Azolla Ventures, Launched by Prime Coalition to Deploy Catalytic Capital, Debuts New $239 Million Blended Fund to Support Overlooked Climate Solutions

The fund, with six initial investments, supports early-stage climate innovation with impact-first capital

CAMBRIDGE, Mass., July 13, 2023 /PRNewswire/ -- Prime Coalition, a nonprofit that steers and influences capital to support scalable solutions to climate change, and Azolla Ventures, an impact-first investing firm launched by Prime, have announced a $239 million blended fund. The new fund invests in companies that could significantly alter the trajectory of climate change, but are overlooked by traditional capital sources. Prime Coalition evaluates and governs impact and additionality for all potential investments and tracks and reports on accomplishment of impact, while Azolla Ventures assesses commercial potential and manages portfolio companies toward growth and maximal impact.

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Azolla builds upon the track record of Prime Coalition's previous impact-first investment programs, including Prime Impact Fund, which was built and deployed with the same investment managers. It blends catalytic, charitable capital with impact-aligned, market-rate capital to drive investment into solutions with deep potential for climate impact that are systemically overlooked by conventional financiers. Catalytic capital can be deployed to overcome risks that are a mis-fit for traditional venture capital. Through both initial investments and follow-on investments consistent with Prime's mission requirements, Azolla is designed to embrace high risk at the earliest stages and help safeguard impact as companies scale.

"We founded Prime Coalition 10 years ago to support market-driven climate solutions that have massive potential but are overlooked by traditional finance," said Sarah Kearney, founder and executive director of Prime Coalition. "Prime launched Azolla Ventures as our next approach to doing so for early-stage ventures, this time blending different types of capital under a single fund thesis. It is a celebration of difference: bringing together many different types of asset owners toward a shared, urgent mission, each aligned within their capital's unique priorities and constraints."

Investments made by the new Azolla Ventures fund must meet three investment criteria:

• Impact: Solutions must have the potential to reduce or remove at least 0.5 gigatons of carbon dioxide equivalent emissions cumulatively by 2050;
• Additionality: Solutions must be unlikely to raise sufficient financial support from conventional investors at the time of Azolla's initial investment; and
• Commercial potential: Solutions must have high potential for achieving commercial success at scale, ultimately enabling the envisioned impact. The fund's investment should also position the solution to unlock additional capital as it matures.

"The catalytic capital at the heart of the Azolla fund enables us to invest differently - in our embrace of riskier ideas, in our ongoing impact stewardship as board members, and in the fund design itself," said Johanna Wolfson, co-founder and general partner at Azolla Ventures. "For example, we're proud that our carried interest as investment managers is influenced by how well we manage portfolio companies toward impact, which is assessed independently by Prime Coalition."

Prime Coalition has been a long-time leader in catalyzing sustainable, effective, and scalable solutions to climate change. Based on Prime's pre-investment impact assessment methodology, Prime co-developed an open-source tool called CRANE that assesses the climate impact of early-stage climate ventures, and Prime now serves as convener of Project Frame, an 800+ member community of climate investors seeking technical standards for impact measurement. Prime and Azolla's joint governance of impact stewardship among portfolio companies marks a significant innovation in a growing movement to design investment systems that aim to prevent impact-washing and greenwashing.

"We need a wide range of approaches to prevent catastrophic climate change, which is why Azolla Ventures does not invest in one sector or vertical. We are privileged to partner with visionary company founders from diverse backgrounds and areas of expertise, who work tirelessly to drive climate solutions with the greatest impact," said Amy Duffuor, co-founder and general partner at Azolla Ventures. "From attacking industrial emissions to sequestering carbon in the soil, these companies will revolutionize our systems and the relationship to our world."

"While there's a historic amount of capital focused on climate overall today, early-stage breakthroughs still risk falling through the cracks," said Matthew Nordan, co-founder and general partner at Azolla Ventures. "Azolla Ventures exists to catalyze the game-changers that will usher in a new era for our planet."

Initial Azolla investments include:

• Heaten, developing high-temperature heat pumps for industrial processes;
• Funga, optimizing the forest microbiome for improved carbon storage;
• Sitration, developing membranes for low-cost battery recycling;
• Carbon Reform, deploying carbon capture systems in buildings for improved air quality and energy savings;
• Calcarea, decarbonizing shipping; and
• Scalvy, modularizing electric vehicle drivetrains for faster EV deployment.

About Azolla Ventures

Azolla Ventures, launched by Prime Coalition in 2021, is an early stage investor in climate breakthroughs that could avert catastrophic climate change. At Azolla Ventures, we prioritize impact first: every investment holds the potential for large-scale greenhouse gas reductions and a more just climate for all. The team seeks out bold entrepreneurs from all corners and embraces opportunities outside of venture norms. Azolla Ventures manages the $239MM Azolla Fund I and the $50MM Prime Impact Fund. For more information about Azolla Ventures, please visit https://www.azollaventures.com.

About Prime Coalition

Prime Coalition is a nonprofit organization that steers and influences capital to support scalable solutions to climate change. Since 2014, Prime has steered over $300MM in partnership with 250+ catalytic investors. Prime Coalition's first impact-first pooled vehicle, Prime Impact Fund, is a 100% catalytic capital fund that made its 16th and final investment in 2021. Prime Coalition now has over 30 companies in its venture portfolio in total. To influence capital, Prime collaborates to build open source tools and convenes Project Frame to organize investors to improve forward-looking emissions impact methodologies and reporting best practices for climate-driven investments. For more information about Prime Coalition, please visit https://www.primecoalition.org/.

SOURCE Prime Coalition and Azolla Ventures