Europe's First VC FoF Focused Exclusively on Ocean-Related Climate Tech

Markus Böhm is a seasoned professional with over 15 years of experience as a Corporate CFO and in M&A Corporate VC. He has a wealth of expertise, having overseen transactions totaling more than EUR 300 million. As a board member and a dedicated father of two, Markus brings a balanced and comprehensive approach to his work. Combining his background as a marine biologist and his passion for scuba diving, he pursued the Planet Ocean, the first FoF in Europe dedicated to investing in VC funds that harness the ocean's untapped economic potential, valued at a staggering U$24 trillion. Listen to the full conversation to learn more about these ocean-related climate tech opportunities, where the technology currently in use dates back more than six decades. You can read the full interview below!

Why did you choose an ocean-related climate tech as a theme for PlanetOcean?

Yeah, that's actually an easy one, thanks for that, Laura. So before I elaborate a little on what PlanetOceanFund is doing, well, my focus on ocean-related climate tech is just because the oceans are huge, they cover more than 70% of the planet. They are what we need to be aware of, our life support system on this planet. So every second breath we take comes out of the oceans, this tiny phytoplankton is producing oxygen in its metabolism, and we're dependent on that, even if we don't see the oceans every day.

It provides us with plenty of food already currently, so around 3 billion people are dependent on their food sources in the oceans, and it provides a really kind of incredible habitat for mankind, for livelihoods, for recreation, so that's kind of why the oceans are central in our focus. And of course, they are a really crucial keystone in the Earth's climate system, so about 25% of greenhouse gas emissions we blow out into the atmosphere annually are absorbed by the oceans. They kind of take on 90% of the excess heat that climate change is producing on our planet, this ocean warming that is now and then in the media, but this imposes severe problems.

If we really want to solve these big issues in climate tech and in biodiversity, we need to focus on the oceans, as they keep by far the largest amount of that biodiversity I have just mentioned on Earth. And last but not least, it's a huge market opportunity out there. So the latest figures the World Economic Forum announced was that the market volume of the oceans is around 24 trillion US dollars, which makes it one of the top 10 largest addressable markets in the world.

So that's quite something. From a venture capital perspective, it's really interesting as most of these technologies that are currently kind of working in the oceans are out of their 60s and 70s. There are oligopolistic systems out there.

So it's really disruptible, which kind of promises a lot of arbitrage and impact. And that's why we focus on these ocean-related climate tech issues with PlanetOceanFund. And what do you think we kind of forgot about the oceans in this whole climate change fever where we always talk about climate change, but when it comes to the oceans, they are not taken into the equation with the relevance they should?

Why?

Yeah, I think because it's kind of not that easy to tap into investments in that space. The classical ocean economies are quite old-fashioned and we're talking about shipping, we're talking about maritime, we're talking often about steel, oil and gas exploitation, which is classical maritime industries. And from a VC and climate tech point of view, we have a very, very, very nascent ecosystem out there.

And that is why we have tried to tap in there as fund of funds to kind of de-risk that a little and help to develop this ecosystem. And I think that are the major barriers. So there is now, and this is really cool, there is now an emerging sense of the importance of the oceans in a broader community.

But it was unseen for a long time. But the good news is that there is a lot of potential there.

And why did you choose fund of funds to tackle this issue instead of maybe a VC and investing directly in companies that will do their innovation?

Yeah, basically we have three rationals on that.

So when we started off, we assessed how we could best contribute to really leverage capital and solutions in this crucial space for the battle against climate tech and biodiversity crisis. We came to the point where we saw that in terms of speed, if we focus now on establishing a proper first TVC fund into that area, we would have needed to focus on, I would say, a part of this huge blue economy. And we would have needed to invest some years into kind of funnel building deal flow generation and to really build a brand to make sure we establish and manage a proper portfolio out there.

But we had kind of quite a respect of the time that it takes to really do that. So we decided to focus on, let's help accelerate what is already out there. Let's help accelerate this unique kind of accelerators program in Norway, for example, or let's help establish this fund structure in Singapore where we could really kind of leverage what is already there and bring fresh capital to the table to really get that speeded up, which is really crucial as we have time frame left of less, unfortunately, less than 10 years to really make a significant difference in that fight.

The second point we decided to do a fund of funds is the scale aspect. Through our model, we are really able to kind of de-risk this emerging ecosystem and reach that gap a little between the more institutionalized investors or those investors that are kind of still not sure if risk-return profile of this ocean economy is attractive. We can help de-risk that sector in that respect and bring larger checks in there in kind of speed and scale.

Last but not least, it was that we kind of could provide with this model a really broad sector overview of what is emerging in this regenerative ocean economy. That is, I've mentioned that very nicely, but it bears several really potent solutions to tackle climate and biodiversity crisis. That's our rationale behind this fund of funds.

But you mentioned Norway, you mentioned Singapore, right? So what is exactly out there already that you can work with? How specialized are current VCs? How deep do the startups go right now? What's out there right now?

Absolutely. So good news is that the system has already quite developed. So we started off researching the market in the early 2020s and we kind of started the fund in 2022.

The ecosystem back then was quite small, but it started to emerge. So we had kind of some nuclear, as I've mentioned in Oslo, there was an accelerator program. And of course, the Nordics are kind of traditionally strong in these maritime industries.

So it kind of started to develop there. And all of a sudden, North America and Europe kind of emerged as the heavyweights in this blue economy ecosystem, so to say. There is a quite significant program of the European Union going on into that direction.

So, there is quite some money that the EIF puts into this regenerative ocean economy, which helps to develop the ecosystem further. So, what we see out there currently is that there are, to give you an idea, there are currently globally around 30 to 40 funds that focus on the oceans. And there are around, I would say, 120 to 150 that have the oceans somehow in their thesis integrated.

So, it's way enough to really differentiate from a fund-to-fund perspective a cool portfolio. But the good news is that it really helps to develop these solutions in a startup perspective. So there are issues covered really across this value chain of this regenerative blue economy.

So we have some funds out there that focus more on this nutritional aspect, so sustainable aquaculture, algae growth, kind of from harvesting algae to really biotechnological process them to different ingredients for the food industry or for pharmaceuticals. So there's a really kind of a range already there. And for example, more general food tech funds also tap into this sphere as they realize there is huge potential in supply there, for example.

Then we have these marine-based carbon dioxide removal mechanisms. So the question is, how can we get rid of these greenhouse gases we have already emitted into the atmosphere? How can we get them out to a kind of price point that is attractive? The ocean has very potent mechanisms to absorb that through enhanced weathering or ocean cleanliness enhancement. So there are funds that focus on that.

And there is a really several startups coming up with solutions now. Last but not least, we have this nexus of new materials and circular economy, which is highly relevant to the oceans where we have already several dedicated funds out there. But we have as well an intersection with more general funds into that specific perspective that is not purely ocean, but that could really well cover that.

And if you ask me in terms of geography, I think I've mentioned that already. We have hotspots in Europe. We have hotspots in North America.

We see kind of some emerging activity in Africa. So I think it will take us another year to get really investable solutions down there. But the ecosystem grows, especially in South Africa, and Mauritius.

There is kind of slow activity starting off more in the South East Asian realm and Oceania area. So there is kind of there's really positive traction in the ecosystem currently. Yeah.

And when you mentioned now that you also can work with more generalist funds for some specific projects, what's your take on sector-agnostic VC funds that invest in climate tech and how relevant do you think is for VCs to be ultra-specialized when they want to do this type of impact investments?

 Yeah. So I think for that, for the development phase we're in now in this climate tech or more specifically in this regenerative blue economy tech, I think specialization is helping in the way that you've mentioned that in the discussion beforehand.

 We are there in very complex issues from a technical and biological perspective. So there needs to be some knowledge I would say in those specific areas. For example, this carbon dioxide removal issue is highly biogeochemical.

One needs to really kind of have some experience in the assessment of these technical chemical solutions and viable business models with them. So I think this is a hard task for generalists to have. So, kind of in this development phase, it's very useful to have specialists and we are kind of half, I would say in our investment thesis and in our deal flow funnel, we would have an overweight on these specialist funds as we firmly believe that they have the prerequisites to really kind of find out in these specific areas.

On the other hand, there is of course, and now I've come in with this biological perspective. So there's a niche for every player in an ecosystem. And these sector agnostic VCs, they were kind of important in the early days when there were just kind of several startups focusing on that issue to bring them up and to generate these kind of good examples that draw attention to the sector and that drive capital into the space.

A role we see currently sector agnostic VCs could play in that game is kind of transfer of knowledge from other industries into the climate tech or into the ocean tech world. For example, if you have a specialized or not a specialist, but if you have a generalist VC fund out there that has some AI portion or some blockchain portion that could be kind of integrated into these natural capital perspectives that are now kind of emerging in this climate tech, ocean tech space, then there is a lot of knowledge transfer they could offer. So there is a place for them in the ecosystem.

But currently, I would bet more on the specialized funds.

So they are the ones who put this topic on the table. And now it's time for the most specialized ones to take.

Absolutely.

And do you have any generalist VC in your portfolio?

No, we have kind of, have in our portfolio, the generalist funds are kind of the climate tech funds that don't have the ocean as their core vertically, but kind of more generalistic we don't have in the portfolio.

 And what do you think about, okay, this is very impact-oriented, but do you consider yourself like an impact on the funds? Do you look for the fund to be compliant with SFDR Article 9?

 Yes. To be honest, I don't like this impact term. Yes, kind of the classical impact definition.

We are an impact fund. As the Article 9 fund, but a really big believer in that we cannot separate this impact perspective from the financial performance perspective. So we, for example, report quarterly our financials and our KPIs.

They are intermingled in our quarterly reporting. Us, it's just crucial to see every aspect of the investment we take. The impact is a crucial aspect of the performance in terms of, for example, greenhouse gas removal or mitigation or sustainable biomass produced for example.

And thus we consider ourselves as a fund of funds that really focus on top quartile financial performance subject to the underlying we invest in to really have sustainable business models. And I think that's where we need to transition from a broader perspective into it. And I often hear that still, especially from the institutionalized LPs out there, there are some side pockets for impact or SFDR9 funds with minor return expectations.

That's not necessary anymore.

I think it's kind of this impact and financial performance is really tied together and one is a prerequisite for the other. But do you require the funds that you invest in to be SFDR9 for example?

No, no.

We have defined target industries and we have defined target KPIs and we actually do not care much about the classifications. We kind of ensure that with the reporting and the data we generate, we make sure that we are classified as an Article 9 fund, but we have their pragmatic approach in our investments.

That's great because that way you don't close doors, right? You keep a lot of doors open actually.

Yeah, yeah. No, I cannot do that actually because then we wouldn't have a global investment mandate.

It's I think crucial what the union has brought out there on regulations. It's of course, whenever it is implemented, sometimes it's a little awkward, sometimes it's a little clumsy, but it really drives us in the right direction.

And we have been speaking about you being able to find the right VCs that of course have been able to find the right startups to invest into, to grow this ecosystem and make it better. But when it comes to you looking for your investors, I was going through your research notes and you mentioned that Planet Oceans Fund's current investment focus is ocean alkalinity enhancement, enhanced weathering of silicate materials, electrochemical ocean-based CDR, and microalgae cultivation. So these are very specific topics. How do you talk about this with your LPs?

So basically we have defined these investment approaches to make sure we have an integrated and coherent investment strategy out there. So kind of from life, I've been a scientist as well. So it was very crucial for me to have that aligned with our investment thesis.

And you've mentioned kind of one of the aspects we're investing into, which is this marine-based carbon dioxide removal. And there are different target industries there. We have defined that as well for blue foods, for example, or for this circular economy aspect.

And there are, of course, as ever, there are different LPs out there. We have some LPs that are really interested in one of these topics. For example, we have engaged with a corporate that's in plastic production.

They are very interested, of course, in alternative or new materials in that respect. And they're really into these theses. On the other hand, we have LPs who have realized that the oceans play a crucial role, as I've stated beforehand, in this climate and biodiversity issue.

And they just appreciate this very broad coverage we could give them in terms of the sector and in terms of emerging trends out there. So where are the founders founding the companies and which topics are kind of trending? Where do we see a lot of traction? So we have this interest in the LPs fair, on the one hand, that is very detailed and that appreciates this kind of detailed investment approaches we have. And on the other hand, that appreciate this broader aspect we could offer as well.

We wouldn't have been able to offer that without this fund-to-fund structure. That's kind of appreciated. That's the feedback we often get.

But you mentioned some corporate VC, right? But then mostly, if you have to define who are your LPs, are there family offices and mostly corporate VCs? How are large institutional doing regarding this topic? Who are your LPs?

Yeah, full disclosure, we're still in our first fund. We have most of our LPs are family offices and high net worths that are somehow interested in the space or that have a history in the ocean. And we had already some very interesting conversations with institutional investors, especially these types of institutionals like insurance companies have already discovered and banks, for example, as well, have discovered that the oceans really play a crucial role.

They currently kind of tackle it currently more from a marketing perspective and not yet from an investor's perspective. As I've mentioned, we are a nascent ecosystem. But why do they use it more as a marketing? Currently, from an institutional investor's perspective, from a risk management perspective, there are no investable funds currently out there yet, as all of the ocean funds are in their first generation.

We are a fund of funds as well in our first fund generation. And you have in these institutionalized checklists, most of the time, kind of prerequisites that there needs to be a fund track record. So that is why the institutional communicate that as well very, very transparently.

That is why we haven't managed to get these institutional tickets into the ecosystem. But there is interest out there. And I'm very confident that we're able to, at least beginning of next year, acquire the first investors into that space.

As we can prove now, we're two years in the market. We're already finally closed, almost finally closed our first fund now. We see the thesis works, the impact works, and the returns work.

So it's kind of we have done our homework and it's now time to really open the door to get these huge tickets in there. As you're aware of, ocean economy, or if you kind of denominate it in the sustainable development goals, the SDG 14, so life below water, it's the most underfinanced SDG we have. So there is kind of all other SDGs, bigger capital inflows, and have more focus than these ocean issues.

We need to dramatically change that. Yeah.

And it doesn't make sense. Is it the one that has the least attention when it's one of the most important ones? It's probably because we're not informed enough, right? Why do you think is it?

Yeah, I think it's definitely. And it's this notion that the oceans have kind of always been there. And they're taking care of themselves 

But that's kind of a very wrong perspective because it's a huge system. It's very resilient, this system.

But we have managed as mankind to bring that huge system to tipping points. And we need to tackle that and build awareness. So it's kind of, again, thanks for having me and for having this chance of building this awareness as this is crucial.

And even if we don't see it, and kind of the oceans all the time when you're on holiday, it looks cool on the surface and it looks very relaxing. But if you dig a little deeper and see them, these micro, and macro plastics that is floating around this deterioration of marine life, this coral bleaching event. So there is something going on there.

And we need to realize that, and we need to tackle that. The good news is that with these capitalistic mechanisms, we try to put in place into this economy, we can steer the wheel in the right direction. And the good news is marine ecosystems are still kind of resilient

So if you transition from these deteriorative economic practices to sustainable ones, they really are able still to regenerate. But we are not allowed to exceed certain tipping points where this regenerative aspect is then kind of not available anymore. But we still have kind of time left in that direction.

What's the role of the public sector here? Because now all the efforts are being done from the private side, right? Whereas oceans are of public interest. What are they actually doing about it? Or they are not doing anything. I mean, of course, the public entities would have a huge responsibility in that.

But it's the same discussion as in more general climate tech as well. If we wait for this regulatory environment or if we wait for governments to really act on that issue, it's going to be far, far, far too late. Literally everyone out there knows that the key solution to really transition to net zero would be to really put a price tag on CO2 at the point source of emission.

That's obvious for 30 or 40 years now. And kind of public players were not able yet to establish that on a global level. So I'm not very convinced that this is going to change concerning the oceans.

That's why we try to foster these private capital investments into that market to get that speed and scale to make a difference. Hopefully, I'm wrong with that. And public players are kind of taking on the responsibilities.

But that's still a long way to go. Yeah, believe me, I don't think they are, because otherwise, we would know it.

Well, I think the good thing is that we're putting these topics on the table. You are the first ocean-focused fund of funds in Europe, right?

Yes, and just to round it up, as mentioned, the oceans could provide us with really kind of tremendous solutions to all these aspects we have. That's why we try to really leverage capital into that space.

We are trying to close the fund by the beginning of autumn. So there's still kind of room for LPs if someone out there is interested. But other than that, it's crucial.

I mean, fundraising is always hard. When you have such an impactful topic, is fundraising harder? Do you find it maybe easier? Is there any commitment when it comes to LPs to try to support this type of initiatives?

I think it's kind of, maybe I'm a little biased, this kind of fundraising was, of course, hugely affected by macroeconomic circumstances within the last one and a half years. But what I could say is that in this market downturn, I think we were on the sweet spot of topics.

So that was a feedback I got very often. Even though it's kind of a no now, it's going to be a yes as soon as there is, again, liquidity in the market. There is a kind of emerging interest on the LP side and the realization that we need to tackle this issue and that it has the potential to provide really outstanding returns out there.

And we see these success stories now in the market. We have First Unicorn in Indonesia in aquaculture, for example. So it's working.

But as you mentioned, fundraising is never easy. But I think we have their kind of tailwinds in that respect. Awesome.

And the last question is, you will be deployed worldwide, right? Are you fundraising worldwide as well?

Yes, we do. But of course, with the name on Europe, as this is our home turf and North America. But we really, we have a global investment mandate.

The oceans kind of connect all continents. And that's why we're fundraising as well, globally.