The Breeze - Issue #21

Technology for transition, Climate Returns with Sarah Tavel, new climate VC theses

The Breeze is a free weekly email about climate tech investing.

I wrote this post in August 2020 and realized it never shipped. I’m posting it directly to the website so it’s discoverable.

It’s easy to get stuck in the daily tragedies of climate catastrophes. This week on social media we saw Canada’s arctic ice shelf collapse and Mumbai go underwater from monsoons. Climate change makes for heartbreaking doomscrolling. 📱

I’ve been inspired recently by work from Carlota Perez and Saul Griffith that paint a picture of what a transition to a sustainable future might look like. Both argue that technology plays a crucial role in decarbonizing our economy. But it’s not a silver bullet because it exists within cultural and political constraints. Political leadership is also necessary to galvanize the shift.

Economist Carlota Perez is most well-known among techies for developing the hype cycle framework that has been popularized by Gartner. Lately she’s been writing (and talking) about the “deep transition” to a green and fair society.

In a recent piece she outlines 4 cultural hurdles that we have to overcome:

  1. It’s easier to point out what’s wrong with the current system of production and consumption than imagine a new one.

  2. We “associate prosperity with possessions” instead of “fulfilling our aspirations”.

  3. The tech and environmental communities are disconnected rather than working together.

  4. Tech has enabled prosperity globally but driven disparity in advanced countries, which has led to a rise of populism and rejection of a green future.

I’m optimistic about overcoming these challenges because I’ve seen that work is underway. For #1 and #3, climate tech entrepreneurs, engineers, scientists and investors are coming together to build new sustainable systems. Programs like Activate deliberately coach scientists and technologists into entrepreneurship. Saul Griffith’s Otherlab is pumping out solutions. Accelerators like TechStars partners with The Nature Conservancy, and Third Derivative works with Rocky Mountain Institute. I see environmentalists and techies collaborate daily in the MCJ Members Slack. (#4 is a tough challenge that I briefly touch on further down.)

For #2, Carlota makes the case that tech has “dematerialized” our need for physical things and mobility. Our experiences continue to move increasingly online. “We have seen it already in films, music and books and in our newly found capacity — thanks to the Covid-19 lockdowns — for communicating, teaching and meeting on the web.” We’re moving from ownership to rentals, in-person to streaming, and classrooms and hospitals to online learning and care. This tech-enabled shift is helping us reframe how we think about what’s good in life. “Quality of life will be defined by health, exercise, experiences, caring, sharing, learning and creative activities, not by mere possessions or passive entertainment.”

During this transition to digital services, our collective carbon footprint will be even further reduced as renewable energy increasingly powers more of our computing and cloud hosting. But we still have a lot of physical stuff, like buildings and cars. Stopping global warming requires that we massively decarbonize our physical products as well. We have to look at bits and atoms.

Entrepreneur Saul Griffith lays out a tactical guide to massively decarbonizing society in Rewiring America. He advocates for an aggressive “Maximum Feasible Transition” (MFT) to achieve 70-80% decarbonization by 2035, and the remainder by 2050. The central tenet is to electrify everything, which can be done with technologies available today: “wind and solar power plants, rooftop solar, electric vehicles, heat pumps, and batteries.” Any time a fossil fuel-based machine is replaced over the next 3-5 years, it must be replaced with renewables.

However we can’t rely on the market alone to get us to MFT. It’s only achievable with government intervention. David Roberts of Vox describes Saul’s plan:

A three- to five-year industrial ramp-up, followed by a sustained period of 100 percent substitution, would require wartime mobilization, which entails government taking a direct hand in industry, working with it to hit specific production targets through some mix of incentives, penalties, and mandates. For the first three to five years, it would be something more like a command economy than Americans are used to.

Though a “command economy” sounds alarming under the current administration, a nation-wide decarbonization unification under a new leadership would be remarkable. The mobilization would help with Carlota’s challenge #4 about income disparity by providing “as many as 25 million net new jobs at peak” across the country. It would eliminate air pollution, and everyone would save money on energy used at home.

The MFT plan isn’t a government spending spree. It relies on private funding to follow government investment. I expect that it would motivate all kinds of private capital to flow into the space. For investors and entrepreneurs who are on the fence: a great way to cure the climate doomscrolling is to get involved. You might find there are financial rewards as well.

Next week on Climate Returns, Abe Yokell of Congruent Ventures will host Sarah Tavel, GP at Benchmark. Earlier in her career, Sarah invested in CPower, one of the original demand response providers.

I got to know Sarah around 2012 when she was a PM at Pinterest. I’m looking forward to hearing how her perspective on cleantech and climate tech investing has evolved, and what she’s interested in now given her focus on marketplaces and social.

Register for Climate Returns: Episode 2

Trade Winds

Max Webster of Version One Ventures shares 4 reasons why the energy revolution is here for real this time: solar is cheap, storage and EVs are getting cheaper, financial innovation is enabling projects, and smart grids and homes are becoming ubiquitous.

These trends suggest a few key opportunities to build or invest in:

  1. The energy OS, enabling homes and buildings to sell energy to the grid.

  2. SaaS tools for the long tail of solar and storage installers.

  3. New financing options and insurance and to enable the proliferation of energy products (migrogrids, EV charging, heat pumps, etc)

  4. Community solar, data products, p2p energy markets and more!

All of these areas are ripe for innovation. They’ll be propelled even more with local, state and federal support of the energy transition.

Rick Zullo and Richard Kerby of Equal Ventures lay out their interest in Energy & Sustainability with a set of investment theses. They’re focused on digital business model innovation, and real-time intelligence, automation and optimization.

Speaking of Carlota Perez’s hype cycle, Shayle Kann of Energy Impact Partners posted a chart showing where various climate tech solutions currently sit on the classic curve. Many of these have a long way to go before getting to the fabled plateau of productivity.

Jetstream recently invested in MilkRun! It’s an online farmer’s market that creates a new food supply chain, helps farmers get paid more, and reduces food waste. Check out CEO Julia Niiro’s profile in Forbes.

Invest with Jetstream

Join me in investing in climate tech startups through my Jetstream Syndicate. We’re a group of over 250 angel investors who are supporting early-stage climate tech founders. I share startups that I believe are great investment opportunities, and you decide if you’d like to invest or not. It’s free to join, and you can invest anywhere from $1,000 to $100,000. We’ve invested in startups like SINAI Technologies, Pachama, Windborne Systems, and now MilkRun. 💸

Learn more about Jetstream

Thanks for reading! Special thanks to Parker and Becky for reading drafts. Photo credit worldofsf.

Stay breezy,