You will never hear an investor say, “The addressable market is small, and the team is pretty weak, but I jumped into their Series A because their financial controls were on point.”
Financial controls are never a reason to invest. But a lack of financial controls is one of the many items that give investors pause. And that pause is time and money for any climate tech entrepreneur staring down the end of their runway.
Founders should consider financial controls as one of the many table stakes for building a scalable, enduring business. Get these items in order and then spend your fundraising time focusing on the important stuff–your team, technology, and market.
Investors love it, too, because they waste less time mired in diligence. A thoughtfully structured business speaks well of the founders and their ability to manage a business at various stages.
So, we’re heading to summer school! We’ll tackle a topic a week for 10 weeks. I’ve lined up the first 5:
1. Financial Controls
2. Board Building
3. Cap Table Management
4. The Goldilocks Data Room
5. Intellectual Property Strategy
I’ve got close to 15 other topics jotted on my notepad, but I welcome your input as to what the other 5 could be. And who knows, if this series is useful, we may take it well beyond 10! The first one drops tomorrow on ClimateHaven Insights. Stay tuned!
Remember those inspirational algae biofuel commercials? It turns out that algae may not save us. This week, a great article in Canary Media (I love those folks, by the way) highlighted algae biofuel’s cardinal sin: it takes more energy to create than it can produce.
Not here to pile on algae biofuel. As my dad likes to say, “The only way you’ll get a hit is if you swing the bat.”
But it makes me wonder: First, what is the next algae biofuel currently lurking in the climate tech ecosystem? Second, should our skepticism of certain technologies be automatically heightened when legacy institutions make big bets on them?
A climate tech founder wears a lot of hats. But here’s one of the most important: Chief Storyteller.
Oddly enough, it is also one of the most overlooked roles a founder plays in an early stage climatetech story. But let me tell you, with no revenue, a challenging product development plan, and an incumbent market that isn’t going to let go easily, climate tech founders better be darn good storytellers!
It also helps to have great marketing folks alongside you! That’s why we are hiring a Marketing & Events Manager at ClimateHaven. This is a critical role as we build our brand and tell the stories of ClimateHaven and the many startups that will call ClimateHaven home! Folks can apply at email@example.com.
Let me just say I’m a big fan of the Members Only jacket—a timeless classic.
Let me also say we are big fans of the startups who have already applied for a ClimateHaven membership. To those startups who haven’t applied, our membership application portal is now open, and we’re excited to review applications this summer in anticipation of welcoming our first startups into the incubator this fall.
You can learn more about ClimateHaven membership here. And if you’re interested in visiting our space in downtown New Haven or discussing the benefits of membership, reach out to Kiko Wong, our startup portfolio manager.
We couldn’t wait to announce our first member, Raise Green, who just so happens to be hiring for ClimateHaven-based roles and launching new investment opportunities with the OG’s of green banks, Connecticut Green Bank! Look for more additions to the ClimateHaven community later this summer!
A buildings-themed edition this week:
The percentage of U.S. greenhouse gas emissions coming from commercial and residential buildings when you include their electricity use.
Yes, that T is for Trillion, and that is the value of new construction put in place in the United States in 2022 alone.
The amount invested in built environment technologies in 2022. Venture investing in this sector is growing, but it is still dwarfed by venture investments in transportation, energy, and agriculture.
Buildings emit a ton of carbon, cost a lot to build, hold trillions of dollars of value, and face regulatory pressure at the state and local levels to decarbonize. Despite all of that, the amount of venture capital invested in building technologies is relatively small compared to the value of the real estate added. That signifies an opportunity to cultivate and invest in more building tech entrepreneurs–and an even bigger opportunity to deploy proven building technologies.
What is summer without a summer get-together?!?
We cordially invite all of you–our best climate tech friends–to a summer gathering (read: beer, wine, and networking) in late August at ClimateHaven. The Date will be announced in early July, and event registration will open shortly afterward.
We couldn’t resist at least one opportunity (maybe two!) to get together before our grand opening in the fall.
Speaking of fall–we’re assembling a list of must-attend climate tech events for the fall. If you have any suggestions, contact our Director of Strategic Event List Gathering.
Back to where we started. One of the other topics I hope to cover in summer school is setting clear milestones.
Most founders articulate the use of investor funds well. It tends to be a slide in the deck or a key talking point in a presentation. But milestones are often less clear. Where are you going to be at the end of this round? How does that translate into an increase in the value of your business? And based on that increase in value, who do you anticipate investing in your next round?
As an investor, it is that last question that I need to do a better job of answering myself. It is easy to get so excited about a promising team or their technology that you fail to adequately think about who will be there to invest in the company’s next round, especially when the business has unique capital needs. Those unique capital providers may not be readily available (re: first-of-a-kind project financing). Understanding how a company will finance itself in the future is equally important to determining if the right conditions exist (team, technology and market) to fund a company now.
Maybe I’ll head to summer school, too!
Until next time,