Catalytic Climate Companies

We invest in Catalytic Climate Companies that use technology to unlock critical resources, accelerating society towards an abundant and sustainable future.

At Spero Ventures, we broadly define critical resources as the building blocks needed to accelerate progress, change, and value. In today’s world, the foundational resources are data, capital, people, and natural resources. We are eager to back companies that are unlocking these.

Technology can unlock a critical resource and make it usable in a way that catalyzes a larger change. For example, Plaid unlocked access to bank information without which many other companies could never have been built. We see the potential for technology to serve this type of purpose in the broader climate space.

Technologies come in lots of flavors — software, hardware, blockchain protocols, proprietary biological or chemical processes, biotech platforms, etc. We’re specifically excited about novel technologies making it cheaper, easier, or more enjoyable to access and build with critical resources needed for sustainable future systems.

Data

Data will play a critical role in creating a sustainable and abundant future. New information that society didn’t value and therefore was not measured will become valuable, like carbon emissions, carbon captured, and battery efficiency to name a few. New technologies will also generate vast amounts of data that will need to communicate and coordinate in new ways — think distributed energy resources and future grid systems or electric transportation with smart city infrastructure. Access to accurate data at the right time in a cost-effective way will accelerate the ability to build new sustainable products, markets, and services.

A few examples of where data will be a critical resource:

• Carbon markets are going to be important. By some estimates, the market will be as large as $100b by the end of the decade. For any market to work though, they need to be trusted. For carbon markets to be trusted, we need trustworthy data on both the supply and demand sides of the marketplace. On the supply side, we need to ensure that carbon credits are removing and storing the emissions they claim to be storing. On the demand side, buyers need to better understand their emissions so they can take action. Market makers need to understand buyer and seller demands. And regulatory bodies need line of sight into market actors. Companies of all shapes and sizes will provide the data, infrastructure, and tools needed to build trusted carbon markets.
• Distributed Energy data. Historically we have had centralized power generation and one-way electron flows. We are moving towards a world where power generation is more distributed (i.e solar on Walmarts, EV chargers at home, and batteries in offices) and two-way electron flows (homes that consume energy can also add energy to the grid). That creates entirely new coordination challenges that require devices and operators to communicate in new ways. Having trustworthy, accessible, and secure data will be critical as our energy system transitions into the future.
• Smart transportation data. Transportation of all types is electrifying and getting smarter. A more sustainable transportation system likely looks different than what we have today: fewer cars and more public transportation, less private vehicle ownership and more autonomous vehicles, more electric transportation, and less traffic. Data will play a critical role in coordinating that future.

Capital

A lot of new technology, infrastructure, and services need to be built to make a more sustainable and abundant future a reality. Capital is a critical ingredient for building, and technology companies can play a role in making it easier to deploy capital at scale into climate-related projects and assets.

Examples of how technology companies are unlocking capital:

• Productizing historically labor intensive workflows. Software is great for this. In the project finance world, due diligence is a fairly consistent process but requires a number of specialized people to execute a deal. People are expensive and that impacts the kind of deals that can be done and the types of firms that can afford to do project finance. We’ve seen a handful of software companies, like Euclid Power, Banyan Infrastructure, and Raptor Maps, productizing some portion of the due diligence process. In doing so, they are making it cheaper for financial institutions to execute project finance deals. This opens the aperture of types of deals a firm can do, the volume in which they can do deals, and the types of firms that can do deals.
• Insurance plays a critical role in making assets and projects investible. For example, Energetic Insurance has developed a proprietary sourcing and underwriting platform that evaluates distributed energy projects. They are able to provide insurance products to project developers, which brings the cost of capital down and makes the project more viable. Kettle Insurance is building a reinsurance platform specifically for climate related events. Their superior underwriting ability allows them to offer better rates to insurers who can in turn pass those rates onto clean energy projects, businesses, and consumers.
• Alternative financing. For example, a number of progressive corporate entities like Stripe and Shopify have pioneered pre-purchasing carbon offsets from carbon removal project developers. In these agreements, they either pre-purchase future carbon removal offsets or make the commitment to purchase them. In the former case, they provide non-dilutive financing for the project developers, which allows them to scale faster. In the latter case, the pre-purchase agreement de-risks the projects and opens up traditional project or equity financing. Stripe and Shopify have invested heavily in building teams to vet these projects. Not every company can afford to do that. Companies like Evergrow, Sequestr, and Eden Dao are building technology to make it easier for more companies to participate in pre-purchase agreements, unlocking new capital. Similarly, there are a number of platforms like Patch, Wren, Flow Carbon, and Cloverly that remove friction in the carbon offset evaluation and purchasing process, thus bringing down the cost for companies to engage in carbon markets. Increased demand for offsets drives more investment in the supply side.

People

Behind all of the change to come will be people building and doing work. There will be a decades-long transition of the workforce into climate related companies, which creates a number of opportunities for technology companies, be it in upskilling and reskilling, education, job discovery, etc.

For example:

• Companies like ChargerHelp (EV infrastructure installation) and Workrise (energy workers) are building climate specific labor marketplaces
• Climatebase, Work on Climate, and Greenwork are building platforms to help climate companies and talent connect.
• Terra.Do and others are educating professionals and helping them transition into climate related careers.

Natural Resources

More abundant and sustainable future economies will value different and more sustainable natural resources and inputs. Technology companies will play a critical role in sourcing and producing natural resources.

For example:

• EV demand makes lithium arguably the most critical natural resource moving forward. Lilac Solutions has developed technology that can extract lithium from natural deposits of salt water brine more efficiently and in a more scalable manner than traditional processes. KoBold Metals applies modern AI techniques to predict the composition of a given subsurface, making the lithium exploration process cheaper and more scalable. The same will be true of natural resources like nickel, cobalt,
• Alternative foods. We need more energy and land efficient ways to feed humans. There are a growing number of techniques and technologies coming to market exploring new ways to produce the natural building blocks of food — proteins, fats, etc.. At the same time, we need to make traditional food systems more sustainable. Companies like Kula Bio and Nitricity are exploring cleaner and more energy efficient approaches to producing fertilizer, which is historically an incredibly energy inefficient and carbon intensive process.
• Hydrocarbons are the building blocks for many of the products we use in our daily lives — plastics, polymers, chemicals, and (of course) fuels of all kinds. Hydrocarbons largely come from fossil fuels. There are a handful of companies developing cleaner hydrocarbons using carbon from the atmosphere (or from point source capture) and hydrogen. These companies are producing a variety of hydrocarbon based products. For example, Twelve, Prometheus, and Lydian Labs are producing jet fuel

We need hundreds if not thousands of Catalytic Climate Companies and there is no better time to build one. If you are building one yourself, please reach out to stephen at spero dot vc.