Infra-tech: New definitions & funding modes

Infrastructure investors can count on an almost guaranteed two to two and a half times their money. A seed investor needs a credible path to 20 times, and more than 50 if everything goes right. Between the two sits the first-of-a-kind project. Shakil Karim of Actia Capital Partners said one needing 50 million of equity should target three to five times while it piles up risks, from the technology and the engineering to the founders, market timing and a single offtaker who could change course. When Shakil asked whether anyone had seen that missing middle done really well, nobody offered an example.

Two kinds of infratech

Shakil and Toba Spiegel of Loom Ventures arrived with different definitions. Shakil, who came from infrastructure private equity, backs companies that are infrastructure businesses from the start. They sell an output on long contracts, typically offtakes, which makes them bankable and cheap to finance. Selling software to an infrastructure company is a different venture case, Shakil said, with a different contract life, procurement process and customer. When a founder who makes fertiliser from electricity asked whether that counts, Shakil offered a broad test. Infrastructure is asset-backed, non-cyclical and protected by high barriers to entry such as regulation.

Toba's fund backs technology sold into infrastructure. Loom belongs to Strabag, a construction group with about 20 billion in revenue that Toba prefers to call an infrastructure group. It builds roads, bridges and tunnels for government customers on long-term plans, and that stability reassured Toba, long sceptical of corporate venture arms. Loom invests in digital infrastructure such as data centres and satellites, in energy and in industry, which are Strabag's growth markets. The group's business units stay out of investment decisions. Shakil saw a contradiction. Start-ups selling to Strabag face exactly the corporate processes Loom keeps at arm's length, so why not back the challengers instead? Toba said the fund has to move fast, with a term sheet in two weeks, and the parent should never be the main reason to invest. Depending on it is a risk in itself.

I don't think that's the business of a seed investor.

Where venture stops

Toba sorted infrastructure deals into three groups. Wind and solar farms are infrastructure but not for venture. At the other end are scalable venture cases that happen to look like infrastructure, such as Open Cosmos, a satellite company Toba invested in. It was profitable early in Earth observation, then won a Ka-band telecoms licence in Luxembourg and became very capital-intensive. Raising the money showed the ceiling of growth capital in Europe. Even so, with governments signing large contracts and the data on top of the satellites giving them their value, scaling was never in question. The company had just raised a round of about 300 million.

The middle group is harder. Toba had looked at thermal storage and concluded that even with debt it was not a venture case, because the customer's return was too thin. Strabag's asphalt mixing plants cost about 7 million each, and storage would add another 7 million. Shakil agreed. Without something truly differentiated, a business can do well, just not well enough to justify the early risk in a seed portfolio.

Ways across

A climate-adaptation investor argued that one financing instrument should not fund both intellectual property and deployment. Their example was a logistics-as-a-service business for post-harvest food processing in Egypt, with $80m of capital expenditure that offtake contracts make debt-financeable. Equity goes into the IP, which is licensed to deployment vehicles funded with conventional infrastructure debt. The aim is 10 times or more, not 50. Shakil was wary of decentralised, modular models, which repeat design, permitting and cost on every site and can burn cash faster than they deliver. They make sense where decentralisation is truly needed, such as water in Saudi Arabia, where households rely on their own tanks and pipelines are missing. Otherwise, "scale has always been king" in infrastructure.

Toba recalled an investor at an earlier infratech Ripple who would take ownership of a failed company's assets to justify the extra risk. "I don't think that's the business of a seed investor," Shakil said, and it was hard to call that de-risking. An investor for two corporates said the takers for a project vehicle are corporates or LPs with a strategic interest, once the project is profitable, which is a big if. At two to three times, such a model cannot afford many misses.

Who fills the gap

One participant asked for more belief, since the biggest returns come from people who go the other way. Shakil said that is what high return targets pay for. One portfolio company is trying to create a new regulated grid operator in the UK from scratch, taking regulatory risk to challenge the distribution network operators. Toba asked what the ideal investor for the middle would look like, and how it would win over LPs without the usual venture pitch. No one had an answer. Someone pointed out that seed investors carry the gap as a risk of their own, the risk that no one fills the middle after them when their money runs out.

This Ripple was hosted by Shakil Karim (Actia Capital Partners) and Toba Spiegel (Loom Ventures) at The Drop 2026 on 16 September.