Climate tech-focused VC funds have popped up so often in recent years in Europe that it’s no longer the USP investors hoped it could be.
That’s according to Nucleus Capital, which is today announcing a €40m fund focused on a niche far more specific than just ‘climate tech.’ It’s looking to back companies rethinking food production or industrial production using synthetic biology.
“A climate fund is way too generic,” says Maximilian Schwarz, who previously worked at Berlin-based foodtech fund FoodLabs and cofounded Nucleus alongside his school friend Dr Isabella Fandrych, an industrial engineer.
“The necessity to have green DNA in any kind of business will increase tremendously in the coming years, so I don't think a climate fund is a differentiator. I think every generalist today will be a climate fund in 10 years.”
Nucleus’s new fund is 90% subscribed, with final close anticipated in Q1 2025. The fund backs pre-seed and seed-stage companies, mainly in Europe but with some focus on the US.
LPs include KfW Capital — for which Nucleus was its first emerging manager bet — plus the European Investment Fund, Rentenbank, Alpha-Q VC, an unnamed global insurance company and several family offices focused on food and industrial production.
Bootstrapping a VC fund
Schwarz and Fandrych first started investing together in 2020.
“We jokingly say that we bootstrapped our way into an institutional venture fund,” says Schwarz. The two started out angel investing together — “stress testing our relationship in a professional context” — by pooling small cheques from friends and family.
Early angel investments included London-based Hoxton Farms, which went on to raise a $22m Series A in 2022.
Schwarz and Fandrych then set up a small "proof of concept fund," which invested €7m into 27 companies from 2021 to 2023.
Notable investments from that period include Munich-based Planet A Foods, which is working on cocoa-free chocolate and announced a €14m Series A in February. The duo also backed Italian startup Officinae Bio, which is developing a platform to help other companies design new products using biology. Maravai Lifesciences announced its intention to acquire Officinae this month, which will mark Nucleus's first exit.
“I think it's fair to say that we're definitely top quartile in terms of performance for the 2021 vintage,” says Schwarz — though he declines to share specific metrics.
Backing scientific founders
Schwarz says Nucleus’s thesis comes from realising that a specific group of talented founders lacked funding.
“I realised there is a very new type of founder out there, scientific by nature but moving out of pharma or some of the more traditional career paths and into entrepreneurship,” he says.
“This kind of founder felt, to me, very underrepresented from a capital point of view, especially at the pre-seed or angel stage.”
Nucleus’s fund focuses on founders with a scientific pedigree. 80% of the 33 companies backed by Nucleus have a cofounder with a PhD.
Synthetic biology
Sectorally, the fund is looking to back companies working to make either food production or industrial production greener, through synthetic biology.
“Our unique differentiator in investing in companies within the realm of synthetic biology,” says Schwarz. Synthetic biology is technology that reprograms microbes to produce greener versions of existing products, be it new foods, or chemicals that don’t rely on fossil fuel production.
Nucleus’s fund has already backed Colorado-based Endolith, which uses microbes to help mines extract more copper from the ore they collect (the firm's new fund has already backed six companies.)
Few VCs invest in mining, Schwarz points out. “In order to stand out, I think you have to do some unconventional deals or invest in sectors that other people are not working on,” he says.
Next, Nucleus is interested in backing companies working on copilots for the bioinformatics industry, which uses computer science to analyse biological data. Schwarz says Nucleus is also interested in ingredients for the food industry and tech that can reduce the cost of biomanufacturing — the industry which scales up synthetic biology.
