Polestar Capital’s Circular debt fund secures €43M to bridge the finance gap for Dutch circular SMEs

Hilversum, the Netherlands-based Polestar Capital’s Circular debt fund (PCDF), announced on Thursday that it has landed €43M to bridge the finance gap for Dutch circular SMEs.

Out of the total, €30M comes from the European Investment Fund (EIF), backed by InvestEU and the Dutch Alternative Credit Instrument in which the EIF participates together with Dutch national promotional institution Invest-NL.

The remaining €13M comes from Realdania, Oost NL, and Polestar Capital itself.

Regional Development Agency Oost NL invested in PCDF from Participatiefonds Oost NL and Perspectieffonds Gelderland, a fund from the province of Gelderland managed by Oost NL.

Founded in 2009, Polestar Capital is an impact investor with the mission to bridge the funding gap for climate action.

Polestar Capital is investing €2B via three thematic investment vehicles, all of which, in different ways, contribute to environmental sustainability. 

Daan van Kassel, Fund Director of PCDF, says, “The expansion of the fund comes at a perfect timing. It can take quite some time to make innovative circular production projects financeable for the fund, and we are now concluding transactions with the companies that we first engaged with or before 2022. This expansion enables us to start new financing processes with another 3-6 circular innovators to bridge their funding gap when they develop a first production facility at a commercial scale.” 

Polestar Capital’s Circular debt fund: Aims to close funding gap

The fund aims to close the funding gap for Dutch circular SMEs by providing capital for sustainable technology companies.

It specifically targets circular innovators seeking to establish a first-of-its-kind commercial production facility.

This support enables the upscaling of their circular technologies and business models and the disruption and replacement of traditional value chains with more sustainable ones.

The fund has now reached €240M in total. This funding will finance 20 to 30 companies in the demonstration phase of their business.

The fund has set clear impact objectives for its investments, such as the reduction of waste and CCO2 emissions and increasing the use of circular and more sustainable materials and products.

What do the investors have to say?

The European Investment Fund is part of the European Investment Bank Group.

Its mission is to support Europe’s micro, small, and medium-sized enterprises (SMEs) by helping them to access finance.

The EIF designs and develops venture and growth capital, guarantees, and microfinance instruments that specifically target this market segment.

“Circularity is still an underfunded area when it comes to innovation,” says Marjut Falkstedt, Chief Executive of the EIF. “We can achieve a lot by better managing resources and products and integrating circular thinking in our production processes. We’re happy to partner with Polestar Capital and build on their network in this particular field of expertise.”

Invest-NL is the Netherlands’ national financing and development institution. 

As an impact investor, it focuses on enabling financing for companies initially considered unfinanceable. 

The Dutch firm focuses on critical societal challenges in collaboration with other financiers, investors, and development specialists in the public and private sectors.

“We are thrilled to contribute to the Polestar Capital Circular Debt Fund, which aligns perfectly with our commitment to fostering sustainable innovation. By solving the funding gap for innovative circular production companies, Polestar Capital finances innovation and accelerates the transition to a circular economy, creating both positive environmental impact and economic benefits,” says Ulrike Kostense, senior investment manager at Invest-NL.

Oost NL is the regional development agency of the Eastern Netherlands. The firm invests in entrepreneurs in the east of the Netherlands.

The agency strengthens the regional economy on behalf of the Ministry of Economic Affairs and Climate Policy and the provinces of Overijssel and Gelderland. Oost NL is active in top sectors like Food, Energy, Health, and Tech.

Wendy de Jong, CEO of Oost NL, adds, “Scaling circular start-ups is key to transition to a sustainable society. We need to invest in our ability to reduce waste, conserve resources, and promote sustainable economic growth by reusing materials and products. This requires capital, also in the form of debt, which is scarce in the current funding environment. Polestar Capital is a knowledgeable partner, and PCDF will be a natural co-investor in circular scale-up companies in Gelderland and Overijssel.”