“People with high expectations have low resilience. Unfortunately resilience matters in success.”  – Jensen Huang.

The Third Sphere Fellowship program is 2 years old and it has far exceeded our expectations. As we approach a new round of applicants for this summer, we wanted to share some reflections on the program. 

With an amazing pool of candidates, we try to find ways to reduce our own biases. We’ve settled on a selection process where one person on our team organizes our final round of candidates into a process to produce an anonymized response to a specific project prompt. Most of the team doesn’t see names, linkedin, etc. We score prospective fellows based on their written work to ensure we can create a meaningful collaboration during the four month program. There are some unsurprising credentials among the highest scores (i.e HBS, Stanford, Berkeley etc.) but there are a lot of folks with less obvious credentials in among the top few scores. 

We share our selection process, motivation, what fellows do and what our alumni are up to now (hint many are working in climate finance) in a full report on the Third Sphere Fellowship. 

Climate

Solar panels from Hyundai now cost less per square foot than fencing from Home Depot. Solar panels can also be used as a privacy fence and they have a longer warranty (30 vs 25 years). Did we mention they also make free electricity? Also, this year battery prices will decline another 50% versus 2023. Zero emissions, resilient electrons are expanding their lead over all other optons. 

Our regular readers will know we weren’t surprised to see the SEC approve watered down climate disclosures for public companies and offerings. Like many things in climate, a lot of time and energy is going to be spent to redefine “complete and truthful”. This has been a pattern as corporations have begun to retreat from climate action in sectors from automotive to real estate and reveal the limits of voluntary action. 

Climate risk disclosures and more will likely be needed to help avoid the next great financial crisis. You’d be wrong to think we’re pessimistic though – major tech transitions usually face incumbent last ditch efforts at delay via legal, public relations and political means. It’s the surest sign that legacy offerings are no longer competitive.  

Startups

It’s 1999 and 2001 at the same time. On the one hand AI is generating internet-era levels of excitement and the attendant eye-watering valuations and growth rates. And on the other, the 2021 hangover continues. So for many founders, they’re seeing investor hesitation and reversion. And it’s not just fewer deals and lower valuations. Only 6.6% climate funding rounds went to female founders in 2023 (by comparison, our Fund IV is tracking at 36% so far, improving a bit our historical 33% number). 

Bias concerns in AI are real because they persist in so many human activities. Our latest challenge is serial position bias – after seeing many variations around themes like EV charging, farming robots or carbon accounting, we become more negative as we move through each series. 

VCs no longer feel like the center of the climate finance universe. We’re seeing more teams bring in capital from more sources. It’s not just VC hesitation, but down and flat rounds are a reminder of the precarious position of common stock in the cap table shuffle. We’ve long tried to expand awareness of other funding options, but the biggest change in the last few months has been founder and early stage VC openness to the rest of the capital stack. 

We recently invested in Streamline who are leading the way to automate grant applications. And Fund 2 portfolio co, Perl Street, continues to build out the playbook for off balance sheet finance. 

Jobs, Asks & Offers 

Third Sphere Fellowship deadline is tomorrow March 15 2024. Don’t worry, it’s super fast to apply. Please forward this to anyone who might be a fit. As we described above, we’re much more interested in how folks respond to our written questions versus traditional credentials. 

Tell your friends – OneRoof continues to unlock what it truly means to connect with those around us. Onsemble is coming to your neighborhood in California to make it super simple to replace old gas-burning appliances with new electric alternatives. For friends anywhere in the world, you can trade-in your Onewheel’s for the Onewheel GTS! 

There are 229 opportunities to join Third Sphere portfolio companies. You might want to work with Mammoth to build supply chain resilience for CPG companies. Furno is looking for an R&D mechanical engineer to help them improve cement production while driving down emissions to zero.  Arbor needs lots of help rapidly scaling their digital consumer energy platform. There may have been turmoil in indoor ag, but Bowery isn’t slowing down. They have open roles for everything from SCADA engineers to growers. There are also 10 roles to help Mill cut organic food waste. And Pallon has multiple computer vision roles to automate inspection of urban drainage systems – we cant manage more rainfall, if the stormwater systems aren’t working. 

Third Sphere News 

Kelvin was featured in Fast Company announcing their $100m off balance sheet facility and is a 2024 Pioneers finalist for building decarbonization.Mill hit a number of milestones in changing the value of waste: they have already improved their bin and their processed organic waste is approved for use in chicken feed. Furno shared a major update on their super-efficient, modular kilns and announced their $6.5M seed round. Loamist laid out their plans in a BNEF interview to make it easier to match biomass supply and demand in the US. 

After very successful 2023 proving out their operations in Vermont, Wasted launched in Boston.  Oonee has made impressive progress winning contracts and getting deployments done that companies 10x their size would envy. And they did something that we wish more startups would do, they publicly released their annual report! HAAS Alert had a major month of announcements including expansion to Japan, EU, UK, and new service to include physical risk alerts.

Stonly met VP Harris. And Yana wrote on finding work life balance. 

Best,

Third Sphere Team

P.S. Say hello at Climate Week in SF. Excited to support the team at Climatebase in their efforts to make this year’s event even better.