Introducing Vensurety: Derisking Early Climate Infrastructure with Impact-First Surety Bonds
Trellis Climate and GreenieRE Coalition launch a new insurance platform to unlock growth for climate innovators and offer a catalytic capital opportunity for philanthropists.
Trellis Climate, in partnership with GreenieRE Coalition, is excited to launch Vensurety, a novel, impact-first, tech-expert insurance platform for climate companies. Vensurety is supported by anchor funding from The Schmidt Family Foundation and Builders Initiative. Vensurety, short for “Venture Surety,” underwrites a new category of surety bonds to guarantee climate startups have the liquidity to support their growth and commercialization.
The goal is two-fold: (i) to accelerate the deployment of novel climate technologies at scale, and (ii) to demonstrate a scalable climate insurance platform with an initial philanthropic backstop. Both are crucial to Trellis’ mission to accelerate the deployment of early climate infrastructure.
So, what is a surety bond? Put simply, a surety bond functions like a letter of credit for a company that might otherwise need to reserve capital on its balance sheet to guarantee payment or performance.
A surety bond is a three-party written agreement where one party (the surety) guarantees to another party (the obligee) that a third party (the principal) will fulfill a specific obligation. This agreement acts as a financial guarantee by the insurer, ensuring the obligee receives payment if the principal fails to meet their obligations.
For Climate Tech Companies: Liquidity To Build
Climate startups have historically lacked access to sureties due to the shortage of underwriting data available for novel technologies. Given the sector’s lack of exposure to this mechanism, many companies may not know when and how they can best leverage Vensurety’s support. To better understand what a surety bond is, the use cases in which it can be applied, and how the Vensurety program works, read on:
When a company might need a surety bond: As climate tech companies build infrastructure, they may be asked to hold a portion of their liquid capital in an escrow account. Given the high cost of venture capital funding, it may be beneficial to instead spend on milestone execution or other company priorities. A surety bond could replace the capital held in an escrow account.
The reasons behind the need for an escrow request vary, but could include:
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Customers of novel climate tech products often require a warranty–backstopped by capital in escrow–to support replacement / repair in the event of product failure to gain confidence in the product. A surety bond could replace this escrow requirement.
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If a company cannot produce goods or provide services at the expected volume in a given time period, its revenues will be lower than expected. This revenue variability can erode lender confidence and can result in higher debt interest rates. Surety can provide a revenue guarantee to increase lender confidence.
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Offtakers may require a startup company to guarantee delivery of its product or service–backstopped by funds in escrow to pay for possible performance penalties. A surety bond could replace this escrow requirement.
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Engineering, procurement, and construction firms (EPCs), equipment vendors, or other providers of goods and services may require climate tech project developers to set aside capital to ensure payment upon delivery of products and services. Surety can help keep this capital liquid until payment is due.
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Startups often have to provide deposits when using or leasing equipment or facilities owned by other entities to secure against damages. A surety bond could replace this security requirement.
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There may be a mismatch between when revenues are received and when expenses are incurred, creating a working capital gap. A surety bond can serve to bring forward revenues to better align timelines.
If you’re a company that wants to learn more about Vensurety, please reach out to Emily Lewis O’Brien, Principal at Trellis Climate, at emily@primecoalition.org.
For Philanthropists: Catalytic Capital That Unlocks Climate Infrastructure
The surety bond market doesn’t work for climate startups — yet. Traditional surety providers require long operating histories and robust performance data, which emerging technologies don’t have. Meanwhile, climate startups have expressed a need for surety, exposing a critical market gap.
That’s why Trellis and GreenieRE have created Vensurety. Vensurety leverages philanthropic capital to underwrite policies and thereby:
Unlocks otherwise stalled projects by removing a financing bottleneck.
Enables capital efficiency for startups with high-impact technologies.
Demonstrates a replicable model for surety underwriting in climate.
By supporting Vensurety, philanthropists help to alleviate a market gap, accelerating the most critical climate innovations as they scale towards commercial deployment. In the long-term, Vensurety aims to prove the model’s viability and crowd-in private insurers, expanding the program’s impact well beyond the initial philanthropic backstop.
If you’re a philanthropist that wants to partner with Trellis Climate on the Vensurety program, please reach out to Lara Pierpoint, Managing Director of Trellis Climate, at lara@primecoalition.org.
