Clean Energy Finance Corporation spins off $200m private sector fund

The creation of Virescent follows the early success of the CEFC’s innovation fund, which has invested $150 million into 21 companies and three cleantech accelerator and incubator programs in the last five years.

To date, each dollar of investment from the CEFC’s innovation fund has attracted an additional $3.07 in private sector investment.

Companies in its portfolio include electric vehicle charging company JET Charge, chemical transportation tank manufacturer Omni Tanker, e-bike start-up Zoomo and alternative protein start-up All G Foods.

The CEFC intends to outsource the management of its innovation fund to Virescent Ventures, but it will remain the owner of those equity positions and has capital reserved to make follow-on investments in the portfolio companies.

Speaking to The Australian Financial Review, CEFC chief executive Ian Learmonth said he would join the Virescent board and the CEFC would further make its own investments.

“We still have significant amounts of uncommitted capital. We have $6 billion committed on the balance sheet, and $10 billion to work with, and we’re also getting back the best part of $1 billion a year from prior investments,” he said.

“We’ll continue to do our own balance sheet investments … [but] this is an opportunity to capitalise on our evolution in cleantech and let a team like this step out into the private sector.

“The cleantech sector for a long time has been very underserved. It hasn’t been a focus of many VC funds … and this is a dedicated, first-class cleantech team to help grow the market.”

Like the CEFC innovation fund, Virescent will back companies in four key areas within the realm of emissions reductions – food and agriculture, energy transition, the circular economy, and mobility and smart cities.

Key areas where Mr Learmonth and Ms Vaughan believe the country can be world leaders include solar energy (in which Australia is already considered to be a leader) green hydrogen, carbon sequestration and technology solutions to manage a more complex grid.

“The number of opportunities coming through the door, and the quality of entrepreneurs we’re seeing has grown tremendously,” Ms Vaughan said.

“We do some super early stuff, but I think our sweet spot will be in seed and Series A [raises].

“We’re looking for a founder or founder teams that are open to feedback, but don’t take everything on. Our best founders are super aware of their strengths and weaknesses, and hire around that.”

Energy Minister Angus Taylor said the move by the CEFC would help propel the country toward net zero emissions by 2050.

“It is crucial to support innovative start-ups which have the potential to create new businesses and industries that will help generate new jobs,” he said.