Until recently, climate tech was either called “cleantech”, and often bundled with “impact” investing, or buried within various categories and tech stacks. Since 2020, though, interest and investment in the category has surged. More VCs than ever branded themselves as climate tech specialists and many went further, focusing on just one or a very few sub-verticals. In 2022, 198 VC firms qualified for CTVC’s list of the “…core group of firms actively investing in climate tech theses,” up from 177 in 2021.
But what do vertical specialist climate tech VCs know that generalists don’t? What are the benefits of specialization for their firms and portfolio companies, and what are the challenges of being so focused? At the SOSV Climate Tech Summit (Sept 26-27 / free & virtual), we turned to three prolific climate tech VCs for answers.
Founded in 2012, AgFunder specializes in food and agriculture, a climate tech space that raised nearly $30 billion last year. Highlights of AgFunder’s portfolio include MycoWorks, maker of mycelium leathers with $187M in funding (also backed by SOSV), Nobell, maker of plant-based cheese with $100M raised, and Atomo Coffee, which has raised over $50M to make coffee without coffee beans. The San Francisco-based firm also operates AgFunderNews, which has become an important source of analysis in this space. Rob Leclerc, PhD, Founding Partner of AgFunder, joined the panel.
Fifth Wall, a real estate tech VC, manages the world’s largest fund for the “built environment,” which accounts for up to 40% of global CO2 emissions. Founded in 2016, Fifth Wall has over $3.2B in AUM and estimates that its current portfolio will save 3 billion metric tons CO2e over its lifetime. In 2023 alone, Los Angeles-based Fifth Wall has joined a $96M investment in SPAN (smart electrical panels; featured in our Grid discussion) and led a $16M round for nZero (carbon management and accounting) and $300M raise for Our Next Energy Inc. (EV and grid energy storage). Greg Smithies, Partner at Fifth Wall, joined in.
S2G Ventures’ Ocean Fund is a division of Chicago-based S2G Ventures, a climate tech VC with $2B in AUM. It is among the first funds to focus exclusively on the so-called “blue economy.” The $100 million Ocean Fund has invested in three animal-free seafood companies—Avant Meats, The Plant Based Seafood Co., and Wildtype—as well as Brilliant Planet, which sucks up carbon with algae pools in the deserts (see last year’s carbon removal panel). Kate Danaher, Managing Director of S2G Ventures Ocean Fund, joined the discussion.
Katie Fehrenbacher, Climate Tech Deals Reporter at Axios, moderated this conversation.
Is ever-narrower specialization the future of climate tech investing?
Dr. Rob Leclerc
Dr. Rob Leclerc is a Founding Partner at AgFunder, one of the world’s most active foodtech and agtech venture capital firms. Rob is a Forbes contributor and has also been published in TechCrunch, Harvard Business Review, Financial Post, and twice in Nature journals. Rob has been invited to chair, speak, and keynote at dozens of global conferences on food & agriculture, technology, and fintech. Rob has been interviewed by Bloomberg TV, CNBC (TV), Wall Street Journal, Forbes, LA Times, TechCrunch, Entrepreneur, FastCompany, and Reuters. He has five degrees, spanning Philosophy, Computer Science (AI/Virtual Robotics), and Computational Biology, including a PhD from Yale University.
Greg Smithies is a Partner at Fifth Wall, where he co-leads the Climate Technology Investment team. Prior to joining Fifth Wall, Greg was a Partner at BMW i Ventures where he led the Sustainability investing practice, investing in companies such as Prometheus Fuels and PureCycle (NASDAQ: ROCH). Before joining BMW i Ventures, Greg led Finance & Operations for both The Boring Company and Neuralink simultaneously. Greg started his investment career at Battery Ventures where he covered early-stage enterprise technology startups, as well as industrial technology buyouts. Successful exits from his work there include Nutanix (NASDAQ: NTNX), AppDynamics (acquired by Cisco System, Inc.), and IST (acquired by Scott Brand). Greg was born in Pretoria, South Africa and currently lives in Oakland, CA. He graduated from the University of Pennsylvania’s Wharton School where he received a BS in Economics and a BS in Computer Science.
Kate Danaher is Managing Director of S2G Ventures’ Ocean Fund. Kate has worked at the intersection of impact investing and sustainable food and agriculture for over ten years. Prior to joining S2G Ventures, Kate was the Chief Lending Officer at RSF Social Finance, where she oversaw the capital deployment strategy to evaluate products, investment sectors, and growth objectives in alignment with the organization’s strategic plan. She is a food and agriculture finance expert who has specialized in the US food system, fair trade supply chains, and consumer-facing brands. Kate received her MBA through the Global Social and Sustainable Enterprise program at Colorado State University.
Katie Fehrenbacher has been a journalist covering climate tech for over 15 years and is currently the climate tech deals reporter for Axios. She formerly worked for Fortune, Gigaom, Red Herring and GreenBiz.