Luxembourg-based climate tech VC Satgana recently announced the first closing of its €30m fund for pre-seed startups. Silicon Luxembourg caught up with Romain Diaz, serial entrepreneur, founder and CEO of the planet-positive VC.
What expertise do you bring to the climate and VC sector?
My background is very entrepreneurial as I have been involved in quite a few company creations and early-stage startup building for the past 10 years – a lot of it on the African continent. I was involved in what became the first unicorn in Africa, Jumia, which is similar to the Amazon of Africa. And then I was also involved in a sort of venture studio in South Africa that gave birth to three companies, after which I became CEO for five years of an early-stage venture fund in South Africa where we created four companies from scratch.
About five years ago, I became more aware of the climate and ecological emergency we find ourselves in. And that’s when I started to basically put all my learnings, time, focus, love and money into the creation of the new venture fund whose only focus was on climate. So that’s how Satgana was created. It took some time to build the team, pipeline and strategy, so we only started fundraising a year ago which led us to just announcing our first closing of €30m.
What was the turning point for you to put all your energy and time into a climate fund?
I’ve always thought that business was a very powerful source of impact, whether positive or negative. We can use business as a force for extraction and exploitation and depleting the resources and creating more inequalities and so on, or, on the other hand, we can use it to create a positive impact and regeneration, and really make a positive contribution to the world. So it was really this realisation that you can choose your side, that helped me in this decision.
Looking through the lens of the UN’s Sustainable Development Goals, I felt that climate was also the biggest lever I could pull to achieve them. Because if we don’t solve climate change, there will be enormous social impacts, especially in emerging countries and vulnerable communities. Obviously, we also have a tailwind from the ecosystem and climate tech booming a the moment.
Satgana invests across the themes of transportation, energy, food and agriculture, industry and buildings, carbon removal and the CE. Are there any themes you left out? If so, why?
I would say we cover most because we want to be agnostic on climate. There are some technologies or models that are a bit less adapted to us. So true breakthrough technologies, for example, are too risky from a technology standpoint and nuclear fusion or hydrogen are too techie or too capital intensive.
But we still have some room for discussion and we are open to taking a little bit of technology risk. We are also a bit less into B2C as well and more into B2B. So there are businesses for which we have less appetite, but in general, we’re still agnostic from a planning perspective.
Why is your focus constrained to European and African startups in specific?
It’s partly due to the fact that I worked in Africa for almost 10 years and therefore we receive a lot of deal flows and opportunities from there. But at the same time, most of our team is based in Europe, so we have expertise on both continents and our deal flow is pretty much 50/50.
And when we say Europe and Africa, it’s actually specifically some countries in Europe. So countries like France, Germany, Netherlands, UK, and Luxembourg are where we receive the most deal flows. And in Africa, it’s mostly Kenya, South Africa, and Egypt, so far.
In the long run, we can extend our range a little bit, but already it’s ambitious the way we’ve set ourselves up. But our long-term perspective is to set up one fund in Africa and one in Europe with different geographies and themes as well. The African one would be probably more focused on adaptation and the European one on mitigation because that is where all the emissions are coming from.
How does your climate fund compare to others in Europe?
As far as we know, we are the only climate tech fund that is purely focused on pre-seed. What we see is that there are many generalist funds focused on pre-seed that want to do climate but do not only focus on climate. On the other hand, there are many climate-only funds – which is wonderful and we want to see more of them – but very few of them actually invest at pre-seed.
That’s why a lot of startups come to us because we have the ability to invest early because we like to be involved with them personally. Not only do we invest early, we also help them from an operational standpoint, investing, marketing resources, impact management, finance, future fundraising and more.
In the end, this boils down to a personal preference because I think pre-seed allows you to have the most room to source ideas that are nonexistent but also can have a massive impact. If you only source the already proven ideas, you might miss out on the ideas that can make the biggest difference.
What can you tell me about the companies you’ve analysed so far and the three that are already in your portfolio?
To date, we have analysed 600-700 companies and we have invested in three of them. One in the energy sector in Germany, one in the food sector in France and one in the electric mobility space in Kenya.
But we’re finalising two transactions as we speak and we have a lot of new very high-quality deal flows, especially since we announced the first closing of our funds. The inbound we get is a bit crazy since then but it’s also very good for us as we have a lot of interest from startups, candidates and the media. It’s a good time to be doing what we do.
What criteria is most important when deciding which startup you want to support?
We have four main criteria, most of which are quite traditional. They include the commercial potential, the potential impact on GHG reductions, carbon removal or biodiversity conservation and, of course, we will look at the characteristics of the deal.
Last but not least, maybe most importantly, we look at the team and assess their hard skills – are they competent, do they have the right academic and professional background – but we also look at them from a more sensitive and intuitive standpoint. Do we think they are going to make it, do they align with our values?
We have very strong values when it comes to integrity, humility, empathy, diversity and inclusion. So we really try to find founders that are aligned with our values.
What should interested startups know about you?
First, we try to be quite clear on our scope: pre-seed, Europe and Africa, climate, and ideally, direct and indirect climate impacts. We prefer direct impact as compared to indirect impact and we are open to leading rounds and co-investing,
We are not too fast to deploy because we really want to understand the startup, the founders, the market, the philosophy and the intentionality of the impact. When founders tell us they are closing next week that is typically not something we prefer to do.
Lastly, in the face of constant climate disaster news and failed targets, what keeps you motivated?
Firstly, I’d say knowing that everyone, regardless of their qualifications or expertise, can make a positive impact. You can put pressure on your employer, join a political party or change your habits, so that gives me hope.
Secondly, speaking to entrepreneurs daily gives me hope. They have so much passion, drive and knowledge of a specific industry and come up with ingenious ideas in all sorts of climate related fields. They are proof that we can invent a new world if we just invest more resources, time and money into the right people and the right solutions.
Of course, we are just a small VC and it requires the whole world to make a change but I think VCs can play a tremendous role in catalysing climate innovation at least.
