Why Toniic members invested in Virta Ventures

The cost of hardware and capital-intensive climate solutions have plummeted to parity with carbon-intensive alternatives. Solar and wind have reached grid parity around the world in the past decade, the cost of lithium-ion batteries has fallen by 97% over the past 30 years, EVs are on the verge of cost parity with ICE cars, and regenerative agriculture projects across the U.S. have demonstrated financial returns at or above traditional farming.

These rapidly falling hardware costs are the result of sustained and growing investment over decades. But investment in software-centric solutions hasn’t kept pace. The result: ballooning soft costs in the development and management of hardware, significant friction in the deployment of hardware, and inefficiencies and waste across all climate sectors.

The planet is warming at an unprecedented pace. Rapid decarbonization is essential to maintain a habitable Planet Earth for current and future generations. While trillions in hardware solutions can help us decarbonize and get to where we need to go as a society, we also don’t have a second to lose.

Hardware without software as an accelerant is time-consuming and costly to adopt and scale. Software and other equity-light solutions can solve this problem, making fixed assets more profitable by lowering costs, increasing revenues, speeding up deployment, increasing utilization, and optimizing performance. Because of this, equity-light solutions can have a swift and broad impact during this critical period.

Hardware takes a long time to scale up: it took Tesla nine years to launch its first mass-market product, and it took Rivian twelve years to launch a product of any kind. On the other hand, equity-light solutions take far less time and money to develop, get to market, and scale than hardware. We don’t have the luxury of time given our climate crisis to wait for commercial success of climate tech hardware solutions. Society needs creation of and investment in equity-light solutions today that can be developed and deployed faster and more broadly across industries, sectors, and climate tech assets.

Now is the time to invest in equity-light climate solutions. They present a massive, differentiated opportunity. For many years, several climate sectors, particularly energy and transportation, weren’t big enough for venture-backed software businesses. They are now — and will only continue to grow, with unparalleled support from both the public and private sectors. It’s estimated that in order to reach net zero by 2050, cumulative capital spending on physical assets will be $275 trillion. Equity-light businesses can capture 10–20% of that.‍

Equity-light businesses are more capital efficient than hardware and are more likely to survive challenging macroeconomic environments, at a time when capital is scarce at all stages of venture. Advances in AI also accelerate the creation of equity-light businesses. AI reduces friction points in human-software interaction, enables the disruption of under-digitized sectors of climate tech, and exponentially lowers the cost of building software. All of this underscores the potential for enduring equity-light climate innovations that drive value creation and positive change to emerge from this point in time.

Virta Ventures

Virta Ventures works to invest in equity-light climate tech innovation during this crucial period. Deploying initial investments of around $200K — $400K in equity-light B2B business models that are digitizing and decarbonizing energy, transportation, the built environment and agriculture, Virta is uniquely positioned to execute on their equity-light climate tech thesis. Virta intends to back “winners” in the equity-light climate tech space that will make up a meaningful portion of the 300 “decacorn” and 1,000 “unicorn” climate tech companies expected to emerge by 2030.

Virta was founded by Russell Sprole, a climate tech veteran with 15 years of operating experience in the space at companies like Full Harvest (CFO), Stem, Sunpower, and Soligent, and prior investing experience with investments in climate tech companies like Convex, Omnidian, Banyan Infrastructure, and Living Carbon. He is supported by a network of investors and advisors with a collective 200+ years of experience, 14 companies founded, and $6.5B in enterprise value created. As one of the only early-stage equity-light climate tech funds with deep operating experience in climate tech, Virta stands out as an early-stage fund uniquely positioned to support founders building equity-light innovation from seed through growth.

Virta’s competitive advantage is in its focus on coaching before capital, helping founders through coaching even prior to deploying an investment. This approach builds an unique advantage for Virta when evaluating prospective investments: working directly with founders through coaching at the earliest stages allows Virta’s team to assess founders’ motivation, mindset, and ability to execute at the highest level. Coaching also builds Virta’s trust and rapport with founders even before investing, reinforcing Virta’s ability to win high-quality deals in the climate tech space. Following investment, Virta provides to startups further coaching and insights from climate operator experience, as well as introductions to investors and high-leverage partners from Virta’s expansive network in climate.

Since launching in December 2022, Virta has invested, alongside top-tier specialist investors like Autotech Ventures and generalist investors like Pear VC, in eleven outstanding companies: Tyba, Fractal, Sunthetics, Treehouse, Amber, Plug, Blackcurrant, Fleet, Goodlynx, Lumina and a stealth company in sustainable construction tech. Six of the eleven companies in Virta’s current portfolio have already raised capital at higher valuations.

Portfolio Examples and Virta’s value add:

Treehouse

Treehouse simplifies residential, commercial, and fleet electrification through software-enabled Installation-as-a-Service. Through AI / ML tools to automate quoting, scoping, design, and permitting and operations as a vertically-integrated electrical contractor, Treehouse delivers a differentiated customer experience to electrification customers.

How Virta Added Value:

In addition to advising the Treehouse team, Virta leveraged the fund’s deep network in climate and beyond to introduce Treehouse to an early dealer partner, a fleet partner, and multiple investors.

From Treehouse’s Co-Founder and CEO Eric Owski:

“Russell has been an invaluable investor and advisor to Treehouse. His advice is thoughtful and considered. He is one of a select group of investors who really take the time to understand the finer points of what we’re building. He has an incredibly diverse network and has matched us with both investors and high leverage partners and he’s my go-to for advice on clean tech.”

Tyba

Tyba is building the AI modeling platform that improves how market-leading developers, IPPs, and asset management funds use models to make crucial infrastructure decisions. Tyba’s comprehensive modeling capabilities support energy companies in development, financing, and operations with the goal of helping energy companies scale and hone their internal capabilities to build and operate more projects, more profitably.

How Virta Added Value

Prior to investing in Tyba and following, Russell served as an executive coach to Co-Founder and CEO Michael Baker. Virta also introduced Tyba to their lead pre-seed investor, as well as to customers that now represent 6 figures in ARR.

From Tyba’s Co-Founder and CEO Michael Baker:

“Russell is the investor you can always count on. He approaches every challenge as a true partner and gives you the confidence to take on the toughest problems…. he’ll introduce you to your first customers and future investors, but most importantly, his belief and support in you, your team, and your mission will be unwavering.”

Virta Ventures and Toniic

Toniic was connected to Russell Sprole at Virta Ventures through one of the family offices that is a part of the Toniic community. This same family office member shared his views about Virta on an internal investor webinar, which encouraged Toniic member David Broz to connect with his fellow investor to learn more about the fund.

David Broz who committed to Virta’s most recent close shared:

“I was introduced to Virta Ventures by a fellow Toniic member, who, though not yet an LP, spoke highly of Russell’s expertise and due diligence capabilities. As I got to know Russell, it became clear that his background aligns strongly with his investment thesis. His extensive operational experience, complemented by a successful track record as an investor, showcases his unique ability to access deal flow, understand climate businesses deeply, and secure deals into the most promising early-stage climate tech startups. I am excited to join Russell at Virta Ventures as an LP and am confident in his potential to drive significant impact and returns”

About Toniic:

Toniic is a global community of private asset owners seeking to steward wealth and use influence to enable a thriving world. Our members — more than 500 high net-wealth individuals, family offices and foundations from more than 25 countries — are active impact investors and philanthropists, for whom Toniic provides education, investment opportunities, impact support, events, and community. Toniic also seeks to build the field of deep impact investing, moving money and mindsets and leading by example.

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