Dutch decarbonization startup RIFT this week raised €83 million in Series B financing from the Dutch pension fund PGGM and other European institutions. The scale-up deal was welcomed by Europe’s early-stage heavy funding scene as a signal of growing appetite among European investors for homegrown climate innovation ready for commercialization.
The shift reflects a newly urgent desire for energy resilience and technological sovereignty as old alliances crumble and new geopolitical risks erupt (see chart, above). Climate and deeptech are “where sovereignty is going to be decided,” Yann de Vries of Kembara, a new European growth-stage fund, notified ImpactAlpha. “Europe has finally realized that they are not in control of these core technologies.”
Growth gap
Europe has more climate tech startups than ever, but not enough growth capital to support startups build their first commercial plants and score paying customers. European Series B rounds on average pull in 20% less than those in the US, according to World Fund, a Berlin-based venture capital firm founded five years ago to invest in climate scale-ups. The firm states the annual Series B shortfall of $2.7 billion means that each year more than three dozen European climate tech startups fail to raise enough to relocate from prototype to production.
First of a kind
RIFT, which spun out of Eindhoven University of Technology, is pioneering iron fuel cells to decarbonize heat-intensive industries such as food and beverage, pulp and paper, and special chemicals. RIFT is focutilized on “preparation and execution of our first commercial project,” CEO Mark Verhagen notified ImpactAlpha.
PGGM teamed up with the Netherlands’ Invest-NL, Rubio Impact Ventures and regional Dutch development agencies to finance RIFT’s series A and B rounds. Verhagen locked in multi-year funding from his investors to overcome what he called a “chicken and egg” problem of securing financing from investors wary of committing to risky first-of-a-kind projects. “Most of the companies facing that moment of final investment decision actually don’t receive any money,” Verhagen declared.
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