Kapital, a Swiss financial solutions provider, has just opened a second office in Luxembourg where it aims to serve asset managers, VCs, and founders in structuring their private market investments in the climate sector and beyond. Co-founder Arman Anatürk tells us more.
Can you tell me a bit about your background and what led you to found Kapital?
Kapital was born from our experience at the HackGroup, which was established by myself and my two co-founders back in Switzerland. We built up a community of climate focussed founders and investors, which is now scaled into 49 cities across the world.
As we started building this community, we realised that our audience’s key need was access to capital. We quickly realised that if we want to unlock billions towards the impact and sustainability sector, we had to do something different than structuring just another climate tech fund.
Our approach has been to tackle the complexities behind why capital doesn’t get allocated to climate tech companies and projects. By doing so we can enable far capital to make its way into this space. Reducing the complexity related to investment structuring turns out to be key in doing so. That’s why Kapital aims to specifically tackle this complexity and make investment structuring easier, more flexible, and less costly.
Why is the climate space more plagued by these issues than other niches?
It’s a problem for every industry, however, when it comes into deep tech, it gets more complicated, especially when you want to structure bankable investments and make them accessible for institutional investors.
As many climate companies typically deal with new and less proven technologies, attracting funds from institutional investors can be very tricky for them. We work with groups that can help de-risk these projects, while we tackle the complex structuring to make them enterprise ready for institutional investors.
Our focus is specifically on private markets where we’ve seen the least amount of innovation happening when it comes to investment structuring solutions. Today, we’re in a situation where there’s a growing demand for investing into the private market so this is really an opportunity for us to make sure that more capital reaches private companies, specifically in climate.
“Companies and funds in the private sector are the ones that are driving the most innovation by working on moonshots with high impact potential.”
Kapital co-founder Arman Anatürk
How do you differ from other financial solutions providers?
We have substantially invested in software automation which helps us structure private market investments in a much shorter time span than traditional financial service providers. From the KYC to deal issuance and capital calls, we have automated 90% of that process. While still providing the high level of customer service that customers in the traditional industry are used to.
What’s your assessment of Luxembourg’s climate space?
ESG dominates the discussion in Luxembourg but I’m not sure how much of that is tied to real world impact. I strongly believe companies and funds in the private sector are the ones that are driving the most innovation by working on moonshots with high impact potential. It’s been inspiring to see how much attention has gone towards the climate tech sector lately, and how more people want to align their business with their values. That’s what drives us. By focussing on private markets, we believe our customers will be able to create more real-world impact than the traditional ESG or green bonds that the industry is most familiar with.
How do you plan on ensuring that the investments made through Kapital have their intended positive impact?
Coming from the climate space, we have a pretty good network and know which companies and technologies impactful and which ones are are carried by greenwashing. When it comes to ESG, there are a lot of junk investments being pulled together that have no real-world impact. Our experience with founders in the space allows us to figure out where companies fall on this spectrum.
So, you don’t specifically tell your clients who to invest in?
That’s correct. They pick their underlying investment opportunities, but we can pick who we work with. Our approach internally is dubbed the “trojan horse strategy” we get the traditional finance sector familiar with us and our solutions – and in time connect them with the projects in climate that can drive impact and meaningful returns. By building a good relationship with them we can connect them to more impact related investments in the future.
“It’s been inspiring to see how much attention has gone towards the climate tech sector lately, and how more people want to align their business with their values.”
Kapital co-founder Arman Anatürk
Who are you targeting as your main customer base in Luxembourg?
Kapital works with a broad range of Financial Institutions including Asset and Wealth Managers, VC Funds as well as private companies. Asset and Wealth manager particularly are seeing an increasing demand from their clients to invest in private markets, and this is exactly where we can help.
Our approach to work across both the Financial Institutions and with private companies goes back to our Trojan horse strategy, where in time we’d like to better connect both worlds to help move capital to and from customers in the Kapital universe.
What can you tell me about your numbers?
We like to keep our numbers confidential. However, I can tell you that in the last quarter we’ve grown our asset under service by over 250%, largely driven by an increased demand from Asset and Wealth manager to invest in private markets. We are now growing aggressively across key markets in Western Europe, and attracting US customers who are looking for Luxembourg solutions.
The typical deals we structure for founders are between € 200k-1m, for VCs € 1m-5m and for asset managers € 5m-50m.
We currently see a huge demand for people coming into the climate space which is very encouraging. As our climate problem aren’t getting any better, more capital will continue to come into the space, and I think one day climate will stop being a sector and it will be backed into every single business.
This article was first published in the Silicon Luxembourg magazine. Read the full digital version of the magazine on our website, here. You can also choose to receive a hard copy at the office or at home. Subscribe now.
