While many climate investors are focusing their efforts on disruptive, advanced technology solutions, ETF Partners’ Patrick Sheehan has other ideas.
“I don’t actually have anything against carbon capture and storage, except that it’s probably going to come to market too late,” he told TechCrunch. Instead, Sheehan and his colleagues are digging into more software-focused corporations that promise to proceed moving the needle.
“There are some who say it’s a cop outside,” Sheehan said. “The more I look at it, the more I completely disagree with it. We need to seek out corporations that we are able to scale quickly to make an impact over the lifetime of the enterprise capital fund. It’s a maximum of 10 years.
This sentiment helped ETF Partners oversubscribe the company’s latest fourth fund value €284 million.
The company was founded in 2006 and survived a series of booms and busts. By 2018, Sheehan describes his work as “more evangelical”. He has since found that limited partners are much more open to climate technologies. “It has become more of a good institutional product.”
Instead of mergers and e-fuels, ETF Partners is interested in finding more startups like (*20*), a portfolio company in the third fund. (*20*) uses artificial intelligence to optimize shipping operations, including route decisions, to cut back fuel consumption by 10-15%.
“Carbon emissions from shipping are almost entirely fuel-based. With a bit of software that can be deployed around the world in just a few years at almost no cost, you can reduce global emissions by 0.3%,” Sheehan said. “It’s amazing – and fast.”
His company focuses on five industries, including energy, transportation, communications, consumer and food, and agriculture. “The umbrella theme over them is what I would call an intelligence layer sitting on top of the infrastructure,” he said.
The fund will proceed to specialize in European start-ups. Sheehan cites more favorable government policies and a public that almost universally believes that climate change is real. “It’s an amazing backdrop,” he said.
As a result, it states that investors do not need to seek out corporations developing disruptive technologies that want to alter the market, and there is less demand for corporations focused on sustainable development.
“A lot of deep technologies can be completely green,” Sheehan said. “But our focus is on companies whose revenues are just starting to grow.”