Keeling Capital targets $75 million for climate solutions by end of 2024

Dublin-based Keeling Capital, a new entrant on the climate financing scene, is planning to deploy $75 million (€69.1 million) into early-stage and growth technologies by the end of 2024.

Founders and long-time friends Bela Hanratty and Ross Madden launched Keeling Capital in 2022, with the goal of reducing CO2 emissions, as referred to in their name. The Keeling curve measures atmospheric CO2 concentrations.

Since the business launched, they’ve been searching for the right investors to commit capital towards their first fund, which they will deploy into fund managers who invest solely in technology being used to tackle climate change.

This has been a growing market with $1.3 trillion spent on average in 2021 and 2022 compared to $653 billion in the two prior years.

By the end of last year, they had raised $11 million which they invested in three funds, which are in turn investing in 15 companies.

These include Koloma, which has developed technology to identify and produce hydrogen from under the earth’s surface and Summit Nanotech, which has developed technology to speed up the extraction of lithium, which is critical to the development of electric vehicles.

Hanratty said they chose a multi-manager approach because “the underlying factors” around these technologies are “very technical” and therefore it needs a manager that has a “high degree of sophistication”.

There are over 300 venture capital technology funds, giving a wide variety of choice, they said. Of those, they have met with around 250 managers to reach their current selection.

Investing in other managers also increases diversification as it raises the underlying number of investments. “Returns from venture capital are not evenly distributed,” said Hanratty. “Most of the returns come from a very small percentage of the companies. So you really need exposure to the outliers.”

The duo are planning to have between $30 to $40 million to invest by the end of the second June, with the full amount by the end of the year. The total investment will be spread across 10-15 fund managers who will invest in around 250 companies.

The three funds Keeling has put money towards so far are North American and the pair think managers from the company will end up running three quarters of the portfolio with the remaining quarter coming from European managers.

“The venture market in North America is extremely mature, there is deep talent that has been there for decades,” said Hanratty. He pointed out that Ireland has only two funds that would meet their requirements.

The duo, who met at school, both have a background in finance.

Hanratty was with UBS for over seven years, before moving to various through a variety of different finance director roles and Madden similarly has been in investment in London.

He spent over 7 years at UBS before moving to work with family offices. They are joined by Tony Lent, an American-based expert in the low-carbon transition.

Looking ahead they hope to launch other fund strategies in the climate finance space, which they described as a “broad, complex and tricky market”.

“It’ll be somewhat driven by the opportunity set and what we see arising from our foundational portfolio,” said Hanratty. “Ultimately, it goes back to the Keeling curve and trying to see where we can have the most impact and generate risk adjusted returns.”