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XElevation Ventures Is Raising $50M for a Climate-Focused Tech Fund in SoCal
Deirdre Newman
Deirdre Newman is an Orange County-based journalist, editor and author and the founder of Inter-TECH-ion, an independent media site that reports on tech at the intersection of diversity and social justice.
Interest in electric cars is spiking as gas prices rise to their highest prices in years, but supply chain headaches and the lack of infrastructure such as charging stations are keeping the demand pent up. And, the longer-term effects on power grids will mean there will be lots to upgrade, even after the transition to cleaner technology, like electric vehicles, comes online.
Elevation Ventures, a new climate-focused venture firm in Orange County, is raising a $50 million fund to focus on technology that can provide new products and services. The fund will target seed-stage companies in SoCal, though it might also invest in a few Series A funding rounds. Check sizes will range from $500,000 to $3 million.
Elevation has partnered with two local organizations with deep roots in O.C.: business incubator Octane and Sustain SoCal, a network of professionals focused on clean tech development.
A VC Built By Consortium
Elevation Ventures Managing Partner Neal Rickner is an Orange County native who recently moved back to the area from Silicon Valley, where he was the COO of Makani Technologies, a company that developed airborne wind turbines. It was acquired by Google in 2013, and then eventually shut down by Alphabet, Google's parent company.
Elevation Ventures Managing Partner Neal Rickner.
Image courtesy of Neal Rickner
He also worked with what’s known as “X,” (formerly Google X), a research and development facility founded by Google, which now operates as a subsidiary of Alphabet.
”I’ve been through the ringer...up there,” he said. “I learned the best I could from the best innovators in the world."
But it wasn’t until Rickner did some serious reflection in 2020, that he decided to move back to Orange County. He had some informal conversations with members from Aliso Viejo-based Octane’s team in 2017, but it didn’t coalesce until 2020. Octane acted as the catalyst and facilitator, bringing in Sustain Socal. Elevation Ventures was formed.
Octane already has a track record in investing. In 2016, it partnered with Visionary Ventures, a VC firm that backs ophthalmology and aesthetic startups, which have a strong presence in Orange County.
The organization has both for-profit and nonprofit branches and serves SoCal’s general technology and medical technology ecosystems—connecting people, resources and capital. One of its initiatives is a four-month accelerator program called LaunchPad that gives local founders access to a slew of advisors and resources.
Sustain SoCal is a hub of climate, sustainability and environmental experts, with a presence at UC Irvine’s innovation center, The Cove. The network comprises thousands of experts; most have been involved with clean tech and/or climate tech for 20 years or more.
Elevation expects to make 15 to 20 investments from this first fund, over the next two to three years, Rickner said. Even before the first close of the first fund, expected this summer, Elevation is already writing checks through a type of investing known as a special purpose vehicle. Typically set up as an LLC or limited partnership company, SPVs make a single investment into just one company.
Rickner, Octane CEO Bill Carpou and Sustain SoCal CEO Scott Kitcher put together a mission statement for their new venture firm in the fall.
”The three of us bring together the core ingredients for a VC fund to succeed,” he said. “And, we complement each other well. We have different networks and skill sets, but we’re mission-aligned and collectively-aligned.”
The team hopes to raise around $20 million by the summer. It’s raised just over $10 million so far, Rickner said.
“The first commitments are all from SoCal and know Octane or SoCal well,” Rickner said, adding that they’re targeting high net-worth individuals and family offices.
Elevation recently also brought on longtime climate technology investor Rachel Payne and former Seeder Clean Energy co-founder Alex Shoer.
Early Investments
Elevation’s first investment, for which it raised more than $1 million, was in Los Angeles-based Veloce Energy. The startup runs a software platform and installation system to enhance the move to a decentralized, distributed energy grid that enables anyone to trade electricity on its networks.
Rickner said companies like Veloce can accelerate the shift to these decentralized power systems “faster and cheaper” than enormous electricity providers.
In late April, the firm made its second investment (also through an SPV) in Carbon Collective.
The Alameda-based startup enables employees to use their retirement funds to fight climate change by divesting from companies that contribute to climate change and to re-invest in companies working to combat the climate crisis.
“Venture deals move quickly,” Rickner said, in explaining why he opted to raise money quickly via SPV rather than waiting for the fund to close. “These first two deals were great opportunities. We had special access, and we didn't want to pass them up.”
Rickner declined to disclose the amount of either investment.
Photo by Tyler Casey on Unsplash
Next Industrial Revolution
It wasn’t an easy decision to leave Silicon Valley.
“Part of the allure for me was [the opportunity to] work on something I’ve been passionate about for a long time,” Rickner said.
He credits the pandemic and lockdowns that followed with inspiring him, like many others, to reflect on what was important.
“A lot of people woke up and decided we had to take better care of our environment, that climate change was happening,” he added. ”When you take time, you realize there are more floods and fires and extreme events, and it became personal to a lot of folks."
Elevation will have plenty of opportunities to invest close to home, Rickner noted. Orange County is home to some of the biggest names in electric vehicles, including electric pickup truck maker Rivian Automotive, which is headquartered in Irvine.
But it will also have local competition. Laguna Beach-based Keiki Capital launched in 2017 to invest in climate tech startups at the pre-seed and seed level.
Rickner sees the time we’re living in as a transition into the next industrial revolution—and he sees opportunities.
“90% of the world economy, as measured by country GDP, has committed to net zero,” he said, referring to several nations’ pledges to move to power sources that are carbon neutral.
More than half of the world’s corporate and financial institutions, as measured by revenue and assets under management, have committed to a net-zero approach, he added.
“The previous industrial revolutions produced many billionaires,” Rickner said. “And this one will do the same.”
Deirdre Newman
Deirdre Newman is an Orange County-based journalist, editor and author and the founder of Inter-TECH-ion, an independent media site that reports on tech at the intersection of diversity and social justice.
Coronavirus Updates: Disney Donates Masks; Cases in L.A. County Surge; L.O.L. Surprise! Makers Create Ventilator
09:27 AM | April 01, 2020
Here are the latest headlines regarding how the novel coronavirus is impacting the Los Angeles startup and tech communities. Sign up for our newsletter and follow dot.LA on Twitter for the latest updates.
Today:
- Disney donates masks to hospitals in California, New York and Florida
- More than 3,500 coronavirus cases in L.A. County; new worries about asymptomatic carriers
- L.O.L. Surprise! maker creates ventilator prototype, launches $5 million fund for healthcare workers
L.O.L. Surprise! maker creates ventilator prototype, launches $5 million fund for healthcare workers
Health care workers receive masks and other protective gear.
MGA Entertainment
The maker of L.O.L Surprise!, Chatsworth-based MGA Entertainment has launched a nonprofit to help slow the spread of COVID-19 and is working on a ventilator prototype.
Chief executive Isaac Larian, whose company has production facilities on contract in China, said he started to order masks from his suppliers after hearing from friends in the medical field who couldn't find needed supplies.
"They couldn't get protection," he said. Next week, he expects a shipment of 200,000 masks to arrive.
Dubbed Operation Pac-Man, the fund will go towards procuring personal protective equipment for health care workers, the company. Larian promises that funds donated will be matched and he's committed $5 million to start the effort.
Meanwhile, the designers at MGAE have created a prototype ventilator that's being tested at UCLA, Larian said. He plans to produce it at the company's Little Tikes factory in Hudson, Ohio.
"We are going to move fast on this," he said. "We expect to go into production late next week."
More than 3,500 coronavirus cases in L.A. County; new worries about asymptomatic carriers
As the number of novel coronavirus cases continued to climb past 3,500 in the county, public health officials warned there's growing evidence asymptomatic carriers of the virus could be spreading it.
"There are people who are infected with COVID -19, but don't have any symptoms and for some of these people there is also evidence that they are able to spread the infection," said the county's director of public health Barbara Ferrer during her daily briefing.
The novel coronavirus has claimed 11 more lives in the county and has infected 513 more people, county health officials said on Wednesday. There's now 3,518 individuals that have been infected and 65 that have died.
She warned that people should continue to take precautions, even if a person doesn't appear sick.
About 20% of those that have tested positive for the fast-moving virus have been hospitalized. Of those, Ferrer said 76% had no documented underlying health conditions.
"Everyone should take seriously the fact that they are at risk not only for illness for COVID-1 but for serious illness," she said.
Disney donates masks to hospitals in California, New York and Florida
Disney Parks has donated 100,000 N95 masks to the states of New York, California and Florida, the company announced through its Disney Parks Blog on Wednesday. In the same announcement Disney said the Parks unit had also donated 150,000 rain ponchos to MedShare, a humanitarian aid group, which will distribute the gear to hospitals. The need for masks is clear, but why ponchos? On March 20, the Journal of the American Medical Association (JAMA) published an article calling for ideas to address the shortage of personal protective equipment (PPE). The article received over 100,000 views and yielded more than 250 comments, with many more ideas sent straight to JAMA editors. On March 28, JAMA published a summary of the recommendations, which included repurposing ponchos for gowns. "The idea was inspired by nurses across the country who inventively found that rain ponchos can be an excellent way to protect their clothing and prolong the use of PPE, while also freeing up gowns when needed," Disney's statement said.
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US Space Force Establishes Tech and Acquisition Arm in Los Angeles
04:04 PM | April 08, 2021
Photo by SpaceX on Unsplash
In a major win for Southern California's aerospace industry, the U.S. Space Force will establish its acquisitions and technology division in the Los Angeles area this summer.
The move, observers said, cements the region – home to SpaceX and Virgin Orbit – as a major force while raising the profile for a myriad of local startups, as the government looks to private industry to bolster the next generation of space travel.
"Southern California — and South Bay in particular — is experiencing its biggest tech renaissance since the Cold War, with record-setting venture investments generating hundreds of new businesses, with over 25 aerospace unicorns operating today," said Van Espahbodi, the co-founder and managing partner of Starburst Aerospace, an accelerator that partners with Raytheon and other big players in the industry. "It's no surprise the formal standing up of Space Systems Command acknowledges the strength and leadership of our region."
The Los Angeles Air Force Base's Space and Missile Systems Center in El Segundo will become the headquarters of the planned division called the Space Systems Command. The center will be responsible for identifying, prototyping and fielding innovative, space-based solutions to support and meet the demands of the National Defense Strategy, according to the Space Force.
"The heart of technology innovation within the space industry takes place right here in El Segundo, so it comes as no surprise that Space Systems Command has selected our community as its headquarters," said Melanie Stricklan, co-founder and CEO of El Segundo-based Slingshot Aerospace, in a statement.
Slingshot Aerospace has worked closely with the Space and Missiles System Center over the last several years to create technologies that promote space sustainability in order to protect our way of life, she said. Other local companies like SpaceX — which has several contracts with the agency — also have standing relationships.
Los Angeles' aerospace history stretches back to the 1920s, with its peak around World War II. Today, more than 25 aerospace companies — including Rocket Lab, Slingshot Aerospace, Relativity and Virgin Orbit — have established headquarters in the Los Angeles region.
The Space Systems Command is one of three major commands under the U.S. Space Force. It will generate additional missions for the base, including oversight for launch operations out of Vandenberg Air Force Base and Cape Canaveral. It will oversee efforts to develop, acquire, launch and sustain military space systems.
U.S. Rep. Ted Lieu (D-Calif.), who co-chairs the California Aerospace Caucus, said the Pentagon's decision reaffirms Southern California's role as an aerospace hub.
"Southern California was already leading the way on aerospace and space innovation, and establishing the Space Systems Command at L.A. AFB will position our region for further growth," LIeu said.
Lieu said he, along with California Republican Congressman Ken Calvert, had requested the Pentagon to consider Los Angeles for the Space Systems Command's home.
Gov. Gavin Newsom said his administration also pushed for the new command center.
"This is a critical investment in California's vital aerospace and defense industries, and it represents a slew of new good-paying jobs as we continue to rebuild our economy better than before," Newsom said in a statement.
In 2003, Vandenberg Air Force Base's Space and Missile Systems Center narrowly escaped closure during a round of military base realignment and closures. The base was spared after a group of politicians and business leaders lobbied to save it.
Judy Kruger, senior director of strategic initiatives at the Los Angeles Economic Development Corporation, said it's too early to tell what the move will mean as far as jobs or procurement opportunities for the region.
"But right now whenever we can position ourselves as leaders in the area of aerospace, it presents us well. It focuses on our core ecosystem here in Los Angeles, our history of space and aerospace," she said. And it's about good paying jobs of the future, she said.
Before the base's Space and Missile Systems Center will be re-designated, Biden will nominate a U.S. Space Force three-star general officer of the SSC, who must be confirmed by the Senate.
In 2019, the Trump administration created the Space Force, the newest branch of the armed services since 1947. It is one of the most visible Trump-era actions that is supported by President Joe Biden.
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Sarah Favot
Favot is an award-winning journalist and adjunct instructor at USC's Annenberg School for Communication and Journalism. She previously was an investigative and data reporter at national education news site The 74 and local news site LA School Report. She's also worked at the Los Angeles Daily News. She was a Livingston Award finalist in 2011 and holds a Master's degree in journalism from Boston University and BA from the University of Windsor in Ontario, Canada.
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