Chat with a climate tech VC and one name is increasingly likely to come up: Lukas Walton.
Lukas is the grandson of Sam Walton, the founder of US supermarket giant Walmart – making him a member of America’s richest family. As of February this year, Lukas Walton has an estimated net worth of $40.9bn.
He invests some of that wealth through his family office vehicles: Builders Vision, which invests as an LP into climate funds; and S2G Ventures, which makes direct investments into climate startups. Both are based in the US.
And, in good news for climate tech investors, as sentiment cools on the sector and other LPs and investors recoil, Walton’s funds say they’re all in — and keen on Europe.
‘Europe will always be a prominent focus’
Builders Vision allocates capital to investors working on clean energy, food sustainability and ocean health. The fund doesn’t disclose its AUM but it’s an LP in 16 funds with an office in Europe — a mix of PE funds and VC firms.
The VCs include London-based Counteract, which invests in carbon removal solutions, and SWEN Blue Ocean Partners, which backs companies hoping to regenerate ocean biodiversity. Not all are publicly named.
Noelle Laing, who was named chief investment officer at Builders earlier this month, says the fund wants a diversified, global portfolio. “Europe will always be a prominent focus,” she tells Sifted.
James Lindsey, director of investments, says the impact of Europe’s biggest LP, the European Investment Fund, makes the continent an attractive place to invest as an LP.
“A lot of these managers are levered up by the European Investment Fund (EIF), that really helps get managers into a much more self-sustaining scale,” he says: the EIF’s cheques help to bring smaller funds up to a scale where they can pull in other LPs.
Despite that, Builders has no staff based in Europe: its 27-strong team sits in the US.
What Builders wants to see
A significant number of first-time climate funds popped up in 2021 and 2022 — and questions are being asked about how (and if) many of them will manage to raise their second fund. Funding for European climate tech startups fell 33% year-on-year to 2024, according to Dealroom.
“We have a lot of 2021 vintage funds that are coming back to market,” Lindsey says; but not all of them have enough to show for themselves.
“It’s pretty clear if they’re investing in companies that are having commercial uptake at this point, so we spend a lot of time assessing the portfolio,” he says. If portfolio companies have had to pivot, Lindsey says he’ll want to see managers articulate why.
For pre-seed investors, Builders wants to see managers who can help portfolio companies keep fundraising to power their R&D. For companies already in the market, the managers need to be able to show they can help companies scale, Lindsey says.
“We have a huge set of portfolios, so we have a lot of good insights based on peer groups, and can really figure out who’s breaking out.”
Firms’ teams are also a significant decider: Builders wants to see firms which are nurturing their early-career staff, as well as bringing on experienced partners to manage challenging companies and help others exit.
The sophisticated family office: debt products
As well as acting as an LP, Builders sometimes provides debt vehicles directly to companies.
The debt products aim to facilitate companies’ first large-scale plants, which they build to demonstrate their tech works at scale. The projects are commonly known as first-of-a-kind (FOAKs).
“We would prefer to be allocating to top tier managers because they can be more hands on,” says Lindsey. “But when we can’t allocate, that’s when we put on our creative mode and say, ‘Let’s go help build the sector’.”
“We’re trying to prove that when you’re building first facilities, you can use a different type of capital, and that you don’t have to be purely focused on the venture-like equity structures that dominate the market.”
Other notable examples of a family office offering specific instruments for companies at that stage include Breakthrough Energy, Bill Gates’ fund, which runs a programme called Catalyst, offering grants to de-risk emerging climate technology.
Lindsey also points out Grok Ventures, the investment vehicle of Atlassian cofounder Mike Cannon-Brookes, which invests both equity and debt into climate companies.
The direct investment fund: S2G
Builders is not the only Lukas Walton vehicle investing in European climate tech.
Last year, S2G Ventures spun off from Builders Vision and became its own entity. It invests the funds of Walton, alongside other LPs. Like Builders, S2G’s team all sit in the US.
It’s a multi-stage firm with $2.5bn in capital, focused on backing startups directly on the same themes that Builders backs: ocean health, food and agriculture and energy.
A spokesperson for S2G told Sifted that it became a separate entity “to allow for continued growth,” but that it “remains aligned with Builders Vision.”
S2G has backed six European companies, including leading a €115m deal into Irish startup Xocean, which works on mapping the seabed, in January this year. It also backed TechMet, another Irish startup which is working on securing access to critical metals, in a $200m round in 2023 and German smart meter company Tado, via its €12m round in 2023.
The deals perked interest in the ecosystem because they mark the family office getting into the weeds of hands-on tech investing rather than LP capital allocation and, as one person with knowledge of their transactions puts it, doing so to the extent that they can win and lead on buzzy deals.
As well as working on its own vehicles and investment strategies, Walton’s family office vehicles are now working on bringing other big ticket investors into the climate world, says Builders’ Lindsey.
“We’re spending a lot of time trying to help other families come into this world,” he says.
Read the orginal article: https://sifted.eu/articles/walmart-lukas-walton-climate-tech/
