New climate tech venture capital firms have emerged in recent years, while established firms have also raised larger rounds. Founded in 2007, Dutch firm SET Venture Capital is one of the latter. The firm's fourth fund just closed on €200 million, double the size of its previous fund, and will be invested in 20-25 European startups working to make renewable energy more mainstream.
SET's name is pronounced “set” and is short for sustainable energy technologies. The firm has a long track record of investing in European climate-focused startups, and with its Article 9 status that mandates sustainability efforts as a goal, it's attracting more capital than ever from corporate and institutional LPs. But managing partner Anton Aerts acknowledges that the larger fund could encourage early-stage companies to commit larger capital at later stages, moving away from his area of expertise.
SET plans to avoid this pitfall “not by trading differently, but by trading more,” he told TechCrunch.
This means avoiding later-stage investments, except for follow-on investments. “Our sweet spot is Series A, with initial investments of €2 million to €5 million,” Aerts said. One recent example is German digital thermal management startup Vilisto, which raised €5 million in a Series A round from SET and others.
While the size of the checks has remained the same, SET’s thesis has evolved over the years, leaning more toward the digital side: “With this fourth fund, we’ve developed a mission to invest in the digital technologies needed for a carbon-emissions-free energy system,” Aerts said.
SET, for example, differs in this respect from the World Fund: Danijel Višević, managing partner of the climate-focused firm, which recently closed its first fund of €300 million, told TechCrunch that Europe isn’t paying enough attention to climate hardware. In contrast, Arts believes that “hardware alone will not be able to achieve urgent climate goals.”
SET plans to continue investing in companies with a hardware component as long as the science is right. One example is portfolio company Instagrid, which develops enterprise-grade portable chargers, which raised $95 million in Series C funding earlier this year.
But the company also believes there are plenty of interesting and potentially big-reward problems to solve in software, especially if the goal is to bring innovation to more people, which can only be achieved through automation that relies heavily on software. “Early adopters are tinkerers, but the mass market needs automation, and that's where AI and other things play a role,” Aerts said.
Partners Rene Savelsberg and Wouter Jong were arguably early adopters when they founded SET Ventures in Amsterdam in 2007. Aerts joined the firm seven years ago and sees parallels between the emerging technologies he witnessed go mainstream early in his career in venture capital and software since the '90s and “everything that's happening around the energy transition” — 5G, ad tech, internet infrastructure, everything.
According to Aerts, this is also a place where founders with expertise in other fields can help apply that knowledge to climate change startups. This is something that's happening more and more, and Aerts supports it: “What's really important to us is that they bring their playbook, their network, their beliefs, and I think all of that adds to the energy and momentum of the space.”
As more founders get involved in clean energy, SET Ventures also felt the need to broaden its network. For a long time, the company had one office in Amsterdam, but a few years ago it opened another one in Germany. This coincides with the fact that most of the company's investments to date have been in the Netherlands, the UK and the DACH region. “With this larger fund, we are confident that we can expand our geographical reach,” Aerts said.