It’s easy to be cynical. With the climate crisis apparently unfolding more rapidly than expected, increasing amounts of VC money are being directed towards climatetech and greentech startups. No surprises there. Big problems create opportunities for those with solutions.
So where does cynicism enter the picture? Well, perhaps it would be better described as healthy skepticism. If you spend any time talking to climate entrepreneurs, it’s hard not to get enthused by their commitment to addressing the carbon crisis. But there are always questions. Beyond the elevator pitch, does this venture really have the potential to genuinely address the problem and can it be scaled to the point where a difference can be made? More generally, is it reasonable, fair or realistic to expect entrepreneurs to play a significant role in solving a global problem that has its roots in the industrial revolution of the 18th and 19th centuries?
Dr. Nicky Dee believes that entrepreneurs have a crucial role to play in helping to mitigate the climate crisis. At the same time, however, she stresses startup founders must be robust in determining what their real impact is likely to be. That’s not always straightforward.
Along with Dr. Chris Coleridge, Dr. Dee is co-founder of Carbon 13, a venture-building program based in Cambridge, England and Berlin. Like other venture builders, the organization selects, supports and invests in teams, with the aim of creating viable and effective businesses. To date, Carbon 13 has invested in 46 companies. On current estimates, the organization projects that these businesses can collectively mitigate 400 million tonnes of greenhouse gases (defined as CO2e) annually.
Agents Of Change
As Dr. Dee sees it, entrepreneurs are “agents of change.” At least they can be. Winding the clock back to 2019 she recalls a growing sense of frustration about how entrepreneurship was perceived. “I got tired of people talking about billion-dollar startups,” she says. “Too often, these conversations were devoid of purpose.”
Carbon 13 was a response to those frustrations. Like other venture builders, its role is to bring people together, helping them to formulate and implement business ideas. Sometimes would-be founders come into the program with ideas that might form one element of a business – say a technology solution – and are teamed up with others who bring a different set of commercial skills. In other cases, the ideas themselves and the teams are created in-house.
But as Dr. Dee explains, it’s not simply a case of turning out ventures that may or may not fulfill the stated purpose of reducing greenhouse gas emissions. Central to the operation is a rigorous approach to assessing impact.
Assessing Impact
“If you don’t think about impact in a robust way, you can end up having an impact that is the opposite of what you intended,” she says.
To make the point, Dr. Dee cites Vegetarian burgers. At first glance, these appear to be climate-positive, but that might not be the case. Yes, you use a lot less carbon producing a vegan or vegetarian burger in comparison to the meat equivalent but that’s not necessarily the whole story. For instance, what if sales of vegetarian burgers rise without any parallel fall in meat burger sales? That could imply they are being eaten as a substitute for fresh vegetables. In that scenario, the net effect could be a rise in emissions. Thus, establishing the true impact requires analysis of a bigger picture.
Dr Dee says the impact on greenhouse gases is always looked at in the round as ventures are being created, with the necessary tools supplied as part of the program. One important principle is “additionality.” Essentially this means that any carbon mitigation should be additional to what would be happening anyway if a venture didn’t exist.
With the additionality factored in, Carbon 13 sets its ventures the target of mitigating at least 10 million tonnes CO2e per year.
Mixed Backgrounds
Although based in Cambridge, the teams are not necessarily drawn straight out of university graduate or postgraduate programs. In fact, the average age of founders is 36/37. About half come from a technical or scientific background, with the rest having commercial track records. Some are traditional entrepreneurs who are now drawn to Net Zero ventures.
So what does a Carbon 13 alumnus look like? Dr. Dee cites a couple of examples of businesses with the potential to scale and combat the climate crisis.
Nium has developed technology to produce green ammonia. Important in food production, ammonia is nonetheless highly polluting when produced in the traditional way. Brought together by Carbon 13, founders Phil Hunter, Lewis Jenkins and Yubiao, Nium’s founding team combines commercial and scientific skills. In June of this year, the company raised $3 million to continue the development of its technology.
The second example, Bluemethane has developed a capture technology, initially designed for use in hydroelectric power plans. As the name suggests, it extracts methane from rotting vegetation at the bottom of lakes and reservoirs. The company has raised $535,000 in a Seed round.
For its part, Carbon 13 invests at the pre-seed while putting companies in touch with later stage investors.
With team-building cohorts in Britain and Europe, plus an accelerator for established teams, Carbon 13 is seeking not only to build net zero-focused companies but also accurately identify the impact. This is likely to be an increasingly important theme within the climatetech industry.
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