Who would have thought that venture capital just needed a little help from its friends in philanthropy to get its mojo back.
For much of the past decade, the lion’s share of venture funding has gone toward relatively conservative investments. Think: fast-followers, rehashes of existing business models updated with some new tech or buzzword and a preference for software above all else. The common thread was low capital expenditures, small headcount and shorter timeline to profitability.
All that might make for good returns, but when it comes to taking big swings on challenging problems like climate change, the transitional venture model can come up short. Not always, of course — there are plenty of firms focused on the sector that have come up with ways of both delivering returns while also queuing up firms that have the potential to eliminate massive amounts of carbon pollution.
But for every company that gets funded, there are dozens of others with viable concepts that are short on funding because they’re still too early-stage.
That’s where Azolla Ventures hopes to step in. On Thursday, the climate tech-focused firm is announcing a $239 million blended fund — meaning it’s not just drawing on traditional investors. Rather, the fund pairs investors with philanthropic partners who are hoping to maximize the impact of their dollars.
The result is a fund that will be focused on investing in early-stage companies — mostly pre-seed and seed with some Series A — that would otherwise be overlooked by other VCs.
“In some ways, you would look at what we’re doing and think, ‘This is an interesting early-stage, maybe very early-stage private investor.’ On the other hand, we’re so different it’s like we’re from outer space,” Azolla co-founder and general partner Matthew Nordan told TechCrunch+.