How The Planet Fund is meeting the capital needs of climatetech

Amanda Goodman and Nicole Kleid-Small first met at the Victorian Startup Gala in 2022.

Sharing a cab ride home, they ended their evening sharing ideas too, talking all things climate tech and how to fund innovations for the betterment of the world.

After some months of conversations and collaboration, the pair began work on what would become Ecotone Partners’ Planet Fund, a specialist fund focused on investing in climate startups and the first move from Ecotone Partners into funds management.

In a full circle moment, the fund was officially launched at the 2024 Victorian Startup Gala with the news that Amanda, Nicole and fellow partners Jeremy Burke and Daniel Madhavan, have secured $300,000 in grant funding from LaunchVic’s VC Support Program to launch the fund in Victoria and back early-stage startups.

The Fund has also secured $20 million of anchor commitments prior to a public launch.

A gap in the capital market

Amanda is a founding partner of Ecotone Partners, a boutique climate-focused investment and advisory firm that works with startups, investors, government, corporates and foundations to drive positive climate impact. Nicole is the former investment director for Victorian early-stage VC Rampersand.

Both have been deep in the startup world for some time, and both saw climate change as a global challenge that would need tech — and capital — to get a handle on.

There was a gap in the market here, Nicole explains. The existing venture model is well suited to capital-efficient, often software-based, businesses with low marginal costs and high scalability.

“Climate solutions, outside of SaaS-based businesses, tend to have heavy capital requirements,” she says.

“They’re often manufacturing; building product or kit. Or they’re more deep-tech solutions. It doesn’t match what ‘good’ looks like for most VCs.”

Another common source of capital is debt. However, many climate-tech startups don’t have the maturity — or the years of profitable trading —- required to secure a loan.

“Lenders don’t want to take a risk on emerging tech that they don’t understand,” Amanda explains.

For many climate tech companies, the optimal solution would be a combination of debt and equity. In reality, they struggle to secure either.

The Planet Fund is designed to meet the needs of these startups, with a focus on flexible capital — whether that’s debt, equity, or a bit of both.

It’s also designed to help startups escape what Nicole calls “the venture capital treadmill”.

The Fund will invest in companies on a near-term path to profitability and self-sustainability, so that they don’t need to raise every 18 months to survive.

A fund to change the world (literally)

The fund will back businesses that are just about ready to start scaling — businesses with low technology risk.

Specifically, Nicole and Amanda are interested in startups working on decarbonisation tech that they can bring to market quickly.

“We’re looking to fund companies that can quickly scale up and start proving that we can deliver decarbonisation outcomes across different parts of the economy,” Nicole says.

“That will hopefully unlock additional capital and additional willingness to partner with climate solutions going forward.”

At the same time, Amanda and Nicole have a vision that’s bigger than just the businesses they can back.

They know early-stage investors see the opportunities in climate tech.

But many of those investors can’t see a capital pathway to growth for these startups. When small cheques won’t cut it anymore, there is no one funding the next steps.

That means no chance of a return, which means no small cheques.

By filling a gap in the market, The Planet Fund strives to patch up that pathway to growth and allow investors to tap into the significant commercial returns available from greater adoption of climate solutions.

“Once we’ve demonstrated there is capital out there as the companies grow — dilutive or non-dilutive — we believe that will unlock further capital into the early-stage ecosystem,” Nicole says.

The right place at the right time

In Victoria, the ecosystem is primed and ready.

The state has also been a central hub for impact-focused investment, whether through family offices, sophisticated investors, philanthropy or —- more recently — impact-focused VC funds.

“Private investors have been a big part of helping more impact funds get off the ground,” Amanda notes.

This environment has fostered success for impact businesses, which has led to more support and more success. And the virtuous circle continues.

At the same time, Nicole says, “the Victorian government, through LaunchVic, has developed a really fertile ecosystem for supporting early-stage businesses.”

“There is a lot of support available in Victoria … It is helping the ecosystem develop here, supporting both funders and founders.”