'Founders need to sacrifice those final 10 or 20 percent' – Zero Carbon Capital doubles down on hard science impact firms

Pippa Gawley founded Zero Carbon Capital with her husband Alex Gawley after returning to Europe from Silicon Valley, where she spent time as an angel investor. Since launching in 2019, the venture capital firm's focus has been clear: investing in hardware companies that can "move the needle" when it comes to reducing carbon emissions. The firm only considers technologies that are backed by hard science and have the potential to reduce CO2 emissions by at least 0.5 gigatons per year at full-scale deployment.

Zero Carbon's first £20m (€24m) fund focused on UK companies and closed last year, while its second fund of a similar size is taking in startups across Europe –– mostly at the seed and pre-seed stage.

Max Werny, venture associate at Zero Carbon, sat down with Impact Loop to discuss the firm's outlook going into 2025.

We’re speaking shortly after Donald Trump pulled out of the Paris Agreement, and off the back of seeing declining levels of VC investment into climate tech globally for the last two years. What is your overall level of optimism going into 2025?

"I would say we approach this year with cautious optimism, ready for minor setbacks but not really changing our approach or strategy. A lot of climate ventures actually originated during the time when Trump was still president, so I don't think that his presidency will put an absolute stop to the activities going on in the U.S. or here in Europe. It is likely to be sector-dependent.

That being said, we have seen decreasing levels of investment over the last couple of years as well as some larger corporations withdrawing from climate alliances. So there are some indicators that the general optimism around climate tech, which was definitely a lot stronger a couple of years ago, is starting to fade away.

It’s now coming down to finding the technologies that are not only green but also have a clear price advantage. That's the challenge really! It's not easy to find such companies but it's not impossible either."

It’s now coming down to finding the technologies that are not only green but also have a clear price advantage

Going into 2025, are there any specific areas within climate tech where you are looking for companies to invest in?

"We took a look at the sectors which are impactful in terms of emissions but potentially underfunded. So what we’d like to ideally see are companies operating in the ag space, anything to do with agricultural intensification – like increasing crop yields – or bio-fertilisers.

We are also keen on the enteric methane space – so basically reducing methane emissions from cows. Green steel is still something we're taking a close look at, while clean energy and anything to do with its deployment is obviously a big one.

And then we've got white hydrogen, which has generated quite a bit of excitement in the investor community, and rightly so. If we manage to somehow utilize existing hydrogen resources or generate hydrogen in situ it would be absolutely game-changing for the climate tech space.

But those are our wishes for 2025, and we of course don't only make investments based on our wishes. If a great company comes along in another space, we will definitely consider it."

Has your outlook changed at all when it comes to what type of company you’re looking for?

"I think our strategy has been clear ever since this fund was launched and we've stayed true to that. We have an exclusive focus on hardware companies that remove significant amounts of emissions at scale. 

In terms of the investment thesis and what we're looking for, I would say it’s the same as in 2024: early-stage ventures which are based on hard science, simply because hard science will give you a high degree of defensibility and a strong IP base. And I think both of these are necessary if you want to be successful in the market and scale at the speed that VCs expect you to scale."

The founders and investment team at Zero Carbon come from a strong scientific background themselves. How does that help you when it comes to both evaluating potential startups and also helping founders succeed?

"It makes the conversation a lot easier with founders. They appreciate an investor who actually takes the time to really dig into the details and understand the technology at its core.

It's quite essential to what we're doing, and it makes the entire investment process a bit smoother if you don't have to rely solely on experts. Given that we have a good amount of technical expertise in our team for a VC fund, we’re in a solid position to do a large share of the due diligence in-house. It’s also a major asset for attracting founders because we've gone through similar journeys and can therefore relate."

What’s the biggest challenge when it comes to helping founders who are going from the scientific world to the business world?

"I think one thing is perfectionism. A lot of scientists are perfectionists, and love to understand things in detail. I think when you're running a business, especially if it’s a startup or a scaleup, you need to be more pragmatic and sometimes sacrifice those final 10 or 20 percent and just iterate fast enough. Time is of the essence, at all stages of a startup. So you need to be able to make those quick decisions. 

The other thing is how to handle investors and the investment process. Some founders tend to go out to investors a bit too unprepared. The advice that I generally give to founders is to reach out to the founders of other startups that are already a bit further in their journey and ask them about the mistakes they've made. They're a great source of knowledge and founders don't have to be worried about failure or scrutiny as they would have with an investor. The harsh reality is that many investors don't give you a second chance, so it’s vital that founders are well prepared."

A lot of scientists are perfectionists, and love to understand things in detail