Frequently Asked Questions
Investing with Carbon Equity
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.
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.
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.
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.
The Climate Investing Club allows us to offer investment opportunities with minimums as low as €10,000. Everyone who wants to become a member of the Climate Investing Club must go through a screening process.
How it works
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 typically be 15% of your commitment. The remainder of your commitment will be called over 5 years in semi-annual installments (i.e. 10% of the remaining commitment per 6 months).
For the Climate Investing Club, the first capital call will be the full amount up to €50.000. If you invested more than €50.000, the initial capital call will be €50.000, and the remaining commitment will be called over the years thereafter.
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.
The investment process consists of 4 steps:
- Request more info: On each fund page you can request more information about our investing strategy and the diligence done on each underlying fun
- Request allocation (invest): 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.
Currently, the minimum investment for most funds is €100.000. Our Climate Investment Club enables limited access to minimums as low as €10.000.
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.
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.
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 (Beta): 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.
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.
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.
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 + 0.4%-0.75% annual management fee on top of this to enable access, select the right funds and handle the administration for you.
Carbon Equity has an ambassador program that rewards people for investing together. Investors who refer others or invest together with friends may add up their respective commitments and both become eligible for the applicable fee tier. See the example below:
You invest €150.000 in a Portfolio Fund
The regular fee tier for €100.000-249.000 is 0.75%
Then, you ask someone to join you
They invest €125.000
Your joint investment is €275.000
You both receive the €250.000 fee tier of 0.65% (i.e. a 0.1% discount)
Who can invest?
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, and €10,000 for limited opportunities within our Climate Investing Club. See ‘what is the minimum investment amount’ for more information.
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.
Opportunities in the Climate Investing Club are currently only available for people who live in the Netherlands.
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.
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.
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.
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, impac 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.
Carbon Equity is in the process of obtaining the complete Alternative Investment Fund Manager Directive (AIFMD) license. The AIFM Directive lays down rules and requirements for the authorization, ongoing operation and transparency of fund managers.
While awaiting our approval, Carbon Equity is registered at the Dutch AFM (Autoriteit Financiële Markten) under the light regime. This regime, commonly used by venture capital funds, exempts funds from meeting all AIFMD requirements. An important implication of this exemption is that investors must invest a minimum amount of €100.000. More information on this regime can be found here.
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.
Carbon Equity funds are structured as a contractual fund for joint accounts “FGR”. An FGR is a contractual arrangement between a manager and its investors, requiring a manager to invest and manage assets contributed by the participants for their joint account. Our legal ownership of the FGR is held by a separate legal entity (titleholder), ‘Stichting Carbon Equity Climate Funds’. The closed ended FGR is ‘tax transparent’, meaning 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.
The assets of a Carbon Equity fund are held in the name of the legal title holder 'Stichting Carbon Equity Climate Funds', managed by Trustmoore Netherlands B.V.. The Fund assets are completely separate from those of the Manager, so in case Carbon Equity B.V. goes out of business, the funds are not impacted and will be managed out by a newly appointed manager.