My first year as a climate tech investor ... and what's to come in 2023. Hint: bugs.

A look back at what I accomplished in my first year, and something like an investment thesis for the year and hopefully years to come. Let's go save a planet, people!

Ok, so for those of you who don’t know, at the end of 2019, I effectively left journalism for a major career switch: to become a VC, with a focus on climate tech investing. I’d been reporting on climate solutions for a few years, and I wanted to do something more direct and impactful (although I do firmly believe in climate storytelling and I’m very happy that Marketplace is continuing to produce the series I created, How We Survive). I joined LAUNCH with Jason Calacanis, whom I’ve known for well over a decade, and started what can only be described as Mr. Toad’s Wild Ride into investing and let’s just say, a pretty dramatic culture switch. lol.

The most visible part of my job is, of course, becoming Jason’s co-host on This Week in Startups. We podcast six days a week—Jason’s pitch to me was, “we podcast in the morning and we invest in the afternoon.” And we do! Upon my arrival, we launched two new series: VC Sunday School, where I got to learn in public about the investing topics that were coming up naturally over the course of that first year. I have a number of sticky notes posted all over my desktop that make me laugh when I look at them now (“things I do not understand: What is a SAFE note?”), and some that are so useful I can imagine keeping them there forever (“They’re raising $8 million at a 15 percent dilution, 15 percent goes into 100 6 times, therefore 8 x 6; that’s a post-money valuation of $48 million”).

We also started a weekly segment called This Week in Climate Startups, where I interviewed more than 40 founders and investors and which served as an amazing kind of Clif’s notes for learning about the big trends in climate (mushrooms, people — mushrooms), plus harvesting information from fellow investors about thesis, focus, promising business models, philosophy. It couldn’t have been a better built-in research module, like having my very own analyst on board to uncover the important things to look at all year long.

So here’s a little look back at the year.

Founder meetings: 134

Not long after I started, our incoming company president, Mike Savino, said, “if you want to be a good investor, you need to hear at least 100 pitches.” I averaged roughly 11 founder meetings per month in 2022, and was lucky enough to also hear company pitches through our LAUNCH accelerator and Founder University, and to judge those pitches plus a couple of external events. The difference between those early meetings where every idea and business model was brand new to me and the later meetings where I knew more about what to ask, what to advise, and how to evaluate, is astonishing. (And yes, I did indeed want to invest in every single company I met with for the first six months, at least. I’m not too proud to be a cliche.) Here’s to the next 100 meetings (or more)!

Climate investments: 5

I am thrilled to say that we invested in three climate tech companies through the LAUNCH Accelerator and two through the Climate Syndicate (which launched in April). These include Spring Eats (the first meeting I took as a VC!), delivering waste-free groceries in electric vehicles; Clarity Movement, which provides accessible real-time air pollution measurements for cities and governments around the world (hello, climate adaptation); and SailPlan, which measures and reduces emissions on commercial shipping vessels. You’ll hear more about the others in the coming weeks (and I believe there’s at least one more in the accelerator pipeline already). I believe in and am thrilled about all of these companies, and I can’t believe I’m actually getting to have a hand in bringing true climate solutions to real people and businesses. This is the work! It’s happening! This was the entire goal and I am so proud that I printed out my first deal memo and have it hanging on my office wall. That deal launched on Earth Day, in fact. Aww.

Goals:

I hope to double the number of climate investments in 2023. Let’s go. The market changed hard halfway through my first year, as you all know, but the strong will survive, and I’m ready to get back to work. The number of climate tech companies is growing incredibly quickly; I believe this is one area that will actually thrive during a downturn because if companies are created to solve problems, there isn’t one that’s bigger and more insistent than the climate crisis.

Takeaways:

As I said on our end-of-year podcast, I can’t believe how much I love this job. Investing is so profoundly interesting, fast-moving, varied, and fundamentally hopeful in a way I would never have imagined. There are a million stories a day in every single company, from the origin story of the founders to the teams they put together, their ideas, their hopes, their ambitions, and what they know or don’t know about starting a company or pitching or accounting. Every meeting is a whole new adventure and my butterfly brain was overjoyed to bop around this blooming garden of ideas.

Also, I am simply amazed by startup founders. As a journalist, it’s so easy to be cynical about, well, uh, everything, but it’s especially easy to be cynical about founders. It’s a type, for sure, but the bravery it takes to have an idea and turn that idea into something real, and then take responsibility for all that comes after that, should never be discounted. I met single moms and first-generation immigrants and people of all ages and walking startup archetypes and everything in between and every one of them was actually building something and most of them were working every night, weekend, and holiday to do so. I’ll never underestimate or be dismissive of founders, ever again. Everything I’ll ever learn about perseverance, I will have learned from Anukampa Freedom Gupta-Fonner.

2023: Ok, I think I see a plan emerging

At LAUNCH, we focus on B2B and consumer subscription software (SaaS), fintech, and marketplaces. Although climate tech solutions can encompass, obviously, everything from nuclear fusion to making mushroom cloth to plug-and-play turbines for water desalination plants to 3D-printed sustainable rocket fuel to some of the most complicated weather satellite launch-and-forecasting tools I’ve ever heard … well. It turns out that the companies that are going to fit best with our firm’s thesis are going to be SaaS, fintech, and marketplaces — with, perhaps, an increasing dash of tech-enabled services.

And this is ok. As I said on a podcast earlier in 2022, I’m increasingly starting to think of climate solutions the way I think of the planet itself: it’s an ecosystem. That ecosystem is made up of many, many, many different parts, and all of them are necessary. This thinking is inspired, as was my entire journey into climate solutions, by sci-fi. In one of “Expanse” books, there’s a scene where a botanist (Prax Meng, if you want to geek out all the way), is talking to his daughter Mei about a simulated ecosystem she tried to build. It collapsed, and he explains to her that it was because she built a top-down system. She focused on the charismatic megafauna and big trees and grasses and predators, and she neglected the base layer that every ecosystem needs to thrive: dirt, bacteria, bugs, rocks, minerals.

If I apply this kind of biodiversity thinking to climate tech investing, then maybe things like nuclear fusion and electric airplanes and perhaps even some of my beloved fungus-related technologies (although fungi are definitely part of the base layer of an ecosystem) are the charismatic megafauna of the climate tech investing world. They’re jaguars and lions and elephants and gorillas. But the things I can invest in, the things that fit my bailiwick, and the things I actually really love, like measurement tools and subtle tweaks to consumer behavior and software that abstracts away the hard parts of energy efficiency … those are probably closer to rocks, bacteria, and soil. But my lord are they necessary—and, as it happens, investable. And that’s great! The ecosystem needs it all. Hard tech, software, subscriptions, marketplaces: my primary goal for 2023 is to absolutely ruthless about solutions. I will not quibble about whether this or that is worthy or unworthy, because we need them all. Bring me the bugs and bacteria and soil! Let’s! Go! 2023!

Bits and bobs …

Will be back next week. I promise. Happy New Year!