Fundraising strategy for Leo DiCaprio's circular economy fund

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Regeneration VC (Regeneration) recently announced their $45M fund in March of 2022. Regeneration is investing in consumer-powered climate innovation driven by circular and regenerative principles. Michael Smith, one of the fund’s GP’s, explained what exactly this means and what Regeneration is investing in:

"Over 90% of materials end up in landfills or natural ecosystems, and the consumer supply chain accounts for 45% of global emissions. Reimagining apparel, food, and CPG presents a $4.5T opportunity to ensure the prosperity of our species and planet. Our mission at Regeneration is to reimagine consumer industries through an environmental lens."

Fund Snapshot

• Stage: Seed – Series A
• Check Size: $500,000 – $3,000,000
• Geography: Global (75% North America, 25% Global)
• Lead/Follow: Both

How can a startup get investment from Regeneration?
Regeneration looks for 3 things.

The first piece is vertical alignment. Regeneration invests in:

• Circular Economy Design (material inputs)
• Circular Economy Use (brands that are using input materials to tell a circular pathway)
• Circular Economy Re-Use (waste to value)

The next piece that matters is business traction. Regeneration likes to see product-market fit with early customer signal, revenues as little as a few hundred dollars, joint-development agreements (JDA), or off-take agreements from downstream partners.

Lastly, Regeneration looks for the right business profiles to invest in. For reference, as a fund, Regeneration wants to see 20%+ internal rate of return and looks to underwrite for 7-10X+ multiple on invested capital (MOIC) outcomes. On the environmental side, they want to support technology that reduces CO2e, improves water, waste and gets rid of toxins.

Why would a startup want Regeneration’s capital?
Regeneration’s tagline is that they are supercharging consumer-powered climate innovation.

Supercharging means that Regeneration works with each portfolio every quarter on one goal. This forces startups to prioritize asks, meanwhile getting Regeneration’s help on anything, including:

• Fundraising help
• Non-dilutive funding
• Hiring
• Supply chain (bill of materials, packaging recommendations, etc.)
• Business development and sales
• Environmental measurement or lifecycle assessments
• Packaging recommendations

Having previously operated and exited companies, Regeneration assigns 1 Partner as a lead on every startup, in addition to each startup has an "advisor working group". In these advisor working groups, advisors work together in smaller groups with clear agendas to complete the goal.

What can a startup do to get in front of Regeneration?
Startups can submit their information through Regeneration’s intake form (found on their website). Regeneration looks at everything that comes in. However, to be seriously considered, startups should meet Regeneration’s criteria that we listed above.

What can a startup expect while going through Regeneration’s due diligence process?
Regeneration’s first stage is based on materials provided by a startup and team meetings. Their deeper diligence includes customer calls, engaging technology advisors, market research, and much more.
If Regeneration is interested, Regeneration writes a short memo to present to the full team. If there’s enough interest, they will do a full memo. Regeneration’s process can be done in as little as 10 days, but ideally takes a month or two.