All-star Climatetech Investors Discuss Their Due Diligence Processes, Industry Outlooks, and Personal Stories

Greentown Labs has kept in close contact with our community of about 100 climatetech and cleantech startups since the COVID-19 crisis began, and we’ve heard a concern surface again and again: what does this period of economic uncertainty mean for startups who are trying to fundraise, and for climate investment in general?

To explore these questions, we put together an Investor Speaker Series featuring leading climatetech investors. These investors share their outlook, offer advice, and provide a window into the current investor mindset.

Our fifth Investor Speaker Series panel featured three people who are leading the charge on investments with major sustainability impacts: Nancy Pfund, founder and managing partner of DBL Partners; Libby Wayman, investor at Breakthrough Energy Ventures; and Emily Kirsch, founder and CEO of Powerhouse and managing partner of Powerhouse Ventures. The panel was moderated by Greentown CEO Emily Reichert.

Reichert: I’d like to start by asking each of you to share a bit about your background, how you came to your current role, and your work as a climatetech investor.

Kirsch: I had the incredible opportunity to work with someone who’s become a national leader in the political space—Van Jones, who was an advisor to President Obama and now does political commentary on CNN. He was the one who really kicked off the conversation, 10+ years ago, about green jobs, and that led me to work with a friend who started a company called Mosaic here in Oakland. I worked with them on their pilot, and that was my inspiration to ultimately start Powerhouse in 2013—to bring together corporates and startups and investors to build an energy and mobility system that is decarbonized, democratized, and digitized. Powerhouse Ventures we started about a year and a half ago, and our goal is to identify and support founding teams that are building innovative software to transform our global energy and mobility systems, and we believe that addressing the climate crisis requires that we develop our most innovative technology today.

Wayman: My background coming to investment is a little unconventional. I started off as a technologist entrepreneur, spinning technology out of MIT. I then continued on in technology development, mostly in the solar industry. Then I had the opportunity to go to the Department of Energy as a technical appointee, where I helped get some new research programs started and new research institutions launched, particularly around advanced manufacturing for clean energy. I then spent a couple years at GE, where I led clean technology development across the company. I always have been committed to clean energy, clean technology, and climate change, and was very confident that I would need a breadth of experiences to push ideas forward, everything from technology to understanding different sources of capital and understanding how technology is developed and made into mature products. Now at Breakthrough Energy Ventures, I have the opportunity to bring that together.

Pfund: I think that DBL is well known for that intersection of venture capital investment, technology, and policy, and one reason for that is because I have always been very active in that intersection. In college I worked on energy transparency, and the work we did turned into one of the first laws about energy transparency. I helped organize one of the country’s first anti-apartheid demonstrations. So I have from a young age been very convinced of the power of small groups to change the world—that’s a paraphrase, of course, of Margaret Mead, the great anthropologist. The other big piece of me is that the day after I graduated from college, I went to work for the Sierra Club in Washington, D.C., and was able to work on some of the most important laws during that period—the Alaska Wilderness Protection Act, the Clean Water Act—so I saw up close and personal just how you can make a difference. Those are the two passions that have now blossomed in terms of DBL and our approach. Our origins have to do with broadening access to the benefits of technology, and yet not believing that technology is a panacea—there are a lot of things that need to happen to make the world a better place. 

Reichert: I’d like to dive into different factors that you consider when you do your diligence. How do you co-optimize for return and environmental attributes? I’d also encourage you to share how you incorporate diversity and equity into your due diligence process.

Pfund: It’s multifaceted, because we do want big companies, so they have to have large, growing markets—all of the things you do as a regular investor in young companies. At the same time, we want to create something for everyone. Maybe not everyone in the world wants to work for a battery company. Maybe they’re interested in fashion. Several years ago, we saw a woman-led company called The RealReal, where you can get high-quality used clothing and other goods for a fraction of their original cost. We said we’re investing because you’re actually a circular economy company. The apparel industry’s a huge contributor to carbon and water waste. Today, over 14,000 metric tons of carbon are avoided by putting goods into multiple economic cycles. These are huge industries that need to be rethought of in terms of how to make them sustainable for the 21st century. So in addition to all the rigor of a traditional venture capital analysis, we really want to focus on fixing something that’s broken and we want to follow the carbon and reduce it wherever possible. 

Kirsch: As far as diversity, equity, and inclusion, I think beyond investment itself, one of the most important things we can do in general is to spotlight, highlight, and uplift the voices of underrepresented founders, including women and underrepresented people of color—meaning Black, Latinx, and indigenous peoples. And I want to acknowledge explicitly that that is not happening on this panel, that’s not reflected in who is featured here. I think that talking about race is something that white people, including myself, need to do more of.

A nuanced understanding of race and gender is so important when we’re talking about investments, because I could tell everyone listening that 50 percent of the founders of our portfolios are people of color, and that could sound great, but then if you were to ask me how many of your founders are women, or Black people, then I would tell you one. So I think that’s where that language of underrepresented founders comes in—it’s not enough to think about people of color broadly, but to really look at who is being included or excluded. As a result of all of this, one of our objectives and key results for this year is a commitment that a minimum of 25 percent of our investments have founders who are underrepresented.

Wayman: We invest in anything across the economy that has the potential to reduce emissions tremendously. We actually set a threshold—we look for opportunities to reduce global emissions by one percent. Then we look for a really special technology. We also look for whether the team is a good fit to advance the technology—whether they have the background, the skills, the capabilities, and the skills to bring people around themselves to advance the capabilities of the company. Finally, we look for all of those things lining up with a great investment opportunity.

Diversity and inclusion are inextricable parts of our approach. The team was built with people who have different windows into making investments and clean technology and climate change technology successful, and who also represent the diversity across the portfolio that we would like to see. And we have seen that come to fruition in the portfolio.

Reichert: Are you optimistic about our industry? Do you see major barriers in our way that are caused by the COVID-19 epidemic?

Pfund: We’ve never been more optimistic. Day to day we’re facing headwinds, of course, but what people have to remember is that we are investing for the long term. A pandemic has shown us how fragile our place on this planet is, in a way that we never fully understood. Investing for resilience, investing to protect diversity across every dimension, is something that people get now. I can’t think of a better time to jump into this industry.

Wayman: We are on the right side of some really huge trends in this space—the falling cost of renewables that exists today, a revolution in transportation, a global awakening around climate change and how it will affect global populations and very likely disproportionately affect the poorest populations. We’re all here to support this community. We’re here to be a resource for people, share intel, share ideas. Feel free to reach out to me to brainstorm or exchange notes—I’m definitely happy to talk to anybody who’s looking to build their innovations in this space.

This conversation has been edited and condensed for clarity and conciseness. See below for a full recording of the panel!

Visit our website for recaps on previous Investor Speaker Series panels.