Information on the Target

Carbon Equity stands as the world's pioneering platform dedicated to unlocking access to climate venture capital and private equity. It offers mass affluent and high-net-worth investors the opportunity to invest alongside premier climate technology funds with minimum investments that are significantly lower than traditional requirements. Through Carbon Equity’s innovative investment platform, individual investors can support a diverse range of forward-thinking climate technology enterprises, covering areas from carbon-free steel production to large-scale battery deployment.

The €6 million raised in its Series A funding round, led by BlackFin Capital Partners and supported by existing investor 4impact, propels Carbon Equity's total funding to €9 million. The capital will primarily facilitate the company’s international expansion efforts, enhance distribution through (neo-)banks and wealth management platforms, and lower minimum investment requirements, enabling access to its ELTIF fund from as low as €25,000.

Industry Overview in the Target’s Specific Country

In recent years, the demand for private market investments has surged significantly, especially within the European context. According to Bain & Company, individual investors currently control around $150 trillion, representing half of the global assets under management (AUM). However, their participation in alternative investment funds remains limited, accounting for less than 16% of total AUM. The majority of individual investors, particularly those in the mass affluent and high-net-worth categories, have traditionally faced significant barriers to entry due to elevated capital requirements ranging from €2 million to €10 million and regulatory challenges.

Despite these barriers, a reported 69% of mass affluent individuals express a keen interest in exploring alternative investments, amid a steep rise in interest for sustainable investment strategies. A survey by Morgan Stanley highlights that 85% of individual investors and 95% of millennials are actively seeking sustainable investment options. This growing enthusiasm indicates a potential shift in investment behaviors and priorities, emphasizing the importance of accessibility to alternative forms of investment.

Moreover, there has been a noticeable generational shift concerning approaches to money, moving from viewing it solely as a means of personal gain to employing it as a tool for addressing significant global challenges. Jacqueline van den Ende, Co-founder and CEO of Carbon Equity, encapsulated this sentiment by emphasizing the platform's role in redirecting investors' capital towards innovations essential for combating climate change, thereby facilitating their participation in the emerging net-zero economy.

The Rationale Behind the Deal

The funding secured by Carbon Equity will be pivotal in augmenting its operations and expanding its footprint across European markets. By streamlining pathways towards private equity and venture capital, Carbon Equity not only aligns with the rising demand for sustainable investments but also aims to democratize access to impactful investment opportunities. The capital will facilitate the development of carefully curated investment products, thus empowering individual investors to engage in high-impact climate solutions.

Through its robust strategy, Carbon Equity addresses the investment gap within the private market, ultimately aiming to convert increased individual interest in sustainable investments into actual capital flows toward climate technology companies. This approach positions Carbon Equity as a crucial player in bridging the financing divide within the climate sector.

Information About the Investor

BlackFin Capital Partners, the lead investor in this funding round, is an independent private equity and venture capital firm specializing in European businesses within the financial services and technology sectors. As of June 2023, BlackFin has managed over $3 billion in assets, including more than $600 million within its venture strategy, having invested in roughly 20 high-potential fintech and insurtech startups. Their commitment to supporting innovative firms aligns well with Carbon Equity’s mission, reinforcing the potential for financial success combined with significant environmental impact.

4impact, the existing investor participating in this Series A round, focuses on driving progress in early-stage digital startups with a pronounced impact on society. As a proponent of environmental sustainability, inclusion, and health initiatives, 4impact's backing of Carbon Equity underscores a shared vision of promoting meaningful change through innovative investment strategies.

View of Dealert

In evaluating the potential of Carbon Equity as an investment, it becomes evident that the firm operates within a rapidly growing and increasingly important sector. The climate technology landscape is gaining traction as both individual and institutional investors prioritize sustainability. With its unique proposition of providing access to breakthrough climate ventures, Carbon Equity is well-poised to capitalize on this market trend.

The decision to lower minimum investment thresholds to €25,000 significantly enhances accessibility for more investors, thus broadening Carbon Equity's potential market reach. This strategic move, combined with its strong growth metrics—including a 300% increase in assets under management and a 100% growth in user base—positions the firm favorably for sustained expansion.

Overall, Carbon Equity's strong leadership team, demonstrable growth, and alignment with evolving investor preferences create a compelling case for investment. With strong backing from prominent investors like BlackFin and 4impact, Carbon Equity is set to become a leading player in the climate investment space. Therefore, this deal appears to represent a wise investment opportunity, with the potential for substantial returns paired with positive environmental impact.

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