Back in 2022, brothers Fabian and Ferry Heilemann launched a VC firm, AENU, to back Europe’s climate tech companies. Unlike the majority of VC firms, it was set to be an evergreen fund, backing companies from seed to IPO.
“That’s our USP — if your company is developing well, we’ll be with you for 15, 20 years,” Fabian told Sifted at the time.
Two years on, the AENU fund has closed, at €170m — but it’s no longer evergreen.
“The difficult market environment has reduced the appetite of the institutional LP market for structural innovation and for fund structures that they’re not familiar with,” Fabian, who was previously a general partner at Earlybird, tells Sifted.
AENU’s fund is backed by LPs including the European Investment Fund (EIF) and German state fund KfW, along with Skype founder Niklas Zennstrom; Tier founder Lawrence Leuschner; Planetly founder Anna Alex and Michael Wax, the founder of Forto, a logistics unicorn cofounded by the Heilemann brothers.
The fund writes cheques from €1-4m, primarily focused on seed-stage, but also dabbling at pre-seed and Series A. It’s particularly interested in energy technology and the carbon economy — from carbon removal tech to carbon marketplaces — and is focused on German-speaking countries, along with the UK, Denmark and Sweden.
The fund has already invested in 26 companies and aims to back around 35 in total.
“I’m gonna take this fund/ And make it evergreen”
Although AENU has pivoted away from the evergreen structure for now, Fabian talks animatedly about its merits, and says that, one day, he hopes LPs can be convinced.
AENU had devised innovative fund structures within its evergreen plans, Fabian says. It had started to develop a system where LPs could sell shares every quarter, thereby encouraging more retail investors to invest in the asset class and “democratising VC,” he says.
The firm had also devised a system where carried interest is paid as equity in portfolio companies rather than capital, encouraging its team to foster long-term links with startups to IPO and beyond. This was enshrined in the legal structure of the fund when it was set up, before the pivot away from the evergreen structure.
Other VCs have successfully set up evergreen funds — but they are few and far between. The best-known example might be American VC firm Sequoia, which launched an evergreen fund in 2021, the Sequoia Capital Fund, with the aim of holding stakes in companies post-IPO.
“They are a very established manager, they were able to almost enforce that upon their LPs,” says Fabian. “As an emerging manager in a market crisis, there’s no way you can push through.”
Fabian says he hopes that, “in two or three fund generation’s time,” AENU might be able to convince LPs to back an evergreen structure.
Europe only has a few evergreen funds investing in climate tech. There’s Kiko Ventures, which is aided by its single LP structure — it’s solely backed by the FTSE 250 company IP Group — and Marie Ekeland’s 2050, which backs long-term climate bets.
The new fund
The climate tech ecosystem is increasingly bipartisan, split between the investors backing hardware and infrastructure, and those focused on software. AENU is somewhere in the middle.
“We invest in both,” says Fabian, “let’s say 60-65% software and 35% on the hardware and deeptech side.”
Existing investments include hardware companies such as low-carbon cement startup Alcemy and software bets like energy management startup Trawa.
AENU’s team brings strong software experience, Fabian says, but that experience is transferable to the hardware companies it works with: helping them to develop business models, work on product strategy and develop team culture, he says.
The firm has also made a name for itself for its work on impact methodology. Spearheaded by principal Melina Sánchez Montañés, AENU works on lifecycle analyses (LCAs) — in-depth studies of the impact of a product — for portfolio companies, and has helped others prepare for ESG reporting requirements. It’s a function that Fabian says is welcomed by generalist co-investors: AENU has co-invested alongside Balderton and LocalGlobe, for example.
And, although we’ll have to wait for the innovative structures of the AENU evergreen fund, the firm has been able to enshrine some of its ambitions for the next age of VC into the existing fund. Investors’ carried interest is tied to impact goals set for its portfolio companies, meaning that the team only receives a portion of their carry if the startups they invest in are having the environmental impact the fund has promised to aim for.
Read the orginal article: https://sifted.eu/articles/aenu-170m-climate-tech-vc-news/
