General Atlantic’s $3.5B haul caps another strong year for climate funds

On Dec 21, 2022

Private equity and venture capital firms are responding to scientists’ dire warnings about the future of the planet by raising vehicles aimed at funding companies that reduce carbon emissions and provide clean technology.

On Tuesday, General Atlantic announced that it closed its BeyondNetZero fund, the growth equity firm’s debut climate-focused vehicle, on about $3.5 billion.

General Atlantic’s fund size fell short of the $4 billion the firm reportedly sought when it launched BeyondNetZero’s marketing effort in July of last year. The fundraising environment has deteriorated for PE firms as LPs have found themselves challenged by the denominator effect and falling asset prices.

However, climate-tech funds continued to attract investor interest.

Other significant climate-focused funds raised in 2022 include TPG’s $7.3 billion Rise Climate fund, a roughly $1.6 billion vehicle from European PE firm Ambienta, Fifth Wall’s early-stage $500 million real estate-tech fund, and Union Square Ventures’ $200 million climate fund.

In 2022, climate-tech VC deals were completed at a median valuation 41% higher than that of the previous year, a price increase that is significantly higher than other verticals. This year was also particularly robust for carbon-tech investments, with deal value and count on track to match the previous annual record.

General Atlantic’s BeyondNetZero fund comprises $2.6 billion in fresh capital from existing and new LPs, such as sovereign wealth funds, family offices and multinational corporations. The additional $900 million is being funded by other General Atlantic funds.

The firm has already invested $826 million of BeyondNetZero, backing five companies including sustainable vertical farming company 80 Acres Farm and RoadRunner Recycling, a marketplace for waste and recycling.