“There’s what people say they did and what they really did.”

– The Ghoul, Fallout Season 1

 

Over 10 years we’ve developed a framework for scoring investment opportunities. We assess impact, team, market size, etc. We’re not so interested in the absolute score, but rather, we’re trying to figure out where our team diverges. The goal is to make sure we are making ever better and low-bias decisions. Now with LLMs we can go a few levels deeper into that question.

Recently, we shared 26 weeks of our scoring and partner meeting notes with an LLM so we could ask some questions about how we think as a team. We can ask questions like which climate topics we’re discussing (or not) or which markets we tend to favor. But we figured it might be most interesting to founders to know what are the most common questions we’re asking. So here’s what we found.

 

Climate

The leading industry group, Science Based Targets, is still debating carbon removal vs reductions and for obvious reasons; if you can delay action it often seems less expensive. But favoring delayed tech adoption often proves costly long term. One risk is your stakeholders could revolt against greenwashing and another is that the competitive and cost dynamics are really hard to predict.

One of the challenges in the debate around costs of delay vs action is that climate risks have only recently started to be priced in and have been getting mixed in with the overall inflation debate. Home insurance is the current domino falling as the frequency and severity of natural disasters increase. The last few weeks saw the worst flooding ever recorded in Dubai, Southern Brazil, and Texas. In the US, home insurance premiums are rising rapidly, particularly in high-risk states like Florida and California. The situation in California is especially concerning, even as wildfire mitigation investments ramp up.

Another place to spot the shift in repricing physical climate risks – weather related risk trading surged 260% in 2023.

 

Startups

There are a lot of random ways to win. But there are a number of knowable and specific ways to fail. Most of how we think about serving portfolio companies is centered on helping them avoid these, and we like this fresh take on the common blunders.

There is certainly an emerging area of blunders we’ll call “AI error” but for now it seems the robots are winning. And fundraising will likely always need a human touch.

 

Jobs & Opportunities

There have never been so many opportunities to work on climate. Here are a few interesting opportunities across our portfolio –

Shellworks is tackling plastic pollution and is looking for a founder associate.

Resonant Link is transforming how we power our world and looking for a Vice President, Hardware Engineering, Mobility.

Mill has transformed our relationship with food waste and is looking for a Launch Program Manager.

Gradient has reimagined heat pump design and installation and is looking for an Electrical Engineer.

All told there are 244 opportunities across 81 companies, including Lifecycle Marketing Manager, Senior Public Relations, Personal Injury Protection (PIP) Adjuster, Director of Customer Success and so much data science at Bowery Farming, Urbint, Miles, CYCLE, and Versatile.

 

Amplify

Worth noting that sometimes we agree 100% that an opportunity is amazing and it turns out well. Here’s a nice 10 year recap from Future Motion that helped us reminisce on one of the first and best decisions we made together.

We’re excited for Furno’s new investors helping them drive down costs and emissions in cement. Oonee keeps growing, adding multiple new cities. Kelvin is now kind of a big deal. Gradient is taking over (and freeing) New York windows. EvolOH took a $20M step forward for green hydrogen development. BloombergNEF interviewed Loamist about how they make it easier to discover waste biomass. And the Wasted team are part of the current 40 under 40 batch.

Climate Robotics is one of the top 20 finalists out of 3600 submissions, for $100mm XPRIZE Carbon Removal Competition. Shellworks introduced their reusable, food safe drinking cup, that doesn’t leave a trace when it’s finally tossed. No wonder they’ve won Innovation of the Year in Plastics-Free packaging in the  Dieline Awards.

Congrats to Climatebase for SF Climate Week. 7 days, 300+ events, 15k attendees. We had a blast.

 

Finally, here’s Shaun’s take on green premiums, the cost of inaction, and more.

 

Best,

the Third Sphere Team

 

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