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Zero Emission Investing - A Brief History...

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We are in a period of urgent optimism when it comes to climate investing. To make the best of the critical years ahead, we have to learn from our past.

https://twitter.com/rypan/status/1223746586984865794

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Presented on January 30, 2020 at a summit hosted by the Environmental Defense Fund.

Published in: Environment
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Zero Emission Investing - A Brief History...

  1. 1. Zero Emission Investing Ryan Panchadsaram Advisor to the Chair ryan@kpcb.com
  2. 2. Our North Star
  3. 3. Zero Emissions
  4. 4. At Scale
  5. 5. Sectors Electricity 25% Agriculture & Land Use 24% Industry 21% Transportation 14% Buildings 6% 55 gigatons CO2e/yearly
  6. 6. Stages of Innovation Idea Product Development Commercialization Scale Seed Series A Series B Series C+ Project Financing
  7. 7. History Optimism Carnage The Wake Urgent Optimism Nascent
  8. 8. Investing was nascent until oil prices rose and attitudes started to change $141 $92 $75 $52 $36 $25 $35 $30 $39 $14 Dollars Per Barrel of Oil Dig Deeper @ EIA.GOV
  9. 9. Seeing opportunity - founders started companies and optimistic investors poured in capital >$3B >150 deals $4B >200 deals >$6B >300 deals >$1B <100 deals # of deals $Bs invested Dig Deeper @ BROOKINGS.EDU
  10. 10. By 2011, nearly every startup founded during this period had shutdown or was in shambles Year of Series A 2006 2007 2008 2009 2010 2011 Failed to Return Capital 80% 86% 99% 100% 91% 100% Why? Dig Deeper @ ENERGY.MIT.EDU
  11. 11. Subsidies were never sufficient to give the renewable sector the lift it needed Historical Average of Annual Energy Subsidies $4.86B $3.5B $1.08B $0.37B Dig Deeper @ DBLPARTNERS.VC
  12. 12. In the wake,early stage investing plummeted ~$1B >100 deals Dig Deeper @ ENERGY.MIT.EDU
  13. 13. Investments shifted to later rounds and to project financing Dig Deeper @ DATA.BLOOMBERGLP.COM
  14. 14. Some companies funded during the period survived and thrived $7.3M $111B 15,291x $1.1B $4.8M $8B 1,679x $300M $5.2M $4.2B 805x $102M $39.6M $3.2B 80x $96.6M $27.5M $2.1B 76x $16.7M Data from CapIQ and Pitchbook 2003 2009 2006 2010 2007
  15. 15. The effects of over emitting into the atmosphere are being felt across the globe 1.Second warmest year, warmest month, and warmest decade on record globally 2.India’s wettest monsoon in 25 years replenishes reservoirs but kills 1750 people 3.Near-record melting of Arctic sea ice 4.The long-feared permafrost carbon bomb may be exploding, says NOAA
  16. 16. Today, we are in a period of urgent optimism. From <$6B to ~$10B 2000-2004: 2.0% 2005-2009: -8.3% 2010-2013: 11.4% 2014-2017: 26.1% Dig Deeper @ DATA.BLOOMBERGLP.COM Dig Deeper: CAMBRIDGE ASSOCIATES.COM
  17. 17. There are new and existing funds supporting early stage investments. ...and we need more.
  18. 18. Hard Lessons Be ruthless in removing key risks You are always raising money; syndicate Unit economics rule commodity markets Own the customer relationship Buyers expect superior products (no compromise) Policy accelerates and sustains change Incumbents will fight; some adapt; some die We all need to play our part
  19. 19. Links & Photo Credits Slide 8 - Cushing, OK Crude Oil Futures - EIA.GOV Slide 9 - Cleantech venture capital: Continued declines and narrow geography limit prospects - BROOKINGS.EDU Slide 10 & 12 - Venture Capital and Cleantech @ ENERGY.MIT.EDU Slide 11 - What Would Jefferson Do? - DBLPARTNERS.VC Slide 13 & 16 - Clean Energy Trends 2019 - DATA.BLOOMBERGLP.COM Slide 14 - Data from CapIQ and Pitchbook Slide 15 - The Top 10 Weather and Climate Stories of 2019 - Scientific American Photo by USGS on Unsplash Photo by Mike Setchell on Unsplash Photo by Marten Bjork on Unsplash Photo by Antonio Garcia on Unsplash Electricity - Photo by Gibson Hurst™ Agriculture - Photo by Ales Krivec Industry - Photo by eddie howell Transportation - Photo by RayBay Buildings - Photo by Sean Pollock on Unsplash Thank you for all the research help Quinn Marvin! Slide 16 - Clean Tech Company Performance Statistics - Cambridge Associates

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