VC Investing in European Scale-Ups that Foster Climate Change

EMS:

Hi Luca, thanks for being with me today.

Luca Zerbini:

Thank you for having me.

EMS:

Absolutely. So, to kick off the conversation, tell us a little about the firm and how you got to where you are today.

LZ:

Yeah, absolutely. So, Una Terra actually started just around COVID time when I realized that if I wanted to do more from an impact perspective, I needed to set up my own organization and also be able to invest. So, I left my long corporate career in order to be able to do just that, put together a team and set up the fund. So, Una Terra is a $200 million fund focused on climate change and biodiversity loss and specifically accelerating solutions across Europe that can tackle the most important issues from an environmental perspective.

EMS:

Great. Luca, as a follow-up question, I would love to hear more your outlook for VC impact investing in these European scale-ups that foster climate change and biodiversity loss.

LZ:

Yeah, absolutely. So, I think there is a lot of positive momentum for that. So, the major tailwinds, at least in Europe, regulation is of course becoming stricter and stricter on everything related to impact not only on energy and emissions, but now also a lot on plastic waste and other areas related to circular economy. On top of that, I would say the consumer sentiment and even customer are requesting more and more solution that are fully sustainable and is not enough anymore to state and greenwash around solution but really the content is important. I think on the other side, there is still work to be done on major investors, so I would think that most of the asset owner and manager are still not equipped to understand the difference between the different type of fund because of the amount of changes that is happening in a very short amount of time. So, we do a lot still of education on ensuring that they really understand what is the difference between ESG and sustainability and impact and Article 9 and all the different areas. But I think over time for sure, this will continue to be an area of high growth. And to be honest, even in this very late downturn in the VC industry, the only part that is still protected and keeps growing is impact.

EMS:

Absolutely, Luca, and that segues nicely into the next question I have for you. I would love for you to elaborate on some of the specific greatest opportunities you see in your space and why.

LZ:

Yea, look, I think that it's a continuum of solutions that are coming to market. I believe we started a lot with energy transition, which was one of the largest issues, but has been regulated for a while and there are a lot of solutions, solar, wind, etc., so it's a lot more about infrastructure. Similarly in mobility, a lot of investment, major automotive players and a lot of infrastructure as well in terms of energy, recharging, etc., batteries. I think what we see right now is that the industry is moving to all the spaces of circular economies. So, in terms of industries, it means packaging, waste management, sustainable food, agritech, fashion and apparel. And those are really the areas where we see a lot more opportunities is really about taking industry that are traditionally linear. So, extracting materials, converting them, selling them, and using it only once into something that can be a lot more circular or can be reused multiple times. And as a result, we are able to disconnect the resources we extract from the one that are really used so that we actually limit the impact from an environmental perspective.

EMS:

Luca, on the other hand, I would love for you to address some of the greatest challenges you face in this space and how you're conquering them.

LZ:

I would say the first challenge is really about the amount of capital that is required. So, we know that this has to be done very quickly comparatively so we have still a timeline out to 2030, which is really a few years away. So, it requires to allocate a lot of capital in a very short amount of time. And people are not used to invest a lot in innovation, right? Innovation we see is only one part of a much bigger capital allocation so I would say is No. 1 issue. No. 2 is leadership. It's really the fact that there are still a lot of lack of, I would say, people that can really take solution and bring them to market and scale them up. While there is a lot of innovation, not enough people that are willing to help scaling up those solutions. And then lastly, I would say also it would be very helpful that the regulation today is supporting quite a bit, but it would be good to stop subsidizing in general the oil and gas industry by and large, because it's the one that is really preventing the move quicker to a new solution across energy, across even plastic, which is the derivative of oil and gas.

EMS:

Luca, we've a lot of ground today and wanted to see if you have any final thoughts you'd like to share with us.

LZ:

Yeah, I think, look, we have done a lot more than just being a fund, and a lot of that has been partnership with many different players do I think that will be the first thing. I think there is a real ecosystem of collaboration that is important, is a lot more than competition of the past. It's really about working together. The second thing that would highlight is we have published a book, which is quite interesting, is called Standing Up for the Planet, which is on Amazon, and we're launching it this week in the U.S. And the reason that we wanted to write this book is because a lot of the leadership we see is actually female leadership, which is great because it's also about diversity and inclusion. And as a result, we wanted to thank all these women and we wanted to inspire others to do the same. So, I think it's an interesting read for everyone who wants to do more for sustainability both environmentally and socially.

EMS:

Well, huge congrats on your book launch and I look forward to reading it. Well, Luca, I wanted to thank you so much for sharing your perspective with our listeners.

LZ:

Thank you. It was a pleasure.

EMS:

And thank you for listening to the EisnerAmper podcast series. Visit eisneramper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business.