 Yeah, it's very hello. So welcome everyone. We have an excellent group of climate tech investors for you today so welcome David Sophia Seth and The topic we have today in front of us is perhaps the biggest one in the world It is investing in solutions to the climate crisis This is an area that has been described as a total addressable market of the entire world So what we're talking about is how do we decarbonize the entire global economy from Transportation to food and materials production the built environments energy many things besides that so I figured we could kick things off by Really touching base on how we all define climate tech investing some firms to find their mandate differently than other firms So the question to all of you is for your firms. What's in what's out and what's your what's your reasoning behind that? Seth do you want to kick us off? Sure. Yeah, so I think roughly climate tech can be broken down into three broad categories one is Decarbonization taking emitting methods of production or methods of anything and making them less emitting twos is capture so taking the Greenhouse gas emissions that are already in the atmosphere and getting them out and then three is adaptation So the acknowledgement that this is problems can be really bad and we want to make it a little bit less bad By for instance making it easier to build new housing quickly so that the people that are going to be forced to migrate can Can have a place to live and so at 50 years we focus entirely on the on the first two I think the third one is really really important But it's a it's a little bit. I don't know too dark for us We I think we want to be optimists and we want to try and figure out a way of making this crisis Less bad and less destructive and to eliminate the need for the adaptation And so we're looking for companies that are significantly Decarbonizing industry and then also companies that are figuring out clever ways of taking green house gas emissions out of out of the air Super so our view is highly inspired by project drawdown that sort of describe the current sources so energy buildings Transportation food and ag and And the current sinks, which is land sinks and coastal and ocean sinks And and that's pretty much like really broad view of what climate investment is But that's the one we're taking with and and the line believe that as you touch on like every pretty much everything has to be updated renewed in a way that is aligned with the aspiration of our societies being healthy being safe and Taking to come the constraint of our environment, which is what we all know So and when you think this way pretty much everything can be can be done so our take is To look at carbon going in and out of the system Of course, it's to look at the adaptation, which we think is important and well Yeah, unavoidable at this point, but also the sort of set of interlinking problems like you know a certification of the oceans you know water like managing water resources You know things like deforestation Destruction of biodiversity and a few other systems that are like under unbelievable pressure and All required to kind of have a livable planet. So we look at it slightly broader than than just climate great and Just to round things out at Voyager We focus on preventing planet warming gases from entering the atmosphere So mitigation and we also invest in carbon removal So taking CO2 that has already been emitted and removing it from the atmosphere and across our firm We've set ourselves a target of 500 million tons CO2 equivalent Emissions which allows us some flexibility to also look at things like methane very potent greenhouse gas And that's an aggregate across our entire portfolio over the lifetime of the fund So again some flexibility recognizing that some companies will directly be removing carbon or preventing it from being emitted And some will be supporting those activities in meaningful ways I'll just allow myself to add that the you know We were looking for frameworks that would sort of allow us to reason about this and the framework We came to which we really like and are highly promoting to everyone is the planetary boundaries framework by the Stockholm Resilience Center You know which which gives us a very sort of nicely balanced view and you know very scientific basis for some of our intuitive decision-making Excellent, so one thing that I find frustrating I know some of you may find frustrating is the description of sustainability or sort of climate solutions as inherently less good than the existing paradigm we have today and I Personally don't think that's true We look for products that are better than the fossil fuel products that replacing But I think that the community as a whole maybe hasn't done the best job of selling that vision of like what is The daily quality of life improvement we get from switching away from fossil fuels So I wanted to ask all of you what is it like a specific example where you know regular people would see an improvement in their daily life by replacing fossil fuel based products with something cleaner Yes, I think historically people have Thought of sustainable products as something you you sort of sacrifice quality or convenience for or pay more for Because it's good for the environment and and I think there's always going to be a niche of consumers That are willing to do that and that's great I'm one of them, but like that is not going to get us through this crisis So we actually have something at 50 years. We call the mr. Burns test so mr. Burns is this a character from the Simpsons He's basically a prototypic greedy industrial capitalist all he cares about is you know his his bottom line and nothing else And so we want to back Founders that are building products that at some point mr. Burns would buy right This is him who doesn't care at all about the planet for other people He just buys what's best for him because it's tastier more convenient cheaper better And so this is the sort of new crop of companies. It's really exciting. I've got one right here It's called planet a it's it's it's chocolate without cocoa and it's just delicious, right? It's super tasty. It's super tasty And I want to eat it just because I like it and like the sustainability part comes as a sort of added bonus a company that we Just announced today or the FDA announced today that they're gonna be able to sell the United States It's called upside foods they grow real meat without animals, and I've tasted their Meat they make a duck all around and they make southern fried chicken They make meatballs and it is just delicious delicious meat and at some point They have a path to having the cheapest healthiest tastiest most convenient meat And that is gonna be really exciting for everybody because you're gonna be able to have all the meat You want cheaper and then you pay for it now It's gonna be healthier than anything you eat now and you're gonna feel really good because there's gonna be no Climate impact or cruelty to animals and so those are the products that we get really excited about I would mention I'm big fun as well as alternative protein and sort of made My first investment on sort of that pieces in 2016, but it's an insect so it's really less Maybe a feeling to the mass Another one I'm really really excited about is mobility and electrification and E-bikes in particular so like if you live in a city the noise the pollutions and most of their journey are short and Most people today have to take the train or the bus or because it's too long to be able to walk and we and that's to a point like it's a very easy example and We after a long search we ended up investing company called cowboy And it's just a fantastic Beautiful design bike. It's a bit like the sort of iPhone of bikes in all of you And and and to put it this scale they make 45 million revenues in a few years super healthy PNL profitable in a year to 71 NPS always winning awards in design. I mean if you love design and bikes You buy that, you know, so so I think that's in a consumer space. I would definitely go for e-bikes as my favorite One way I look at it is that you know, we have this Industrial system that came out of the industrial revolution several a few hundred years ago And it's so wasteful and it's so fucking dirty and it's smelly and it's like also, you know destroying the whole planet and and you know this crisis which we have is a very bad crisis We can get back to how bad it is in a second, you know, shouldn't be wasted, right? So we had the opportunity to fucking rebuild all this shit and like make nice clean quiet beautiful things and you know We as investors in the space. We see all these illusions and they're really coming in. It's amazing, you know And you know the people want them governments want them businesses are buying them, you know We as a community we just have to build all these kind of amazing things and you know get them up there So they can be ready for mass consumption Yeah, it's about fucking time completely agree. I think it's it's Sometimes, you know, it's ridiculous how people talk about an attachment to fossil fuels because when you think about what? Interaction a person has in their daily life with a fossil fuel. It's some toxic sludge I'd be like dug up from underground that you put in your home or your car and you burn and then you breathe in the fumes And it you know makes the air Everyone likes the smell of gasoline a little bit, right though So I live in New York City and one of the things I love to do is walk around New York City and picture What is going to look like when we get rid of all the combustion engines and stop burning all the fossil fuels and the air can Be as clean as it is Out of the countryside. I mean that's that's a change I would love to have in my city If you if you say pull into your garage close the garage or behind you when your car is running and you fall asleep There's a good chance you die Engine car right if you do that with a Tesla Well, it'll actually it'll just shut off because we'll realize it's there, right? And so like a lot of these products will just be Qualitatively better experiences for consumers and then oh by the way, you know, they're sustainable The point about combustion engines a very serious side effect that you noted And I wonder if those products we get approved today in a world where we have electric vehicles Yeah, which one which one are you the most excited about what sort of you know I rode an e-bike for the first time which is a little embarrassing given what It was really fun. It was like joyous. It wasn't just more convenient. It was actually fun So maybe I'll have to get a bike So let's let's talk about scaling This is something where the challenges of bringing a climate tech company to massive global scale Sometimes look different than scaling a software company. They may be non-linear challenges So I'd love to hear your perspective on what are some of the challenges that Disproportionally are important for companies building in climate tech and potential solutions for addressing some of those scaling challenges So one has to be very careful, of course, you know as investors, you know, we we need to generate returns because otherwise we're not in business So, you know, we have to look for things and be smart about finding things that can scale And then you know, there are things that are a little harder to do than a software But can be solved with, you know, all kinds of non-deluded financing So so it is possible to find these kind of high IP highly scalable businesses. Eventually, they may consume a lot of capital But that'll be you know when they build out massive, you know infrastructure and that we don't have to pay for that And our investors don't have to pay for that Also, there's two challenges that a lot of especially deep-tech climate companies face that software companies don't And and and both of these challenges are in our estimation a huge part of why sort of the clean tech 1.0 boom and bust happened So one with a lot of deep-tech companies You have to do like a really solid techno economic analysis before you start going techno economic analysis Is basically like an Excel spreadsheet where you list out all of the assumptions around your costs Right everything from the steel and your bio actors are going to make them So the energy that you're gonna need to power them to the land that you're going to rent to the labor All the to your agents all those things and then you make some assumptions around how good your process is going to be And then you sort of make some assumptions around what you're going to be able to sell your stuff for and you're basically saying does That says the math makes sense right and in clean tech 1.0 a lot of companies didn't do that And they built these big beautiful things and then they just weren't economical And in pure software you don't have to do that because software is so cheap It's like zero marginal cost that you can basically start to build and kind of assume that it's going to work its way Work itself out and so that's that's a challenge that a lot of deep-tech climate companies have the other Which is also a mistake that was made deep-tech 1.0 is that you're typically building some some physical things some asset which then has a production capacity and You really don't want to wait until that asset is fully online to start building your distribution in sales But it's kind of hard to do that because like how do you sell something that you're not making yet? And so in clean tech 1.0 companies waited until it was online then they started to sell But it turns out that even if you're selling a commodity product cheaper than everyone else It takes a long time to like ramp up sales And so it would take you know two years to build a thing and then two years to have the sales reach capacity now Your payback period is really pushed out And so what we've seen a lot of companies do solid in our in our portfolios on this really well is they've literally built their Distribution by taking the product that they will sell When their production capacity is online just literally buying it on the open market Selling it and then as soon as the asset comes online They stop buying it and swap it out for for their for their for their own product and and by doing that You can have a hundred percent of your capacity spoken for literally the week that your asset comes online And so these are a couple of the sort of challenges that a lot of especially deep-tech climate companies have to think about that You know software companies that really don't I can build up on that I think For my perspective, it's a lot about the asymmetry of understanding between the investment community and Entrepreneurs what they're doing is so much more complex. It's most of the solution are full stack So it's which is great for an investor because you capture all the value most of the time But it is more complex. So you need to understand the retail component the technology component So and and historically as venture capitalists would not down that much so I think first is really educating which it which is a big part of and having like we do with our firms having like a lot of expertise and knowledge through partnership or within our venture partner network So but you do need that expertise to be good doing so that I think that that's structural and and then one which is Unfortunate but so very true is that People want to back what is proven So it's like a I remember when when so many times at that conversation But yeah, but show me 10 companies who existed at more than 2 billion or 1 billion or whatever And I but I can't because I'm just telling you about a future market and a future opportunity So so and and just as the way people think you know and and so and that's why around this table We share actually a lot of strong conviction about ad performance. We all obsessed about that performance Until you have that It's complicated to convince more more people But I want to end on a positive note though is that I was looking at some numbers are earlier today for for this panel and and I was really optimistic about it. Like if you look at the last eight years the amount invested in climate is 155 X Which is compared to AI just so we have like an idea which was 47 X so it's actually massive and And we don't talk about this enough, but it's happening. It really is happening But it's happening more in later stage very mature assets and less so in venture But it's coming with the first generation, but hopefully now many many more will follow And that's of course a function of like civilization having woken up to this and the the buyers like the for the end, you know Infrastructure builders actually being ready. So, you know, this community as tool makers. We have to kind of give them stuff to build Yeah, and I think it's true because one of our entrepreneurs phrase that's perfectly in my view is that One is not your problem. You don't care. So the fact is become universal whether you are in India China France or the US now, it's your problem. So because it's your problem You're interested in it and that really Interconnection of those problems is actually very powerful. It's it's unfortunate But it is actually driving a lot of the capital towards what we do It's actually really interesting most products that do good do good for the like consumer that has access to it or interacts with it But with climate tech, you know a ton of greenhouse gas emissions removed anywhere helps everyone everywhere It is just like inherently a global good. And so that's something we really haven't seen with many past technological ways That is very true So let's talk about European versus North American climate tech investing A fellow investor said to me earlier today that in Europe we make rules to solve a problem in the US We throw money at it Whether or not that's true and question to you all whether you agree In the US we have started throwing money at the problem finally, which is great. We just passed a massive Climate bill it's not called the climate bill for political reasons. It's very poorly named. It is the best climate bill with the worst name It's called the inflation reduction act or the IRA not the Irish which is exactly what it's not gonna do And it is it is a massive amount of investment It is four times bigger than the last big investment bill we passed which was after the 2008 2009 financial crisis. It's over 300 billion dollars in funding across a spectrum of solutions that includes a roughly 30 billion dollar green bank for preferential financing for climate tech solutions money for electric vehicle infrastructure a Expanded 45 Q tax credit, which is a tax credit for Carbon capture and carbon sequestration among many other things. So it's super exciting It's certainly starting to change the landscape in the US So question to all of my fellow panelists is What are you excited about in European investing and how do you see the difference between investing in climate tech in those two markets? So the only Europe focus fund so I start so so in Europe it really is the most advanced in terms of like Affinity and familiarity with their with the challenge, you know, it's it's it's just a continent that always been very concerned around sustainability and social Fairness and all that just all roots and also because of the history of like colonization and everything There is actually a mixity in the population that he said that we also understand what's going on emerging countries so and you I can see this in the numbers like like If you look at the emissions in the last sort of decades China of course is just to the roof US was neutral and Europe was already minus 25 percent So we are in advance in terms of our emissions and our policies But we don't have enough capital and that's always the challenge, you know So and the US is the opposite, you know It's like you go from zero to one overnight and then there's a massive funds are located But what that means for companies is just something to know, you know and and and that's true that the later stage You are would say series B plus your March mortality event becomes quite rough and you have to you have to do two things One is being a bit more technical about understanding different type of deal structures. There's not these standard preferred equity. We all know that there is Less standard terms, you know structured that structured equity and it sounds Chinese But it's so important that you understand the Do the varities that you can have access to and the second is obviously Travel be with not to be but also to other part of the world where where they have a strategic Short-term interest through the regulations for example, and we've seen that with some of our companies and it's been very successful I also invest in Europe actually so 70% Europe and a little bit little bit of companies coming to Europe I mean we see you know we're say here investing around the eighth a series a and you know, we just see a lack of capital in that stage You know, there's a way more in the US for sure There's a lot of quality companies here and you know at the A stage a lot of these companies are not quite ready to cross the pond So, you know, yeah, there's very good opportunities here in Europe for that getting reasonable ish valuations and You know feel we can add value and then we're also investing like 30% in basically US companies or foreign companies that are coming to Europe Because a lot of these companies see that you know, there are half things happening here Yes on the regulation side where we are strong Whatever that means and you know, they're coming and looking for good partners when we try to be a one of be one Of course, so we're 90% focused on North America and we've got 10% of that founders were supporting our in Europe I would say there's a few things to be really excited about a few things that need to get fixed So the things they get excited about as if you mentioned, you know, there is a much greater Pole from the market for sustainable solutions A lot of the societies are less sort of individualistic American and they care about each other more and care about each other more You tend to care about the climate crisis a little bit more. Also very interesting is that institutional investors So not VCs institutional investors care a lot more about climate in Europe I was talking to someone who works with a lot of them and they said they they roughly estimate that somewhere between 90 95% of institutional investors in Europe have some sort of ESG or climate mandate and that that number is 5 to 10% in the US So that's very exciting Europe also has some incredible research universities, right where you know in those labs There are solutions being built to basically every problem you could think of So that's all very exciting on the flip side and you find people who've been working on climate like for 20 years Really going deep. It's amazing on the flip side. I do think that there's a need for more capital Especially at the sort of like later stages. There's a huge funding gap in Europe that doesn't really exist in the states anymore to There's sort of like a swashbuckling Like, you know shoot for the moon attitude that is very popular in Silicon Valley where I'm from that I think more European climate tech founders can embrace you shouldn't be planning to have a company that you sell in three To four years if you're trying to solve the climate crisis, you know The solid and founders started off wanting to decarbonize the chemicals industry, which is one of the most admitted industries on earth and now Five years in they've changed it to wanting to decarbonize industry, right? And of course, it's insane But it's also incredibly inspiring and that allows them to go far and faster And then the third thing which is probably the hardest thing to fix is the is the tech transfer policies at universities So basically if you develop cool technology at a university You typically have to negotiate with your university to get that IP out and into a company and in the top research Universities the United States that process is kind of a pain in the butt But you can get it done and in months and the deal you get will be pretty reasonable in the vast majority vast majority of European research universities that process takes Minimum like six months up to two years Imagine trying to wait two years to start your company and oftentimes the university takes so much economic Right in the company that the company then can't even go out and raise from venture capitalist because it has a broken Cap table and if there was one thing I would fix about the European tech ecosystem It would be making the university tech transfer process look a little bit more like it does at American universities Great plants all around definitely agree with that IP licensing issue also So Voyager we invest about a third in Europe about two-thirds in the US We also see that wild-eyed ambition that really intense looking Valley style global ambition more frequently in North America particularly the US would love to see more of that in Europe Point in Europe's favor you get a lot of smaller markets Creating more proving grounds and conditions in those local markets might sometimes be ahead of where they are in the US So, you know the penetration of electric vehicles in certain countries Well in advance of the US market allowed entrepreneurs to start building for those markets sooner So that's a it's very exciting as early-stage investors to kind of see how these things play out sooner in some places than others Let's talk about hard tech versus software I was speaking to an investor yesterday who said I love investing in software It's got the you know the best business model the best margins of my distribution is free I'm not gonna go anywhere near anything that's you know moving Adams around in the physical world and kind of implied that everyone who does as a sucker And I think that's like a myth that software is always inherently going to be like a better Business better business model than hardware I would imagine some of you agree there for example your distribution is not free if you sell on the app store I think they take like 30% maybe 40% it's the north of 50% on some other platforms Maybe YouTube folks in the audience probably know this better than me And you may have to spend hundreds of millions of dollars to acquire enough customers to really go public or otherwise Become a really big company if you're a hard-tech company and you have a Manufacturing facility and one customer is going to sign the off-take for all of your electric planes you're making or all of the You know metal that you're producing great, you know how to spend anything on marketing your customer acquisition So I I would really push back on that notion that yeah Only you can't build a great business and hardware and so yeah Well only in hard tech have I seen like you know advanced purchase orders of a billion dollars plus for a startup that you know has No revenue And yeah, you know it's possible Yeah, I agree and I was like Reading this very good blog by things blossom Street Ventures who analyzed 73 SAS IPOs and and sort of defined The amount that they raised pre IPO and the average was 600 plus million the median was 300 so to be fair a bit less But it's a lot of money So even if in theory you could do it much less and we all have this fantasy of WhatsApp stories, etc reality just tells something different where I think and I agree with you so much There's this kind of intellectual Laziness I would say to sort of shortcuts Truth is that just the growth looks different You know you especially if we talk about hard tech and industrial tech, which is in a step further It's more like this, you know like you grow you have your facility to pilot and then you wait And then you have a big purchase order and then you went so it's just a different growth style and Funding and but it doesn't mean that it's less efficient and it doesn't mean that you'll make less money It just means that it's a different way of doing it And and I agree with you we can't just put everything on software uber raised 25 Billion dollars 25 billion dollars and because they don't have the magic formula which Sarah talked about which is I make a thing and that thing Makes me x per month and therefore my payback period is why all that they raise basically has to be equity financing Which of course for investors is not great because you get diluted every time Whereas a lot of these deep tech companies can raise debt financing or project financing Which is basically a sort of loan that doesn't actually dilute the other shareholders And so it tends to be actually a much cheaper source of capital and then I get really riled up and people say like oh But you know softwares made so much more than deep tech over the last you know 10 years or the last 20 years especially from you know VCs are supposed to be about what's next not about what was in the past and you know if you look at the history of say Silicon Valley It got its name because of semiconductors and that was kind of the cool thing to invest in semiconductors And then guess what it was networking and if you when networking was becoming a thing We're like I don't know that you haven't made much money networking It's all about semiconductors You would have missed the big trend and then it became the internet and if you were like I don't know about this internet networking is kind of the cool thing You would have missed internet the whole internet and then and then it was mobile and if you had this you could have been I don't know there's not a lot of mobile companies mainly internet companies You would have like you'd miss every big wave ever If you wanted evidence for its success before it happened like you just can't get that's the nature of new waves, right? And so I think when we look at climate in particular and just in general global problems Software is kind of easy to build now a couple of high school students can build a sass app over a weekend. It's amazing It's so so so we end up with a hundred products that's roughly do the same thing Yeah, a lot of competition But it also means that like the easy problems to get solved have been solved by software if they could have been Solved by software because it's so easy to launch and the problems that we're left with are really hard problems that require really hard solutions Trust me if you could have solved the climate crisis with a sass app someone would have done it Have a lot of sass app developers It doesn't mean that there's no place for software in the climate crisis But a lot of these problems are still around because they require these incredibly hard deep tech solutions They often require brilliant PhDs that have been working in a lab for many many years to bring that technology out to the world to solve The problem and so don't look at the past think about what's next deep tech climate. That's it We look out and we see these amazing founders You know some of them are repeat founders some are first-timers out of the best universities and they're working on these problems And there's like no world in which some of them many of them are not going to build world-changing companies Because that's what amazing founders fucking do so lightning round because we're pretty much out of time So if you can keep it to me be one sentence, what is a technology or company that gives you hope? Synthetic biology is gonna change the world There's so many You go ahead when I pick one Actually all of the things yes, I'll just shout out to fucking politicians everywhere You know Take some freaking leadership You know people want to be asked to do things they want to be asked for deprivation You know that's meaning of life This is you know one of our good friends Albert Wenger was saying this has been saying this for a while Like people want to be asked to sacrifice You know so ask people to sacrifice and you know fucking invest in this in a way that we're not doing right now Even the IRA is like tiny compared to what we need take some fucking leadership So not a technology even though I love technology One thing for me is the number two issue that people cared about in the midterm elections in the US was climate And if you pull people Even globally it's about 70% of people actually care about climate. They want action on climate. We've been told It's not popular. That's a lie. Yeah, like it's actually incredibly popular people want this Any any last thoughts Sophia? Yeah, just on to answer your question. I think we I'm very excited about ocean in general like 95% are completely undiscovered It's in for me. It's an expensory and synthetic bio to discover new molecules and energy prediction I'm fascinated by what this door can can sort of bring us wonderful. Well on that note Thank you all for joining us. Thanks, and We're delighted to be investing in the future. We hope you'll join us go build some stuff Thanks everybody