Elevation Ventures Is Raising $50M for a Climate-Focused Tech Fund in SoCal
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.”
According to plan, he enrolled at Indiana University and promptly founded Guuf, an esports tournament platform, before leaving school and selling the company shortly thereafter. Inspired by a talk on the problem of patent trolls from Union Square Ventures' co-founder Fred Wilson and a blog post on the subject by Elon Musk, at 19 Cavanaugh formed Brainbase, a technology company meant to simplify and streamline the management of intellectual property (for example, trademarks, patents, copyright).
Five years later, the company has around 40 employees and its customers include BuzzFeed, the Vincent Van Gogh Museum, and Sanrio (of Hello Kitty and friends fame). Its flagship product is called Assist, which includes a dashboard for tracking royalty payments and schedules; analytical tools for comparing IP asset performance by property, territory, partner, category and distribution channel; automated invoice generation and contract management; and artificial intelligence tools to identify potential opportunities for exploiting IP.
Now, fresh off an $8 million Series A led by Bessemer Ventures with participation from L.A.-based Struck Capital, Alpha Edison, Bonfire Ventures, and Tera Ventures, Brainbase is expanding its product suite with a marketplace to facilitate IP-oriented transactions and a tool to enable IP filing and renewal. In a statement about the investment, Kent Bennett of Bessemer described Brainbase as bringing "the archaic, paper-shuffling world of IP management into the 21st century."
Brainbase's Assist product helps customers manage their IP
Cavanaugh has long been interested in business and tech. His dad is a serial entrepreneur himself whose current venture, Ready Nutrition, recently signed brand partnerships with NBA superstar Giannis Antetokounmpo and L.A. Rams pro-bowler Aaron Donald. As a 10-year-old kid he remembers marveling at videos of Steve Jobs, which he often rewatches now that he, too, runs a business. "The reality is it's in my genes," he says.
dot.LA caught up with Cavanaugh to ask about his journey so far and what motivates him to keep going, sometimes in the face of skepticism around his youth. His latest prediction? He says the next stage for Brainbase is going to be hard, but he's up for the challenge.
dot.LA: Tell me about your background and how that led to the company you sold after dropping out of college.
I'm originally from Pittsburgh and I grew up in an entrepreneurial family. My dad had been starting companies since I was born, so I was essentially interning at startups from the time I was eight years old. In my junior year of high school I started a website design and services business, and I was making enough money from it that I didn't want or need to go to college.
But I went to Indiana, largely because of Mark Cuban – he's from Pittsburgh, too, and he went there. I knew I didn't want to finish, but I don't think I had the risk tolerance to just not go; I wasn't ready to be a full-time founder yet. I didn't want to keep doing my website business so I decided I'd go, and try to start a startup with the intention of leaving early.
I'd been interested in gaming and esports, and as I kept learning about venture capital I thought a services business would be interesting. There was a company called Major League Gaming that was doing well at the time and my freshman year I formed a company that was basically a platform to facilitate esports tournaments. That was really before esports took off and frankly I think we sold it a bit too early.
Nate Cavanaugh is the founder of Brainbase
You're now on your third company and you raised over $12 million before turning 24. Have you had any pushback along the way because of your age?
Of course. There's a lot of negative press about young founders who aren't ready to run companies at scale. Until you sign that first set of impressive customers or raise money, you get doubted. I was 21 when Brainbase first raised VC funding and I didn't have traditional domain expertise in intellectual property. I was basically self-taught, and there were a lot of people that questioned our story.
What kept you going?
I'm extremely competitive. When I commit to something I have a will to succeed. And dropping out of college to start something makes you want it to succeed extra badly and do whatever it takes to make it work.
What would you consider some of your biggest personal achievements so far?
I'm a big believer that raising money is not necessarily a successful milestone – you need a strong outcome from that, so there's still a lot of work to do. But the fact that we were able to get a round done with Bessemer during COVID-19 was certainly not easy and I'm proud of that. We also recently did a deal with a big university for trademark licensing; I applied there for undergrad and was denied, so getting rejected and then getting them as a customer is kind of a a funny accomplishment.
And the customers we've been able to get, like Sanrio; they're one of the biggest licensors in the world and we got them as a customer within 12 months of starting.
Also one of our first investors was the founder of Duolingo, a unicorn, and they're from Pittsburgh, so I was proud of that too.
How did your dad's business experience impact you?
He had two businesses when I was growing up that got up to a fairly impressive scale, and then he wound them both down to start Ready Nutrition when I was in high school. So he was starting a clean-slate startup when I was a junior. I saw that grow from a one-person business to making nine figures in revenue. I worked as an unpaid intern and I saw how he ran meetings, interacted with employees, how he closed deals. That gave me a lot of valuable experience early on. It's one thing I don't talk about too much when I'm fundraising – as a founder you want your merits to live separately from that – but I was fortunate to be able to grow up with that.
How has your relationship with your dad evolved as you've had your own success?
We have an interesting dynamic. My family is still in Pittsburgh – when he and I talk it's almost all about work; it's the nature of our relationship. It's interesting to be able to talk about different ways we've done things. His business is bootstrapped, whereas we just closed a Series A. It's been really cool to be able to bring my experience with tech, VC and startups and to hear about his side of things in consumer goods. It's fun to be able to talk about and learn from the challenges he and I are going through.
Who else do you consider your role models?
Of the people in my network, I spend a fair amount of time with Adam Struck, the founder of Struck Capital; he's been a helpful mentor and is on our Board. Severin Hacker (co-founder and CTO at Duolingo) and Kent Bennett (Partner at Bessemer Ventures) have also been helpful. It's been great being able to go to them for function-specific questions.
I've been a fan of Steve Jobs and how elegantly Apple markets their products. I still go back and watch his interviews with Kara Swisher. I'd watch those when I was 10 years old.
I also admire Ben Horowitz; his book The Hard Thing About Hard Things is excellent. Andy Grove (former CEO of Intel), too. And I'm also interested in Peter Thiel, who often provides a contrarian view compared to the mainstream tech narrative.
What's your impression of the L.A. tech scene?
I've been really impressed, on a couple of levels. There's sufficient seed-stage capital from funders and the Series A market is maturing. I still think for Series B and beyond most founders think you need to go to NYC or San Francisco to raise, or at least to make the process competitive. And from a recruiting standpoint, there are so many impressive companies here and the region has a ton of engineering talent. So from the capital and recruiting standpoint it's only maturing and I expect that'll keep growing.
This interview has been edited for clarity and brevity.
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Sam Blake primarily covers entertainment and media for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LAFrom Your Site Articles
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