Many leading venture capitalists in Los Angeles say they've altered their investment strategy because of climate change, and some are responding to the crisis by pouring more cash into clean-tech startups.
A majority, or 60%, of the more than two dozen investors polled by dot.LA said climate change is affecting how they invest.
The trend is fueling a record-setting year for the sector, as investors put billions behind Southern California-based companies such as electric vehicle maker Rivian and home energy storage firm Swell.
As of late October, Pitchbook tracked $6.4 billion in Southern California "climate tech" deals this year — nearly twice as much as in the entirety of 2020. The expansive sector, as mapped out by the data firm, includes everything from clean-energy generation and electric transportation to the development of plant-based proteins (a.k.a fake meat).
By deal size, Rivian and Faraday Future led the pack in SoCal, followed by Swell, nuclear fusion firm TAE Technologies and Bird, the scooter company that just debuted on the New York Stock Exchange.
"I've been actively investing in the space," Thomas McInerney, L.A.-based angel investor and World Wildlife Fund national council member, told dot.LA. "I think venture can change the world. Its role is crucial," he added, and pointed to several investments in startups such as carbon-removal company Charm Industrial and battery-swapping startup Ample.
Most of the venture capitalists polled said the climate crisis has prompted them to fund more clean-tech startups. One investor noted they were on the lookout for "more novel solutions to these problems."
Globally, climate investments have skyrocketed. In the third quarter of 2021 alone, Pitchbook tracked a record $30.8 billion in related deals. "The industry could give rise to 500 to 1,000 unicorns in the coming years," Pitchbook added in its recent climate report.
What Can't Tech Do?
The promising fundraising trend comes as the White House argues that yet-to-be developed tech will play a critical role in the response to the climate crisis.
"I am told by scientists that 50% of the reductions we have to make to get to net zero are going to come from technologies that we don't yet have. That's just a reality," U.S. Climate Envoy and former Senator John Kerry said in May.
But like others skeptical of Kerry's optimism, Dr. Deepak Rajagopal, professor at UCLA's Institute of the Environment and Sustainability, views the environmental problem as less a "technological one but more socio-political at an aggregate level and behavioral at an individual level."
For years experts have warned that tech alone cannot solve the crisis, and emerging tech often yields unexpected outcomes.
"My research on life cycle assessment of technologies always has shown every technology has unintended consequences and it is an ethical question whether the unintended consequences are worth it. You cannot find a solution which does not have some type of negative impacts," Rajagopal told dot.LA
Dr. Greys Sošić of the University of Southern California, whose research includes supply chain sustainability, called the rise in clean tech investments "commendable," but urged a holistic approach.
"I am wondering what is happening with the rest of their investments? Are there any trends toward reducing investments in "dirty" startups? Until this happens, we cannot make a lot of progress," said Sošić. "Just adding some clean tech startups in one's portfolio, without doing additional changes, looks more like greenwashing than a serious effort to help the environment."
Largest Southern California Clean Tech Deals by Size
Data from Pitchbook.
Lead image and infographics by Candice Navi.
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Similar programs are common in the startup world and in the creator economy. For example, social media companies can use accelerator programs not only to support rising stars but to lure those creators—and their audiences—to the company’s platforms. Genies believes avatars will be a crucial part of the internet’s future and is similarly using its program to encourage creators to launch brands using Genies’ platform.
“I think us being able to work hands on with this next era—this next generation of designers and entrepreneurs—not only gets us a chance to understand how people want to use our platform and tools, but also allows us to nurture those types of creators that are going to exist and continue to build within our ecosystem,” said Allison Sturges, Genies’ head of strategic partnerships.
DIY Collective’s initial cohort will include roughly 15 people, Sturges said. They will spend three weeks at the Genies headquarters, participating in workshops and hearing from CEOs, fashion designers, tattoo artists and speakers from other industries, she added. Genies will provide creatives with funding to build brands and audiences, though Sturges declined to share how much. By the end of the program, participants will be able to sell digital goods through the company’s NFT marketplace, The Warehouse. There, people can buy, sell and trade avatar creations, such as wearable items.
Genies will accept applications for the debut program until Aug. 1. It will kick off on Aug. 8, and previous experience in digital fashion and 3D art development is not required.
Sturges said that the program will teach people “about the tools and capabilities that they will have” through Genies’ platform, as well as “how to think about building their own avatar ecosystem brands and even their own audience.”
Image courtesy of Genies
Founded in 2017, Genies established itself by making avatars for celebrities from Rihanna to Russell Westbrook, who have used the online lookalikes for social media and sponsorship opportunities. The 150-person company, which has raised at least $250 million to date, has secured partnerships with Universal Music Group and Warner Music Group to make avatars for each music label’s entire roster of artists. Former Disney boss Bob Iger joined the company’s board in March.
The company wants to extend avatars to everyone else. Avatars—digital figures that represent an individual—may be the way people interact with each other in the 3D virtual worlds of the metaverse, the much-hyped iteration of the internet where users may one day work, shop and socialize. A company spokesperson previously told dot.LA that Genies has been beta testing avatar creator tools with invite-only users and gives creators “full ownership and commercialization rights” over their creations collecting a 5% transaction fee each time an avatar NFT is sold.
“It's an opportunity for people to build their most expressive and authentic self within this digital era,” Sturges said of avatars.
The company’s call for creators could be a sign that Genies is close to rolling out the Warehouse and its tools publicly. Asked what these avatar tools might look like, the startup went somewhat quiet again.
Allison Sturges said, “I think that's probably something that I'll hold off on sharing. We will be rolling some of this out soon.”
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