Entrepreneurs for Impact (EFI) Podcast: Transcripts

#203:

Jason Scott, Entrepreneur-In-Residence at Spring Lane Capital — Also, Chairman at DevEngine Partners and Board Co-Chair at CREO. Private Equity for Food, Water, Energy, Transportation, Waste.

Podcast Introduction

Chris Wedding:
My guest today is Jason Scott, Entrepreneur in residence at Spring Lane Capital, Chairman at Dev Engine Partners and Board Co Chair at CREO. That's CREO. Spring Lane Capital is a private equity firm providing hybrid project capital for sustainable infrastructure and energy projects as well as the companies leading them. CREO is a quote unquote secret club for billionaires. Not their words. One of the media's headlines about who they are. They connect ultra high net worth individuals and family offices to investment opportunities in sustainability and clean energy. In addition to co-leading these two organizations, Jason has extensive experience in sustainable finance including roles at Renewable Resource Group, Acumen, Fund Generation, Investment Management and Encourage Capital. In this episode you'll learn four important takeaways and much more. Number one, why he likes to invest in both corporate and project finance at the same company.
Number two, what venture infrastructure means as a climate finance snitch. Number three, the importance of relationships versus transactions and number four, how he learns to balance in life by surfing in the ocean. Please give Jason CREO, Spring Lane Capital and Dev Engine Partners a shout out on LinkedIn Slacker X by sharing his podcast with your people. All right, before we hop in, I've got a challenge and I guess an invitation for you all. First, the background. My goal is to empower 250,000 entrepreneurs, investors and university students to tackle climate change through startups, finance and personal growth. Is that enough? I don't know. It's a lot. Maybe it'll grow. Anyway, the podcast is one way to do that. To that end, the sector needs more inspiration, tools and tips from CEOs and investors in this space.
Conveniently, as you may guess, these folks are precisely my guest on this podcast. So here is the challenge. If you and five of your friends rate, review and follow this podcast on Apple and Spotify and share your efforts with me on LinkedIn or in response to my newsletter on Substack, I'll hop on Zoom and brainstorm a climate tech, business or investment challenge or opportunity with you. Now. Is that a reward? Is that punishment? I don't know. There it is. This is the best way for new folks to learn from the CEOs and investors on this podcast. If the process is unclear, as it was to me in the show notes, you will find a link explaining how to do this. I read every single review. So please tell me and all of us which guest insights you like the most. Thanks so much. Hope you enjoy it.

Podcast Interview

Chris Wedding:
Jason Scott, who is looking to me in video like a deer in headlights because we're pressing record. Jason Scott, partner at Spring Lane Capital and Board Chair or co Chair. You'll tell me at CREO, among many other titles. Jason, welcome to the podcast.

Jason Scott:
Thank you Chris, nice to see you. Great to be with you. A couple weeks ago in person walking campus at Duke. It was great. Yeah, great.

Chris Wedding:
Great to have you as another, you know, investor entrepreneur turned part time a faculty member at Duke University. Training the next generation on how to do great things that matter with money.

Jason Scott:
It is fun. They are important. More important than we are.

Chris Wedding:
Just don't tell them that from a.

Jason Scott:
Strict time frame and impact perspective, they're very important.

Chris Wedding:
Well, I tell them something different. I say look, if you all are worried about getting a job and fill in the blank. ESG, Climate, Tech, Sustainability right Now, I hear you. The economy, you know, it's iffy. But I promise you're super lucky compared to whenever I was trying to get a job in any of those fields which didn't even have names, perhaps.

Jason Scott:
Back then, I agree to have names and places and role models is. Is really impactful. And I think for undergrads especially, which is the group I'm teaching with my good friend Diana Pro Pair, they really have an amazing set of opportunities in front of them. They're also terrified of some of the challenges, but the opportunities they have to try to make a difference are vastly different from when us youngins were starting to worry about climate.

Chris Wedding:
Us youngins. Nice. So before pressing record, you mentioned that you wrote up some lessons learned from your Duke class. I'm going to just kind of tease the listeners with that. Maybe we'll get some of those lessons towards the end. But I want to start with a super delightful and in your face headline that relates to CREO, which I'll get it wrong, but the title was something like the Secret Club for Billionaires who, I don't know, who Care about climate or who are Tackling Climate Change, describing CREO. So quite a headline.

Jason Scott:
Secret Club for Billionaires. I think it wasn't even Rich people billionaires.

Chris Wedding:
Yes. Yes. So what in the world is. Is CREO?

Jason Scott:
It's a great question. And, and I joke that was a terrible headline and also a really effective one for ginning up interest in a fantastic organization and at the time really needed a lot of attention to grow. So it's one of those things where you cringe every time you saw it and heard it, but it really did catalyze a lot of interest at a time when the world needed it. So short description of CREO is we're a nonprofit co-chair of the board with my friend Christian Saval from Spring Lane Capital, and our job is to catalyze more money to solve climate through investments.
We're now getting more involved in policy and other types of capital formation, but really the goal is to make sure that family offices specifically, but also family offices, as catalysts for larger institutional pools of capital like pension funds and corporates, invest in climate solutions in a way that matter, that are both effective for solving the problem and also make money. Because I think that, you know, we are at a place where there are really exciting commercial solutions available, but there's still. We're at some kind of tipping point. We've been through some kind of tipping points, but we're still not at a tipping point where that's actually universally accepted truth. We actually have a paper coming out that'll be out by the time this podcast is released on different archetypes for family offices investing in climate.
And I think we found over the last 10 or 15 years ago, we started 10 or 15 years ago with CREO with just, you know, a dozen families in a conference room in New York City after the financial crisis in 2009 saying, Holy, you know what, like we're in big trouble here. You know, there aren't that many people that want to invest after what people call The Climate Tech 1.0 bust and capital markets are in disarray. So we kind of banded together to try to make our investment successful. And it's grown to about 180 families worldwide and we're doing great stuff. But the lesson learned from the paper, most fundamentally is that there are many, many different ways for families to make a difference investing in climate solutions. There's no one way, there's no single north star.
And many, many of these waves can be successful. The only thing that isn't successful is not trying at all. And so we're trying to create a roadmap for people that has many paths. So when you see the fork in the road, take it. Is that kind of the. Take them. I think is maybe what a philosopher once said.

Chris Wedding:
I'm going to quote you on that one.

Jason Scott:
I don't think it was me. I don't think I was the first one.

Chris Wedding:
Okay, so the report. So by the way, I think two things on reports from CREO. One is that you all published another quite meaty report which I, I highlighted in our newsletter at Entrepreneurs for Impact. I think it was Introduction to Climate Offtakes. Is that right?

Jason Scott:
Yeah, a couple weeks ago.

Chris Wedding:
Yeah, I think listeners should look at that one. I think if I recall from memory, pages 6 through 18 were the most kind of actionable insights. As I imagine writing those numbers.

Jason Scott:
As the co-founder of Terracet, you must have really paid attention. Impressed. I'm impressed.

Chris Wedding:
I did, I did. Tara said, always on the mind. But this current white paper, are you saying it. It's meant to help these families understand which forks to take to experiment investing in climate solutions or. Or it's meant for the other side or how entrepreneurs should talk to seek out, find the right fit with family offices.

Jason Scott:
It is definitely written for families.

Chris Wedding:
Okay.

Jason Scott:
I think entrepreneurs would get an immense amount of learning from it. One of my pieces of feedback to entrepreneurs as an investor And I've been an entrepreneur myself as a company and nonprofit executive and CEO. So you know, kind of been there, done that too. I wish someone had told me how asset allocation policy is and investor sentiment will eventually roll downhill to change every plan I ever had.
So one of the reasons I think it'd be a really useful read for entrepreneurs and CEOs is that the way money eventually is getting to you is through a complex set of intermediaries and investment committees and junior analysts and trustees and all these things that aren't just that families, they're also insurance companies and corporates and pensions and you know, some decision that some asset allocator makes in Quebec, you know, or Sydney or London or New York actually has a really big impact eventually down the road on what happens to the see through growth equity market for us clean tech. And so I think it's really important for entrepreneurs, investors to think about that. And that's something I wish people had told me when I was starting my first company.

Chris Wedding:
So let's take that other side, right? Many entrepreneurs hear about family offices and they'll think, oh well, holy grail baby, I now know how to fund my company, right? But, but obviously it's way more nuanced than that. Every, I think the expression is if you've met one family office, you've got family office, right? What advice might you give entrepreneurs who are thinking, oh, I think I'd like to try to find the right families to invest in my company's growth?

Jason Scott:
Well, one observation I'd make is there are a lot more networks and organizations for families than there used to be. And by families, if you also mean high net worth individuals, folks are writing, you know, 50, 100, couple hundred thousand dollars checks, couple million dollar checks. There's no, there's Tonic, there's the Impact, there's Gratitude Railroad, there's CREOs. There are networks of places that aggregate these families and high net worths that are really good intermediaries for you because it is true, if you've met one family office, you've met one family office. But even within a family office, there are many family offices.
And by that what I mean is there are now enough sophisticated experienced families investing in climate solutions and sustainability more broadly that they have mandates, they have the same type of guidelines and investment theses that a venture fund would have that I'm sure you teach your entrepreneurs and your students to research as well. The only problem is they don't have websites usually, a lot of them do now, you know, a Capricorn or a Builder's S2G or, you know, folks like that who have professionalized, externally facing investment management organizations. Prelude, you know, folks like that. You can go to the website, you can look at the partners, you can see what they invest in, just like you can for, you know, TBG Rise or Congruent, right. For anyone. But many families don't have that. And so for that, you've got to do really great research.
You've got to see who, you got to use databases and resources like, you know, CTVC and places like that to figure out if companies like yours are getting funded by families, like which families. And you need to use these intermediaries to find matches for you. Because the one thing that won't work is just like it won't work with a venture firm is sending a hard tech idea to a software firm. So that's what I'd say is like, use the intermediaries, do your research, do the research you can do. And then the other thing I'm sure you tell them is, you know, network like crazy with your fellow CEOs, with LPs, with other people. Like, you know what? I met this family, it's a new family, it's Australian billionaire who made their money in X. And they're really interested in Y.
Because the thing about it for families is because they're not public, they sometimes have a hard time finding great deals.

Chris Wedding:
Yeah, it goes both ways.

Jason Scott:
Yes.

Chris Wedding:
So back to CREO specifically. So you mentioned that, you know, you all are involved in, you know, kind of helping to shape policy capital formation as two of the objectives. How would you want listeners to think about like when they'd reach out to CREO? Is it. I'm raising a series A. Let's go find a bunch of billionaires Jason, you know, light it up baby. Or is it more like, Well, our biggest lever is actually in thinking through blended finance models or, you know, influencing when a, a price on carbon removal at the federal government makes sense or whatnot.

Jason Scott:
That is a great question, well said, because I think it's all of those. But the nuance is there's a very formal, structured process for people to go to CREO and say they're an entrepreneur or they're a fund manager and they're raising money, right. And you go online, you submit something, someone gets back to you. Hopefully someone recommended you do it like me or you now, because they know you too, right? So you have a warm intro like anything else. But what's really a great opportunity for entrepreneurs and investors is to then share market information. Because CREO, it's a whole team of folks who do research and write these white papers like the one you read about offtakes. They're picking up the phone and they're calling people and hey, what's going on in the market? How much are people paying for X?
What are the terms for Y? So if you're one of those people that's just sending reliable information about what's happening in decarbonizing real estate or shipping or carbon capture or soil sequestration or anything, you know, seaweed in oceans, literally anything. If you're one of those people who knows something, having a relationship, sharing information makes our analysts smarter, our research team smarter, we make our investors smarter and they make more investments. It is truly a virtuous circle. Now the only problem is, just like venture capital and growth equity and everything else, 99% of the people won't get money because just kind of the odds. So when we get to my lessons learned in the class.
Well, the one thing I can say is if you build a relationship with a smart person on the other side of the table, especially earlier in your career, that person will be your friend and your confidant and your colleague and look out for you for low and many decades. And so it's a long term game with CREO, just like it is with I think everything else, it's fair to say.

Chris Wedding:
Well, I mean, it's kind of the reason we're having this conversation right now. I mean, you know, maybe not quite. No, maybe about 20 years ago, you tell me you were at Generation Investment, early days. I was at the private equity firm and you know, mutual friend at the PE firm. And you were workshopping all sorts of kind of cutting edge topics, and that was kind of my job at the PE firm as well. And anyway, yeah, that's what happens.

Jason Scott:
I mean, I cannot even. I mean, the number of times I've had a direct introduction or contact to someone who would invest in something I was working on, whether it was a fund or a company or raise money for a nonprofit or a political campaign or a policy initiative, and I met them and asked them for something and they gave it to me is like zero maybe. Maybe half a dozen times. You're like, wow, that worked. It's always this web of relationships and context and trust that builds up over time. And so I think the thing I can relate to having started a couple companies and nonprofits and funds is that, man, it is really hard and stressful and depressing.
We just finished raising a fund at Spring Lane and were very successful and it was very depressing and stressful because like the yes to no ratio is still like, even if you raise a couple hundred million dollars, it's pretty low. Pretty low. A lot of no's, a lot of polite no's, a lot of impolite no's, and a lot of no responses and actually 80% no responses. So I think that is probably the same thing for an entrepreneur, as I recall.

Chris Wedding:
I'm so glad you said that because I can't recall when it came up last on the pod. But yeah, like everyone has someone they're beholden to, right? I mean typically. And I think it's very easy for entrepreneurs who do take whatever kind of capital they take, they raise, rather, there are the ultimate limited partners or who knows, the depositors of the bank, let's say, or the right bank, the bank board or whatnot. There's always somebody that the person you're asking for money from has to answer to.

Jason Scott:
Well, and I think it's one of the lessons I learned, I had to learn two or three times before I actually understood it. Like most things because I'm a little slow sometimes learning things. Stubborn might be one word for it.

Chris Wedding:
Persistent. Reframe positively.

Jason Scott:
There are other words for it. But you know, the first time I was raising money for a startup, I actually, without naming names, went to an endowment that I was affiliated with maybe as a student and found the person who ran private equity had given money to my nonprofit that I'd started in Durham. Why? So I've said Duke now, I guess, but really wonderful person, really supportive of me, introduced me to all of her LPs. Turns out she was one of the most successful LPs in early stage venture. So I had all these name brand famous VCs calling me back for this crazy startup. I was doing .com 1.0 in 1996. I was like, it's so interesting, all these people are calling me back. I wonder why. Maybe I have a great idea.
I did not quite realize that she was an LP in all of their funds and she was their boss. So you know, then it's like, okay, well who do they take their direction from? They take their direction from whoever's running the endowment and then the trustees, the whole ecosystem of how. That's really the point I was making at the beginning of the pod, which is you need to understand the ecosystem in which you're asking for capital and what affects it. So even when we started generation and we started with a big lead over a lot of other entrepreneurs and startups, were a startup, we had seed capital from our founder, David Blood. We had to go raise money. And I thought, well, this time, I mean, this will be easy. And it was not.
Because guess what, there's a whole nother ecosystem of people that live outside that asset allocation world for global equities and then private equity that I didn't know. And what we ended up doing actually was partnering with some of the biggest pension funds in the world to try to help influence their internal processes to get them to care more about sustainability. Some of which worked, some of which didn't. But it was just another lesson that you kind of run kind of either bullheaded or idealistic or naive into a market without understanding how it works, you make your job a lot harder no matter what you're raising money for. And again, whether it's a nonprofit or policy initiative or a fund.

Chris Wedding:
Well, I think to underscore the last, you know, five or six minutes, it's about relationships, right? These are not transactions, they're relationships.

Jason Scott:
Long term relationships.

Chris Wedding:
Yeah, yeah. So you referenced Spring Lane Capital, where you are now a partner and I believe maybe entrepreneur in residence, but you'll correct me.

Jason Scott:
True. Both can be true.

Chris Wedding:
Great great great.

Jason Scott:
Both forks taken.

Chris Wedding:
Both take them both, some wise person once said. So some of the listeners know Spring Lane. Certainly I've known at least Nikhil and Rob for a while. How would you describe the niche that Spring Lane Capital plays in the space?

Jason Scott:
Yeah, and I'll back up one second just to explain how I met them because we actually co-founded CREO together back 2008, 2009 when I was working with Encourage Capital and Wolfensohn Fund Management and Adam Wolfensohn and Ricardo Bayon, Eron Bloomgarden. When were starting, Otho Kerr, were starting that firm together and were majority owned by family offices looking for other families to do investments with in a really capital constrained environment, 2009, 2010, and Christian Zabbal and Robin Nikhil had started Black Coral Capital out of the family office of a large oil and gas family, same thing. And we actually had each done the same thing, which was we had each created our own networks of families to try to help each other.
For students of the industry, Richard Kaufman, who's now the chairman of Generate and Nyserda and a bunch of other amazing things, Department of Energy, was the Godfather. He convened a meeting or helped us convene a meeting in which we all got together and realized that there were two intersecting nodes of this network. One was Black Coral and one was actually Prelude, Gabriel Kra, and we should put these networks together actually. Martin Whitaker is now at JUST Capital, is one of the co-chairs of the board of CREO when we founded it and we had a nonprofit network called the CREO Network and a non profit network called the Cleantech Syndicate. We decided to call them the CREO Syndicate because we're really bad at branding. That's how I met Christian and Robin Nikhil.
So I've known them since Black Coral, knew them when they spun out and started Spring Lane. And what they offered me was a chance to sit at a really exciting place at a really exciting time to both help them start new businesses and be a partner working on their fund mandate. Their fund mandate is basically to invest in what we call the missing middle of the sustainable infrastructure space. So we invest in that tricky space of corporate equity and project finance. So companies that are building things or doing asset heavy models, right, and a lot of people want to do asset light. A lot of people want to do project finance. Not many people want to do both. There are a few really fantastic peers in our space who we love to co-invest and partner with.
But I do think Rob and Christian and Nikhil coming out of Black Coral did have a view because they both invested in funds and companies of Black Coral that there was this kind of messy area where companies needed corporate equity to grow and project finance to build stuff. And if they were willing to get in there, we have a couple operating partners. Get your hands dirty, do some structured finance to protect downside, but also make sure that the company gets a lot of upside if they're successful. That's what we kind of waded into. There's a great paper, Rob Day, who was the original clean tech VC at least by Twitter handle, you know, has written about this a lot. He has a column in Forbes.
But Franco Sullivan from S2G has written about this and a great report on the missing middle that there is this gap and if we don't solve this gap for building things, and not just building, you know, first of a kind breakthrough technologies, we definitely need to do that. And also, what am I going to say, Chris? Both forks.

Chris Wedding:
There you go. Recurring theme.

Jason Scott:
Sorry, not forks. Take both paths. We have to do both and the breakthrough stuff, but we also have to just make sure the things that we know work distributed generation, waste to value, EVs, micro grids, building efficiency, we need to make sure that stuff gets built, it gets managed, it gets built. And that those companies that are building those things have an ecosystem around it. CTVC did a great newsletter on it. They called it venture infrastructure. Where those projects can go down the capital cost curve to where they're effectively just like what happened with Moon, just like what happened with solar, where they're getting bank debt, right. But to get from, hey, we need $50 million, 10 or 20 of equity, 20 or 30 of debt or project finance.
All we can get now is venture capital money, which is too expensive and not purpose built for building stuff and not from people who are used to building things. Having been both a VC and a software entrepreneur, I think that's a fair characterization. We tried to build a strategy that helps grow those companies to a place where they can access much cheaper capital.

Chris Wedding:
Yeah, I think one example company, Portco of Spring Lane Capital was a friend of ours, Joseph Atlas.

Jason Scott:
Yeah, exactly. Sure.

Chris Wedding:
Joseph was one of the, I think earliest. Which number did it? I think it was number three. Our client peer group here at Entrepreneurs for Impact and actually Nikhil connected us back.

Jason Scott:
Great. And by the way, you know, a great example because Generate bought the company. Generate has a much bigger balance sheet. Generate has access to much cheaper capital. They play all up and down kind of the market, you know, near and around us and close to us. But they're, they were a better partner. They were a better partner to grow that business.

Chris Wedding:
But you all played the role of kind of, you know, the transition, the kind of messy metal of, is it practicing, is it corporate. It's some, it's some combo in companies kind of like that. I'm glad you differentiated between first of a kind financing, where there really is tech risk still, versus a company like Atlas in the organics waste of value space where not really tech risk, plenty of execution risk and just not as sexy to have more investors wanting to invest really cheap capital to grow those companies. Those are two very different but really kind of gaps in the market to fill.

Jason Scott:
And that's interesting to me is I think we've had for a long time, just like you have in any market when you know, Bill Gates was starting Breakthrough back in the day and Jigar Shah was still either at SunEdison or Generate, somewhere, and you have the deployment people versus the tech people.

Chris Wedding:
Yeah.

Jason Scott:
You know, they've both been amazing markets to invest in and they both need more money. And now you have Jigar, DOE and Breakthrough's built like an amazing franchise and doing all kinds of other things. But at the beginning there's this instinct within any ecosystem to say, hey, one's more important than the other. And I think because of the size of the problem and also the size of the commercial opportunity, I think we want to recognize that you really do need to invest in the scale up of both. But they are very different. And I think that's what Spring Lane understood a little earlier than others because they started investing so early in the space, early 2000s basically, that they're very different. And so you need a different set of skills, different set of capital structures, return expectations.
The final thing I'll say is that what is exciting from a capital formation perspective, which we were talking about earlier, is that there are vast pools of money that because of this kind of asset allocation pressure from the very top, from stakeholders making pensions and other people invest more sustainably, that money's flowed through the big firms, the Apollos, the TPGs, the KKRS, the Brookfields. But they need assets to buy. Right. So again, understanding the macro demands on these large asset owners and how that money is flowing down, if we can build a set of companies that we can sell to them or they can invest in because they have way more money than we'll ever have, that's a huge success. But we need to understand how to build things for that group of asset owners. Well, they'll invest for,
would be lovely if it was a high single digit return, that's probably not possible now, but you know, cheaper than venture money.

Chris Wedding:
Absolutely.

Jason Scott:
Big gap between Treasuries and venture money, right, so.

Chris Wedding:
Absolutely. Yeah. And I think I've always thought, since I, I guess I knew, maybe Rob during Black Coral days, but even, especially now with Spring Lane Capital, one of the few firms that will do both project and corporate in the same deal. I think it's safe to say most investors, they're one or the other. We invest in corporate or we do assets, we do infrastructure. So I think that's another edge that you all and a few, you know, a few peers have and there are, yeah.

Jason Scott:
There are increasingly more people willing to do it, which is great.

Chris Wedding:
So what you mentioned some of the sectors earlier that are not FOAK, not first of a kind financing. But just to make sure the audience is clear, I don't know what are two or three other examples of sectors that you all want to fund with this dry powder and fund two.

Jason Scott:
Yeah, I think EVs are still a big growth area. Some noise of late maybe of the kind of slowdown of the EV revolution. We're super early in that process, both from a consumer adoption and infrastructure perspective, especially in US and North America, Europe, and some other geographies. That's a big one for us. Waste to value generally, I would say is a big one. Whether it's renewable natural gas or different kinds of recycling or reuse of materials. I think waste to value is a massive, massive opportunity. And then I'd say distributed generation more broadly, whether it's solar and storage and microgrids, you know, VPPs, things like that. I think those are just to name three areas. We're also really interested in trying to find investments that fit our business model in the nature based solutions world.
That's more of my background from Encourage and Eko and RRG, Renewable Resource Group. I think there's also a real interest in figuring out if there are some breakthrough technologies that we could figure out a structure for and partner with other people to do. We're listening for sure. We don't think that there's an easy way to do that right now with commercial capital, but we're very interested in learning. We're definitely a part of a lot of conversations with peers and entrepreneurs to figure out if there's a way to use our model for some of the more breakthrough technology.

Chris Wedding:
Well, and I think that takes us back to our earliest conversations almost 20 years ago, was the Eko, E K O, Asset Management. Is it possible to kind of drill down a layer or two on what a nature based tech or solution could be that may work for Spring Loot?

Jason Scott:
Yeah. Yes, I am very interested in, the team is very interested in voluntary carbon, which I'm proud to say still interested in voluntary carbon despite kind of a lot of air going out of that bubble. And it was a little bubbly, but I've been involved in carbon market since the mid 2000s when I worked at Generation and when the EU ETS was passed, and AB32 in California. So compliance markets and voluntary markets work hand in hand. I think there are ways to invest in voluntary markets that are smart and project finance oriented. We haven't yet found the model, but I think that land use change, reforestation, soil sequestration, all that kind of true nature based solutions work that's going on from just a plain old execution perspective. As you mentioned a few minutes ago, just for execution is the risk.
There's obviously market risk and price risk but, and then there's some areas where it's a newer way of doing things and it's technology risk. But we really believe that development and when Spring Lane says projects, we also think development, project development, not just projects. And we think that we're a very developer oriented, developer friendly firm. We run something called Developer University, which people should apply to our next Developer University, not yet announced, but soon to be on the webpage of Spring Lane Capital. We think it's great too, but we think that there is a lack of development expertise in the nature based solutions space. And so you get a lot of people really excited about these projects but just don't have the experience and skill set of having done things like that before.
So either we can bring it, we hope, to a team that's really technically savvy or has a really interesting business model, or we find a group of really great developers and maybe we have some of the market knowledge, but kind of no matter what, we're very focused on the development of these assets that could be valuable in the voluntary carbon market for nature based solutions.

Chris Wedding:
Yeah, super interesting. And I would just say obviously you don't disagree with this based on your last comment, but just because there is a lot more, there are a lot more headwinds right now on voluntary carbon, on offsets, et cetera, that in fact could mean it's the best time to find a play there. Then when the market gets smarter, better contracts, better buffer pools, you name it, where are the projects going to be, right? These net zero corporate targets are not going to be met purely within corporate boundaries, that's for sure.

Jason Scott:
Correct. And there's insetting and there's all kinds of other things that people are doing in their supply chains. But fundamentally I think we all know this and you've written about it in your newsletter and talked to folks about it on the podcast. We were in a bubble, so there was a lot of, there were a lot of things, projects and companies that were funded that were good ideas and I hate to say over capitalized, but maybe over capitalized, but there's still incredibly brilliant kernels of ideas in those companies. You just need a different, maybe a different structure to unlock the value than just straight venture, you know, and the days of raising a couple hundred million bucks of venture, they're not coming back for a while. I'm sure they will come back because they always do. They are probably not around for a while.
And a lot of these carbon companies raise money and have great ideas. And it's just a question of how you unlock the value.

Chris Wedding:
Let's switch, as we do in the podcast, towards Jason versus what Jason does in his current companies. So, Jason, advice for your younger self to be happier, more effective, more impactful on this career building thing. What you got?

Jason Scott:
I think two things. I think that a lot of the things that more experienced, I'll say, people learn about balance and whether it's family or for me it became surfing or meditation or yoga, which I wish I was better at but I'm not very good at or whatever it is. I wish someone had told me how important balance was earlier in my career. And I definitely over it sounds like the answer to an interview question, but I definitely did not quite understand that. And like for many people was really having kids that kind of smacked me upside the head and made me realize that was kind of the poor way to run a life with generally. That's one thing.
I think the thing I would say that I did well, that I would encourage people to do is to be inquisitive and kind of follow your nose. And I think that I run into a lot of people who are very ambitious but not very inquisitive and see inquisitive people that I really want to hang out with because they're interesting, they have interesting ideas, I learn things from them. I love ambitious people too, and they tend to get things done, but they're not as much fun to be around and they sometimes tend to run you over if you're standing in the way. And so it's not the greatest feeling in the world, but I appreciate the need for people like that in the world.
But I think just being more, you know, being thoughtful and inquisitive and following your nose, all the kind of stuff about doing what you love, et cetera. But you really do what you love and you really build things when you're thinking hard and you're asking questions every once in a while, there's a need to put your head down and just bulldoze your way through something. That's great. We've all done that before. But that's not a long term sustainable plan.

Chris Wedding:
Well, on the curious note, it's also true that interesting people are interested. They're interested, right? They want to know about, I mean, oftentimes you or what you're building or what it is the asking good questions, I think, which, look, we all love to be asked those good questions. We love folks to be interested, but there's also a humility in that as well, that we have things to learn from, probably from everybody.

Jason Scott:
And I think one of the things I did early in my career is I worked in politics. I was a, quote, unquote, community organizer back in the day and was trained as a community organizer. And the first thing they teach you is to find out what makes people tick, and the only way to do that is to ask questions and kind of have that view of the world. You see people around you doing that. They're not community organizers. They could be investors, they could be bankers, they could be entrepreneurs, they could be engineers, they could be anything. But you're like, oh, that person, they're trying to figure out what's going on, and everyone else is just like, you know, plowing ahead. And I learned that in community organizing, and it's been the most valuable lesson I've ever learned, I think.

Chris Wedding:
So there's another lesson there. If you want to be trained to be an impact investor, start with community organizing.

Jason Scott:
Well, by the way, I actually believe that to be true. I mean, were to get the lessons from the teaching undergrads. You know, I would say that a surprising number of successful investors and entrepreneurs in our space started off in politics, whether it's policy or community organizing or literally working on a campaign after college or between jobs, because it gives you this, you're a very small cog and a very big machine no matter what you're working on, and you need to use every lever you can to hopefully get people to do what you want them to do. But you can't make people do what they don't want to do, so you have to figure out how to tap into something they believe in that's aligned with what you believe in. And being an investor and entrepreneur is not actually that different.
People think it's different. It's not actually that different. Now you need to be informed by data and do research. And what I really learned at Generation was the power of research and, like, very fundamental ways of looking at markets and companies and opportunities. But markets do not function as rational allocators of capital. They function as individual human beings interacting with each other, making these weird collective decisions, and that all goes back to community organizing. When you say it, I believe it a thousand percent.

Chris Wedding:
No, seriously. I think it's not an intuitive path for sure, but I think for most of the students, the grad students I teach at Duke that don't come from finance, many want to go into finance and are concerned that they lack that skill. And I, I try to remind them, you know, being a great investor is not just about being great at Excel. It is what you just described. It is the soft skills, knowing what makes folks tick, what's the biggest risk they're scared of, what are less obvious ways that they want to win in a negotiation, let's say.

Jason Scott:
Yeah, for sure. And that comes from understanding what makes people tick.

Chris Wedding:
Yeah. Let's stick with that same thread then.

Jason Scott:
Sure.

Chris Wedding:
We referenced it at the very beginning. How about a couple other lessons you've taken away from teaching at Duke?

Jason Scott:
Well, we kind of just stumbled over the relationship one. I do think that there is a role for people who are specialists and really good at things everywhere, whether it's being an investor or an entrepreneur, podcaster or whatever it is, right. But I do think that for me, what I noticed is that people, through the course of the semester, how much the people, and they were mostly investors who came to talk to us, some entrepreneurs talked about relationships and the relational aspect of being an investor or an entrepreneur, that you're constantly working in an ecosystem of people who are very closely interconnected, even if they're mission driven, right, and have this one purpose. We say they all have very complex motivations and relationships.
And we talked about it for investors in the context of being on multiple boards and being one side of a company or the other side of a company, a minority and majority, on the board, not on the board, having a blocking rate, not having a blocking rate. These are complex ecosystems of individuals that when you're trying to make hard decisions, you need to have a reservoir of relationship capital, especially when times are hard. And let's face it, this is not an awesome time for a lot of entrepreneurs and fund managers from a pure kind of markdowns, performance, fundraising challenges perspective. And the second thing was from a relationships, from a entrepreneur and CEO perspective, managing your board, managing your team, managing your investor base, spending time with them, and having a relationship to draw on.
When you're having a challenge with an executive, or you're being challenged as an executive, or you're having a challenge with an investor on your board, and that you know, when everything's going up for the last 10 or 15 years and you have low interest rates and people are buying stuff and stuff's going public, it all looks great. But when it really matters is when things turn and you have to be able to draw on that, not just relationship capital, but this complex ecosystem of people who, especially if you're in the climate space you're more or less going to be working with over the next 10 or 20 or 30 years. There'll be new people come in and big new funds and sources of capital and great entrepreneurs who come from, you know, healthcare or SaaS or whatever.
But it is ultimately a fairly small ecosystem, even as big as this market has become. It was surprising how much unprompted investors and entrepreneurs both talked about the relational nature of being an investor. The class was investing in climate solutions, not relationships.

Chris Wedding:
But so key, right? So key. So Jason, I know we're.

Jason Scott:
A certain amount of commoditization as we got to be able to read a model and do a term sheet and build a product. So I don't want to downplay hard skills.

Chris Wedding:
Of course. Well, listen, I know we're at time here, but is there a final message, call to action, please go experiment. What's a final word to listeners? What you got?

Jason Scott:
I am right now in a place where I think we need to do some more risk taking. I think that it's a very difficult market environment from a sentiment perspective. But the problem is as big as it ever has been and the opportunities are as big as they ever have been. And the only way you don't win is if you don't play the game. And I think that I feel a kind of bit of a calling for CREO, for Spring Lane, for teaching, for all the communities I'm a part of where it's time to kind of band together a little bit and get each other's backs and push each other a little harder to try to do big things, because this is an environment where great companies are built and great asset management platforms are formed. It is in these difficult markets.
It is also in the great markets, but most of those franchises don't last very long. It's the difficult ones. And I think you see that cycle after cycle and this cycle will end and things will get frothy again. And if you kind of leave the game, you can't play. So I just, I want people to jump in, stay engaged and take some risks. And I think some really great stuff will come out of this next kind of 12 to 18 months.

Chris Wedding:
Yeah. Here here, on experimentation. And to your earlier point about kind of being in this space for decades, you know, we've seen the ups and downs and know that this is a down, but it doesn't last forever. And I mean even your, this final comment of kind of rallying, you know, the ecosystem to do xyz. You know, I mean, I think that also harkens back to your early training in community organizing, right. Communicating the benefits of sticking with it in tough times because there's light at the end of the tunnel, solar powered light.

Jason Scott:
And, and don't be afraid to stand up for the sector, for your friends, for your companies, for your, you know, for your funds, for whatever it is you're fighting for there. We, we do have to have a little fight, you know, 2024, macro stuff, political campaign, pushback on policies and regs, I think, and Chris, I know you know this from your own background, but we need to remember this is a fight. And I, I, I am a kind of expanding pie, like everyone's trying to do a great thing, the world will get better and we're not fighting with each other, but there are actually people and institutions and organizations who do not want us to succeed right now as a sector in a space and solving climate change because they have vested interests and they're not aligned with ours.
And I guess maybe that's where I intended to add, but at the end, but it's important to remember that not everyone wants this sector to succeed and not everyone is playing fair. So we need to band together and support each other. And I think we can win. But it is a fight we have on our hands.

Chris Wedding:
Yeah, agreed. And actually I'll end with this. The last guest speaker, we had a social entrepreneur talk about the importance of the warrior mindset for the CEOs in our CEO peer group which resonates a lot with what you just said. Jason, rooting for your all's success at Spring Lane capital, at CREO, at RRG and lots of other places where you are organizing great people to make a difference with capital and company formation.

Jason Scott:
Thank you Chris. I will see you soon in Durham.

Chris Wedding:
Okay, thanks for listening. And if you're not sick of hanging out with me just yet, then please join over 20,000 entrepreneurs, investors and innovators who get our 3 minute newsletter about changing the world through startups, finance, humor and wisdom. Or at least poor attempts at the last two. You can subscribe on Substack or at our website entrepreneursforimpact.com. You can also come check me out on LinkedIn where I share five or ten posts each week with commentary on climate tech startups, impact investing, better habits and perhaps too many references to lessons from Buddhism that may apply to our work here tackling climate change. Okay, that's all. Y'all make it a great week because it's usually a choice. And P.S., if you're curious, that is not my kids favorite thing I say to them most mornings before going to school, but it's still true.
All right, take care.