Entrepreneurs for Impact (EFI) Podcast: Transcripts
#89:
Funding data for 212 mobility startups
Chris Wedding:
Hey there, folks. It's Chris Wedding. You're hearing a different format for this week's podcast. I'll give you two reasons for that. The first reason is that I decided to take the family on vacation and we saw eight parks out west, four or five states across a couple of weeks with three kiddos.
Some awe and also some disbelief as in, “Why are we doing this versus playing basketball with my friends, playing soccer?” Those of you parents get that. We also happened to finally get COVID, all of us while on vacation. So, hooray, we've joined the club. Not a piece of cake, we're all better thankfully. Hope you all are as well. That's reason one. Goodness, with those distractions. Lining up a great guest for the podcast just took the backseat this time.
The other is because I'm testing this format again. I've tried it a couple of times. I'm debating whether to have the audio version of the weekly newsletter delivered through the podcast each week for those of us that are on the go, but want to digest climate tech startup investor intel and maybe not in front of the computer to read these newsletters. So, that's the premise. We'll try this out this week. Who knows? Maybe next week it is August after all. I hope we're all not working as much as normal. Got to recharge those batteries. Let's hop in.
So, this is the newsletter from Entrepreneurs for Impact from August 4th. The topics we're going to cover, there's six of them. I'm going to give you these topics, then we'll go into each story separately. The first is Climate Tech VC for market updates, so some really helpful graphs coming from Climate Tech VC, the kind of news data media group, which is just awesome.
Second story says, “Funding data for 200 plus mobility startups.” A friend, Alex Mitchell over at LACI putting together a great newsletter and database on this topic. Third item here, 143 million climate refugees. Yeah, just let that settle in one second. Fourth topic, I'm referencing a movie. I'm calling it, vegans are not weenies. That is clearly not the title of the movie. That is certainly something they're fighting against, that stereotype.
Fifth item, it says, “Save $250, learn climate tech startup funding with me,” and really with hopefully 24 other pre-seed and seed stage founders through an online course I'm launching in September the 5th to the 16th. Finally, the title here, under every beautiful company logo is a hot mess. All right, those are our six topics.
Let's go to the first one, Climate Tech VC for market updates. Here we go. So, if you're feeling like your capital raise is doomed, just hold on a second, put the box of Twinkies down. It doesn't have to be this way, I promise. So, I'm looking at these four graphs from Climate Tech VC, the newsletter and data organization and I'm trying to tell four helpful stories from these graphs.
Number one, $70 billion has been invested in climate tech since Q1 2021. So, great inertia, but we're just getting started. Some of you know this, but the UN IPCC estimates that we need to be investing $3.5 trillion, yes, that's with a T, per year to tackle climate change, as in to keep the average global temperature increased to 1.5 degrees Celsius or less. As you hear that, as I read this, you might feel a little indigestion bubbling up, maybe it's the Twinkies if you've already resorted to that approach.
04:13
All right, number two here from these graphs, $20 billion of climate tech VC capital, aka dry powder has yet to be deployed. Due to economic uncertainty right now, but in parentheses, don't say the R word that happens to rhyme with introspection, wink, wink. The term sheets that investors now offer founders, maybe many founders would consider worse. Some founders, many investors would say the term sheets are more reasonable and these investors, many are going, quote unquote, pencils down, just hanging out for a second. They don't want to catch the proverbial knife as it's falling, which means they're waiting for the bottom of the market before they choose to start investing again.
But the capital is there, and frankly, it's their job to place it. They only have X number of years, if they're a typical VC fund, to place the capital during their investment period. Anyway, it's their job, but they don't have to do it right this second.
Third takeaway, transportation and energy have received really by far the most later stage capital, while carbon and climate management tend to receive earlier stage capital. Maybe that's like, duh, I don't know, we'll see, but graphically it's helpful to see. Just like in junior high school, bear with me for a second, not everyone matures at the same time. And for those of us in the land of Michael Jordan, that's North Carolina for sure, we know that you got to watch the late bloomers.
In case you didn't know, Jordan grew seven inches all the way to 6’6 between his sophomore year in high school and his sophomore year in college at UNC Chapel Hill. As my 16-year-old son who loves basketball hopefully reads this or as I force him to read this perhaps maybe he'll get some hope there. 5’11 so far not too bad, almost taller, probably taller than daddy. That's a good milestone.
Number four, carbon startups Q2 funding this year was 10X the average 2021 quarterly investment. That's saying in the first half of this year, we saw $1.5 billion invested in carbon removal, point source, carbon capture, carbon marketplaces, verifiers, and carbon utilization. So, those are my four takeaways. There are others for sure. I'm just going to skim through these and give you a point or two.
Since Q1 2021, CTVC is showing 27 billion invested in transportation startups, 17 billion for energy startups, about 14 billion for food and land use. Those are the three biggest categories for sure and then we started getting quite a bit smaller in the other categories. Interestingly, there's only 1.5 billion invested in the built environment, which if you think about the recent announcement from Fifth Wall with $500 million fund investing at the nexus of startups and real estate, lots of room to grow there.
In terms of climate tech dry powder, so I mentioned about $20 billion of capital and funds raised since 2021, about $10 billion deployed, again, 20 or so billion remaining. And we talked about how companies in the carbon or climate management space receiving a larger percentage of seed and Series A investment, whereas buckets sectors like transportation and energy tending to receive more growth stages, just more mature sectors. All right. Let's go to story two here.
This is funding data for 200 plus mobility startups. Again, coming from Alex Mitchell, SVP at LACI, which I'm sure you all know, but it is the Los Angeles Cleantech Incubator, he writes a newsletter, Su$tainable Mobility, with the second S in sustainable as a dollar sign, obviously.
08:26
In a recent issue, he's tracking, or really showing updates on funding for 212 early-stage mobility startups in his database, which is pretty cool. But he also says, “Hey, look, if you want full access to the Airtable version of that database,” just check out his newsletter. I think you just drop him email and he'll give you that. Pretty cool.
Out of the 212 startups, 29 have raised follow-on capital in I think the last 12 months. So, he's showing a 4.6 increase in funding in that 12-month period for the 29 companies that have raised capital. When they first started tracking the companies, the average capital raise per company was $432,000. Now it's close to 2 million bucks, so early, but a good increase.
His data also shows that EV charging has raised the most capital, that is startups in that space, but for the highest multiples of capital raised in this 12-month period, trucks, medium and heavy duty, and maritime have the highest growth in capital raised. Finally, he observes that for companies that combine hardware and software, they have a higher capital raised multiple. 7.9X in this 12-month period versus more like 2 to 5X if you're just purely hardware or software. And if you're involved in moving goods, the capital raise multiple is higher, 7.6X relative to moving people at 2.3X. All right, lots more to dig into and I encourage you to check out Alex's newsletter, Su$tainable Mobility and this full data set.
Third story, 143 million climate refugees. All right, so just in case there was any doubt, the climate crisis is not just about polar bears and honeybees. I mean look, important, but it's really about millions of people being forced to relocate due to a higher frequency and severity of natural disasters and temperature aberrations. So, this AP article notes the following.
Each year natural disasters force an average of 21.5 million people from their homes around the world. And over the next 30 years, 143 million people are likely to be uprooted by rising seas, drought, searing temperatures, and other climate catastrophes. By the way, there are sources from the UN for both those stats. As an example, in El Salvador, scores each year leave villages because of crop failure from drought or flooding and end up in cities where they become victims of gang violence and ultimately flee their countries because of those attacks. So, you can see the trickle-on effect here from climate change.
The fourth thing in this excerpt says, “An increasing number of countries are laying the groundwork to become safe havens for climate immigrants. In May, Argentina created a special humanitarian visa for people from Mexico, Central America, and the Caribbean displaced by natural disasters to let them stay for three years.” If you're a frequent reader of the newsletter, you may be thinking to yourself, “Well, gosh, this sounds kind of alarmist compared to last week's more optimistic newsletter,” where I talked about how doom and gloom are not the answer to mainstreaming climate change and really climate change solutions.
But look, hang tight. We have to be aware of the facts and what's at risk and then we need to hopefully choose optimism around humanity's recurring ability to innovate out of possible calamity. Then I say, well, look, usually, but let's stick on the optimistic side of things.
Story number four here is, this is the movie where I'm throwing in a punch line of sorts, which is vegans are not weenies. If you ever wondered whether vegans and vegetarians can be shredded in quotation marks, which is the muscular ambition of my two teenage boys, this is a compelling and contrarian movie to watch. We saw it on Netflix, maybe other places. It's called The Game Changers, quote unquote, a revolutionary new documentary about meat, protein, and strength. So, I'm going to read for you some excerpts from the website to entice you to watch this.
12:52
Directed by an Oscar-winning documentary filmmaker, an executive producer, James Cameron, Arnold Schwarzenegger, Jackie Chan, Lewis Hamilton, Novak Djokovic, bear with me here, Chris Paul. This movie tells the story of James Wilks, an elite special forces trainer and ultimate fight winner as he travels the world on a quest to uncover the optimal diet for human performance.
Showcasing elite athletes, special ops, soldiers, visionary scientists, cultural icons, and everyday heroes, what James discovers permanently changes his understanding of food and his definition of true strength. So, where does this come from? Wilks says, “Look, after being unable to train for six months due to an injury,” he started researching the optimal diet for recovery and stumbled across a study about the Roman gladiators, which concluded they ate little or no meat.
This seemed really far-fetched since he was confident that animal protein was necessary to build muscle, sustain energy levels, and recover from injury. So, he flew to Austria to meet the researchers who made this discovery, and he left convinced that gladiators really did train and compete on a plant-based diet. We made this a whole family movie with the three kids, lots of shock and awe and encouragement around a more plant-based diet.
Fifth story here says, “Save $200 and learn climate tech startup funding with me in September.” This is really about this course, this online live cohort-based course that I'm teaching again in September called Fund Your Climate Tech Startup. It's being taught through maven.com, an online learning platform. We'll have a group of 20, maybe 25 entrepreneurs at the pre-seed and seed stage, maybe some career switchers as well coming into the cohort.
The content is super hands-on and practical. I’ll tell you what it includes, it's really my five-step process for raising capital, having been in private equity and investment banking for many years. A climate investor list with 500 plus names, emails, LinkedIn profiles, portfolio companies, et cetera. A nine-step method for improving your one-page business plan, seven tools for assessing your competitive edge, 20 startup mistakes to avoid and lots more.
Plus, the course is, well, new and improved since the last time I offered this. Those improvements include a third party verified certificate of completion, more small breakouts with peer feedback, more practice pitches, more months of online community Q&A with support from me and your peers, more live group coaching and a new library of climate tech funding resources.
Anyway, tell you what, there are various codes for promos depending on when you sign up. Tell you what, this is the one I'll maybe mention to you. If you sign up by August 15th, you can use the code CLIMATE200. So, the word climate and then the letters 200 and that'll get you $200 off as readers of the newsletter slash listeners to the podcast. All right. Hope to see you there again. Super hands-on.
16:28
Finally, the sixth story here says, “Under every beautiful company logo is a hot mess.” I don't recall exactly where I heard this sentiment, but that's what came out from me during a recent call with one of my Climate CEO Mastermind peer group members, doubting really where they were relative to peers. I was, I think, trying to rightfully reset expectations by saying, when we're feeling a little low confidence in our venture's trajectory, we're not alone. We're all building the airplane while we're flying it, even if we don't think we are. Again, for those of you that have worked in various places, you know that despite the great websites, logos, glossy material, plenty of kinks to work out for sure.
I end all the newsletters with the same idea, which is make it a great week because usually it's a choice. Make it a great day because usually it's a choice. You get the idea. All right, folks, we're going to call it here. I may try this again next week as well as we're in our August lull of bits, but lots of amazing new podcast guests coming up. Leaders in venture capital investing from decades ago, CEOs that have raised hundreds of millions of dollars to grow their companies in the climate space. Lots more coming.
By the way, if you’ve got feedback, hit me up on Twitter or LinkedIn, on guests to have on the show, ways to make the podcast more interesting, more helpful for you. All right. We'll call it here. Peace.