For Amy Duffuor, general partner at Azolla Ventures, the firm’s three key criteria that each investment must meet help to ensure that LPs are aligned with its climate impact mission. Those criteria include a precise greenhouse gas reduction goal and investing only in rounds where Azolla’s presence is necessary for a start-up to achieve optimal climate impact.
“We’re not everybody’s cup of tea and that’s okay. We’re doing high-impact – some would say high-risk – investing, and for those that feel excited by and want to support that, we’re totally their tribe,” Duffuor says. “Many of those people find our three criteria grounding and validating. They love that we don’t just say we’re focused on impact, that there’s a metric we hold ourselves to for every investment. They like that we’re not going after the ‘hot deals,’ that we’re really focused on overlooked founders.”
LPs also appreciate that Azolla only backs companies deemed capable of attracting downstream capital in later funding rounds. “We don’t want our money to be a bridge to nowhere, so that is also very grounding for LPs,” says Duffuor. “While we are an impact-first fund, we don’t believe you can get impact at scale without being a financially sustainable company.”
Despite the lack of exits so far from an earlier vehicle, Prime Impact Fund, which Duffuor and her fellow GPs raised in 2018 before launching Azolla, she believes their early insight into certain climate tech market trends made it easier to raise capital for Azolla Fund I. That fund, which consists of a full-cycle fund and a catalytic fund that currently share the same portfolio of 14 companies, was oversubscribed with a final close on $240 million in 2023, surpassing its $200 million target.