Frequently asked questions

A fund of funds is an investment fund that invests in other funds rather than directly in companies. Instead of picking individual companies yourself, you commit capital to one fund, which then allocates that capital across a selected group of underlying funds. Each of those underlying funds invests in companies on your behalf.

The main benefit is diversification. Through a single commitment, you gain exposure to multiple underlying funds and their companies, managed by specialists across different strategies and sectors. This spreads risk in a way that would be impossible to replicate as an individual investor, both because top funds require institutional ticket sizes and because doing your own due diligence on each one would take years of work.

The trade-off is an additional layer of fees. Underlying fund managers charge their own management fee, typically around 2% per year for venture capital and private equity and 1.5% for infrastructure, plus carried interest of around 20% on profits above a defined threshold. Carbon Equity's own management fee sits on top of that, in exchange for selecting the funds, building the portfolio, handling reporting, and taking on the administrative burden.

Most Carbon Equity funds use the fund-of-funds structure, including Climate Tech Portfolio Fund IV, Climate Infrastructure Fund I, Energy Transition Debt Fund I and Access to Climate Tech Fund II. The Co-Investment Fund I is structured differently. It invests directly in companies alongside our partner fund managers, removing the underlying fee layer.

Each linked fund page details the structure, fees, and what you actually invest in.

After you finalise your subscription to a fund, you will receive your first capital call. A capital call is the request to transfer (a part) your committed investment amount.

The first payment is specific to your commitment, country and investor type, and as estimation of your expected capital calls can always be seen in your investor dashboard. After you receive this notification, you have 21 days to transfer the amount. If applicable, the remainder of your commitment will be called over roughly 5 years in semi-annual instalments which depend on the expected calls from underlying funds (e.g. roughly 5-10% of the commitment will be drawn every 6 months).

Each Carbon Equity fund gives you exposure to a curated selection of climate investments, but they differ in what they invest in, the stage and risk profile, and the minimum ticket size. This lets you choose the fund that best matches your goals.

Climate Tech Portfolio Fund IV. Invests in 6 to 8 leading venture capital and private equity funds, complemented by 8 to 12 direct co-investments, giving you exposure to over 150 climate tech companies across early to late stages, primarily in North America and Europe. Target net IRR of 10-15%.

Climate Infrastructure Fund I. Invests in 4 mid market institutional climate infrastructure funds, which will provide exposure to 40–50 infrastructure projects like battery storage and renewable energy, with 75% exposure in Europe. Target net IRR of 10-12%.

Access to Climate Tech Fund II. Our diversified entry-level fund. Invests in 5 to 10 venture capital, private equity, and infrastructure funds, complemented by direct co-investments, covering the full climate solutions landscape. The minimum is €20,000 instead of €100,000, and the fund is structured as an ELTIF with a limited redemption option. Target net IRR of 8 - 12%.

Co-Investment Fund I. A concentrated portfolio of 12 to 15 hand-picked growth-stage companies, accessed through our relationships with top climate fund managers. Invests directly in companies rather than through underlying funds, which removes a layer of fees. Higher risk and higher return potential than our other funds. Target net IRR of of 25%.

Energy Transition Debt Fund I. Provides loans to companies and projects deploying proven climate technologies. Returns come from interest payments and principal repayment rather than equity upside, offering more predictable income, earlier distributions, and a shorter duration than our equity funds. Target net IRR of 7-8%

Each fund's page includes a detailed breakdown of strategy, target return, fees, and minimum commitment. If you are unsure which fund fits your situation, our team is happy to help you decide.

Net internal rate of return (net IRR) is the average annual return on your investment, after all fees and expenses, taking into account when money is paid in and when it comes back.

An example: imagine you commit €100,000 to a fund. You pay it in over the first few years as the fund makes investments. Many years later, you receive €200,000 back as the fund's investments are sold. You doubled your money, but how good was that as an annual return? That depends on how long it took. Doubling your money in 7 years is a much better outcome than doubling it in 15 years, and net IRR is the calculation that captures that difference. Roughly, doubling in 7 years works out to about 10% net IRR, while doubling in 15 years is about 5%.

The "net" part means the calculation already takes into account our fees, the underlying fund managers' fees, and any other expenses, so it reflects what you actually receive, not the gross performance of the underlying investments.

Net IRR is the standard way to measure performance in private markets because it accounts for the fact that capital is called gradually and distributions come back over many years. A fund that returns your money quickly will have a higher net IRR than one that returns the same amount more slowly.

Each Carbon Equity fund publishes a target net IRR, which is our expectation of the average annual return after all fees over the fund's lifetime. Targets vary by fund, reflecting differences in strategy, stage, and risk. Target returns are not guaranteed, and actual returns will depend on the performance of the underlying funds and companies.

A debt fund lends money to companies or projects, while an equity fund buys ownership stakes in them. This shapes the risk, return, and time horizon of your investment.

Equity funds buy shares and become co-owners. Returns come from selling those shares later at a higher value, typically when a company is acquired or goes public. The upside can be significant, but returns depend on the company growing in value over many years.

Debt funds provide loans. Borrowers repay the loan over a defined period, with interest. Returns come from those interest payments and the repayment of the principal. Compared to equity, debt funds typically offer:

• More predictable returns, from scheduled interest payments rather than uncertain future exits.
• Earlier and more regular distributions, starting soon after capital is deployed rather than years later.
• A different risk profile. Lower potential upside than equity, but also lower downside, because lenders are repaid before shareholders if a borrower runs into trouble and typically have tangible assets as collateral.
• Shorter duration, because loans have defined repayment schedules.

Each Carbon Equity fund publishes a target net internal rate of return, which is our expectation of the average annual return after all fees over the fund's lifetime. Targets vary by fund, reflecting differences in strategy, stage, and risk:

• Infrastructure and debt funds aim for steadier, more predictable returns in the high single to low double digits, with cash distributions starting earlier in the fund's life.
• Diversified equity fund-of-funds aim for higher returns, in the low to mid double digits, with most of the return realised through company exits later in the fund's life.
• Concentrated co-investment strategies aim for the highest returns, with correspondingly higher risk and a smaller number of underlying companies.

Target returns are not guaranteed. Investments carry the risk of loss, and actual returns will depend on the performance of the underlying funds and companies. We report on progress against the target throughout the life of the fund.

Returns in private markets typically follow a J-curve. Early years show negative returns as capital is deployed and fees are paid before investments mature. As the portfolio matures and exits begin, returns turn positive and accelerate. The shape of the curve varies by fund type, with infrastructure and debt funds showing a flatter curve than venture and private equity.

For specific target returns and how they break down between cash yield and capital appreciation, see each fund's page.