Patrizia completes first close of €100m VC fund

Sustainable Future Ventures has raised an initial €50m to invest in tech it believes will drive sustainability in the built environment.

The first in a new fund series for German investment manager Patrizia, SFV received the majority of its capital from German institutional investors with significant real estate holdings. Additional capital came from family offices and other real estate operators and investors.

SFV, led by partners Conan Lauterpacht and Matthew Chagan, will invest in startups globally, but with a “strong focus” on Europe.

Two startups have already received backing from the fund:

• GBuilder: a Finnish startup that digitises the residential process, particularly at the configuration level, which minimises waste and allows customers to choose the materials they use
• Liftango: a startup based in Australia, New Zealand, the UK and US that helps businesses plan, launch and scale on-demand shared transport systems in an effort to cut emissions

SFV will target a total fund size of €100m, with a cap of €140m.

Generating best possible returns

The fund had its start about 18 months ago when Patrizia brought in Lauterpacht from VC firm M7 Structura to launch a tech investment vehicle.

Although the brief was broadly to generate the best possible returns for their investors, Lauterpacht and Chagan believed a focus on net zero targets would play a major role in that.

SFV will invest primarily – but not entirely – in companies that meet its sustainability impact assessment criteria.

“If they don’t, then that’s not a no. We may still invest in them, because we also look at things to improve general productivity and efficiency, but that’s effectively a minority of the fund,” said Lauterpacht.

Facing macro volatility

Raising capital for the fund “happened a lot faster than I think we would have expected”, Chagan said, crediting Patrizia and the power of its brand.

He added: “In a high interest rate environment, you’re typically looking at investments that are either hedged against inflation – like real estate – or you’re looking at investments that will grow quickly – like venture capital. Fortunately, we sit at the intersection of the two.”

With the recent fall in tech valuations, VC funds that are just starting out can take advantage of lower pricing.

But that does not mean throwing money at any potential startup. “Growth at any cost is gone,” Lauterpacht said. Less certainty about revenues has forced funds to ensure that companies are prudent and capitalised enough to get through the next two years.

“You don’t want to be going into a company that’s thinking it’ll be going back to market in 12 months, because you don’t quite know what the situation is going to be in 12 months,” said Lauterpacht. In 24 months, you could be more optimistic about economic conditions stabilising, he said.