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Steven: Strange. Layla: It’s a maze. Steven: It’s a-maze-ing. - Moon Knight
Climate startups are different. It’s not enough to grow fast in a huge market. You also have to generate impact—and you’re probably building a hardware company. We get a lot of questions about our climate investment thesis and approach.
Do we really have 87% of the technologies we need for 2030 GHG reduction targets? Yes. From our analysis of the latest IPCC report, that seems like a reasonable assumption. Do you need to make hardware investments to work on climate? Probably. Because over 80% of the climate unicorns are hardware companies. We recently hosted our first Climate Startup Investing 101 session where we addressed these topics.
Folks seem to like it. So we’re going to do another one in May—request an invite here. Here’s the deck from our most recent session. Climate Reminder: the best climate tech doesn't look like climate tech. It’s often just cheaper, safer, cleaner, and cooler tech. For a lively internet debate about the other stuff, check IPCC twitter. While you’re there, check out this twitter thread summarizing carbon capture approaches and various system-level trade-offs, capacities, etc. TLDR: CDR is complicated.
Here’s a great backgrounder on the CDR effort by Frontier. Brands like Meta, Stripe, Alphabet, and Shopify have an interesting role here. We can see them offering more visible ways for their customers to participate in voluntary carbon purchases. But this requires, we think, for public sentiment to be supportive. As if to underscore this point, here’s an excited message from Exxon, which also played a critical role in shutting down Biden’s climate push. Our main question: who pays beyond the initial voluntary carbon purchases?
Meanwhile, in the world of mature, rapidly deployable solutions, different challenges come with different assumptions. Much of the thinking around human infrastructure assumes that our electricity grid is reliable—the EU in particular benefits from trading energy across borders. But when facing extreme weather events such as in CA and TX, confidence in grid reliability has fallen off and opened the door to residential storage and solar. This analysis makes the case for the grid as a backup option. In this scenario, distributed is plan A, renewables are king, and storage is diverse. Thankfully, more battery production capacity is coming. Systems We’ve said this for 9 years, but it bears repeating: we need to redesign cities to tackle climate change. While CDR captured a lot of attention in the most recent IPCC report, cities were newly featured too. One solution set is to electrify the heating and cooling of apartment buildings. The bigger, more infrastructure-y stuff tends to take longer—not just because of the scale of cost and effort, but also because of politics. Perl Street’s Tooraj offers a meta-analysis.
Another pathway is to electrify transportation. Although four-or-more-wheel EVs get most of the attention, the real shift continues in unlocking small E-scooters and E-bikes, which are fun, healthy, and increasingly safer electrified transportation. Increasingly, the smallest EVs are getting support from city leaders, who are responding to a growing public support to remove or severely limit access to larger vehicles in urban environments. Here are 12 strategies being used, mainly in EU cities, to remove cars. Startups It might finally be time for hardware to eat the world—in part, thanks to increasingly better financial arguments for deep tech.
The largest hardware some startups will tackle is infrastructure and construction. Here’s an organized and thorough report on the state of construction tech startups. Interestingly, it covers startups aimed at improving building energy use. This includes Third Sphere portfolio companies like BlocPower (which finances and installs energy efficiency upgrades), Flair (which makes software to try to optimize HVAC use), and Domatic (which aims to change the way we wire buildings). Portfolio Partsimony, your manufacturing supply chain superpower in a world of uncertainty, just released its 2.0 offering. Bowery is partnering with Nature Conservancy. If you’re reading this early enough (and near NYC), meet them at Union Square today, 4/21, from 12 p.m. to 7 p.m. They’ll be dishing out greens (and exclusive Bowery gear) and talking about how they’re working to rewild our land. Gradient is having its first east coast hardware demo next week! It will be an informal meet & greet with cocktails and a hardware demo. Stop by if you will be in NYC Monday.
There are over 500 career opportunities to work on climate across our portfolio (and even more opportunities from others in our Slack). Opportunities The U.S. Department of Energy (DOE) announced the Clean Energy Innovator Fellowship, a $6 million program that sends recent graduates and energy professionals to work at critical energy organizations to advance clean energy solutions.
We announced our own fellowship program recently too. Please share with your broader networks! We are accepting rolling applications.
Finally, we’re proud to be ranked #5 out of over 200 climate funds in Climate 50 this year. Thanks to the teams at 2150 and Contrarian for a thoughtful methodology to make it easier for founders and co-investors to identify the leaders in the climate tech space.
Best, Shaun, Yana, Mark, Shilpi, Stonly, Zeev and Anthony
P.S. In honor of Earth Day, treat yourself to (a kindle version of) this page-turner. And if you like sci-fi as much as we do, check out this series of intelligent and beautiful sci-fi stories.
How did we create this update? The content comes from our slack channels where we review contributions from people like you. So you can wait for this newsletter or join us on Slack. You can find our previous updates here.
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