Strategy Session: General Atlantic Sharply Scales Its Climate Strategy

Growth investor General Atlantic, with $84 billion in assets under management and around 200 companies in its portfolio, is already one of the most established names in the tech sphere. Increasingly, the firm is looking to make a bigger mark in climate tech as well.

Enter BeyondNetZero, a cleantech investment arm GA launched last July to focus on high-growth companies it believes will have a meaningful positive impact on climate. Structured with its own pool of limited partners, BeyondNetZero hasn’t disclosed a set fund size. With plans to invest $50 million to $300 million per transaction, however, it’s clearly a big-ticket initiative that I’d guestimate in the range of a couple billion dollars.

To see where this effort is going, Crunchbase News sat down with Michael Bevan, a longtime energy- and environment-focused venture investor who joined BeyondNetZero as managing director. Also on the call was Graham Rihn, CEO of RoadRunner Recycling, the latest addition to the firm’s current portfolio of three known investments. 

There’s a lot of money going into BeyondNetZero, indicating you see a huge market opportunity at hand. How  would you describe the mission?

Bevan: We believe that society has waited too long to address climate change. In the next decade, we as a society need to cut global emissions by 50 percent. We believe over the next decade, supply chains are going to be rewritten, and this is going to be the next industrial revolution. 

Are there particular industries you’ll focus on around that concept?

Bevan: We have four segments in which we are focused. One is decarbonization, removing carbon from the supply chain and industry. Second is energy efficiency, using less power. Another is resource conservation, the concept of letting the resources we have already extracted be used more effectively. The last is emissions management and monitoring.

Note: Looking at BeyondNetZero’s three initial disclosed investments, we see those themes at work. RoadRunner, which helps commercial businesses make arrangements to recycle waste, fits in the conservation space. 80 Acres Farms, a vertical farming upstart that uses renewable energy, checks the conservation box. And o9 Solutions provides supply chain planning software with a  focus on sustainability.

For your latest investment, you led a $70 million Series D for RoadRunner, which is working on increasing recycling by businesses. What attracted you to that deal? 

Bevan: There are many countries in Europe where as much as 60 percent of all waste is recycled. In the United States, we recycle less than a third of all waste, and it’s largely because most of the participants in the U.S. waste process own the landfills and own the trucks. They get paid to put waste into landfills. RoadRunner is trying to break that cycle.

Note: It was also a competitive round, per RoadRunner’s Rihn, who found himself in the position of choosing among multiple interested backers.

Cleantech investment is still somewhat associated with “Cleantech 1.0”–the period in the mid- to late-2000s when a lot of VCs made big bets in infrastructure-heavy companies that did not produce hoped-for returns. What’s different about the latest cleantech investment boom? 

Bevan: One of the starkest differences between the previous investment environment and this one is that in the first generation of businesses, we were pulling people from other industries. This time we’re seeing repeat entrepreneurs in this industry. Many of the first generation of businesses were also capital intensive. They ignored the fact that there were incumbents with pricing power.

Note: Another theme, touched on by Rihn and Bevan, is the notion of “asset-light” businesses, which investors currently tend to favor over “asset-heavy” businesses. RoadRunner puts itself in the former category, with an Uber-like approach to commercial recycling, connecting businesses with existing freight trucks, and drivers who can transport recyclable materials.

(Editor’s Note: A previous version of this article contained incorrect information: General Atlantic has around 200 companies in its portfolio.)

Illustration: Dom Guzman

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