Azolla Ventures debuts $239m blended fund to support overlooked climate solutions

Prime Coalition, a nonprofit that steers and influences capital to support scalable solutions to climate change, and Azolla Ventures, an impact-first investing firm launched by Prime, have announced a $239 million blended fund.

The new fund invests in companies that could significantly alter the trajectory of climate change, but are overlooked by traditional capital sources. Prime Coalition evaluates and governs impact and additionality for all potential investments and tracks and reports on accomplishment of impact, while Azolla Ventures assesses commercial potential and manages portfolio companies toward growth and maximal impact.

Azolla builds upon the track record of Prime Coalition's previous impact-first investment programs, including Prime Impact Fund, which was built and deployed with the same investment managers. It blends catalytic, charitable capital with impact-aligned, market-rate capital to drive investment into solutions with deep potential for climate impact that are systemically overlooked by conventional financiers. Catalytic capital can be deployed to overcome risks that are a mis-fit for traditional venture capital. Through both initial investments and follow-on investments consistent with Prime's mission requirements, Azolla is designed to embrace high risk at the earliest stages and help safeguard impact as companies scale.

Sarah Kearney, Founder and Executive Director, Prime Coalition: "We founded Prime Coalition 10 years ago to support market-driven climate solutions that have massive potential but are overlooked by traditional finance. Prime launched Azolla Ventures as our next approach to doing so for early-stage ventures, this time blending different types of capital under a single fund thesis. It is a celebration of difference: bringing together many different types of asset owners toward a shared, urgent mission, each aligned within their capital's unique priorities and constraints."

Investments made by the new Azolla Ventures fund must meet three investment criteria:

• Impact: Solutions must have the potential to reduce or remove at least 0.5 gigatons of carbon dioxide equivalent emissions cumulatively by 2050;
• Additionality: Solutions must be unlikely to raise sufficient financial support from conventional investors at the time of Azolla's initial investment; and
• Commercial potential: Solutions must have high potential for achieving commercial success at scale, ultimately enabling the envisioned impact. The fund's investment should also position the solution to unlock additional capital as it matures.

Johanna Wolfson, Co-founder and General Partner, Azolla Ventures: "The catalytic capital at the heart of the Azolla fund enables us to invest differently - in our embrace of riskier ideas, in our ongoing impact stewardship as board members, and in the fund design itself. For example, we're proud that our carried interest as investment managers is influenced by how well we manage portfolio companies toward impact, which is assessed independently by Prime Coalition."

Prime Coalition has been a long-time leader in catalyzing sustainable, effective, and scalable solutions to climate change. Based on Prime's pre-investment impact assessment methodology, Prime co-developed an open-source tool called CRANE that assesses the climate impact of early-stage climate ventures, and Prime now serves as convener of Project Frame, an 800+ member community of climate investors seeking technical standards for impact measurement. Prime and Azolla's joint governance of impact stewardship among portfolio companies marks a significant innovation in a growing movement to design investment systems that aim to prevent impact-washing and greenwashing.

Amy Duffuor, Co-founder and General Partner, Azolla Ventures: "We need a wide range of approaches to prevent catastrophic climate change, which is why Azolla Ventures does not invest in one sector or vertical. We are privileged to partner with visionary company founders from diverse backgrounds and areas of expertise, who work tirelessly to drive climate solutions with the greatest impact. From attacking industrial emissions to sequestering carbon in the soil, these companies will revolutionize our systems and the relationship to our world."

Initial Azolla investments include: Heaten, developing high-temperature heat pumps for industrial processes; Funga, optimizing the forest microbiome for improved carbon storage; Sitration, developing membranes for low-cost battery recycling; Carbon Reform, deploying carbon capture systems in buildings for improved air quality and energy savings; Calcarea, decarbonizing shipping; and Scalvy, modularizing electric vehicle drivetrains for faster EV deployment.

www.primecoalition.org
www.azollaventures.com