Vala Capital has invested in three fast-growth start-ups with sustainable strategies after successfully completing its first funding round for its new Sustainable Growth EIS. The company plans to raise GBP15 million for the sustainable EIS over the next two years and, having raised its target of GBP1.2 million for the first round, is due to embark on a second round of fundraising in September.
The new portfolio includes one of Vala’s existing investments, Good Club, an online, low-waste, low-emission, sustainable grocer, which provides sustainably sourced, ambient food (such as pastas and non-dairy milks) as well as household goods. The eco-friendly supermarket is currently raising its Series A off the back of month-on-month revenue growth in excess of 17 per cent over the past 18 months.
The sustainable portfolio also includes Homethings, which grabbed the attention of all five dragons on a recent edition of Dragons’ Den. The sustainable cleaning product company is closing in on GBP1 millio of annualised revenue just ten months after launching its Just Add Tap cleaning products that save 96 per cent of carbon emissions compared to conventional sprays and 100 per cent of single-use plastic sprays.
The third company in the inaugural portfolio is Qflow – a construction-tech business providing real-time analysis of materials, waste and emissions onsite. The company has successfully licensed its software solution to some of the largest contractors in the UK and deployed on several high-profile projects, including HS2.
Jake Wombwell-Povey, fund manager at Vala Capital, says: “This is just the start of our long-term journey to identify fast-growth companies that aim to deliver attractive returns because of their sustainability credentials, not in spite of them. We believe that there are compelling macro tailwinds that will drive both financial returns and sustainability impact for businesses that can capitalise on them over the next five to 15 years.
“The world is increasingly demanding that business is done in a sustainable way. It is the truly sustainable companies that will benefit from preferred access to customers, talent and capital – and increased interest from more conscientious retail, corporate and government buyers.”
The Sustainable Growth EIS will be managed by a six-strong investment team, including Jake Wombwell-Povey, Max Middleton, Jonathan Spanos who recently joined from Virgin Start Up and Vala’s CEO and founder Jasper Smith. The investment team will be supported by a group of experienced investors, seasoned entrepreneurs and sustainability advisers, including renowned sustainability expert Mike Penrose of The Sustainability Group, which will help identify opportunities and will provide strategic support together with hands on mentoring for all portfolio companies.
The investment team applies a proprietary sustainability assessment framework to all potential portfolio companies and focuses on three themes. To reinforce the framework, all proposed investments are independently assessed and must meet strict sustainability criteria set by The Sustainability Group to be eligible for investment. The three themes are:
technology for planetary health: technologies mitigating climate change
consumption and commerce: food, packaging and the circular economy
fairer access to social goods: health, education and water
There are no initial fees for the investor to pay (these are paid by the investee company). There is an annual management charge of 1.5 per cent and a performance fee of 20 per cent on profitable exits in excess of 110 per cent of the acquisition costs.