Armed with a $500m war chest, Telstra’s venture capital arm is scouring the market to invest in tech start-ups aimed at tackling climate change and greenwashing.
Telstra Ventures, which has more than $1.3bn in funds under management after completing the $500m raising last week, is interested in companies that can measure the plethora of net zero and emission reduction targets most businesses have adopted.
Managing director Matthew Koertge said there were 1000 companies or more focused on monitoring environment, social and governance (ESG) compliance and Telstra Ventures was aiming to get a toehold in the market before it booms.
“There are definitely a whole lot of limitations around greenwashing and also really getting the true benefits. We are certainly aware of the negatives around the carbon credit systems that people are using,” he said.
“But from our perspective, investing in innovation that improves all this is obviously very exciting and the opportunities we see are really substantial.”
Mr Koertge stressed Telstra Ventures was not becoming a climate fund, and said many of its portfolio companies – such as Docusign, which has erased the need for snail mail, saving trees, paper and cutting postie bike emissions – were tackling climate change without a formal mandate.
“Our thesis is that the rapidly rising carbon levels are frightening the living daylights out of us. This is just so important and many companies are starting to recognise that urgent action is needed. There’s likely to be 1000 unicorns of companies that will potentially address that opportunity and hopefully there will be strong investment returns on the back of that as well.”
Since its inception 10 years ago, Telstra Ventures has returned more than $800m to its investors, gaining favour from former Telstra CEO Andy Penn, and Mr Koertge said that number would hit $1bn in the next few years.
Meanwhile, it has generated $640m in revenue from its portfolio companies. Mr Koertge said Telstra Ventures was expected to make its first investments on companies solely focused on climate change in coming months.“Venture capital by its very nature is very forward looking, so we are always looking five or 10 years out on where we think the market is going,” he said. “These technologiestake time to evolve into being big companies but understanding the thematics today, finding the areas that we think are going to really drive change and value going forward is a journey we’ve already been on.”
Collectively, Telstra Venture’s 88 investments have resulted in 33 liquidity events – via M7A or IPO – with 17 achieving unicorn status, a valuation above $US1bn ($1.5bn), including five achieving decacorns status (above $US10bn).
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