Mundi Ventures closes on €750M for Kembara, its largest deep tech and climate fund

In a landscape where Europe has poured billions into early-stage climate startups, many have faced significant challenges, particularly at the Series B funding stage, as highlighted by a recent report. Addressing this critical gap, Mundi Ventures from Spain has successfully raised €750 million for its latest initiative, the Kembara Fund I, marking the largest deep tech and climate fund the firm has established to date. The Kembara Fund I has secured a notable €350 million commitment from the European Investment Fund as part of the European Tech Champions Initiative, positioning it as a pivotal player in the region's investment scene. Regulatory filings indicate that the fund could potentially reach a final close of €1.25 billion, underlining its ambitious scope. According to Yann de Vries, co-founder and general partner of Kembara, achieving €750 million within a challenging investment environment over just two years was a formidable task. Kembara is operated by a dedicated team within Mundi Ventures, with offices spread across Madrid, London, Barcelona, and Paris. The fund's leadership includes Mundi Ventures founder Javier Santiso, who also serves as a co-founder and general partner, alongside de Vries. They are joined by climate tech venture capitalist Robert Trezona and deep tech specialist Pierre Festal, with former Atomico partner Siraj Khaliq lending his expertise as a senior strategic advisor. The team's extensive experience has enabled them to attract investments from institutional backers eager to support European ventures capable of transforming university spinouts into robust businesses. De Vries, who has witnessed the trials faced by numerous climate and deep tech startups, emphasizes that Europe's primary obstacle is not a lack of innovation or startups, but rather a deficit in scaling these enterprises efficiently. Focusing on Series B and C funding rounds, Kembara plans to issue initial investments ranging from €15 million to €40 million across about 20 companies. The significant fund size allows for follow-on investments to aid portfolio companies in scaling their operations and expanding internationally, with total investments per company potentially reaching €100 million. However, the capital-intensive nature of climate and deep tech firms means that even substantial investments can fall short. Drawing lessons from his experience with Lilium, a German electric aircraft startup that collapsed after raising over $1 billion, de Vries recognizes the difficulties associated with relying solely on equity financing. This realization has inspired Kembara to pursue innovative financing strategies, including non-dilutive funding options aimed at reducing financial risk for deep tech founders. The geopolitical landscape also influences the motivations of limited partners interested in providing growth capital to European startups. De Vries anticipates significant backing from European sovereign wealth funds, governments, and corporations, all keen to cultivate homegrown champions in deep tech. Kembara's investment focus includes sectors that bolster European sovereignty, such as dual-use and defense technologies. However, de Vries clarifies that the fund is not merely compensating for capital that later-stage European firms could have accessed abroad. He believes there are numerous undiscovered gems in Europe that could evolve into global leaders, citing the example of DeepMind, which sold too early despite its potential. The urgency of retaining European companies within their native markets has grown, particularly in fields like quantum computing, semiconductors, and space technology. Kembara aims to create global champions that transcend borders. Interestingly, 'Kembara' translates to 'to wander' in Malaysian, reflecting the team's journey towards excellence. With connections to Malaysia, including Santiso's previous role as CEO of Malaysian sovereign wealth fund Khazanah, the fund is looking to attract global investors in its next funding round, enhancing access to international markets and supply chains.