The investment market is struggling. Investors are increasingly keeping a tight rein on their spending, partly due to political and economic uncertainties. What options are there for start-ups and scale-ups in the energy transition, food transition and circular economy? Isabel van Nesselrooij, fund manager Transition Fund at ROM InWest, emphasises the value of project financing. “Patient capital is crucial to get projects past the operational phase. Once you are there, you have a better chance of financing from the private market.”
“Just when the energy transition was gaining momentum, the investment climate deteriorated considerably,” says Isabel. “The political uncertainty in the Netherlands due to the change of government and new laws and regulations plays a role, but global conflicts are also putting pressure on the availability of raw materials. International political events such as the recent American elections also have their impact. All these factors make private investors cautious, which means that entrepreneurs are often turned down.”
Obstacles due to changing investment climate
Entrepreneurs in the energy and circular transition face a series of serious obstacles. Isabel mentions examples such as grid congestion, dependence on foreign raw materials and the high costs associated with the transition to sustainable energy. “These challenges make consumers cautious and slow down the development of new initiatives. It is not an easy market.”
Innovative projects provide solutions
Fortunately, there are also positive developments. Isabel: “Many entrepreneurs are working on concrete solutions with innovative technologies. Think of hydrogen projects, smart energy hubs, battery storage systems, aquathermy and recycling; projects that we at ROM InWest applaud because they play an important role in accelerating the energy transition, food transition and circular economy.”
Project financing as an investment instrument
“These projects are characterised by the large investments that are required at the start, for example for the construction of a factory,” Isabel continues. “But market parties are reluctant to provide financing in this early phase, because the risks are still high. That is why we also offer project financing. We focus on 'first-of-a-kind' initiatives in the energy transition, food transition and circular economy, among other things.”
Participations and loans
Isabel explains that in addition to participations, ROM InWest can also provide loans with a term of up to ten years. “This ‘patient capital’ gives entrepreneurs the space to further develop their projects. In addition, we offer business development advice and connect entrepreneurs with relevant parties in the ecosystem. In this way, we help projects through the most uncertain phases. When the biggest risks of the project are behind us, private financing becomes more accessible.”
Successful examples
Isabel points to examples of project financing in North Holland. “A good example is S4 Energy in Heerhugowaard, which has realised an energy storage system at Windpark Luna. This system ensures a constant energy flow, allowing the wind farm to deliver energy more efficiently. Another success story is Chaincraft in Amsterdam, which ferments fatty acids. Thanks to project financing from the PDENH fund, Chaincraft was able to build a demonstration plant – a crucial step in scaling up their innovative solution.”
