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Mason Wallick
Managing Director
Clime Capital

28 October 2022

Clime Capital is still a relatively young organization. What were the circumstances that led to its creation?

The idea came about in 2019, while working with global philanthropic supporters of climate change mitigation. We all saw some significant challenges in South East Asia, from regulatory issues to shortage of early stage capital, and various philanthropies took bold action to come in early and help propel the low carbon transition in new ways. In a nutshell, we all thought of bringing in new sources of capital that are risk tolerant and patient, and de-risk businesses so that in the future other investors would turn their attention to the opportunities available in this part of the world. 

Your mission covers the entire South East Asia, are there any countries that stand out in terms of investment opportunities?

The Philippines, Vietnam, and Indonesia stand out to us. Their GDP growth remained strong even after Covid-19, and they all have relatively large populations. In addition, these countries are behind in the low carbon transition – both in terms of renewable energy production and in terms of transition plans. This creates regulatory uncertainty and makes it difficult for investors to come in. But this is also where we can play a relevant role – in markets that need to make tremendous effort to move the needle for the low carbon transition, where other investors are unwilling or unable to invest. 

You mentioned that you are seeking capital that is "risk tolerant and patient". Can you describe Clime Capital's investor profile?

Our capital comes from a variety of different sources – leading foundations and philanthropies that have been investing in climate change for a long time, as well as a number of high net-worth individuals or family offices from the tech industry, from Australia, the US and Japan.  There are also prominent names such as Microsoft which invested through their Climate Innovation Fund, and more recently our newest limited partner CVC, a private equity fund that has invested through its philanthropic impact initiatives.

The common denominator is that we're able to offer massive climate impact as well as an opportunity for a financial return. To that end, for every dollar that we invest we look at how many dollars our investees raise – and so far, for every dollar we've invested, our investees have raised more than 9 dollars of follow-on capital.


When we look at it from a climate change perspective, if the investments are successful, our portfolio could deliver more than 100 million tonnes of CO2 reduction. 


The concept of philanthropic capital isn't very common - how does it work?

Indeed, we're the only fund of this type in SE Asia, and one of the few that exist globally. Philanthropy has really woken up to supporting climate through a number of initiatives and they fill a major gap – putting the mission first. Philanthropy is able to take a higher risk than the private sector, and without it many valuable ideas would not be going forward. With the traction that we've built, we managed to prove the viability of this model so this is hopefully just the beginning.

Can you provide some examples of early stage projects that you've worked on?

One good example is our first investment, in an Indonesian company called Xurya. We came across them on the onset of Covid, when they had limited capital and a tough market to bring investors in. In 2020 and into early 2021 we invested USD 1 million, and in December last year they closed a USD 21 million investment round – we believe they will become one of the leading rooftop solar companies in Indonesia.

Your investments carry a high level of risk, how do you decide whether to go ahead?

Embodied in our decision making is a threshold criterion which we call "additionality" – briefly, if a project or business is too advanced, and we think they will be able to find capital elsewhere, we won't invest. We're saving our capital for those that are in an early high-risk stage and can make the biggest climate impact.  We also look at financial viability. This means that underneath it all, the business model is strong and has real potential to bring additional capital onboard after our investment helps to de-risk the business. 

In terms of returns, what do you expect?

We look at returns in two ways. First off, when our investees invest in specific projects we expect them to have at least a 10-15% return. When it comes to our own gains, we are prepared to lose it all considering the high risk we take – but for those companies that do well, because we invest early and potentially get out early, say in 3-5 years, we would be looking to double or triple our money. This may seem like a lot but, since we're talking about an early stage which involves high risks, private investors typically look at much higher, prohibitive returns.

Within the next 2-3 years, what objectives are you pursuing with priority?

Our pipeline is growing and the plan is to pursue the projects that are fastest to scale and the fastest to make the low carbon transition happen. In the Philippines our goal is to enable electric mobility because it is an excellent way to also stimulate energy storage. When we look at Indonesia, the plan for the coming 12 months is to focus on energy efficiency and electric mobility with storage in partnership with two of our investees – these sub sectors are key because the country has a very large and growing air conditioning load and electric mobility with storage can help stabilize the electrical grid to enable more renewable energy generation. We're also going to transition our portfolio there towards renewable power generation, though the current regulatory environment is difficult. 

Vietnam has had a very successful implementation of wind and solar over the past two years due to its feed in tariff, but even so only 10-12% of the country’s energy comes from renewable sources like wind and solar. Our intent is to help stabilize the grid with storage, the lack of which currently holds back further development. We plan to do that through a variety of different investments including into electric mobility and grid-tied charging, to open the doors for more storage and renewables.

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