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.
