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A Climate Tech VC Shares What You Need to Know About Funding

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Paul P

Published on

February 09, 2023

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As the climate crisis accelerates, you might be one of the growing number of people who are deciding to leave a job in another field to focus on the problem—and launch a climate tech startup of your own. But if you haven’t started a company before, it isn’t necessarily clear how the funding process works. To take a look behind the curtain, we talked to Mia Diawara, a partner at Lowercarbon Capital, a climate-focused VC fund that has backed a wide range of new tech, from plastic-eating enzymes to “bio oil” that can be pumped underground to store CO2.

Diawara shared what Lowercarbon’s team looks for when they meet founders, and the gaps that new startups can help fill. Even in the current market, it’s still a good time to get started: While investing is slowing overall, money is still pouring into climate tech startups. Since the beginning of last year, more than 130 new climate-focused funds have launched, with billions of dollars in funding ready to deploy.

Fast Company: If someone is interested in pivoting to climate tech and potentially starting a company, where do you think they should begin?

Mia Diawara: Two words: Climate Draft. Check it out to ramp up on climate tech, connect with current startups in the space, and tap into the climate tech community. 

Generally, though, I would encourage anyone thinking of founding a climate tech company to ask themselves three questions: 1) What are your superpowers and how might they shape the type of company you’re best positioned to build? 2) What are the biggest gaps in the landscape that need more attention and innovation and the largest categories of emissions going unaddressed? and 3) Are you ready to devote the next decade of your life to living and breathing this? Does it bring you joy, get you fired up, is it just about all you can think about?”

What are the gaps that you see in climate tech now? What are some areas that need more attention and new solutions? 

One of our investment areas at Lowercarbon is buying more time for communities and ecosystems on the frontlines of the climate crisis. We have to face the fact that we’ve already locked this planet into 1.2 degrees Celsius of warming and, in doing so, have locked billions of people—primarily the most vulnerable among us who are also the least responsible for this state of affairs—into devastating consequences. Scalable technology is one of the few things that can help mitigate the impacts of things like extreme weather, reduced crop yields, water insecurity, etc. The whole realm of adaptation and resilience needs more attention and innovation, and it’s an area we’re excited to keep backing.

How are you finding the startups in your portfolio? 

Relationships play a big part: Many of the introductions to founders we’ve partnered with come in from people in our networks—from limited partners, founders in our portfolio, from fellow investors, etc. We’ve worked to actively deepen connectivity with the academic institutions and labs that groundbreaking tech emerges from, and with entrepreneurs in geographies that are less represented in our portfolio right now. But for the most part, founders find their way to us because we’ve built the leading brand in the space, and they trust us because we can speak their language and share their mission. The backgrounds of folks on our team are far from the norm when it comes to venture; for the most part, we’re science nerds, engineers, policy wonks. . . . We’re climate folks through and through, and that’s intentional; it shapes the communities we’re tapped into, and it means we deeply understand the technologies founders are building and the markets they’re selling into. 

When you get an email from a founder, what are you looking for? What makes you want to learn more about a startup and set up a meeting?

When I’m deciding whether or not to take a first call with a founder, I’m looking for four things: 1) Stage fit—we like to partner with teams early, generally at the pre-seed or seed stage of company building. 2) Thesis fit—we’re looking for founders making products that are better, faster, sexier, cheaper than the carbon-intensive incumbents. 3) Climate impact—founders should be tackling industries that represent a big chunk of global emissions, or areas where the impacts of climate change will be most significant. And 4) storytelling/communication—founders need to understand and be able to communicate in clear, compelling terms why now is the time, and why they have an unfair advantage that makes their success inevitable. Being able to nail the delivery of those two points is a proxy for a founder’s ability to sell their product further down the road.

What are examples of the types of questions you ask founders? 

  1. Why now? What’s changed in the past few years that makes your technology and business possible now? 
  2. What’s your unfair advantage? If the answer is “me/our team,” why are you one of 10 people in the world who could build what you’re building? 
  3. If you succeed, how will that affect concentrations of greenhouse gases in the atmosphere?

If you’re interested after a pitch, what are the next steps, and how long does it typically take before a startup could get funded? 

We pride ourselves on our ability to move quickly. We’re nimble and flexible: Our investment committee can meet late on a Friday night if needed and generally, we move through our diligence process on the order of weeks, not months. Sometimes, things can take longer than that if it’s a space we’re learning about for the first time, but other times we can make an offer 24 hours after meeting a founder if that’s what’s required to win.

Any other advice you’d give early-stage founders?

First, get feedback early and don’t let a “no” discourage you. This is a field that requires grit and tenacity and the sooner you get real about red flags in your business model or tech, the more quickly you can pivot to something that has a real shot at healing the planet. 

Second, and most importantly, there has never been a better time to start a climate tech company. Get building! And once you do, reach out.

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