Suspended in a sunbeam in a vast cosmic arena

My perspective on investing in climate tech

Since joining the team at First Star Ventures in February 2019 I’ve been running down an instinct to invest in people and technologies solving climate change. That pursuit is the existential challenge of our generation, of my daughter’s generation. It is the single most impactful way I can think of to spend my time in this job (though if any First Star companies cure cancer in the meantime, we’ll take that, too). And it’s wild to me that we still have to say this out loud, but: there is an impossibly huge mountain of money to be made investing in climate-centric tech. We already pay – in countless ways – massive costs to deal with the effects of climate change after the devastation has been wrought; it’s way past time for proactive capital allocation and execution.

I’ve chosen to concentrate my efforts in climate tech, while we at First Star remain focused on pre-seed deep tech and new computing more broadly. So I’ve sought to answer for myself, “what climate change problems can we solve using compute as the core element?”

Climate change is a systems problem; we must understand every system to solve it

Humanity has, on the whole, gotten extremely good at designing/building/implementing relatively cheap, scalable sensing technology. And not for nothing, much of it is objectively cool tech: hyperspectral imaging scanners on drones, remote sensors on satellites, soil carbon/nitrogen chips, ocean floats/Saildrones, etc. The data those sensors generate, combined with new computing techniques like machine learning, help us understand and predict how the (changing) climate affects industries, and, in turn, how industries affect the climate. Far beyond just tracking GHG emissions, we must sense everything we can.

We’ve known for a long time that there exist loops between industry and climate, that each affects the other in turn. We can see the macro effects of these loops playing out in real time each day the Arctic takes longer to freeze and each time a coastal region’s economy is shattered by a storm we can’t insure against. By breaking down these planet-scale loops into smaller-system loops we can assess and act on root causes. Every climate change technology sector and their customers – from ocean analytics to energy efficiency in the built world to wastewater membranes to regenerative agriculture solutions to direct air capture and beyond – will require a first-order understanding of:

•   which climate/industry loops they directly affect and are affected by

•   where they sit within those loops

•   what that means for the technologies they should be building/deploying

To do that, climate tech founders are creating technology to establish their own loops – built and powered by compute – within and around those climate/industry loops.

The high-level loop we must build via compute (see above) consists of four key stages:

•   Sense (what’s happening?)

•   Analyze/understand (why is this happening?)

•   Predict (what’s going to happen?)

•   Act (what should we do about it?)

And repeat (what’s happening now that we’ve acted?).

See aquaculture as an example of an actionable loop: local ocean conditions affect fish farm operations, output and profitability; however, local ocean conditions are also affected by aquaculture sites’ operational decisions, feed mixes, fish mortality rates, etc. If we can solve these problems, we can accelerate an industry that has the potential to feed billions with cheap, clean, sustainable protein and sequester massive amounts of carbon in kelp and other biomass. The World Resources Institute has highlighted aquaculture as a critical area of focus to meet future global food needs, and improving the industry takes aim at Project Drawdown’s single most impactful sector of emphasis: reducing food waste.

Forests provide another recent commercial example of these loops in action. In September 2020, in announcing that the Norwegian government had awarded Planet Labs (among others) a contract worth up to $40M to remotely monitor forests, Norway’s Minister of Climate and Environment said, “Better insight into what is happening in the rainforests will enhance efforts to protect these priceless ecosystems.” He didn’t have to add: these are ecosystems that eat atmospheric carbon for us. How do we create balance and sustainability? We must understand what’s actually happening within these loops, what’s driving it, and how to address it.

We’re looking for founders building, informing and affecting the loops that underpin our ability to understand *and influence* the dynamics between industry and climate. We can’t create and deploy the right solutions to solve climate change unless we understand with great specificity: how, precisely, is each element of an industry affecting the climate, and with what second-order effects? And vice-versa.

In that vein, we led the pre-seed round for Scoot Science last year, and we’ve co-created Salient Predictions, among other climate-centric pursuits (we’ve also backed companies like Fyto, Zanskar, Bedrock Energy, EnPowered, and I’ve personally invested in Phoenix Tailings). I’ll write more about some of those companies – and how they fit into this framework – in the coming weeks, but we’re just getting started.

Climate change and its effects are only getting more volatile and harder to predict. Any predictive model is only as good as the data that feeds it, and we’re still in the early innings of collecting and using granular, actionable data on the physical world we inhabit. Our ability to “compute the real world” is nascent but improving quickly; we remain firmly in the age of discovery in this realm. Opportunity abounds.

These loops and the broader societal mission are baked into the DNA of entrepreneurs working to solve climate change. I’m optimistic; there is upon us a new generation of builders, people who are not only making better but doing good (and hopefully making a whole lot of money doing it). It is our privilege and responsibility to reinforce and accelerate those founders on the journey to a healthier planet and an improved humanity.

If you’re working/writing/thinking on something that touches any of the above, I want to talk to you about it. Please reach out: teddy (at) first star (dot) vc

Thank you to the (too many) people who helped me cut down on the noise in this post as it evolved, esp. my wife Nicole, Drew Volpe, Chris Tolles, Blake Mandell, Jason Jacobs, Rags Gupta, Shayle Kann, Will Manidis.