Seaya Ventures raises new climate fund with Article 9 classification

Madrid-based Seaya Ventures has today announced the first close of a new sustainability-focused fund. The fresh pot of cash will invest in startups working in four main areas: food value chains, agritech, the circular economy and “green tech” — a fuzzy term that, for Seaya, covers technology that enables green energy production and distribution. 

€130m is already committed from investors including Spanish energy company Iberdrola, Spanish government-backed fund ICO Next Tech and Nortia Capital. The fund, dubbed Seaya Andromeda, has a final close target of €300m.

Much like Seaya Ventures’ previous funds, Andromeda will be investing from Series A upwards, with ticket sizes expected to range between €10m to 15m. The team will be focused on southern Europe primarily, but will also be looking at opportunities across the continent. Seaya’s wider portfolio includes companies like Glovo, Cabify, Wallbox and Capchase. 

The new fund is classified as an “Article 9 Fund” as part of the EU’s new sustainable finance regulations, which aim to hold self-described “sustainable” investment vehicles to account.

What does Article 9 mean for Seaya Ventures’ VC fund?

Unlike Seaya’s other funds, Andromeda is selling itself wholly on sustainability and so is the first to win Article 9 classification. What does that mean?

“You need to go through a very tough process in front of the local regulators. Specifically in Spain it’s the CNMV,” says Seaya partner Antonio Gimenez de Cordoba. “This is something that’s been very deeply framed, and we need to go through the process and measure [KPIs] before the investment, during the investment and post-investment. So this is something we’ve been doing very thorough work on.”

In terms of what those KPIs look like, it varies depending on the subsector, says Carlos Fisch, Seaya Ventures’ principal and sustainability specialist.

“We have certain specific SDGs (sustainable development goals) allocated to each of the verticals,” he explains. “So for agritech it’s things like Life on Land, Zero Hunger, Sustainable Consumption. For circular economy startups it’s measured on the amount of resources saved or recycled, so it depends on the business model.”

Some environmental watchers have raised concerns that the new EU regulations come with a risk of greenwashing because some funds have been given sustainable classifications without changing much in the process.

Gimenez de Cordoba doesn’t agree though: “I think it’s really positive that this framework is quite strict and I think we really are embracing that.”

Not one or the other

He adds that he doesn’t believe there’s a trade-off between high return investments and impact opportunities, pointing to some of Seaya Ventures’ portfolio success stories like car charger startup Wallbox and sustainability tech platform ClarityAI.

“We have proof points, so it’s not like we’re saying it out loud and we can’t do it. We have done it and that’s why we’re doing it more systematically with this specific fund,” he says. “We have proven that you can provide very good returns to your investors investing in these kinds of companies. We see big tail winds in the sector so there’s going to be very good opportunities in this specific space, so we’re optimistic.”

Tim Smith is Sifted’s Iberia correspondent. He tweets from @timmpsmith