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Why invest

Positives

  • Strategy: Exposure to a portfolio of early-stage deep science companies that can have a large carbon impact.

Issues

  • Track record: As Zero Carbon Capital is a new fund advisor, there is no meaningful track record yet.

The Investment Manager

Positives

  • Team: The Zero Carbon directors bring a range of experience in business and angel investing in Silicon Valley.

Issues

  • Company size: The team is very small, and this may act as a slight constraint, although the advisory team should alleviate this.

Nuts & bolts

  • Duration: The fund has a close on 30 June 2020, although this may be earlier if sufficient funds are raised.
  • Diversification: The manager expects to provide at least six investments for each closing, with a target of ten.
  • Valuation: Will usually change at next financing or on writedown.

Specific issues

  • Fees: Unusually simple fee structure, with the only fee being the performance fee.
  • Performance fee: Charged at 25% of all exit proceeds.

Risks

  • Target returns: The target of 2x capital after seven years seems somewhat low for the stage of investment, but has been set conservatively.
  • Companies: Supplying risk capital to early-stage companies, many of which will not yet be commercialising their offering, is a key risk. There will be a spread of company returns, as the successful ones will do very well but those who fail may do so completely.
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