The Launch of a Generalist Cleantech VC
Today, my co-founder, Tom Rand and I announced we’ve raised $200 million for our second cleantech fund at ArcTern Ventures, a fund we launched together in 2012 at a low point for the sector. Raising capital for a cleantech venture fund following Silicon Valley’s initial foray and blow-up in the sector was a huge challenge, but fortunately we were both ex-startup entrepreneurs with just the right level of naivety, vision, and persistence. Most importantly, we were able to find an incredible group of investors who aligned with our vision and were willing to make a bet on a new fund team.
We can’t thank these early investors enough and will continue to deliver on our vision of positive environmental impact and outsized returns.
At the time, the opportunity was obvious. Greenhouse gas emissions were not being addressed with urgency by politicians and business leaders, and ultimately the challenge would demand breakthrough technologies and solutions to ‘fill the gap’ created by inaction. This was an opportunity to do our part to address humanity’s existential climate challenge while generating wealth for visionary and patient investors. In capital markets, when you solve a big problem, you get big reward … the climate crisis is the largest problem humanity has faced.
Since 2012, the climate and sustainability problem has only worsened. The pace of GhG emissions has not slowed, the plastics problem in our oceans and waterways has continued to proliferate, and extreme weather is the front page story. We are entering uncharted territory. The last time the Earth experienced a comparable concentration of CO2 was 3–5 million years ago, when the temperature was 2–3°C warmer and sea level was 10–20 meters higher than now (source: World Meteorological Society)
The only positives are the growing urgency from governments and corporations around the world to solve the problem, and the breakthrough ideas coming from passionate and environmentally conscious innovators.
We at ArcTern are corresponding looking to move faster and bolder with our Fund II. We have refined our strategy with a greater focus on massive scaleability and speed-to-market. We are building a rock star team that aligns with this vision and striking new relationships with leading partners in this space.
We believe cleantech is no longer an investment sector. Just as the internet started as a nascent and emergent investment sector, it now underpins the modern economy. Similarly, cleantech has evolved and must become pervasive. Every business across every industry that hopes to survive and thrive must today consider how it will achieve net zero emissions and full circularity in its business model. Even pure software companies are striving for zero impact (and in the case of Microsoft, planning to erase its lifetime CO2 footprint … applause!).
Therefore, today, we view ArcTern Ventures as a generalist VC investing in future industry leaders that embrace cleantech and sustainability as a source of competitive advantage. Cleantech’s first venture round was launched (unsuccessfully) by Generalist VCs into Cleantech; Cleantech today is being launched by Cleantech VCs going General.
We hope others will follow, as Mother Nature needs more Generalist Cleantech VCs.
