Nick Rockwell

Data from the International Energy Agency (IEA) illustrates the current "readiness" of #ClimateTechs + their potential impact on carbon reduction. As shown, many techs are at an early stage of being able to have a material impact. Concerningly, some tech funds recently returned capital back to investors recently + closed their funds - citing inability to fund capital intensive techs, found in areas like ClimateTech. This in part may be contributing to the $2 trillion shortfall in ClimateTech, that Deloitte estimates. What this may mean for the future? - The migration of LPs to global, super VC funds within ClimateTech, given the large capital pools needed to fund tech development - Greater specialization from smaller funds, energizing more niche elements of the ClimateTech market - but also altering their / LP's risk profile - A greater role to be played by debt financing in funding growth entities at an earlier stage - impacting cashflow dynamics Will be an interesting space to watch moving forward. We at The Proptech Connection are constantly working with all parts of the Proptech ecosystem. From the leading LPs, funds, techs and adopters in market, providing an independent view. Reach out to us today to find out how we can help. #InvestorTrends #Strategy #Global Ivo van Breukelen Stuart Daun Kiki C. Ethan Ward

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Last week, I had the pleasure of moderating a discussion on navigating FOAK in climate tech at the Greentown Labs Summit in Boston (which had >600 people!!). Here’s a quick rundown of what was shared by Katherine St. James of Spring Lane Capital, Paris Smalls, PhD of Eden GeoPower, and Hannah Friedman of Planeteer Capital: 🌱 What is the definition of FOAK? We discussed how the term can be controversial - it's almost too general because it doesn't identify what kind of "First" FOAK refers to - first team project? First geography? First of a technology in a sector? First time for the integration of a system? It's also too specific because it has the word "first" in it, which can be anathema to later stage / project finance investors. 💰 Partnerships for Funding FOAK Projects We discussed how important it is to build a blended capital stack & use off-balance sheet capital for a project so you're not using the most expensive equity dollars to fund an infrastructure project with low-ish IRR. We also talked through being creative about using corporate partners to provide in-kind services or ink some agreement (at least an LOI) to attract this funding. 🏛 Role of Government We talked about how government capital is seen by investors & how it can be catalytic for FOAK. Government capital can provide validation that a startup has passed a rigorous diligence process by a third party - and incentives like grants or credits can help improve returns for the first project- but it's important to be doing this in conjunction with getting customer validation and to be able to present line of sight to competitive economics without concessionary capital. 👥 Advice for FOAK startups The panelists offered some very specific pieces of advice for startups going through FOAK: how to get creative with things like revenue sharing agreements or convertible notes, getting smart with project development early on (like with DeveloperU), being careful about using FOAK too liberally with certain investor groups, getting the right commercialization / FOAK talent in and around you early Huge thanks to the panelists and the team at Greentown Labs (Jill Kirkpatrick, Julia Travaglini, Aisling Carlson, etc you rocked it!!) for hosting this discussion on bridging the FOAK gap. Also immensely enjoyed the rest of the agenda. Check out the full recap & videos here: https://lnkd.in/d9ApYe9Y #ClimateTech #FOAK #ClimateFinance #ProjectDevelopment #GreenTech #CleanEnergy

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We (Climate VC) need to stop making excuses for the growth trajectories of our companies There’s a reason why Matthew Stotts and I chose the venture capital asset class to focus on - it has to GROW fast. And there are a lot of fast-growing, money-making opportunity areas with huge problems that could benefit from highly motivated well-funded and skilled teams looking to build a large company. If you need to make an excuse or caveat for any of the statements in the previous paragraph, you’re in the wrong asset class The good thing about VC is it grows fast and BIG. The clock is ticking on our biggest problem areas - let’s get to work!

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Check out my recent post on why President Trump is the forcing function for us to solve the “Missing Middle” and catch the industrial Tsunami of onshoring coming to the US!

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LP Tip #20 out of #50: To re-up or not to re-up A re-up refers to an LP making an additional investment in a fund where they previously invested. Before we dive in I want to share that there are reasons an LP may not to re-up which are not in your control. Here is a short list: ➡️ The LP may have evolved their strategy and needs to scale back the #️⃣ of funds they invested in.   ➡️ The LP was never set up to re-up in the first place. ➡️ The LP could be an individual that found themselves in a cash crunch and overly exposed to venture.  I'm assuming that when you got your investment that the LP explicitly told you they do re-ups. Please do not assume they do. My expectation is also that the LP dug in to properly underwrite the fund. 🏴 Re-ups are not automatic. An LP will have to re-underwrite each fund. The speed of the re-up also depends on how much work was done in the initial investment, who led the investment, level of confidence there existed when that investment was done, and current pipeline of funds. There are 4 flags that may cause an LP to walk away. 1️⃣ Partner Breakups/Changes and Team Turnover:  The biggest risk in Partnerships are whether the Partners will stay together. One LP gave me a framework on how to think through this issue that has stuck with me. Partnership is like a marriage. If one feels there is potential for a breakup, does one believe it will be an amicable breakup? Or, does one believe the spouses will never talk again? If it is an amicable split that is manageable. The Partners can find a way to support the fund. Then the question becomes whether the LP wants to back the Partner/s that remain.  If there is high team turnover. The LP will want to investigate because team stability is used as a proxy for firm sustainability and ability to scale. 2️⃣ Fund Does not Execute on what they Sold the LP:  The LP “bought” something specific and typically it is because they were missing this strategy or wanted exposure to a strategy for the portfolio they were constructing. An institutional LP will invest and write a detailed investment memo flagging all the things you said you were going to do and then go back and compare when you come back to ask for money. If for example you pitched a generalist seed stage fund and you show up asking for money sharing that you invested in deeptech at A that will cause alarm. The same can be said for the number of companies you promised to invest in or check sizes you wrote. If there are big differences LPs will want to know why. 3️⃣ Bad Actions  The fund manager/s does something that is unethical. This is a no go for an LP.  What if the situation is not clearcut? This is different for everyone and requires discussions b/w GP and LP, but most LPs don't want headline risk. 4️⃣ Continuous Underperformance  If it's early days an LP will look at some key indicators to see how you are progressing over time.

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💡 Interesting takeaways (+ my own commentary) from this #SFClimateWeek session on startups engaging with #utilities - Bits (software) and atoms (hardware) will both be required to power #decarbonization and the #energytransition. Enterprise SaaS is a proven business model that needs to complement innovations in deeptech. Start by targeting the customers most open to moving quickly with new approaches - which might be municipal and coop utilities. Referencing those early customers and successful deployments then helps when you start targeting more risk-averse companies, who have higher expectations and potentially more to lose from new technologies. I've seen the latter play out many times in SaaS markets. Successfully penetrating more mainstream (and conservative) segments of a market requires thoughtfully sequencing and orchestrating product development, partnerships & integrations, go-to-market capabilities, and delivery/service capabilities. Would have loved to be at the session to hear firsthand from Adriana Penuela-Useche Louisa White Page Crahan Andrea Sguazzi Giancarlo Savini.

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In the work I do at Earth Finance, I see everyday that the large companies, with complex value chains and net zero strategies, require and rely on innovative technologies to achieve their goals. Being able to meet their need is vital not only to their success, but also for an emerging technology startup’s success. In this episode (our third which I think officially makes this a series 🤠), we talk basics of securing the business and trust of a large customer when they take a chance on your new tech and aim to scale it across their business.

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Wonderful article about Emily Knight and the whole The Engine Accelerator team on the amazing work their doing changing the world with #ToughTech!

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Earlier this month, PitchBook reported that "13 percent of venture GPs don't plan to raise another fund as the LP pullback spoils fundraising efforts, according to PitchBook's semiannual VC Tech Survey. That's double the rate in H1 2023, when 6 percent said they had no plans to raise another fund. Ultimately, this is good for startups in the long term, because it ends a 10-to-20-year cycle of cheap money propping up a system that hasn't placed innovation at the forefront of its thesis in a long time." https://lnkd.in/ekYdEJYe #inc #entreprenuership #venture #venturecapital #techinnovation #technology #startups #startup

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Excellent blog post on the realities of Climate & VC. While these are "tough times for the transition," there are also many opportunities. Significant capital will continue to flow, with Corporate VCs playing a larger role in financing this transition. Through this process, they will strengthen their LP positions in funds tackling climate challenges. I receive weekly calls from large Holding & Corporate VCs seeking introductions to Climate / Energy / Infra VC Funds. When I ask about their target sub-verticals within Climate / Energy, they often mention that they default to focusing on specific regions due to limited resources and coverage. In other words, rather than evaluating whether a DACH VC is better positioned for solar or grid-tech compared to a Nordic or US VC, they simply pursue whichever regions they can access—a haphazard approach at best. I always advise LPs to evaluate VCs within their operating market context. Since sourcing is crucial in venture capital, Holding Cos. and Family Offices should carefully assess a VC's location, regulatory context, and market environment before investing and building a portfolio of Funds. I've heard "I wish I had discovered this VC / region sooner" far too many times... * At ComposeVC's Built World Fund, we do not invest in Climatetech or Energytech directly, only as it relates to our Built World thesis.

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📢 Some big news this week that marks another pivotal step in the evolution of carbon markets… The Biden administration, led by Treasury Secretary Janet Yellen, will be unveiling the first broad US government guidelines on the use of carbon credits as part of decarbonization strategies. It’s a much needed step that will promote high-integrity carbon markets, and boost corporate confidence in using carbon credits. The Bloomberg article's sources suggest the upcoming framework will align with the government’s stance that: “voluntary carbon markets have a role in reaching net zero, as long as they promote high-integrity emissions reductions and channel meaningful amounts of capital into nature-based projects today as well as carbon-removal technologies in the future.” And that is the key. There is no silver bullet for the climate crisis. Whatever the critics may say about carbon credits, more transparency, clarity and official endorsement on their use will serve to unlock billions of much needed corporate dollars for carbon projects. Couple this news with recent initiatives by major tech companies like the Symbiosis Coalition of Google, Meta, Microsoft and Salesforce and we’re starting to stride in the right direction. Read more and sign up for the live stream: https://lnkd.in/ddDRA8yd #carbonmarkets #carboncredits #naturalcapital #climateaction #breakingnews

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'Drill, baby, drill' isn't just for oil and gas - it could unlock geothermal energy and geologic hydrogen too. That's the fascinating paradox of climate tech I discussed in a recent TechCrunch feature examining how VCs are viewing the sector's future. The reality is that policy impacts are rarely straightforward - deregulation of drilling and permitting, such as for overhauls in transmission and distribution, could actually accelerate clean energy solutions. Furthermore, the sector has shown remarkable resilience through multiple administrations and market cycles. The core message I shared with Tim De Chant and Rebecca Szkutak rings true: technological advancement and declining cost curves will keep driving solutions forward, regardless of the political situation. The energy landscape continually presents new opportunities at every turn. Worth a read for anyone interested in the exciting future of climatetech investing. https://lnkd.in/gjNdm4DW #ClimateInnovation #VentureCapital #Geothermal #GeologicHydrogen

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Excited to announce our investment in Alta Resource Technologies alongside Leonardo Banchik (Voyager Ventures) with participation from Orion Resource Partners, Overture Ventures, and WovenEarth Ventures. Rare earths are critical in products from magnets to ceramics and it's important for the US to develop its own supply chain. While the US has some of the best rare earth resources, separating them has historically proven expensive and environmentally unfriendly. Alta through it's computationally designed and optimized proteins allows the US to bring back rare earth production with a cleaner, lower capex, and lower opex solution - and that's just the beginning. Congrats to Nathan Ratledge and the entire Alta team. Read more here: https://lnkd.in/gbGnAJn3

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Cleantech was such a disaster that it got relabeled Climatetech. Now that that’s not going well some VCs in the space are looking to relabel again. 🤦🏻‍♂️ Maybe the problem is with the investors and not with the name? Part of the problem is having a catchall term for a bunch of often disparate investments doesn't make much sense. Another (and bigger) part of the problem is being “greener” is baked into most technological advancements now, so the best “climatetech” investments are in energy, semis, AI, etc. Most "climate" investors simply aren’t qualified to invest in such hard technologies. Far too many climate investors are in it for the vibes. That never ends well. https://lnkd.in/eKfQ7rMU

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Kettleborough VC has been active for ~6 years, invested in ~30 companies, gone through ~80 funding rounds, witnessed ~12 exits including ~4 instances of partial principal erosion, seen ~4 seed to $100M journeys, tracking ~29% XIRR across the portfolio. A couple of IPOs from the portfolio surely seem very much in line ahead.

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Avoiding bloody water (lots of competition) might be the most high leverage way to engineer success…here’s our blue ocean strategy: Avoid venture backed players (who can spend on unsustainable growth practices) by targeting niche industry verticals Avoid private equity buyers (who drive up valuations via auctions) by staying under $3M ARR What else can be layered in to avoid other dimensions of competition? #microsaas #saasgrowth #acquisitionentrepreneur

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A bit of a tribute to founders / humbling reminder for investors at the start of '25: I've looked at thousands of early-stage fundraising decks over the past two years. In stereotypical fashion, I can typically tell within 30 seconds (2-3 seconds per slide) if I'm going to dig in, and if it's a company I'd be interested in investing in. Over the last two months I have been working on a project with a really cool company who is raising a Series A. I've been supporting on building the deck, data room, etc. So I've been fully back in the early-stage operator seat. And let me tell you. It is SO MUCH HARDER than investing. I sent the deck to some investor friends for feedback. I really value their opinion. Their feedback was stuff that I tell founders all the time about their decks. But I flat out missed it when putting this deck together. Startups are so much easier said than done. It's really hard being in the arena. Founders live there every day. Cheers to you.

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It has been a week of climate at The Drop and another incredible one coming up with NY climate week! Another topic that's close to my heart: Spotlight on #femalefounders: There's been a recent decline in the aggregate number of female startup founders (down almost 2% in 2023), one of the lowest % in recent years. While this decline affects many traditionally active sectors (education, consumer, biotech, and SaaS), FemTech is a notable exception - with a 1000% increase in startups over the past decade. Still, in 2023 - only 1.4% of capital invested went to #FemTech, many citing the "ick" factor. To add salt, male-led FemTech startups have historically secured more funding than female-led ones. Many have written on this, including Cindy Gallop 👏🏻. This is a largely untapped and underfunded market - some argue the "Femtech Revolution" will exceed $103 bil. by 2030. I'm excited to see more funds with female partners executing deals - which will naturally #growthepie and increase the capital flowing to female founders. The #formula is simple: Female investors + female founder expertise puts us in solid position to solve the many issues that disproportionately affect women - from #healthcare, #FinTech and #sustainability. ⭐️I'm proud to work with the fantastic team at Emmeline Ventures - and if you haven’t heard: they are doubling down on this focused thesis. 👀 #WomenInTech #VentureCapital #Investing

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