Tomas Kemtys | General Partner
Interview given to Ms Maria Louisa Vafiadaki
-Please introduce us to Contrarian Ventures VC. What do we mean by “energy transition” and “smart mobility” and why have you selected to focus on these sectors ?
Contrarian Ventures is a venture capital firm that was established in 2017 for investment in the climate techspace in Europe. Back then, these terms weren’t as popular as they are today and many people were raising their eyebrows (hence the name – Contrarian). In 2017, there were very few notable exits in our area and very few investors. However, this is where we saw an opportunity arise.
We have now launched our second fund, targeting €100m, to close the funding gap for future climate-tech founders and mobilize the resources needed for climate action. We are in the process of fundraising for the new fund and we have already completed a significant first closing with second closing being completed shortly.
The new fund sees as grow from Europe’s smallest Seed fund to one of its largest having completed 21 deals - including light electric vehicles platform Zoomo, novel hydrogen electrolysis technology developer H2Pro and utility scale solar software startup PVCase
Our portfolio construction is looking to consist of 60% software first, 20% hardware / deeptech and 20% hardware enabled software startups.
Contrarian achieved all its success as a bootstrapped team of just 5 - but the next step is its institutionalisation. Contrarian is looking to become one of the most impactful players in the climate tech sector and is looking to triple the size of its team by expanding its investment team and adding roles such in market research and platform management.
-What type of companies are part of the Contrarian Ventures family and where are they based?
We currently have a pan-European portfolio of 18 category-winning companies, ranging from Zoomo in the UK who are building the world’s most convenient, affordable and safe light electric vehicle platform to H2Pro in Israel, a startup commercialising a novel electrolysis technology to enable the wide-scale adoption of sustainable hydrogen.
Other companies within our portfolio are solving the critical climate problems of the day through transformative technologies, including PVcase a Lithuanian solar tech startup that we’ve backed from its earliest stages. Built by solar engineers for solar engineers, PVcase recently raised €20m in Series A funding to help companies design and optimise commercial and utility-scale solar assets.
The global ratings agency for the Voluntary Carbon Market, BeZero Carbon is another seed investment and raised £17m over Seed and Series A rounds in just six months between September 2021 and March 2022. Across all Contrarian’s portfolio companies the key components are business models with a positive and measurable impact as well as the potential to disrupt the existing status quo thanks to a strong team, product DNA and a clear path towards product-market fit.
-What is the profile of your investments? Can you guide us into some financials so that we get an idea of the scale of investments ?
Fund 2 is targeting EUR 100 million and we are looking invest EUR 1.5 -2 million as a first check at Seed and EUR 2-4m at Series A.
Our investment period is going to be 4-5 years with the fund term being 10-12 years; a rather typical structure. Part of our carry will be tied to impact metrics showing our dedication to real impact measurement and achievement.
Our first fund is currently performing at top decile in 2017 vintage with 4 ‘soonicorns’ (privately held firms with a 100m EUR+ valuation) in the portfolio already.
-Can you share an inspirational success story with one of your companies which have had exit ?
The company “Last Mile” comes to my mind. We’ve invested in the company about 3 years ago and they are doing sustainable last mile delivery locally in the Baltics. It really exploded during covid. The orders went 100 times up. A year and a half later, they were sold to a massive German conglomerate in Europe, REWE Group.
-What are the main risks in the VC model in the energy and climate sectors ?
As a firm, we are solely focused on building a leading early stage platform serving climate enterpreneurs. Our fund focus is to back European ClimateTech founders at seed stage. We are focused on decarbonisation theme and tackling the largest emitting sectors including energy, transportation / mobility, industry and built environment. We also look at climate mitigation, and carbon management and removal.
A lot of companies in climate tech are hardware / deep tech businesses esp in Hydrogen, CCUS (Carbon Capture Utilization and Sequestration) or DAC (Direct-Air-Capture), which require discipline and milestone-based building, which requires focus, and great planning in terms of what you are trying to achieve and what capital you will require at each milestone. There will always be a variety of risks (tech, science, operations, financing etc).
Very different risks apply to hardware startups compared to software. However, the key differentiator will be the founding team that we will be backing.
-Please talk to us about the Energy Tech Summit which you organize on an annual basis hosting global climate tech investors and entrepreneurs.
With the hustler mentality, at the very beginning of founding of the firm we’ve decided to do more than just to invest capital – we wanted to gather and expand the community of climate tech enthusiasts. Hence we’ve created a number of initiatives: The Energy Tech Summit is a 1400-strong event for the climate tech community that has been developed in 3 years by Contrarian from a one-day event for portfolio companies and co-investors into Europe’s largest energy tech event, a platform for everyone in the climate tech community - Investors, Entrepreneurs, Corporates and Policymakers.
Spin-off event Energy Tech Challengers identifies and brings the world’s top energy, transport and sustainability startups together on one stage to compete for an equity-free money prize, as well as the attention of global media and 100+ VCs and CVCs.
Climate50 was developed to inspire more investors to deploy capital in climate tech, ease entrepreneurs fundraising efforts and most importantly bring transparency to capital flows in climate tech. Many of the successes its portfolio companies have seen stemmed from this community-enabled platform and the network effects it brings its entrepreneurs building category-defining businesses.
-Finally, based on current trends, which sectors and sub-sectors do you think will have an increased investment interest in the near future ?
Current climate capital is disproportionately skewed towards mature companies focused on solving problems for the next decade. So much so, the number of early-stage investments in climate tech has remained largely stagnant since 2018.
This has created a significant funding gap in seed funding stages for today’s brightest founders committed to solving longer term problems. A gap that is only exacerbated by the typically longer times needed to develop innovative technologies in this sector.
The amount of money needed to decarbonize the planet is about 50 trillion dollars. We now have about 40 billion dollars invested in the space. We will see a lot of new stuff such as carbon storage. We are also excited about the whole infrastructure of green things i.e. recycling batteries, micro mobility electric bikes... Finally, I believe it is important for ambitious people to engage in the green sector, as there is funding available for them to start something.
Thank you
