Entrepreneurs for Impact (EFI) Podcast: Transcripts
#90:
Carbon tech wishlist from a $350M VC fund
Chris Wedding:
Hey there, good morning or good afternoon, folks. It's Chris. All right, as you can guess, we're still in the August lull, which means a little less work, a little more deep work, a little more family time. I'm coming to you today with another newsletter from Entrepreneurs for Impact in the spoken form. Hopefully, this is helpful for those of you maybe, who knows, listen to the podcast on vacation driving somewhere beautiful. All right, I'm going to cover six topics today.
Number one, a carbon tech wish list from a $350 million fund. Basically, this fund, Lowercarbon Capital is saying, “Look, if you build a company around one of these carbon, let's say, often sequestering solutions, well, we may have the capital you need.” Lots more research required.
Story number two, the headline, and with a big old emoji of a shocked face, it says, “You don't need VC funding.” Of course, in parentheses, some of you do. Number three, climate tech podcast number one, the title, Making ESG Investing Easier for $2 Billion. Story four, climate tech podcast number two, both these, of course, coming from Entrepreneurs for Impact, the title here, a $100 Million Love Letter to Pioneering Climate Business Leaders. Story five, 225 millionaires fit into these four categories and then finally, I'd love to share your pitch deck with 25 early-stage climate investors. More to come on that.
So, let's go to our first story here, a carbon tech wishlist from a $350 million fund. Some of you know, Lowercarbon Capital raised a $350 million fund for carbon removal startups in April of this year. Recently, one of their partners, Ryan Orbuch, wrote an article on their site and they're laying out this wish list for the kinds of carbon removal tech that they would like to fund. Before it gets into the list, Ryan says, “Look, the rest of this post is going to be pretty geeky, but in fairness, that's who we are. We will not apologize for the climate nerdery that follows.” Preach on, brother.
They then say, “Probably all these won't work, all these solutions won't work and most of them require a lot more fundamental research to understand potential risks and trade-offs. But the stakes are so damn high and opportunities so big, it's really worth digging in.” Yeah, totally get that. So, he puts these solutions in two buckets. The first bucket, physical and geochemical pathways. I'm going to read about eight of these to you here.
The first, zero emission metal oxide production. Carbonation and monitoring of zero carbon alkalinity. Mass transfer driven ocean alkalinity enhancement. By the way, if you feel like you're back in college science courses, there's a reason for that. Durable storage of dilute CO2 streams. Low volume injection sites flipping the economics of storage versus capture. Low energy approaches to rearrange CO2 into other stable products. So, that's their physical and geochemical wishlist.
The next bucket with four are biological pathways. Number one, cheap, stable, and easy to monitor preservation of existing biomass. Growing biomass that doesn't decompose. Biologically accelerated silicate weathering, and biology-inspired CO2 concentration and mineralization. Finally, a fun fact I did not know from the research, less than 1% of the carbon atoms on earth are in plants, animals, bacteria, and all living things. Again, not what I'd assume. 99 plus percent of earth's carbon is in rocks in the crust, example, limestone, and rocks dissolved in the ocean, for example, bicarbonate in solution as part of the slow carbon cycle with which I include holy hydroxides, right? Calcium and magnesium, of course. Yeah, you got to be a nerd to like most of this stuff. So, check out this article from Lowercarbon Capital and read more about their wishlist for carbon tech companies to fund.
04:40
Second story here it says, “You don't need VC funding.” Now, obviously, many companies that have long sales cycle, more product market fit to work out, higher costs to get to where they need to be with product, et cetera, do need VC funding. But other founders should consider the following types of alternative capital.
Number one, grants, so think federal funding, state support or nonprofits. Number two, revenue-based financing, so for companies with predictable, such as contracted revenue. And strong gross margins, maybe 30% or more revenue-based financing can be an option.
The third idea here, debt, basically startup debt funding. The prominent example in the startup space would be LACI, so the Los Angeles Cleantech Incubator, their loan program has two products. One is for working capital for post revenue startups and the other is bridge financing for startups that have lined up pilot projects or customers, but they got to get there. They got to get to that purchase order being paid.
Number four, asset-backed lending. This is a loan product, of course, tied to a startup's accounts, receivables, hardware, or inventory. And then finally, project expansion capital, such as when FOAK projects, first-of-a-kind projects, are deployed. So, think companies that have received plenty of VC capital, you've got the technology to where it works at a smaller scale, but now you need to ramp up to project finance.
The Intel here is organized through a site called Climate Capital Stack by Daniel Kriozere. By the way, I'm going to butcher a lot of last names here, so sorry, Daniel, since I'll usually only call you by your first name. Climate Capital Stack, you can find that online.
The other interviews are with Joel Armin-Hoiland, CEO and Founder of Climate Finance Solutions. Again, Joel, I'll just call you by your first name, never your last. I'm sure I butchered it. Dimitry Gershenson, CEO and Co-founder of Enduring Planet, that's revenue-based financing. Joel works with getting startups a non-dilutive grant funding.
Hyder Shuja, Senior Manager of the LACI Cleantech Debt Fund. Mark Paris, Managing Partner of Third Sphere, it's asset back lending and then Kyle Adkins, Partner at FullCycle Climate Partners for the project Expansion Capital. So, VC gets lots of love and great, we need it for sure, but other ways to get your climate tech startup funded and growing.
All right, story three really is a podcast, a podcast on the same station, if you will, Entrepreneurs for Impact. This one is called Making ESG Investing Easier for $2 Billion. So, if you haven't heard it, check it out. It's with Jay Lipman, Co-founder and President of Ethic. He's also a Top LinkedIn Voice for the green economy for 2022 and a member of our Climate Mastermind peer groups at Entrepreneurs for Impact. Ethic, in their words, is working toward a future where all investing is sustainable investing. They're backed by almost $100 million of funding and they empower wealth advisors and investors to create portfolios that seek to align personal values with financial goals.
08:02
They've got a bunch of cool videos making ESG much easier to understand. In the newsletter through Substack, I post a link to those videos. And Jay still claims somehow that his sophisticated British accent is not a factor in his success. But let's just say the jury is still out, Jay. Anyway, good times.
Story four is also a podcast here at Entrepreneurs for Impact. Here we went overseas, if you will, to France. The title, $100 Million Love Letter to the Pioneering Climate Business Leaders. That is taken from the mission page of a company called Sweep. Sweep is a SaaS company that helps large enterprises reduce carbon emissions in their businesses and supply chains, really importantly in their supply chains. Sample customers include multi-billion-dollar entities such as Saint-Gobain or HP.
Rachel Delacour is the Co-founder and CEO of Sweep. She's also a board member at 2MX Organic, investment committee member at RAISE France, and board member at Shine, as well as the former President of France Digitale, and Co-founder and CEO of BIME Analytics, which was acquired by Zendesk. Check that out as well for a European perspective and really a way to operationalize a lot of the regulatory changes through entities like the SEC and its analog overseas.
Story four, 225 millionaires fit into these four categories. I think a financial planner, let me get his name here, Tom Corley his research included five years of talking to oodles of millionaires. He breaks the four types down into four categories and my question to you, of course, is which one are you, which type are you now, or which type will you be?
There's also a link to a free summary of his research in the newsletter.
The first type is a saver investor. He says, “No matter what their day job is, they make saving and investing part of their daily routine. They are constantly thinking about smart ways to grow their wealth.” Number two, company climbers. Climbers work for a large company and devote all of their time and energy to climbing the corporate ladder until they land a senior executive position with an extremely high salary.
Number three, virtuosos. They are among the best at what they do and they're paid a high premium for their knowledge and expertise. Formal education such as advanced degrees are usually, but not always, a requirement. Fourth category, dreamers. These individuals are all in pursuit of a dream, such as starting their own business, becoming a successful actor, musician, or best-selling author. Dreamers love what they do for a living, and their passion shows up in their bank accounts. Don't we all hope so listening to this podcast?
The last story, it's a pitch, or maybe it's an invitation, let's say. You've heard it before, if you've heard the prior podcast. Basically, I'm saying, “I'd love to share your pitch deck with 25 early-stage climate tech investor friends and the venue for this is an online cohort-based course that I teach through maven.com. The course is called Fund Your Climate Tech Startup. This cohort runs September 5th to the 16th. And the benefits to pre-seed and seed stage founders who enroll include a five-step process for raising capital, a 500 plus climate investor list, including emails, a nine-step method for improving really a one-page business plan. Six tools for assessing a startup's competitive advantage. 20 top startup mistakes to avoid. A third party verified certificate of completion. A new library of climate tech funding resources. More small breakouts with peer feedback. Lots more practice investor pitches and really a new tribe of allies, friends, to support your journey and theirs towards raising capital and growing important companies in the climate tech space.”
12:27
Again, it is online. It's only about five hours of learning per week, so very modular. It's also again, cohort based, so it's capped at 25 students, really entrepreneurs and super high touch, super applied. If you'd find value in this and would like to enroll by Monday, August 15th, there's the discount that I'm happy to offer $200 off if you use the code CLIMATE200, the number 200 and the word climate all stuck together at checkout. Again, pretty intimate setting and the room is filling up fast, thankfully. We need a lot more companies raising capital and scaling up.
I'll conclude the newsletter as I conclude all newsletters, which is make it a great week because usually it's a choice. That's the truth, folks. All right. Hey, we'll call it there. If this is useful, let me know. If there are other types of guests you'd like on the podcast also reach out via LinkedIn or Twitter.