“If you stop at general math, you’re only going to make general math money.” – Snoop Dogg.

 

Our newest playbook is about exits in climate tech. Why?

Climatetech is now 10x invested since 2021 compared to cleantech 1.0. While some mistakes are being repeated and there are notable failures, there are also some fast growing, even profitable climatetech startups. The last required step for private investors to keep investing in climate, is to turn paper gains into cash. The stakes could not be higher – if we fail, we risk a rapid departure of private capital from climatetech in the coming years. And this means we’re certain to miss our climate impact goals. 

The goal of this playbook is to explore what exit strategies are emerging for successful climatetech startups. We’ll meet during NYCW to share our findings and connect leading founders, investment bankers, PE, corporate development teams and climate VCs. Request to join here.

 

Climate

The good news is BP is projecting the world will reach peak oil as early as 2025. China’s emissions appear to be peaking well ahead of 2030 goals, driven by reduced coal usage and massive renewable energy deployment. US solar production surged by 25% in just one year. Batteries can only get cheaper and heat pumps are on a race to maximum efficiency. 

The bad news is this year’s floods and other disasters seem like the new normal for physical damage from climate. Sadly you can just do a find-replace for the city names and you will see many similar stories. Not surprisingly, adaptation-related language is increasingly present in financial markets — more than 11% of publicly traded entities in developed markets could be considered adaptation solutions. Maybe there is an investable company making Dune stillsuits?

A new dataset studying homeowners insurance found a sharp 33% increase in average premiums in the last few years. We’ve talked about insurance leaving markets or getting prohibitively expensive due to increased weather and fire risk, but what if you’re covered and insurance still won’t pay your approved claim? 

 

Startups

AI is opening opportunities to redefine product offerings. The evolution from hardware licenses to SaaS is now shifting towards AI-powered problem-solving services, potentially disrupting traditional SaaS.

Fundraising success doesn’t guarantee product-market fit. This cautionary tale highlights the importance of shipping products customers will buy, especially given the current challenging fundraising environment. 

Looking for ideas to build for resilience and adaptation? Here are 28 from a White House report.  

Since we’re all political now, thank you Biden-Harris Admin for making immigration significantly easier for founders.

 

Jobs & Opportunities

NYC DOB and The Partnership Fund just launched the Buildings Tech Lab. Chicago Booth’s “Entrepreneurial Selling” course offers early-stage startups free MBA student support for 7 weeks, providing valuable sales resources and market analysis.Here’s an opportunity to pitch to Con Edison and their 10 million customers. Applications are open for the 2024 Environmental Tech Lab Challenges.

 There are 192 opportunities across 82 companies in the Third Sphere portfolio.

 

Portfolio News
M&A isn’t just for exits. Prudent cash management and clever dealmaking, is allowing quite a few of our portfolio companies to grow through acquisitions. These 3 deals are now public – Cycle has acquired Ebike4Delivery to expand its last-mile delivery platform likely making them the largest e-bike leasing company in the EU; Urbint Acquires WRM Software to Expand Utility Risk Offering into Storm Response expanding their support for utilities; Kiwibot buys Taipei chipmaker, Auto Mobility Solutions as they look to consolidate their lead in robotic delivery in a growing number of geographies.

Beyond M&A, Plentify raised an oversubscribed round. Firmus had a successful raise as well.

FastCompany gave Kelvin an Innovation by Design award. Gradient got the Undecided with Matt Ferrell treatment. Miles soared to Top 15 in Lifestyle Apps on US App Store and Future Motion / One Wheel is now a cult icon according to the New Yorker

 

Third Sphere News

We’re very grateful to have closed our fund during a time when there are so many talented founders deciding to focus on climate. We’re super excited about new and returning LPs including Citi, Cisco Foundation, Builders Vision, Allianz and more.

We’ve also updated our fundraising playbook for founders – we’re onto V4. What’s changed? The last major update was during COVID, when money was cheap and growth at any cost, was in fashion. V4 has more on managing existing investor relationships. And there is more on running multiple fundraise plans like a bridge, traditional VC, non-dilutive and strategic (investment or M&A). And we have some reminders on cap table math.

 

Best,
the Third Sphere Team

 

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