$101M for the #1 Climate Management & Accounting Platform — Kentaro Kawamori, CEO of Persefoni
Led by CEO and Co-founder Kentaro Kawamori, Persefoni is a SaaS platform that enables companies and financial institutions to measure, disclose, and reduce their carbon footprint, thereby meeting stakeholder and regulatory climate disclosure needs with the highest degrees of trust, transparency, and ease.
Listen to the Podcast
BUSINESS
What does your company do? What makes you unique versus the competition?
We are a venture-backed SAAS company. We are not even two years old. We started the company in January last year (2020). We have built a platform that helps both operating companies and institutional investors calculate their carbon footprint and disclose that in a financial and regulatory manner.
What does that mean? The core of our platform is a system of records built around a carbon accounting process and a huge swathe of activity data. For example, if you are Fed-Ex and you are driving around 100 vans per city, flying airplanes, and using commercial air travel, or you are Coca-Cola, and you are distributing coke cans around the world, then that data looks different.
Think of us almost like an ERP for carbon data. We run that data through the carbon accounting methodologies that exist, such as the Greenhouse Gas Protocol, and we come out with calculations that can be used in highly auditable, regulatory, and investor-grade carbon and climate disclosures.
The carbon accounting space is so nascent that what most of them (competitors) lack is in-depth expertise around carbon accounting methodologies, and the difference between carbon accounting and sustainability reporting, which are two very different things.
One difference might be between a product’s carbon footprint and a company’s carbon footprint. We are very focused on the latter. But a great example of the former is Logitech. If you buy a product from Logitech, then on their packaging you will see a corresponding carbon footprint number.
Other companies such as All birds and Proctor and Gamble are doing the same. They are calculating the footprint of their individual products, which is a whole different class of carbon accounting called life cycle analysis.
Then simultaneously, if you look at the startup field in our world right now, you have a whole bunch of different approaches. You have some that want to be the QuickBooks of the space, and others focus on selling offsets.
We, instead, are more focused on the larger enterprise and financial institutional space.
Big picture, we are seeing this maturation of the carbon accounting market, which has historically been a very niche practice dominated by consultants and 100% spreadsheet-driven. You are now seeing that very classic digital transformation happening, which is a route manual process dominated by flat files undergoing the digitization process to a platform-first approach.
As a rule of thumb, for a SAAS business to disrupt a market or create a new one, it needs to be about ten times more efficient and cost-effective than the previous solutions, and for us, it needs to be very targeted at disclosure grade output.
How are you funding your growth — e.g., revenue, VC, CVC, government grants, M&A? What are 1-2 lessons you’ve learned along the way?
Last week we announced $101 Series B round that was led by Prelude Ventures and TPG RISE climate, which is the climate fund of a large private equity fund TPG, based out of San Francisco. By our estimations and according to Pitchbook, it is the largest funding round for a climate tech SAAS company in history.
I think people who are raising money in the early stages need to find a balance between the concept of venture-scale returns and how that plays into an investor's psyche versus the realistic expectations about what you’re actually going to go do.
A traditional venture capitalist needs return a 10x on that initial investment. The typical fund distribution for a VC looks like this: Out of 10 deals, at least one needs to be a home run (10x return), two deals might produce a smaller return around 3-5x, and the other seven can lose money.
What investors are looking at in the early stages is a strong product-market fit. But if you are really early, then they're are betting on people. The greatest venture investors will often focus on Team and TAM (Total Addressable Market).
They, for instance, will have this thesis on a big macro trend, perhaps sustainability and climate. But maybe the startups they're don’t even have a product yet, or product-market fit. However, many of the greatest venture capitalists will say they believe that a certain team understands that market, customer pain points, and the technology needs. They know they will build something.
Outside of your current business, what other 1-2 climate or sustainability sectors seem like promising areas in which to start a business? What might those solutions look like?
I spent some time in the energy industry, and two things I am most intrigued about today are hydrogen and portable high-efficiency powerful sources of energy. When you work in energy for a little bit, it really teaches you that access to energy, much like capital in the financial markets, is the cornerstone for all economic development. As we go through this energy transition, it is truly the first industrial revolution that any of us will live through in our lifetimes. It seems clear to me that hydrogen has to be a part of the future equation.
This year, for the first time, I am on the judging panel for the Forbes 30 under 30 energy list. I saw an amazing amount of entrepreneurs and innovation happening in the hydrogen space going through that process. It definitely made me envious of being at the early stages of what I believe will be a huge technology development for the world.
PERSONAL
If you had to start over, what are 1-2 tips you’d give yourself in order to be faster, more effective, and higher impact?
When I reflect on ten years ago, a few years ago, or even today, I think a common characteristic for me is that I tend to be fearless. I don't necessarily ignore risk, but I tend to have a very high appetite for risk. But I would still tell my younger self to lean into that even more. What I’ve learned from the greatest entrepreneurs is that by doing this, you are a little bit of a maniac; you are going out and saying, I see something that nobody else sees, and I am the person to go figure this out. For me, I always knew that was the path I was going to take.
The other big piece of advice is about the importance of relationships. I think earlier in my career, I did not value relationships when, as a young whippersnapper, I thought competence and knowledge would carry me farther. But in business and in life, it’s that old school mentality that relationships are everything, and especially in our journey with Persefoni this has proven true a thousand times over.
Some habits and routines keep you focused, healthy, and sane — e.g., meditations, exercise, productivity hacks?
Family is huge for me. I go from the crazy hustle and bustle of fundraising creating a start-up to a two-and-a-half-year-old daughter at home that keeps me grounded in a way that only having a young daughter can. She doesn’t care what I did all day; she just wants to play and hang out. There is some magic behind that, which I am super grateful for.
My wife and I don’t bring our work home. We just act as a family unit and keep grounded as sort of an anchor point on having that perspective of what is most important in life.
On health and wellbeing, I am super obsessed with productivity and efficiency. I work a lot of hours like all entrepreneurs do, but for me, it’s the efficiency of those hours. So, if I am clocking even slightly less sleep, then I would want to, I am going to shift my schedule to make sure I am doing stuff at higher efficiencies. I spend way too much time and money on this (chuckles). I have a Whoop (band). It tracks my sleep in detail, and I am religious about it. I also got this amazing AI-powered mattress cover that regulates your temperature throughout the night, so if I can eke out even 2-3% more efficiency out of my sleep, I am all about it.
I also like to play tennis and lift weights, so staying physically healthy is super important for my mental well-being and being productive at work.
And lastly, I am an absolute glutton for information. I can consume and read for days on end or listen to podcasts and audiobooks. I am always consuming new information, which has been a cornerstone habit of mine that’s been really productive for me.
What recommendations do you have for our audience — e.g., books, podcasts, quotes, or tools?
I’ll do three books and three podcasts: One of my favorite genres of books are what I would call corporate biographies, those tthat are chronicling the journey of a company, sometimes through the eyes of the founder, or just the company in general. Three that have been my favorite are Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration by Ed Catmull, which is about Pixar and the culture and business they built. Another one is No Rules Rules: Netflix and the Culture of Reinvention by Reid Hastings, which is all about the Netflix cultural philosophy, but most importantly about Netflix’s secret weapon, which is reinvention going from a mail-in DVD business to streaming giant, to Hollywood production company. The third is The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company by Bob Iger, who was the long-time CEO of Disney and oversaw massive transformation and made bets by buying Lucasfilm and Pixar, which at the time seemed controversial. He is just one of the great CEOs of our time.
The three podcasts, The Colombia Energy Exchange by Jason Bordoff, the Dean of the Colombia Climate School, which provides excellent economic and macroeconomic analysis around the energy transition. I don’t think you can pack high-quality information per minute on any other podcast besides, of course, your podcast, Climate Torch. (chuckles)
Two other favorites if you like VC and startups are as follows: 20VC by Harry Stebbings. This guy is prolific. He’s so prolific and has now turned it into being a fund manager. The other favorite is a series called Acquired by Ben Gilbert and David Rosenthal. They do these 1–4-hour readings of iconic companies and how they came to be. They just do fascinating research and storytelling around how those companies became as influential as they were.
What’s the nicest thing anyone has ever done for you — outside of your own family?
This is an easy one. One of my co-founders Jason Offerman, just ripped up his life and moved all his family from Oklahoma to Tempe in the earliest days of our venture to join me in starting this business. You heard me say it earlier, but you have to be a maniac to start a business at the early stage with no product and no investment. Having a partner that you can do that with you in the earliest of days, for sharing the vision and supporting each other, has been amazing. I would absolutely characterize it as one of the nicest things anybody could have possibly done for me because of the sacrifice and confidence. The challenges of doing so were enormous, and I will be forever grateful for that.
CLOSING
Do you have any requests, announcements, or final advice for our listeners?
I would tell everybody whether you are an entrepreneur, inspiring entrepreneur, working at a company, or working for the government, you have to keep learning all the time. Climate science is ever-evolving. The entrepreneurial space around this is ever-evolving. You and I just talked about your class on ESG investing at Duke University now; ESG investing in the financial markets is a hitting scale but it's a very new concept.
If you’re listening, you are probably already convinced that climate change is perhaps the greatest challenge of our time and maybe the greatest challenge we will ever face as a species. So, we need people from all walks of life and from all industries and governments to get involved. It doesn’t mean you have to dedicate your career to it. Maybe you make some life changes. It might mean having the conversation and talking about it openly and frequently.
In doing so, I think you’ll find smart people that want to have an impact or do something that will further the cause, and I think that is the most important thing we can do right now.
Learn more.
Apply to join our Climate CEO Mastermind peer group — Through peer-to-peer sharing of best practices in monthly video calls and annual meetings, we focus on faster business growth, better decision making, bigger thinking, investor savvy, and stronger networks. Our current members represent $5B+ of market value for tackling climate change. (Amazing human beings, too.) Founded by Dr. Chris Wedding — with $1B of investment experience, 60,000 professional students taught, 25 years of meditation practice, certification as a Mastermind Professional, and too many mistakes to keep to himself — our cohorts function like your own personal advisory board.
Sign up for our weekly newsletter — Climate startups, finance, personal optimization, and attempts at humor.