“I... drink... your... milkshake!” - Daniel Plainview, There Will Be Blood
There is no shortage of explainers and position statements amongst observers of the ongoing catastrophe in Israel and Gaza. But one thing is almost invisible - the corrupting role of oil money.
When we started to work on climate, a core hypothesis was that we might re-invent human systems to limit suffering (while aligning better with planetary systems). It was already clear that a changed climate would lead to accelerated flooding, storms and fire which in turn often lead to food shortages which have further consequences including political instability and conflict.
But the consequences of warming, pollution, and ecosystem destruction have never been the only risks from fossil fuels. Oil money also keeps a small group of unelected people in power. It funds oppression across the Middle East, Russia and Africa that barely even makes the news because the same money is flowing into PR and media buying, effectively stopping most critical media coverage. Oil money ultimately allows entire regions to opt out of dialogue, democracy and building economies beyond extraction. And more directly, this money funds conflict.
We’re all complicit because, conveniently, dictators and theocracies have kept oil prices relatively low and stable. There is no easy and brief history here, but The Prize unpacks how long and complex things are, and remains the best recap of how we got here.
So what to do?
Protest. Lobby. Fight. There is justification for almost all actions. But we choose to work with climate founders because sometimes the only way to fix a broken, corrupt system, is to build a new one. And the new systems can and will be free of fossil fuels, ending their corrupting influence. 10 years in, we're watching many portfolio companies completely change the landscape of what's possible. There is a lot to do and it will take speed and scale but a better future is possible.
10 Portfolio Updates
Here are 10 portfolio companies inspiring us with their rapid growth and impact.
Bowery Farming has led the way in indoor vertical farming but the category has been decimated with most startups shutting down around the globe. So how can we still be optimistic? Bowery hasn’t suffered from many of the issues like high energy prices or poor consumer branding. But even more importantly, there are multiple tailwinds. Bowery has been expanding into new product categories like berries and for the first time we’re seeing retailers willing to pay to avoid having empty shelves - a more frequent problem with climate change playing havoc with crop yields.
Cove Tool continues to define low carbon building design with the most used suite of tools in architecture and engineering beating out their incumbent competitors in the most recent industry reports. But more interesting is the team’s understanding of how to accelerate adoption first for sales automation and now by providing automations with AI.
Cycle is quietly growing into most major EU cities to make ebike fleets the easiest transportation choice. From bike lane infra to low cost and high performance, there are lots of tailwinds. And with the correction in VC, there are likely two main players left to compete. As we shared in Design for Finance, successful teams have to quickly unlock non-dilutive finance via partners, customers and off-balance-sheet structures. This is exactly what Cycle is doing. Recently, our long time collaborator and founder of URBAN-X, Esther Bahner, joined their board to help navigate some of the new brand and channel opportunities.
Earth Force, via on-the-ground data from field sensors, provides vegetation management to limit wildfires. Within the first 2 years, Earth Force has already deployed their first fleet and completely sold out current capacity. The team has previously built startups and operated large fleets of large and small vehicles but this is still a very impressive start, suggesting that the market is ready. At the same time we’re seeing rapid repricing of climate risk by re-insurers, which is likely to further accelerate demand.
Forward is one of the fastest growing companies we’ve ever seen. With their pandemic pivot, the team went from analyzing public programs, to running them. They went from early pandemic uncertainty about how to survive, to thriving as they run programs from e-bike rebates to flood recovery funding for small businesses. Lots of great program examples in Forward’s LinkedIn feed.
Future Motion just launched their latest Onewheel specifically for off-road EV adventures, the GT S. Only a few weeks ago, they conducted a recall of over 300,000 Onewheels. This took the form of an over the air firmware update of the kind you might have experienced with Apple or Tesla. How does this impact the brand? The Tesla model 3 and model Y are two of the most popular cars in the world. They’re also the most recalled. For Onewheel owners, the response was positive because the update included some completely new capabilities, effectively upgrading already purchased boards.
Kelvin (fka Radiator Labs) is a reminder that building startups can be humbling. During the pandemic they barely generated any revenues because they couldn’t access many buildings. Now they’re on track for another 300% growth year in 2024, driven by tailwinds like the IRA that now enables them to lease their heating system retrofits for older buildings. They’re now entering a virtuous cycle where volume drives down cost, which opens up more customer segments, driving further cost declines. More in Fast Company.
ReynKo makes virtual wind tunnels and testing tanks to help solve a ubiquitous issues in motion and energy efficiency: turbulence. ReynKo has solved this missing math of computational fluid dynamics that will thus allow their customers to skip building and testing physical prototypes, reducing R&D costs and allowing for faster development. The ability to do most hardware design in software has already transformed everything from chip design to architecture, however, fluids are the last challenge in this realm. This critical climate issue touches on a variety of projects with far-reaching application. From ship hull design to wind turbines, air defense to motorsports, ReynKo has only just begun their journey, but is already in late stage conversations with first application partners in areas like aerospace and energy. Here’s more on why we invested and here’s a presentation from the CEO that summarizes the opportunity well.
All of these companies are hiring. So are another 67 teams in our portfolio. Here are nearly 300 opportunities to work with them.
Design for Climate Finance
“Simply spectacular”
This was the feedback on our Design for Climate Finance event during NYC Climate Week last month. It was a very well received treatise on how climate startups can access more capital without more dilution. The core idea is simple - don’t use the cap table for most fundraising, a thing that pre-Internet Silicon Valley used to know how to do, and that climate tech is re-learning. You can see the deck and video here.
Fellows
We started our fellowship program during the pandemic. Our hope was to get help in areas filtering cold inbound pitches as well as specific diligence and research projects. What we hope to give back is helping fellows then find new climate investing or operating opportunities. Here’s how we’re doing after almost 3 years -
Quite a few fellows have gone on to full time investment roles. Elias Habbar is now climate investor at Cisco. Annalisa Ronaboldo is at NY Green Bank. Andrew Yi will continue climate investing at a large family office. Miela Mayer now works with Zeev on our credit platform. Jasmin Sadegh continues her ground breaking work at the World Bank.
Other fellows are going back to school or taking on operating roles. Kamya Jagadish is at HBS. Nicholas Lyos is working on his Yale MBA. Connie Wang is in the Salata Inst at Harvard. Ben White is now at Shopcore.
And we are excited to be working with three new fellows this fall. Dara Gill is a MBA/MS in Environmental Science candidate at the University of Michigan and is passionate about utilizing technology to help protect climate vulnerable communities. Christie Pitts is an experienced investor, with a deep understanding of working with early stage teams. Belle Tangkuptanon is a UC Berkeley student studying Business Administration and Industrial Engineering and Operations Research (IEOR).
Want to learn more about the program? Apply to the Third Sphere Fellowship. Please share with anyone who you think might be interested.
Newest Team
Teddy O’Hara joins Third Sphere team:
This past quarter, we welcomed Teddy to the Third Sphere team as Venture Partner. He will lead our efforts to drive value to our LPs, in addition to returns. As Third Sphere enters this next phase of evolution, Teddy will be a key part to our ongoing investor relations and expansion, investment strategy, firm growth, compliance, and impact alignment with our partners. Teddy joins us most recently from EQT Partners, and before that, StepStone Group, both based in their New York offices. After graduating from Colgate where he studied Political Science and Environmental Studies, Teddy lived in and around NYC, though you can currently find him in Boston or somewhere in between.
Jon Hallett joins as Venture Partner and LP:
It’s rare to come across someone with multiple successful startup exits who is also willing to show up and put in time to guide founders through the challenging moments that are a part of all startup successes. Jon sets the bar for how to show up for founders to help them be their best and get to the best outcomes. We’ve worked together as board members in specific companies like Future Motion and Rachio. Jon has introduced many deals, including Cove Tool, and transformative people like David Hardwick at Kelvin. It’s no accident that all of these teams are featured in this update. So we’re super excited to have Jon join us as an LP and as a Venture Partner.
Other News
A few recent opportunities to hear from us:
Stonly shared his origin story with Opportunity Miami.
Shaun shared insights and intelligence on the CLIMB podcast.
Shilpi was on stage at Verge (Day 3 video at 1:21:00).
Best,
Stonly and the Third Sphere Team
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You can find our previous updates here.