Jenson Funding Partners has launched a £60m fund for pre-seed to Series A stage companies focused on net zero solutions.
The early-stage VC firm aims to start deployment of the fund, called Aurora I, in mid-2023.
The fund will be deployed over three years: with 60 pre-seed and seed stage companies in the first year, 20 follow-ons in the second year, and then a final 10 investments made in the most successful firms.
The VC tends to look at 10 to 15 companies per year with investments at SEIS level up to £150,000 and EIS up to £250,000.
“There are some fantastic companies out there that are busy making greener alternatives affordable and practical,” Sarah Barber, CEO of Jenson Funding Partners said. “We see this as a critical step to encouraging the mass adoption of more sustainable ways of living and doing business.
“I don’t think that we are going to get to net zero just by putting a load of wind farms up,” she told Growth Business. “We need to come at this from a wide range of angles and know how individuals are approaching this.
“If governments are championing net zero, my personal belief is the only way you can do that is to bring the crowd with you. You’re not going to convince everybody – there are people saying all this is absolute nonsense – their choice is about buying the best product, nothing about it being eco-friendly.
“If you ask a parent of two or three kids, are you going to buy an eco-friendly product or one that’s cheap but works? What are they going to do? We’re all living through this cost-of-living crisis.
“It’s about making sure the choices that are given to people aren’t done through guilt, but because it’s the best.”
>See also: TSP Ventures to back 10 climate tech start-ups in 2023
The challenging blend of net zero targets and economic uncertainty is not getting Barber pessimistic, however.
“Early-stage investing always lends itself really well to times of trouble because people start to become quite innovative,” she said. “People have come out with some great ideas with sustainability because over the last two years they’ve had time to think. We’re seeing a shift change. From a portfolio perspective we’re seeing great, exciting innovative businesses.
‘If you ask a parent of two or three kids, are you going to buy an eco-friendly product or one that’s cheap but works? What are they going to do?’
Sarah Barber, CEO Jenson Funding Partners
Barber says the problem is not so much finding innovative, attractive portfolio companies but rather investors sitting on their hands given the cost of living crisis and turbulent conditions.
“The challenge comes on the other side finding the investors. Money doesn’t just disappear, it’s more like how confident people are to invest in something like EIS or SEIS. You need to make sure to do that matchmaking correctly.”
Potential investments for the new fund will be scouted using Jenson’s network of universities, accelerators, fellow VCs, incubators and corporate advisors, while regional investments will also be a key component.
“We’ve always believed the best companies are going to come from the widest pool of deal flow you can find,” Barber said. “We’re very focused on increasing that pool of portfolio companies and making sure we are getting the best companies.”
Previous sustainable companies backed by the VC include The Seam, a company which makes it easier for consumers to find tailors and repair old clothes, and TreeApp, an app which enables individuals or businesses can finance the planting of trees in locations around the world.
To date, Jenson Funding Partners has launched five SEIS and four EIS funds and is now on its 14th tranche, having invested more than £21m in over 130 UK businesses – around 60 of which are active in the portfolio.
It has also supported 28 companies with follow-on funding rounds and completed 10 exits.
“Early-stage investing is something you have to be really passionate about,” Barber concluded. “I don’t think there’s enough knowledge about early-stage investing – there’s a lot of barriers keeping people from investing in early-stage businesses.
“For example, we’ve got to stop regulation for the sake of regulation. That’s widely understood. It’s also about education: the risks and rewards. Unless you’re in it, you don’t know about it. We need to be less scared of early-stage investing.”
What Jenson Funding Partners looks for in founders:
Listeners: “There’s a balance between taking on advice and knowing what you need to do. Even if they don’t take the advice, considering it. Listening is absolutely key.”
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