There’s more than one chasm to cross when taking climate solutions to scale.
Some investors are tackling the challenge of first-of-a-kind, or FOAK, projects for later-stage climate tech ventures building their first commercial plants. Other gaps exist in pre-development costs for infrastructure projects, and project financing itself (for example, see, “Skill sets for The Great Deployment: Zoning, permitting and project finance”).
But the “middle” that is missing from climate finance is even broader, says Brian Wayne of Curvepoint Capital, which this week announced its spinout from Aegon Asset Management, an arm of the Dutch insurance giant.
“There are companies that are doing things in manufacturing, that are enabling technologies for helping mitigate climate, that provide more operational efficiency to different businesses,” Wayne told ImpactAlpha. “That doesn’t need project finance. That’s just a scaleup business itself, at the enterprise level.”
With an anchor commitment from Transamerica, Curvepoint aims to provide structured capital for growth-stage climate tech companies. That includes both credit and equity and could combine, say a convertible note and a term loan in a single investment, or private equity with redemption rights or debt financing with warrants for equity.
If it sounds complicated, that’s what Curvepoint is counting on. The firm, with offices in Los Angeles and Boulder, Colo., saw an opportunity to provide companies poised for growth with bespoke financing that is not available either from venture capital and private equity firms or from commercial banks.
“They’ve commercialized their product, they’re trying to scale up in growth” with expanded distribution or manufacturing, Wayne said. “At certain inflection points, it doesn’t make sense for a company to just take on more equity capital to fund those things.”
Spinning out
The Curvepoint team built the Aegon Climate Capital strategy inside the $337 billion asset manager, also on behalf of Transamerica, an Aegon company. That team’s first deal, in 2019, was a bridge financing for Enerchem International, a Canadian company that turns municipal waste into biofuel. The capital helped Enerchem expand their facilities and distribution. “It was a smaller round to bridge them to a certain inflection point of their business where they can be a lot more attractive to potential offtakers and project finance players for their next commercial facility,” Wayne explained.
Over four years, the team did nine deals, deploying about $100 million. The team is relying on that track record as it sets out to raise as much as $250 million. James Rich, another Curvepoint founder, said in a statement that the spinout from Aegon “marks a pivotal evolution in our journey to reshape climate finance.”
Wayne said the opportunity has dramatically expanded with incentives under the US Inflation Reduction Act, demand from corporations that have set sustainability goals, and falling cost curves for core technologies.
“There’s this snowballing effect that is taking place,” he says. “That means that more companies That are at that growth trajectory need that kind of capital and are now investable.”
