Introduction
An innovative venture fund that gives investors access to revolutionary climate technologies
Nucleation Capital Fund I, launched in 2021, is an evergreen venture fund that invests in scalable climate solutions that can solve climate change and restore the health of the climate. We have specifically launched this fund through an online tech platform that makes participation readily accessible and affordable for more accredited investors. Investors can easily access our subscription portal online to review the fund materials and select the amount and the term of a subscription that works for them and their investment portfolio.
Nucleation’s unique thesis—to invest in ventures innovating next-generation nuclear and carbon management technologies—emerged as a function of the growing promise of these two nascent tech sectors in the face of continually growing emissions and the threat to humanity posed by climate change. Until just recently, both sectors were largely overlooked by other climate investors as either taboo or too risky. Nucleation’s founders chose to combine their complementary experience and skill sets, knowledge and networks to de-risk these two very critical “deeptech” sectors through a curated portfolio. By deploying as a “non-traditional” venture fund, we make these higher-risk and higher-return deeptech sectors both accessible to—and affordable for—investors who are keen to invest in the ventures innovating the most impactful climate solutions.
Investment Approach
We only invest in true climate solutions
Our goal is to invest in the best ventures deploying the best technologies that can have both the greatest carbon impact and provide the greatest return. Nuclear power—with the highest EROEI of any type of energy—is naturally at the top of our list. We bring considerable expertise, deep networks and exceptional deal flow to build our investors portfolios of ventures with the best prospects of long term success.
Nucleation combines a deep appreciation of the clear benefits provided by traditional nuclear energy, with an understanding of the compelling innovations and advancements that will enable next-generation nuclear to be even better. Even before the passage of the Infrastructure Investment & Jobs Act (IIJA), the Inflation Reduction Act (IRA) and, just recently, the ADVANCE Act, Nucleation saw the importance of advanced nuclear to the world’s ability to transition to 100% clean energy.
This is a once-in-a-lifetime opportunity for investors. Prior to this moment, most nuclear innovation happened in the national labs. Now, innovation is predominantly occuring in private ventures—some of it emerging out of the labs—providng investment opportunities never seen before to get in on the ground floor of what we recognize to be the future of energy. And we’re not the only ones. The tech giants, needing many more data centers to power our digital existence and everything from AI to crypto, are now looking at what nuclear power can provide.
Similarly, with so much CO2 released into the atmosphere, we must deploy and power a vast amount of carbon capture and management technology to reduce the CO2 levels and begin to restore our climate to hospitable levels. The ventures working today to innovate carbon management solutions are barely known to the general public. But we believe they will be as critical a sector as the fossil fuel extraction industry is today: we’ll just be extracting carbon from the air, rather than from deposits of virgin hydrocarbons in the ground. The key to the success of this sector will be the availability of 24/7 clean, low-cost energy. To get this, we will need commence the mass production of the coming generation of advanced small, modular reactors, as these two sectors will work hand-in-hand.
Nucleation’s focus on a narrow subset of contrarian technologies has a few additional benefits. We don’t overlap very much with any other climate funds. Also, given that a majority of climate investors are making staggeringly incorrect assessments about both nuclear and carbon capture, there is far less competition for deals. This enables Nucleation to invest at more down-to-earth valuations.
We invest broadly across a narrow climate thesis
We seek to diversify as much as possible within our narrow thesis. Accordingly, we invest across all available dimensions to best reduce risk and diversify the timing of returns. We invest in both primary teams, such as reactor developers, but also secondary sector participants, such as supply and support ventures that are vertically-integrated teams, which are helping to build sector capacity.
We are “atomictech” agnostic and will evaluate fission, fusion, LENR, subcritical, radioisotope and other emerging technologies. We are also geographically agnostic (so long as the team speaks English) as a way to reduce market and regulatory risk. We’re also stage agnostic, and will invest in virtually any stage other than science experiment.
Nucleation Fund I Mechanics
Venture capital terms, reduced minimums, online operations
Nucleation Fund I functions much like a traditional venture fund but we have lower costs and lower capital requirements. lnvestors are able to set the terms of their funding—the amount to invest per quarter and number of quarters—to suit their preferences and portfolios. Our quarterly subscription model provides cash flow predictability for the investor, both as to timing and amounts of our “capital calls” (in contrast to traditional funds which issue irregular capital calls, as funds are needed, that often include fund expenses). We cover all of our ordinary fund platform expenses.
Participation in Nucleation’s Fund I starts as low as $2,000 per quarter and can be as large as $2,000,000 per quarter. Investors can participate for one or more quarters and can expect to see an average of one deal closed per quarter. A 4-quarter subscription will produce a portfolio of about 4 or 5 positions. For an 8-quarter subscription, the investor will get equity in about 8 to 10 ventures. Subscribers should select a quarterly funding level that they would like to see be the approximate amount invested per deal. The term of the subscription should reflect the size of the portfolio that the investor would like to hold of ventures in thse sectors.
Fund I utlizes the format of a Master Series LLC structure. We invest up to the amount of the subscribed funds received each quarter. All subscribers get their pro rata portion of the investments we make. In the event that we invest less than the total subscribed amout each quarter, those excess funds roll over into the next quarter, increasing the amount that is available then. We do not have a closed-end period by which fundraising or investing must end, like traditional funds have. This is why AngelList refers to this evergreen investment product as a rolling fund.
Communication, fund reports, tax reports
Nucleation Capital’s fund custodian and platform, AngelList Ventures, provides back-end services for the fund. It also provides investors with their own client account, portfolio dashboard, and facilitates quarterly funding and offers customer service support. AngelList maintain records on behalf of each client and provides annual K1 tax reporting. This portal enables us to communicate with our LPs directly and securely. Platform communications are stored and maintained by AngelList for the life of the investment and made accessible to each investor through their personal AngelList account and investment portal.
Billing, fees, costs, cancellations
The AngelList platform automates, simplifies and reduces costs on many aspects of the fund for both investors and fund managers, making subscriptions, accreditation, quarterly funding and cancellations quick and easy. Either Nucleation Capital or AngelList customer service can help any subscriber who needs extra support.
Best of all, AngelList provides these platform services at a reasonable cost, which is fully funded by Nucleation Capital, so investors do not pay these platform costs. Investors do not see additional ordinary fund expense fees and only pay Nucleation’s management fee and carried interest fee. There are no extra capital calls issued by the fund for amounts beyond the subscribed amount committed at the getgo, so no surprise funding requests.
Nucleation Fund I charges standard venture fees but also provides discounts for longer-term and larger subscriptions. We charge the standard 2% management fee and a 20% carried interest fee (“2 and 20”) on 4-quarter terms. For subscribers selecting an 8-quarter term or longer, we provide a 25% discount on our management fee.
Nucleation also provides a 25% discount on carried interest for investments of $50,000 or more per quarter. Carried Interest (“carry”) is an incentive fee that is paid to us, the General Partners (GP), on net proceeds earned by our investments. Investors get all principal that they paid over the course of their subscribed term returned to them from proceeds first, prior to the calculation of carried interest fees. Carried interest is paid to us when returns generated from the investments we made during the term exceed the total principal amounts paid in by the investors, i.e., the Limited Partners (LPs), for their full term and serves to align LP and GP interests.
(NOTE: Most rolling funds do not cover the AngelList platform “Admin Fee” as Nucleation does. We work hard to maximize investor returns and have structured in a multitude of ways to risk-reduce on behalf of our LPs. For too long, AngelList’s automated messages made it appear that our LPs pay that fee, as with every other fund. You don’t. Our LPs have never been charged this fee. AngelList has finally updated their notice to reflect how we have always handled these fees.)
Syndicate privilleges
Every LP in Fund I is automatically included in our syndicate but have special privileges. Fund LPs get first dibs and priority access to the allocations that we are able to syndicate. Fund I LPs also get reduced carry fees on participation in our syndicate, from the standard 20% down to 10%. We do not charge any management fee on syndicated amounts and, because most of our syndicates are deemed “side cars” to our fund investments, we benefit from AngelList’s 50% discount on their SPV formation fees. Thus, fund LPs have the best of both worlds: they have guaranteed access to all of our deals through the fund. They also have priority and highly discounted access to participate in our syndicates, which enables those LPs who wish, to boost their exposure to select deals, when possible. We provide these privileges as a service to our fund LPs to enable them to maintain very low average fees across their portfolio.
Investing in Nucleation Fund I
If you are ready to apply for Nucleation Fund I, you can do so through the below link that takes you to our online subscription portal at AngelList. There you will have access to all fund documentation, fee information and the application process. The interface walks you through each step that is necessary to apply, which involves setting up your investment account and getting accredited. There’s a place to enter a comment at the end of the process. Please be sure to indicate that you found us via our website. If you qualify for either of our discounts, we will apply that upon the approval of your application.
Should you wish to meet with us and have questions answered, we’re happy to meet via Zoom (or in person, where possible) to be sure that we answer any questions that you may have. Please use this link to schedule a meeting. If you run into issues when subscriting, you can get email support from our AngelList support team or contact us.
