"Roads? Where we’re going, we don’t need roads!"
Dr. Emmett Brown, Back to the Future
We’re on a road back to the (new) normal, so it’s the right time to update the Urbantech Startup Playbook. Startup fundraising is happening without meeting in person, support for climate action has surged, and battery prices just hit the magical $100/kWh. And that’s just the appetizer. The current version of the playbook was written when we had made about 20 investments, and now we’re close to making our ninetieth.
We have a two-page overview of what we’re thinking, along with a few questions. If you have a moment, please take a look and add any thoughts or comments.
Cities are changing
The year 2020 has been a catalyst for upgrading cities—from robots and scooters to drones and home design. Not all of the change has been good. American state and city government budgets are bleeding out. “Very little actual work or production is being relocated. What’s really changing is the addresses of those who own and control the capital.” City and state governments are going to have to figure out new approaches to revenues if the 1% stay remote.
Globally, we’re still on track to hit 750 million people living in megacities by 2030. And while more people could mean more congestion and pressure on aging and inadequate transportation systems, it doesn’t have to. See what cities can do to meet the needs of future populations.
Climate advocates and startups are learning new lessons
Climate action has new tailwinds but also many lessons left to learn. What Bill Gates got wrong on climate—or, more specifically, what his main advisor, Smil, got wrong—came back to hardware economics and understanding Wright’s Law. This is what helped make batteries and renewables competitive much faster than expected. We’ve just hit $100/kWh for battery packs.
Each time we work with a new startup, we have a framework for working together to address key sources of risk. But we’ve struggled on one of the biggest risks: culture. We recently found one of the clearest culture articles we’ve seen, in WPP’s research on successful startups. As investors pile into ETFs devoted to ESG, Liz is exploring how VCs can better consider public purpose in decision-making. And some of the best lessons on creating value from new tech startups can come from looking at what caused cleantech investments to fail.
The equity gods must be crazy
With a year that started with VC exhaustion and then pandemic-induced stagnation in Q2, the balance of the year has seen a deal frenzy. It seems we are back in a founders’ market. And this time, founders are getting smarter about secondary markets and controlling the cap table. Some are thinking earlier than ever about exits, thanks to the rise of SPACS.
Equity financing for software is essential, but climate impact requires hardware financing. While there’s still some way to go on education and closing the gap for alternative financing for startups, debt is on the rise.
#wins
Versatile secures their $20 million series A investment. Approaching commercialization for its autonomous radar nav system, Lunewave raises $7 million. Swell is raising $450 million for distributed power projects. Omnetry pivots to Loop: Mission-Driven Car Insurance.
HAAS Alert, Circuit, and UpShift are amongst the winners of the AutoTech Breakthrough Awards. Bumblebee Spaces is in Bloomberg and the WSJ. ABB and ChargeLab partner for networked EV charging solutions. Kyle Doerksen discusses inventing the Onewheel and engineering a lifestyle. Thrilling is in Vogue. Starcity acquired its rival co-living firm, Ollie. Blokable introduces the first vertically integrated modular housing development. Business Insider added Treau, Sapient, and Bowery Farming to their list of climate-tech startups to watch in 2021.
#asks/opportunities
Happy Holidays!
- Urban Us
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