - Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. Even when diversified within a fund, investing in early stage companies carries a higher risk than investing in more established companies. Investment in EIS and SEIS funds should be considered as part of a diversified portfolio.

The Fund’s strategy

Climate change is a threat to all of us: Arctic sea ice shrinking rapidly, droughts in the African desert pushing more farmers to migrate, increasingly dry weather in the Western states of the US enabling the worst wildfire season in living memory, the most powerful hurricanes on record - all this is happening with global warming of just 1°C. As temperatures continue to rise and feedback loops accelerate, these disasters will get worse - with catastrophic consequences for humans and for the entire globe [1].

It is quite easy to see what we can do about Climate Change. Stop putting carbon dioxide and other harmful gases into the atmosphere. We have to stop, and we have to stop now. But it is difficult to do.

Our entire global economy needs to transition from a hydrocarbon base to a renewable, non-emitting base. We need to change how we live our daily lives, the way we heat ourselves, the way we travel, clothe ourselves and consume food. This requires substantial interlinked innovations to effect change.

This need creates compelling commercial opportunities. The companies which will succeed in addressing these opportunities will be the ones which have a positive impact in the fight against climate change. Therefore financial success goes hand in hand with a positive impact.

The GAS Climate Change Fund will invest exclusively in companies which contribute to the fight against climate change, and it will do that in the simplest possible way, by co-investing with the GAS Angel Syndicate: if the Angel Syndicate invests in a particular company, then the Fund invests too, and if the Angel Syndicate does not, then the Fund does not.

The remit of Green Angel Syndicate is innovative early stage companies that contribute to solving global warming and climate change. This includes cutting greenhouse gas emissions, absorbing carbon dioxide, or preserving or rehabilitating the natural environment. The Fund will look at all relevant sectors including, but not limited to, energy, transportation, buildings, agriculture, food and industry.

The Fund’s aim is to deploy each individual Fund Investor’s money across 10-15+ companies, over a period of 12 months. The Fund will only invest in companies and rounds where SEIS or EIS is available. For more detailed information, please visit: www.climatechangefund.co.uk.

Green Angel Syndicate’s unique model

Over the past years, we have developed a unique strategic model in early stage investment:

Specialisation - GAS leverages its deep specialist knowledge in the relevant fields, both within the core team and within the membership. Our members play a key role in identifying investment opportunities, performing due diligence, and providing post-investment growth support for our portfolio companies.
Early stage - Investing at an early stage comes with high risk but enables potentially large returns upon successful exits.
Diversification - GAS invests across a variety of sectors and business models, including both hardware and software, and products and services. This reflects the diversity of the solutions that are being developed to tackle climate change across the economy.
High standards in deal selection and due diligence - Successful investments are selected from a broad range of applications and must pass several filters, including:
- ahead of any pitch, the verdict from GAS’ Associate members, a group of a few dozen experienced angel investors who review the applicants’ pitch decks and business plans;
- after any successful pitch, an extensive due diligence process to professional venture capital standards, with a deal coordinator and a team of GAS members who have expressed an interest in the particular opportunity.
Active investors - Green Angel Syndicate involves itself actively in the development of our portfolio companies, seeking the appointment of a non-executive director role upon investment, and making an ongoing material contribution to their success.

The syndicate’s track record

Since 2017, GAS has invested in 24 different businesses, building a widely diversified portfolio: eight investments in energy-related startups, four in industry & recycling, four in ecosystems regeneration, three in each of the transport and agriculture & food sectors, and two in energy efficiency for buildings.

A diversified portfolio of early stage businesses tackling climate change

Source: Green Angel Syndicate

It is too early to know what companies the Climate Change Fund will invest in - as these will be the companies in which the Syndicate invests over the 12 months following its closing date in February.

However, for illustrative purposes, we show below what a Fund Investor’s portfolio would have been composed of if the Climate Change Fund had been investing during the 12 months between September 2019 and August 2020:

12 different portfolio holdings: BuyMeOnce, Rovco, Naked Energy, Scottish Bee Company, Zeigo, Thrift+, Stormharvester, Good Club, Powervault, AirEx, Power Roll and Zedify.
Six broad sectors: energy, agriculture & food, circular economy, mobility, buildings and water.
A diversity of stages, as shown by the range in pre-money valuations: six investments at a valuation of less than £3m, four between £3m and £10m, and two at more than £10m.

Please note that past performance is not a guide to future performance.

Our impact

Every single one of our portfolio companies is developing a product or service that helps reduce greenhouse gas emissions or safeguard the natural environment - that is our purpose. Depending on the sector in which our portfolio companies operate, their impact may stem from enabling the displacement of CO2-emitting activities, or from delivering services in more resource-efficient ways, or from helping regenerate natural ecosystems.

Therefore, the primary measure of our impact is the total amount of CO2e (carbon dioxide equivalent) that is not being emitted in the atmosphere thanks to our portfolio companies.

We estimate that since early 2018, the total quantity of CO2e that has been avoided thanks to the GAS portfolio companies has passed 10,000 tonnes (see our recent blog post here). This is still a small number - it equates to taking approximately 3,500 cars off the road for a year - but it is growing rapidly.

Source: Green Angel Syndicate

With the launch of the GAS Climate Change Fund, which will add to the angels’ investments into new and existing GAS portfolio companies, we will collectively be able to increase the amounts of money that are put to work into innovative companies tackling climate change - and therefore to accelerate our impact in cutting emissions, and help safeguarding our common future on planet Earth.

[1] Climate Reality Check 2020’ report by Breakthrough - National Centre for Climate Restoration, Oct. 2020

Antoine Pradayrol is a Director of Green Angel Syndicate, the only angel investment syndicate in the UK specialising in the fight against Climate Change and Global Warming. For regular updates follow Green Angel Syndicate on LinkedIn and Twitter.

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