Europe invests billions into early-stage climate startups, only to watch too many fail at Series B, according to a recent report. But new funds are being raised to fill this gap, and Spain-based Mundi Ventures’ latest fund, Kembara Fund I, is one of them.
After securing a €350 million commitment from the European Investment Fund under the European Tech Champions Initiative in 2024, Mundi Ventures has just completed a €750 million first close for Kembara, its fifth fund and largest to date.
Regulatory filing from Spain reveals that the fund — focused on deep tech — could even stretch its final closing to €1.25 billion. But according to Kembara co-founder and general partner Yann de Vries, getting to €750 million in two years as a first fund in this environment “was not easy.”
Kembara is managed by a specialist team within Mundi Ventures, with offices in Madrid, London, Barcelona, and Paris. Mundi Ventures founder Javier Santiso is now also a co-founder and GP of the Kembara fund, which has now disclosed the full list of its senior partners.
Alongside de Vries and Santiso, climate tech VC Robert Trezona and deep tech VC Pierre Festal have also joined as general partners, as well as former Atomico partner Siraj Khaliq as senior strategic advisor. (Pictured from left to right: Javier Santiso, Siraj Khaliq, Robert Trezona, Yann de Vries and Pierre Festal.)
Their individual track records helped them raise funds from institutional backers waking up to the need for European growth capital that can turn its many university spinouts into sizable businesses with industrial synergies. But it also gave them a front-row seat into the broader growing pains of European climate and deep tech startups — especially de Vries.
A seasoned venture capitalist who founded Redpoint eVentures Brazil and later became a partner at Atomico, de Vries had moved to the other side of the table to join German electric aircraft startup Lilium — only for the company to cease operations in 2024 after raising more than $1 billion and going public via a SPAC.
In de Vries’ view, Lilium went bankrupt because it couldn’t find the growth capital it needed, but this “traumatizing experience” also had a silver lining. “I saw so many amazing teams in Europe that were going through the same journey,” he said. “[Europe] doesn’t have an innovation problem. It doesn’t have a startup problem. The problem it has is a scale-up problem.”
Kembara’s sweet spot will be Series B and C rounds, with plans to write initial checks from €15 million to €40 million into some 20 companies. But the fund’s size leaves room for follow-ons to help portfolio startups scale manufacturing and expand globally, and total investments could go up to €100 million per company.
That’s more than the full size of many European funds, though this may be changing: deep tech VC firm Elaia and asset manager Lazard teamed up to form LEC (Lazard Elaia Capital), whose initial investments will range between €20 million and €60 million per company, while operator-led fund Plural is reportedly raising a new fund of up to €1 billion.
Still, the capital-intensive nature of most climate and deep tech growth-stage companies means that even large VC checks can only go so far. One lesson de Vries learned from Lilium is that raising only in equity is very hard, and even puts companies in a hard spot later on. This inspired Kembara to take a different approach to financing.
“Several of us have lived through this, and what we want to do now is to productize non-dilutive financing for these deep tech founders to help them de-risk their future financing and optimize the capital structure to minimize dilution. And we’re bringing in [limited partners] who […] not only want to invest in the fund, but also want to coinvest in those winners,” de Vries said.
For these LPs, geopolitics also plays a role in wanting to provide growth capital and venture debt to European growth-stage startups. “There’s going to be a lot of support from sovereign wealth funds in Europe, from government, from corporations, to push and drive for building these European champions in deep tech out of Europe,” de Vries predicted.
These geopolitical undertones are also reflected in Kembara’s sector focus, which includes dual use and defense tech to “protect European sovereignty,” according to a press release. However, de Vries pushed back against the idea that Kembara is simply replacing capital that later-stage European outfits could have raised abroad.
“There are lots of gems that are under the radar in Europe, that could be scaling into global champions, and that are not realizing their full potential.” He said DeepMind is a related example, “where they were missing this growth capital and sold too early.” (Google acquired the company for more than $500 million in 2014, but it is now estimated to be worth billions.)
Keeping European companies European has gained urgency in many verticals that overlap with Kembara’s thesis, such as quantum computing, semiconductors, and space tech. But its goal is to foster global champions that cross borders. Coincidentally, Kembara means “to wander” in Malaysian (although the team holds “the humble path to excellence” as an older meaning).
Beyond the name, Kembara has Malaysian connections. Santiso is also the former CEO for Europe of Malaysian sovereign wealth fund Khazanah; and doors could open as many countries examine their exposure to the U.S. “In the second close, we’re going to be looking for global investors, because we want to have global access to markets, but also global access to supply chain,” de Vries said.