Frequently Asked Questions

Investing with Carbon Equity

How does the typical Carbon Equity investment work?

Carbon Equity only offers top-tier private market funds with a focus to decarbonise the planet. We pool investments through our Carbon Equity investment vehicles. This means that all cash transfers, fees and expenses are paid through our investment vehicles. Carbon Equity represents you as an investor towards the underlying funds. To ensure secure and efficient fund investment & management we work with best in class partners such  as Trustmoore, Finnius, Zuidbroek and Amstone.

What is the difference between Carbon Equity funds?

Carbon Equity offers Portfolio Funds and Direct Funds. Our Portfolio Funds invest in a set of 8-15 climate private equity funds, with the goal of creating a diversified investment product. Our Direct Funds invest in a single fund, allowing you to build your own portfolio.

How is it different from crowd equity or crowdfunding?

Crowdfunding platforms enable you to invest in single companies. Typically, you must do your own homework on the opportunity. The risk of a single company failing is very high — hence the risk of crowdfunding is typically very high.

Carbon Equity allows you to invest in private equity funds, which are generally more diversified, curated and professionally managed compared to crowdfunding.

Diversified: Crowdfunding platforms raise money for individual startup companies. Carbon Equity funds invest in many startups at the same time.

Curated: Crowdfunding requires investors to research and select companies themselves. Carbon Equity does this for you, with its experienced investment team.

Professionally managed: Carbon Equity and the investment teams within the private equity funds leverage professional resources and expertise to ensure companies get the help needed to grow.

How is this different from stock market investing?

When you invest in the stock market, you are investing public companies. A public company is one that has held an initial public offering (first sale of stock to the public) and whose shares can be bought, sold or traded on a stock exchange.

Carbon Equity focuses on private equity, which is an asset class focused on acquiring ownership stakes (equity) in privately held companies (i.e. not listed on a stock exchange). The investment horizon, cash flows and other investing dynamics are different within private equity compared to stock marketing investing. You can read more about that in the how it works section below.

How does the typical Carbon Equity investment work?
What is the difference between Carbon Equity funds?
How is it different from crowd equity or crowdfunding?
How is this different from stock market investing?

How it works

How and when do I need to transfer my investment?

After you finalize your subscription to a fund, you will receive a capital call. A capital call is the request to transfer your committed investment amount. With an investment of €100,000 or more, the first capital call will be the higher of €100,000 or 25% of your commitment. The remainder of your commitment will be called over roughly 5 years in semi-annual instalments which depend on the expected calls from underlying funds (e.g. roughly 5-10% of the commitment will be drawn every 6 months).

What is the investment horizon of Carbon Equity funds?

Carbon Equity funds typically have a duration of 10-13 years, just like the private equity funds Carbon Equity invests in. During the first 3-5 years, these funds invest part of the money into startup and scaleup companies. The remaining years they use to continue investing in, grow and sell these companies.

If you invest with Carbon Equity, you commit money for the full lifetime of the fund. That doesn’t mean you don’t see any money back before the end date. Any time a portfolio company is sold or goes public, you receive your share of the proceeds. On average, you get your initial investment back within 5-7 years, and your additional proceeds come in the years after.

How do I invest with Carbon Equity?

The investment process consists of 5 steps:

  • Create an account: To find more information on our funds and compare your options, you first have to create a free account with us.
  • Request fund info: On each fund page you can request more information about our investing strategy and the diligence done on each underlying fun
  • Reserve your investment: Once you decide to sign up, you must fill out the reservation to invest form. The reservation form is non-binding.
  • Onboarding and subscription: You will be invited to the digital onboarding process and sign a subscription form. The subscription form is binding.
  • Capital call: After subscribing, you will receive the first ‘capital call’, i.e. the first cash transfer request.
What is the minimum investment amount?

Currently, the minimum investment for most funds is €100,000.

What do cash flows typically look like for a Carbon Equity fund?

Cash outflows: Depending on the amount you commit, you will have a single upfront capital call (the full amount) or have several capital calls spread out over the years. See “How and when do I need to transfer my investment?”.

Cash inflows: Typically, funds will start to exit companies (e.g. sell their ownership shares) after 5 years, and the cash proceeds will be distributed to you periodically. On average, you will have received proceeds equal to your initial investment after 5-7 years and you will receive incremental profits in the years thereafter.

J-curve: If you look at the typical pattern of cash flows in a venture capital or private equity fund, they resemble a J-curve. Private equity funds tend to post negative returns in the initial years as a result of investment costs, management fees and a not yet mature investment portfolio. Then, they post increasing returns in later years when the investments mature.

What is the target return of your funds?

Target returns will differ per fund. Portfolio Funds are well diversified and aim to return 2-2.5x your invested capital over the lifetime of the fund (10-15% net IRR).

Direct funds aim to return anywhere between 2-3x your invested capital (12-25% net IRR). Because a direct fund is less diversified (one fund rather than multiple funds), the range of outcomes may be more wide than the range of outcomes for a highly diversified Portfolio Fund.

What kind of communication and reporting can I expect?

Fund email updates: Every 2 months you will receive an email update on the fund, including but not limited to new investments, approval of new investment teams and fundraising milestones.

Fund reporting: Customers receive a financial overview of the fund bi-annually, including total capital invested and fund performance.

Investment dashboard: The investment dashboard offers access to an overview of all your investments, a continuous stream of portfolio company milestones and updates and more background reading on how can solve the climate challenge.

Impact reporting: In our investor portal, we will share stories of all your portfolio companies, the problems they’re trying to solve and how big that impact might be. We will also share the impact reports of the private equity funds you are invested in, together with a note from our Head of Impact on how to interpret this information.

Can I exit my investment early?

No, you cannot cash out your investment early. In case you do wish to exit early, you will have to find a buyer for your shares. Carbon Equity may assist with this, but please note that this will be on a best effort basis and that no guarantee can be made that a suitable buyer will be found. It is not uncommon for secondary transactions to happen at a discount to the value of the shares.

Can I select which companies I want to invest in?

No, you cannot select specific companies to invest in on the Carbon Equity platform. Through Carbon Equity you invest in a fund managed by a team of expert investors. You will be invested in the entire portfolio of a fund. You can decide to focus on a specific investment area within climate tech (such as agri-food or growth equity) by selecting a Direct Fund rather than a Portfolio Fund. By investing in multiple companies your investment is more diversified, lowering the risk of losing your initial investment.

What fees do you charge?

Investors pay two layers of fees. Fund managers will typically charge a 2% management fee annually. Most funds will initially charge this over the committed amount and after the investment period (3-5 years) charge over the amount of capital that is actually invested. Funds will also typically take 20% of the returns, in excess of a certain minimum hurdle rate (typically 8% return per annum).

Carbon Equity charges a 1% setup and 0.4%-0.75% annual management fee on top of this to enable access, select the right funds and handle the administration for you.

How does the Carbon Equity ambassador program work?

We tried to keep it simple. When the person you refer mentions you while reserving an investment, you and the person you refer automatically benefit from a 0.05% discount on your yearly management fees. You can find more details on our ambassador program here.

Who can invest?

Who can invest in Carbon Equity funds?

Everyone can invest with Carbon Equity! That is part of our mission. Investors do need to be able to meet the minimum ticket sizes, which is currently €100,000 for most funds.

Can I invest from outside of the Netherlands?

Yes, investors from around the world invest with Carbon Equity. Some countries may require that investors meet Accredited or Qualified Investor criteria. Such criteria require that you have a minimum net worth, a certain level of annual income or professional experience working as an investor. These criteria will differ per country.

Climate investing

What types of companies does Carbon Equity invest in?

Carbon Equity invests in high-growth climate tech companies. These are companies developing products and/or services that are part of the solution to reaching net-zero CO2 emissions. Like next-generation solar panels, plant-based cheese, zero-carbon fuel for aviation, and carbon accounting platforms. You can find all our portfolio companies here.

There are seven sectors that Carbon Equity invests in: energy, industry, agrifood, transportation, buildings, carbon control and enablers. Each of these sectors have a critical role to play to get to net-zero CO2 emissions.

How does Carbon Equity select funds?

Carbon Equity has a highly experienced investment team, with decades of private equity fund investing experience and energy transition expertise who select funds based on a 4 step process. Learn more here.

How do you get access to the best investment teams?

Carbon Equity leverages its extensive network of advisors,   shareholders and clients to gain access to top funds. Funds are eager to work with Carbon Equity because they support the Carbon Equity mission to enable access to more people. Carbon Equity furthermore can add value to funds through it’s best in class climate diligence framework and expertise on climate fund best practices.

How do you measure impact?

First, we assess how committed a fund is to impact. Funds can prove their impact commitment to investors in several ways, including its: impact mandate, impact goal, impact thresholds, impact sourcing and impact incentives. Then, we thoroughly vet a fund on its climate impact. We do so using our proprietary climate impact scorecard that requires input on 40+ questions across 12 topics.

Legal

What are the risks of investing in a Carbon Equity fund?

Investments in venture capital and private equity funds involve a high degree of risk. Past performance does not guarantee future performance. The value of an investment may decrease as well as increase, and investors may not be able to retrieve their original investment. Please review the documentation of respective funds for details about potential risks, charges and expenses.

Carbon Equity Portfolio Funds offer a higher degree of diversification and are therefore more risk-averse than a Direct Fund investment.

Investments in Carbon Equity funds should be considered illiquid. Investors should only invest with capital they can afford to set aside for 10 years.

Given the high risk and illiquid nature of venture capital and private equity, investors should only invest a sensible portion of their liquid net worth in this asset class. Professional investors typically invest between 20-30% of their liquid net worth in private equity.

What is the legal structure of the Carbon Equity funds?

Carbon Equity manages a number of funds and these can have different legal forms, depending on the commercial considerations for that fund and the target investor base. To date, most funds are structured as a contractual fund for joint accounts “FGR” under Dutch law. An FGR is a contractual arrangement between a fund manager and its investors, requiring the manager to invest and manage assets contributed by the participants for their joint account. The legal ownership of the assets and liabilities of such an FGR is held by a separate legal entity (titleholder) which has the legal form of a foundation (stichting) under Dutch law. For Dutch tax purposes, the funds are treated as a ‘closed ended FGR’. A closed ended FGR is ‘tax transparent’, meaning that any income and gains realized by investing through the closed FGR are attributed to the participants as if the participants were investing directly in the investment portfolio of the FGR.

Carbon Equity also manages a fund in the form of a cooperative (coöperatie) incorporated under Dutch law. A cooperative is a limited liability company and it has legal personality, meaning that it owns the assets and liabilities in its own name. A cooperative is non-transparent for Dutch tax purposes.

Carbon Equity intends to manage funds in the form of a limited partnership (commanditaire vennootschap) incorporated under Dutch law. A limited partnership consists out of a general partner (which will be a Carbon Equity company) and limited partners (the investors). A separate foundation (stichting) under Dutch law will be incorporated to hold legal title to the assets and liabilities of the fund. Funds in the form of a limited partnership will be structured as tax-transparent for Dutch tax purposes, meaning that any income and gains realized by investing through the limited partnership are attributed to the participants as if the participants were investing directly in the investment portfolio of the limited partnership.

What happens should Carbon Equity B.V. go out of business?

The assets of a Carbon Equity fund are either held by a separate foundation (stichting) that acts as a custodian, or by the fund itself. Carbon Equity will act as fund manager only. The fund assets are completely separate from those of the fund manager, so in case Carbon Equity B.V. goes out of business, the funds are not impacted and can be managed by a newly appointed manager. In case of bankruptcy of Carbon Equity, the trustee (curator) cannot put a claim on the assets of the fund. The fund agreements provide for a mechanism through which Carbon Equity can be replaced in such an event.

I have a complaint, what should I do?

If you have a complaint or are dissatisfied with Carbon Equity or your investment product, you may submit a complaint in writing to invest@carbonequity.com, or Carbon Equity B.V., Geldersekade 101-F, 1011 EM Amsterdam. Your complaint will be handled carefully and as soon as possible. Carbon Equity is also registered with the KiFID, the Dutch Institute for Financial Disputes. You can file a complaint with KiFID as well about Carbon Equity. You can find more information at www.kifid.nl.

Is Carbon Equity under supervision, and what does this mean?

Carbon Equity is licensed as a fund manager by the Dutch Authority for the Financial Markets, under article 2:65 of the Dutch Financial Markets Supervision Act. This means that Carbon Equity meets legal requirements to be active as a fund manager and is subject to conduct supervision by the AFM and prudential supervision by the Dutch Central Bank. Carbon Equity is included in the AFM register for investment funds.

Still have a question?

Send us an email

Invest in the future you wish to see

Carbon Equity logo
Follow us
Impact in your Inbox
Our monthly newsletter on all things climate tech investing
Subscribe
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

The information on this website is not an official offer to buy or invest in the funds of Carbon Equity B.V. nor does it function as a prospectus for such investment. The information on this website should not be used or relied on for purposes of any contract with, commitment to or investment into funds managed by Carbon Equity B.V. or its affiliates.The information on this website might have legal, regulatory or other limitations in certain jurisdictions. Carbon Equity B.V. asks visitors who view this information to become familiar with and obey rules applicable to them. Carbon Equity B.V. does not accept liability for violation of such rules by anyone browsing this website, even if that person is considering investing.

Offering of funds managed by Carbon Equity B.V. will be available to potential investors via a separate and dedicated account environment, which is clearly indicated as such. Investors should take note that investments are offered in a limited number of accepted jurisdictions and potentially investors will be required to commit to an initial investment of at least EUR 100,000, unless an exemption applies.

Carbon Equity B.V. will act as the Alternative Investment Fund Manager (AIFM) of its funds and it is fully licensed pursuant to article 2:65 of the Dutch Financial Supervision Act (Wet op het financieel toezicht). Carbon Equity B.V. and the funds it manages are subject to supervision by the Authority Financial Markets (Autoriteit Financiële Markten) in the Netherlands. Carbon Equity B.V. is registered with the Authority Financial Markets with registration number 15005329. The license allows Carbon Equity to manage investment funds which invest in one or more funds.

Carbon Equity does not offer investment advice. Nothing here or elsewhere should be seen as a recommendation for any investment in any security. The fund documents, available via our dedicated account environment, outline potential risks, charges, and expenses. Please review these risk warnings and disclosures carefully. Investments into private equity are speculative and risky. The value of investments can vary over time. Investments into private equity have a long horizon (exceeding 10 years) with limited liquidity. If you cannot afford to potentially lose your full investment, it is best not to invest. Past performance does not guarantee future returns. Investing in a private equity fund is not comparable to a deposit with a bank.