Technology Enabled Climate Transition Companies and Projects - Grok Ventures
Grok Ventures has a deep understanding of technology through its founders and team and is not afraid to invest in technology-based climate businesses critical to our climate transition.
- Investor: Grok Ventures
- Source of finance: Various
- Financial instrument: Commercial debt and equity
- Sector: Climate technology
- Geography: Australia, US
Grok Ventures invests in technology enabled companies and projects that will decarbonise our planet. Through its investments, Grok aims to lower emissions, removing carbon, and generate attractive returns.
Grok invests predominantly in Australia and North America. Grok believes:
- Technology is the biggest lever we have to decarbonise the economy.
- Seeding and scaling climate tech into climate infrastructure is going to require trillions of dollars in private capital. We consider this the biggest economic opportunity of our lifetime.
- The funding requirements of climate tech and infrastructure are unique – The capital and capability need to be flexible, focused and fit-for-purpose. How We Invest – Grok Ventures
Grok can be a first mover and build the capital stack required for a project through matching their own risk and return expectations with other investors. Grok’s flexible approach to investment is key to this ability. Grok also provides support and capability building to the enterprises that they support, helping move from building a track record to attracting institutional investment at scale. Grok has a deep understanding of technology through its founders and team and is not afraid to invest in technology-based businesses.
This is an important perspective as many of the businesses requiring support as part of our climate transition fall into this category and require much more blended financing support. Many of the technologies in sectors that offer greater mitigation potential have costs above their reference technologies and would benefit from investment to drive innovation and deployment, increasing market adoption and lowering costs. (Understanding the Climate Finance Gap, CREO Advisory, July 2024, p17)
Grok has invested through blended finance stacks in projects including:
Brighte
A residential solar project, where Grok provided seed A and B finance and structured loans to attract mezzanine and senior debt from NAB. The project was in line with State Government mandates which provided certainty of demand.
Long Duration Battery
Located in the US, this project required seed A & B finance from Grok and attracted institutional investors in its latest round. The project benefited from the US Inflation Reduction Act 2022 credits, which enabled a more attractive return. In addition to blended finance to respond to risk and return expectations, Grok was able to blend across timelines, derisking the project over time. (The Inflation Reduction Act (IRA) is climate legislation, passed by the United States Congress in August 2022, that has global ramifications. The legislation contains AU$520bn worth of programs and funding to accelerate the transition to net zero in the US.)
Final Insights
Private capital that is flexible can play a critical role in catalysing and arranging finance from across the sources of finance. It can help projects and enterprises build a track record and prepare for institutional investment.
Private capital such as Grok Ventures plays a critical role shepherding and advocating for projects as they gain investment support along the continuum of finance. Grok Ventures provides technical assistance and capability building. This role should be well recognised as it enables climate finance to accelerate at pace and helps address the Missing Middle, which is a challenge in climate finance.
Australia has cheap energy, talent, and land. If we look at some of the blended finance models developed in countries like Sweden, we could accelerate private capital into climate finance.
Private Capital
The providers of private capital into blended finance transactions are usually investors with more flexibility and a higher risk appetite than institutional investors. This form of capital enables projects to build and scale up.
Sustainability for Strategic Advantage
Strategy
Sustainability for Strategic Advantage
A one-day program for senior and mid-level executives, this course is distinct in approaching sustainability as a strategic issue, with a particular focus on climate change.