Kasper:
Welcome to Balentic Edge, conversations that matter in private markets. I’m your host Kasper investor, entrepreneur and founder of Balentic. On this show, we explore the people, strategies and ideas shaping private markets today, from GPs building tomorrow’s funds to LPs allocating in a shifting landscape. This episode is brought to you by Orca, an AI-driven compliant platform connecting the right GPs with the right LPs, smarter matches, faster decisions and better outcomes.

Kasper:
Today I’m joined by Clare Murray. Clare is a co-founding partner at Blume Equity, a growth equity firm backing climate tech companies driving decarbonization. She brings deep experience from BlackRock, LeapFrog and Goldman Sachs with a track record in sustainable investing, impact frameworks and supporting high growth companies on their ESG journeys. Welcome Clare.

Clare Murray:
Nice to be here. Thanks for having me, Kasper

Kasper:
My pleasure. Clare, let’s jump right in. You’ve had a career that spans something as different as Goldman Sachs, BlackRock, LeapFrog, and now you founded Blume. What first pulled you towards sustainability and impact investing as your personal focus?

Clare Murray:
So I started my career on the traditional finance side at Goldman. And while at BlackRock, again, started on the more traditional side, was working with college endowments, foundations, and family offices, primarily in the US, across their portfolios to think outsource CIO sort of work, partnering with their endowments. It was through that work that I started learning about sustainability. It was the early days of divestment movement in the US on college campuses. It was the continuing trend of next gen taking over capital from generational wealth and thinking about how they better align profit with purpose. It was nonprofits and foundations, particularly environmental ones, which I happened to work with, that to date had very much separated their investments and their mission.

And we’re thinking about how to better align those two to at a bare minimum ensure they weren’t at conflict or at odds with what they were doing on the mission investing and what they were doing on the mission side. And then more catalytic thinking, how do you actually do more with your money versus just invest and then send it to the grant side. And so it was through my relationships with investors and them thinking about these challenges and opportunities that I had the opportunity at BlackRock to help build their sustainable investment platform across private and public markets.

Kasper:

For those of our listeners a little bit less familiar with Blume Equity, what is your core thesis? Where do you focus? And how do you position yourselves in what I think is fair to say is an increasingly very sort of competitive climate tech type of space.

Clare Murray:

Absolutely. So Blume Equity, are a climate tech fund investing across Europe at the growth stage. So supporting scale ups on their journey. We have offices in Amsterdam and in London, three co-founders. I am one of them, and in terms of what we’re investing into, it is European software businesses, services and asset light hardware solutions that increase efficiency and climate resilience. We’re investing at what’s called the missing middle, which I’m sure you’ve heard of and your audience has as well, but at that growth stage. So companies that have proven product market fit, but are scaling and are usually not yet at profitability, which is increasing importance in this market for a number of later stage investors. And I do think that climate tech continues to have more of a focus and there’s more capital flowing into that space, particularly in Europe, given the political environment in the US to some extent. But where we’re seeing more of those flows is in the early stage, particularly where there’s a linkage around AI, and then in later stages, once you have companies that are profitable. And so that scale up support, getting them to those milestones, is certainly an area that others look at, but we have been able to create an opportunity for ourselves within that space.

Kasper:
I think it’s great that you are in this sort of the valley of death gap, but then the cynic in me would argue that if these companies were fundable, wouldn’t that actually automatically be drawing in capital?

Clare Murray:
So I think people have that question with impact more generally at times. I think the pushback I would have to that point is, we are operating within the capital markets and our underlying investors are fiduciary. So we are targeting both financial returns, the market rate for financial returns and also impact.

Our capital isn’t just capital, it’s the expertise that comes behind that to support these companies. So we really understand climate, we understand the thematics and the sectors within climate. We understand the technologies behind those, the team itself, decades of tech investing experience. And we are able to help these companies hit the milestones that either unlock much larger pools of capital, whether that be later stage climate focused funds or more traditional firms, as well as thinking about strategic and other exit / partnership opportunities. We recently have a data point where we helped prepare a company, which we held for a relatively short period actually for a strategic sale, which was then sold to an energy corporate, which we can get into. But having that ability to help the company get prepared for that engagement is something we have a lot of experience in. And so it’s that support as well that isn’t just important, that is important in addition to the capital we provide.

Kasper:
So not the science projects that we may recall or may not recall from the clean tech wave in the early noughties

Clare Murray:
The space has evolved since then, both in terms of investors’ education in the space, in terms of the types of companies and the maturity of them and the milestones they’re hitting and what’s exciting for us. And we’ve even seen over the course of our fund is there’s more and more companies that are getting that proven product market fit in Europe and really thinking about the acceleration to get to European expansion, global growth,

Kasper:
I think we, especially in Europe, all still mostly agree that climate change is happening and is important, but in today’s geopolitical environment, are LPs even interested? And should they be?

Clare Murray:
So when we think about our investor base, there are some investors who partnered with us because of climate mandates they had, whether that was a political European or country specific government policy and initiative, whether that was foundations who were focused on tackling climate change. And we also have traditional investors who recognize that

In addition to doing good, hopefully, this is a huge market opportunity where there is a lot of capital coming in from a policy perspective. There’s a lot of talent in the space. There’s a lot of macro trends supporting technologies that are enabling decarbonization of industries. So we do have, from an existing investor base, a real range of motivations on why people chose to invest in us. And I think that’s similar to others.

climate firms out there. When we think about now / future, certainly the political environment has changed in various regions. You can hear I’m American by background. We do need to care. I think there is an opportunity for Europe in particular to become a global winner related to climate. And there is this strong and deep connection between energy

Kasper:
it is against you Clare.

Clare Murray:
resilience, security, which is even more important in today’s world. So there’s actually additional economic imperatives on why investing in climate is important. And you are seeing the energy markets, the European energy markets needing solutions and venture and growth stage companies are able to address that and provide solutions.

Kasper:
Can you walk us through the specific tech sectors and or technologies within climate tech that excites you the most right now? Where are you focused on putting your dollars down?

Clare Murray:
So when we think about Blume, we are building a portfolio with 10 to 15 companies and partnerships of those. And the partnership part is very important to us because we want to help support these companies given the expertise we have. So we invest across climate

We are spending time on grid resilience. So thinking about how to ensure there is data and accurate data for that matter that are able to go to utility companies, for instance, to ensure that they’re able to make the best decisions in real time. That’s because right now the increase in flooding, increase in fires you’re seeing globally.

at the moment. And so the technologies around that space are not only how you get that data from various earth observation points, drones, other providers, and then also thinking about how you can analyze that and get it to the utility companies. we’re looking at aging infrastructure more generally and what can be done

around maintenance of that. Again, more on the technology side, given our investment focus, but to ensure that you’re addressing challenges proactively, also thinking about how you, when you do upgrades, whether commercial or residential, you’re doing that in the most energy efficient and sustainable way that increases resource efficiency. Another company which we’ve invested into but recently has

had an additional funding round with some large, well-known investors, is a company called Aerones that is a robotics company doing inspection and maintenance on wind turbines. So the technology is enabling the energy transition, particularly onshore wind. And there was recently a funding round announced by S2G and Activate out of the US to large US climate investors.

So we go across technology, but when you think about what we are focusing on at the core, it is increasing efficiency and climate resilience and thinking about what technologies do that across industries, across sectors.

Kasper:
You could make a light argument that to some extent you’re also in this sort of, shall we call this, defending democracy because grid resilience goes beyond a lot of other things that we certainly need to be paying a little bit more attention to today.

Clare Murray:
Yes, absolutely. within energy, the energy value chains, there are these other lenses as you talk about in terms of defensibility, in terms of European sovereignty that are becoming more and more critical, whether that’s energy generation, transmission, distribution, the electricity markets, electricity consumption, and optimization around that. You know, there is this lens that’s becoming

even more urgent and important. And you’re also seeing government and EU initiatives to encourage that.

Kasper:
So an important reminder that there may be more to climate investing than just meets the eye. And it’s not just about doing good, but it’s also potentially about something that we care much more fundamentally about without transgressing into aerospace and defense.

Clare Murray:
I like that one-liner, that’s a good summary of what I was saying.

Kasper:
I think every successful firm that I’ve always looked at or looked at as an LP, there’s a sort of defining insight or a differentiator. What is your aha moment at Blume? What gave you the conviction and confidence to launch Blume? And that still anchors your strategy today.

Clare Murray:
It really was focusing on this missing middle. My background being American, there’s more capital in the US markets. And it felt when I was investing and partnering with companies in Europe, that there was a lot of capital and I’m talking broadly, so not even climate at the moment at the early stage venture. And then at the later stage buyout, whereas there wasn’t as much capital.

for companies that were not yet profitable. And you then overlay climate on that and it felt that there was an even greater opportunity within Europe for that space. And when I got connected to my two co-founders, I was seeing this from the climate realm because my background is in impact investing and my co-founder seeing this more from the scale up and getting companies to this milestone and the support they need in addition to the capital.

to get them to those next phases. And that’s where it felt that our team and our co-founding team had the ability to support them in this journey. And frankly, we’ve done it ourselves. We’ve built our own business. We understand the challenges and the ups and downs that come with being entrepreneurs. We are an independent organization that is owned by the co-founding team.

Kasper:
We talked a little bit about it, so I want to double click on that as well. Entrepreneur to entrepreneur, would you do it again? Because running a GP you are going into something for a minimum of 10 years and you’re marrying your co-founders and I’ll get to them as well for another 10 years. Would you do it again, Clare?

Clare Murray:
Yes, I certainly would. It has been the most rewarding experience of my career and one of the most rewarding in my personal life as well to have built something particularly as critical and targeting the climate space as building Blume Equity.

Some days are certainly harder than others. I think anyone who raises a first-time fund doesn’t appreciate how hard it’s going to be. And certainly, it is one of the harder things. And people say that we did and hopefully will do. But I’ve enjoyed being able to build a team and a culture and a firm that’s doing this and having investors, so RLPs.

who are trusting us with their capital and with their fiduciary roles is an incredible, meaningful place to be. It’s so easy to think about what’s to come and all that’s on your plate, but we do try to take a step back and appreciate the milestones we’ve had. Last year, we won the Emerging Manager of the Year with the Growth Investor Awards. not that we need the external validation, but it is a nice

reminder of what we have been able to build.

Kasper:
Absolutely, and well deserved, I’m sure. Going to your co-founders, tell us a little bit about your co-founders. How do you click? Tell us a little bit about the wider team and then let’s dive into that in a minute.

Clare Murray:
Great. Two co-founders, Michelle and Eleanor, we come from the traditional investment backgrounds. So Michelle, investment banking, private equity, Eleanor consulting, private equity, and then myself, traditional finance and sustainability. And so we have very complimentary backgrounds that we bring together across investment banking, across consulting, across investing, across…

impact measurement and management that has helped us build a unique offering and platform for European high growth companies in terms of the team. Team of nine as of next week where we have an additional person joining us with offices across London and Amsterdam. And then we have strategic advisors and other core European geographies for us for additional

leveraging OF boots on the ground and our networks. And in terms of the team, investing experience at blue chip firms, as well as climate experience, whether that be climate thematic within larger firms and climate dedicated organizations at the growth stage.

Kasper:
Okay, and zooming in on the partners, how do you agree to agree or how do you agree to disagree as the case may be? Because this is where I, as an LP, have often seen emerging managers break apart, that what looks really great on paper and looks like a great fit, one, two, three years down the road, there’s a fallout between the partners.

Clare Murray:
Yeah, and it’s hard to, I imagine it’s an LP and it’s something that our LP has spent a lot of time on when they were diligenting us is, how do you pressure test that in the moment before it’s actually happened? And the three of us spent a lot of time, quote unquote, dating before we, to use the marriage metaphor, before we committed to building Blume. 

And that was really to help us assess how we each think and what we bring to the process and where potential disagreements could come up. So building that vision and alignment and understanding what’s motivating each of us, both personally and professionally, was important to us. And we actually brought in a third party to have some of those conversations and set out frameworks and guidance on those conversations to test how we would think or respond in certain moments if we were given an X discussion that we had to decide on. We also looked at a number of opportunities together before Blume, before taking any external capital for that reason, because certainly we wanted to set our processes up before that. And what’s most important to us is consensus.

We have consensus on all investment decisions, so the investment committee, et cetera. And so we all need to agree. But what we’re very focused on is not just passively agreeing. So you talk about agree to disagree. That is supported both within the co-founding team and in the broader team as well. So it is raising diverse thoughts and potentially opinions.

But ultimately recognizing and appreciating those versus trying to get to a final yes when maybe that is not the most important thing to do.

Kasper:
From an LP perspective, I have always wanted to put the managing partners on a sailboat and send them out. And I don’t know if you sail, but see what happens when it gets a little bit gusty. Who’s gonna panic? Who’s gonna start blaming others? Who’s gonna take the wheel and calm everybody down? I think that’s live pressure testing, but I don’t think my prior firms would have really fully approved of that.

Clare Murray:
There might be a cost to that. Yeah, that’s hard to get through. But funny, I actually had a team offsite last year in southern Sweden. We did sailing as a team exercise. We had good weather. I wouldn’t say it was extremely grueling. Yeah, so I think we probably have a leg up when it comes to sailing and some other funds

Kasper:
Good, good, something to watch out for for the next round of due diligence, maybe, if you get sent on a sailboat.

Clare Murray:
Happy if someone wants to fund that we are keen to go on.

Kasper:
Let’s see if we have any takers. Focusing on LPs a little bit. They grapple, I think it’s fair to say, how to allocate the climate. There is not necessarily a clear-cut bucket and we are somewhat institutionally stuck with buckets. How do you balance return expectations, regulatory pressure, long-term convictions, etc.? With this in mind, what is the most common misconception you hear from LPs about climate investing?

Clare Murray:
Yeah, I think the most common misperception is that all investments within climate have very high capital intensities and long time horizons. And there certainly are a number of opportunities that fit that profile. And I do think when you start thinking about those, potentially longer fund lifetimes as well as larger funds are required or more catalytic capital to do so. But there are certainly, when you think about the technologies enabling the energy transition, for instance, there’s a number of really exciting opportunities out there in Europe that fit traditional investment molds as well. 

And so this idea of it being concessionary returns by default is a misconception. And I think, and you got to it actually with the question yourself, but like climate is so broad. And so what does climate actually mean? Like, what stage, what sectors within climate? Like, do you have a thematic lens then across broad climate? Are you focusing on deep tech? Are you focusing on the carbon markets? 

It really runs the gamut. So double clicking, and I do think we’ll see that over time of people, the firms moving away from the broad headline climate or having that, but then having a line underneath, maybe that’s for political reasons. But I think also it’s because of trying to get to the essence of what it is that firm’s strategy actually is and climate, when it was a more nascent industry was probably enough. 

Whereas now, I think investors want to know, well, so what does climate mean? And so I think firms getting smarter about what it is they do within climate. To the first part of your question, on these buckets, as I mentioned, some of our investors do have these buckets. Some don’t. And so I think we will continue to, because institutional investors do have allocations that are mandated by their boards or their teams to have that. And so you will continue to see that, but I don’t think there’ll be a requirement that all firms have that I think you’ll continue to see a real range of how investors approach climate.

Kasper:
To that point I think that something GPs generally need to get better at telling their story. What is it they actually invest in? Because climate, to your point, it’s a very broad field and it becomes easy for us to say no to that because like what is it really? It’s not very tangible and that’s why we start looking at the more industry-focused funds, the domain expertise, etc. which is easier for us, I think, as laypeople to grasp.

Clare Murray:
I think you’re right. I also think the space has matured even from five years ago. And so you have both investors who understand more. And so I think you can have a conversation that goes a level deeper. There are also a lot more interesting companies at the growth stage across climate. And so you’re able to have a pipeline that’s large enough to be more focused. So I also think firms are getting, some firms and all are getting more focused because the opportunity set is growing.

Kasper:
What excites you today? What’s the sort of one development in climate tech, whether it’s a breakthrough technology or regulation or climate change adoption or whatever. What excites you and what makes you, and I really hope you are optimistic for the next decade, Clare.

Clare Murray:
I certainly am. I think it would be an issue if I wasn’t, but I genuinely am, particularly with the opportunity Europe has to be a leader in this space and support homegrown companies becoming global winners. And so what am I excited about? It’s the role Europe has. It is companies getting the capital and the policy support to mature and continue on their journey.

And then you’re starting to see exits again, because if you look at the past couple of years within climate, and that’s a very short time horizon anyway, but the markets have not allowed for many exits. You’ve seen up rounds and continuing to mature on the funding ecosystem journey, but you haven’t seen many exits and you are seeing more of those. I mentioned earlier, we’ve recently had an exit to an energy strategic. 

You’re seeing those sort where there’s a intersection between driving down costs and increasing resource efficiency. It’s a natural play. You’re seeing ⁓ &A activity pick up in that space. so investors certainly want those validations in the market in order to continue to invest.

Kasper:
I want to touch upon the European angle because the US may have taken a step back, maybe next time they take a leap forward, we’ve seen that before. For Europe to maintain leadership, what do you think we need to be better at here?

Clare Murray:
It’s funny. It’s two sides of the same coin. It excites me, but it also is what keeps me up at night, how can Europe seize this moment? The first one, which is being talked about, but just continues to need to be focused on is the policy. Europe’s obviously fragmented. You have a lot of various countries, different motivations behind this. 

And you need clear and consistent policy for companies to scale and to understand what that is. I also think Europe needs to do a better job with the carrot versus the stick. I think the US is great at incentivizing companies with tax incentives and other with the carrot versus the regulatory requirements, which is more of the stick. And that being what drives compliance and it becomes more of a compliance thing versus business opportunity when you think about a stick versus carrot. So I think Europe has the opportunity to do more certainly now. And so that I hope is the approach they take as well.

Kasper:
Well, certainly we hope there’s a couple of politicians out there who may also be picking up our podcast. I want to stay a little bit on what keeps you up at night aside from European policy. What else is out there that concerns you as you look across the climate investing space?

Clare Murray:
I think, I mean, it’s partially with policy, but it’s an extension of policy. I think Europe is really strong at innovation and pilot programs, but struggles with commercialization at scale. And I think a part of that is there just isn’t as much capital to support these companies. Part of that is the policy side. And so what you found is companies, at least previously, really needing to move to the US or Asia to find growth capital.

To find the industrial partners, to find markets big enough for them to continue to grow at scale. And I think you’re starting to see, one, some of these other markets become less attractive and also become more uncertain, which is an issue in and of itself. And you’re also seeing in Europe significant talent. And I think you are seeing more industrial partners come into this space and you are seeing more capital, which is a good and bad thing for us. in a good way, you know, it brings some of the companies that we’ve gotten to a next milestone to really accelerate growth. You you just saw that with Aerones with this additional funding round of the U.S. it’s a Latvian based company, but U.S. investors coming in to support this next phase. And you are seeing European managers also continue to raise larger pools of capital or find more innovative ways to partner with their underlying investors with Co-Invest, for instance, or having these direct drawdown vehicles. So I do think you’re also getting the check size and the risk appetite to some extent, but I think that’s still where there’s a challenge in Europe.

Kasper:
This is again from the European perspective, from the underlying company perspective, should they care where the money comes from?

Clare Murray:
Should they care? Yes, I think they should care where their money comes from. you talk about the partnership and the marriage between co-founders. It’s also in a way a marriage. Maybe it’s an open marriage, less traditional marriage, but a marriage of investors and management teams. And at the stage we’re investing, they still are based for the most part founder led businesses. And so having the right people around the table, ones you trust. 

Once you understand what their motivation is, it is important. So there’s one on the mission motivation side. I think it’s also important to know who, to care who your investors are in terms of the support they can bring. Is it partnerships? Are you going into the US where then it is important to have people who have US relationships, whether those are US managers or firms elsewhere that have those connections and understand that I think capital is capital and quantum is important.

But there is more and when there is more than one capital pool out there, thinking about what else matters is something that I certainly think management seems to spend a lot of time on.

Kasper:
We have time for just two final quickfire questions if you’re game. One climate tech sector that is overhyped right now.

Clare Murray:
Please?

Kasper:
Everyone else says AI, by the way, when I ask this question.

Clare Murray:
I realized I already talked about AI. I was going to you I think that technologies is around data centers. I think there’s obviously it’s connected to AI and that, you know, there’s more and more need for data centers, given the consumption of AI and the processing of AI. I think it’s an interesting space. I certainly do. But I do wonder at what valuations and what is the journey going to look like for these companies. And so I think that is a space where there could be some recalibration in the market, which will be a challenge to some investors who have deployed at the highs.

Kasper:
This was a sharp and insightful conversation with Clare on how to go from traditional finance to sustainability, the missing middle in financing European climate investing, how to marry capital with expertise and unlock more capital, the macro trends backing investment in climate, as well as Europe’s potential to be a global leader and for the politicians out there how we might better be able to sustain that. We also touched upon how LPs may DD their GPs through a sailing lesson or a sailing exercise. Clare, it’s been an absolute delight to have you on Ballantic Edge. Thank you so much for joining us today and sharing your thoughts and your insights on Blume Equity and investing into climate.

Clare Murray:
Likewise, pleasure to be here.

Kasper:
Thank you also to our listeners for tuning in to Ballantic Edge. I hope you enjoyed the conversation. If you did, please hit follow on Spotify or Apple, or subscribe on YouTube. And consider sharing this episode with a friend or a colleague. Do you have feedback or questions? I’d love to hear from you. Connect with me on LinkedIn. This episode was brought to you by Orca, helping GPs reach the right LPs and LPs discover the right funds. Learn more at balentic.com/orca Thanks again for listening, and until next time, stay illiquid.

Kasper:
Finally, a small disclaimer. The views expressed in this podcast are solely those of the host and guests and are provided for informational purposes only. They do not represent the views of any affiliated organizations, employers or entities. Nothing discussed should be construed as investment, legal, tax or business advice. Any reference to specific funds, companies or investment strategies are purely illustrative and do not constitute an offer, solicitation or recommendation to buy or sell any security or financial instrument. Listeners should consult their own professional advisors before making any investment or financial decisions.