KOMPAS, a European venture capital fund, has announced a $160 million early-stage fund that will accelerate developments in digital technology and automation. Focused on the manufacturing, real estate and construction sectors, the fund is targeting a top quartile financial return, but couples this with a mission to reduce waste and CO₂ emissions.
The building and construction sector is one of the biggest contributors to greenhouse gases. Driven by population growth and economic development around the world, the 39% of the global CO₂ emissions come from the building sector. And in Europe, demolition and building accounts for 30% of the waste generated.
Sebastian Peck and Talia Rafaeli, are the fund’s managing partners, and Peck highlighted why the fund will be so important, “tackling the existential threat of climate change requires us to think differently how we design and build our future cities, commercial buildings and residential homes,” he says. But this also represents an opportunity for those businesses and ideas that can help us meet the demand for more development while minimising the impact on the environment.
The opportunity for companies that can address both these challenges is significant, and, in Peck’s words, “there is no conflict between clear ethical convictions and strong financial returns.”
Early stage funding to reduce the impact of construction
KOMPAS’s Fund I will focus on early-stage, Seed and Series A, funding. The initial investments will range between $1 million and $5 million for founders in Europe, the US, and Israel. And will offer backing to those with ambitious ideas in three key areas in the real estate and construction sectors.
First, for those with ideas for smart homes, from using better materials to improved IoT and climate solutions. Essentially, those ideas that reduce the ongoing impact of buildings once constructed.
Second, ideas that improve the sector’s business models and services. Whether at the design stage, identifying and implementing architectural solutions, or at the building stage, where construction methods have often remained unchanged for decades, or even longer.
Finally, they want to back founders with ideas for digital enterprise in the building sphere. Whether providing support to improve business processes, or better management of supply chain, to help reduce impact while generating a return.
Sebastian Peck and Talia Rafaeli both have a track record of supporting successful founders with an environmental focus. Peck was a backer of Battery Resourcers, a leading battery recycling company, and Circulor, which provided transparency of the supply chain and supported ethical sourcing. Rafaeli, meanwhile, was involved in UBQ, a waste management technology that helped reclaim waste for useful products, and Ecotech, a specialised developer that recycled rubber.
They have already announced their first Fund I investment in Tynt Technologies. A smart glass company, Tynt hope to make an impact on the sizeable energy loss in homes that can be attributed to windows, up to 30% in a typical home. Using smart windows can realise a 20-45% energy saving. In the US alone, this could potentially result in 1.8 Gigatons less CO₂ emissions.
Seeking entrepreneurs with purpose and authenticity
Their environmental mission is important to KOMPAS, and they are looking for founders that share it. Generating good returns on the investment is a hard reality for any fund, but Peck is also looking at the personal qualities founders will bring.
Unsurprisingly, they are looking for founders they feel will have the discipline to succeed in challenging situations. Peck highlights that, when it often seems easy to raise funds, it’s easy for founders to lose their way. “Entrepreneurs must exercise strict discipline and conviction in the initial phases of the company’s journey,” he says. “In market environments defined by excess liquidity, good founders need to exercise discipline when fundraising, run lean operations and raise only enough capital to reach the next significant, pre-defined milestone.”
Founders must, in other words, need a clear purpose, and a clear vision of how they will achieve it. “Without a clear sense of purpose, it is difficult to overcome the many setbacks any entrepreneur will invariably face,” Peck told TFN.
However, Peck also stresses the need for authenticity beyond that purpose. A good answer to the question ‘why are we doing this?’ is not enough, a founder needs to be authentic enough to convince those around them to join that mission.
Indeed, in some ways, this might be the most important factor Peck is looking for. “It is the authenticity that ultimately matters to us when we make an investment,” says Peck. “It is what makes a founder and their company unique.”