Female Founders Fund, a seed stage generalist firm, has joined the burgeoning trend of generalist funds backing early-stage enterprise software companies that help businesses track, manage and reduce their carbon footprints.
Why it matters: Without deep climate or science expertise, generalist investors have to get creative to responsibly back companies in the industry. And most Silicon Valley investors are extremely comfortable evaluating software companies.
What’s happening: The fund, which primarily backs female entrepreneurs, built its climate investing thesis around a handful of headline-grabbing software acquisitions in 2021 and early 2022, and estimates a $46 trillion market for climate technology using its fairly narrow definition. These transactions from the past six months provide evidence.
- S&P Global purchased The Climate Service, a North Carolina-based climate risk analytics company, for an undisclosed amount on January 4.
- Privacy startup OneTrust acquired Planetly, a Berlin-based carbon management software maker, on December 8.
- Generac Power Systems, an equipment manufacturer, purchased smart thermostat maker Ecobee for $770 million on November 1.
- Corporate governance software startup Diligent purchased the Ireland-based Accuvio, a data software startup for ESG, for an undisclosed amount on August 10.
What they’re saying: Female Founders Fund principal Adrianna Samaniego tells Megan that, just like other modern industries, the future of climate technology will depend on cloud software companies.
- “There are more investors who never would have invested in climate tech after the last climate tech bubble, so many people stayed away from it. Everyone is trying to understand who they should pay attention to,” Samaniego says.
- Specialist investors tell Axios that they are glad generalists are starting to invest in climate technology, but are curious to see whether they go beyond software companies.
- “Software will be nice, it’s nice to have efficiencies of business, but I tend to like investing in things people will pay any price for,” Mayfield partner Arvind Gupta, who leads the fund’s climate and engineering biology investments, tells Axios.
The bottom line: “Especially for generalists, we think we don’t have a role or we are on the edges doing limited things, but every investment in every sector has an impact,” Samaniego says.