Digital Could Save the World (from climate change)
What does Buoyant mean by digital? And how are we using it to solve for climate change?
Climate change is a very physical thing. Flooding, heat waves, more severe hurricanes, and droughts. So, when we state that Buoyant invests in digital solutions to solve for climate change, sometimes questions arise, especially from those working at the front lines of climate, around what we mean by digital.
At Buoyant, we strive to invest in the nearest-term solutions to help us adapt to and mitigate the impacts of climate change at scale. This translates to us being very focused on finding solutions that are ready for mass deployment today and which can be scaled quickly thereafter. Because not only is climate change a large-scale problem, but deploying solutions that have impact today will pay dividends in the future.
Naturally, this makes pure software solutions (data, software, algorithms, UI/UX, etc.) a great fit. However, inexpensive off-the-shelf hardware is also included in our definition of digital. Why? Because climate change is a very physical thing, and large investments have been made in physical infrastructure that we must make more resilient for a carbon-constrained world. While it would be mentally easier to rip everything out and replace it, we know that an effort like that is most certainly the most expensive, time-consuming, and wasteful option. This means that energy, food, manufacturing, and other systems of the future, will be built on top of, and evolve from, the systems we have today.
There are two important points here. First, when we layer digital on top of existing assets, we can make them more efficient, reducing their impact. Secondly, for new assets, digital solutions can make the assets more financially attractive accelerating adoption and investment.
When we look for digital investments, we are looking for the following:
Market Ready Technologies: The solutions we invest in need to be deployable and effective today. Obviously, the advantage of software is that it can be improved upon even after it is deployed, but the base solution value needs to pencil for customers without a significant amount of further investment.
As an example, FloodFlash parametric flood insurance leverages proprietary underwriting models and a unique sensor to price flood insurance more accurately and affordably.
New Data & Actionable Insights: A lot of solving for climate change is figuring out how to address the new challenges we face with data and insights which can provide direction on actions to take. Sometimes data collection requires innovative hardware in the form of sensors or controls to enable the actions or insights.
For example, StormSensor installs sensors in underground water infrastructure to analyze the flow of water before and during storm events, helping to predict and manage flooding.
New Business Models: Some of the challenges we face today have nothing to do with software or hardware and everything to do with how we are selling the existing in-market solutions. Ranging from stacking revenue streams, new financing models, and cost/benefit sharing, all of these enable inventive ways to facilitate the flow of money into hardware solutions that are digitally enabled.
As an example, Shifted Energy’s software helps residential energy customers access clean energy to power home devices.
Efficiencies: Hardware can be an expensive resource, but so are employees and brain cells. Using technology to improve how systems operate or limit how much human intervention is required can help make the best of/scale the expensive assets required.
For example, Raptor Maps helps optimize utility scale solar assets and streamline maintenance, making solar power more productive and efficient.
One of the oldest examples of the impact digital can have is the Solar Power Purchase Agreement (PPA). Solar costs have declined dramatically for a wide range of reasons. However, like homes or cars, paying upfront costs for large purchases is a significant barrier to adoption. Nowhere is this more apparent than in Georgia and Florida, where Georgia, at half the population, has allowed PPAs that have 3.5x times more small-scale solar generation than Florida, see here.
Today, we see these examples everywhere and are excited to continue investing in digital solutions that will achieve the speed and scale needed to buy us time to solve the largest problem we face as humans.
Gina McCarthy, the outgoing presidential climate advisor, just announced a website to map and drill down on climate-related hazards in real time, leveraging data from Esri, Garmin, FAO, NOAA, USGS and the EPA.
This tool breaks climate risks down by extreme heat, drought, wildfire, flooding and coastal inundation and provides case studies on climate resiliency. It is great to see the increased focus on climate resiliency and adaptation.
We are excited to Welcome Jacob Gleason to the Buoyant Boat!
This summer, we were very proud to hire our first full-time team member, Jacob Gleason, following his graduation from the MBA program at Northwestern’s Kellogg MBA program, where he focused on venture capital and impact investments.
Some of you may remember meeting Jacob when he worked with us for nine months in 2020-2021 before entering Kellogg. He led our foundational research into climate risk intelligence which resulted in two deals in the Buoyant portfolio – FloodFlash and SupplyShift. While at Kellogg, he helped the Chicago Mayor's Office launch the inaugural Black and Brown Excellence Investment Summit and led a number of finance and strategy initiatives for the FinTech startup, Ramp. His intellectual rigor and hustle were evident from the first day when he reached out to Amy upon a referral by Aaron Rudberg at S2G Ventures (thanks, Aaron!).
Jacob is a Principal with Buoyant and, as part of a small team, does a little bit of everything – sources and diligences deals, serves on boards, improves our fund operations and processes, contributes to research, assists with fundraising, supervises MBA interns, and represents Buoyant at industry events and conferences.
He comes to Buoyant after nine years in banking at Wells Fargo and US Bank, where held diverse roles ranging from debt and equity principal investments in sectors such as insurance, operations leadership of the bank's Investment Portfolio Trading function, and risk management analytics and reporting. His background has come in handy when contributing to investments in the climate risk sector, e.g., insurance, which is part of our climate adaptation strategy.
Jacob is a lover of the natural world, having hiked in over half of the US National Parks, and resides in Chicago with his wife and their Australian shepherd, Kona. Where he cheers on his beloved Chicago Bulls both at home and away, and serves as the resident expert on Chicago food and drinks
Thanks for joining us on this climate adventure, Jacob!!!
What we are…
We have seen a lot of action in the carbon market space with RMI and Global banks partnering to standardize reporting and transparency, Salesforce announces a carbon credit marketplace, and Time launched a platform to facilitate businesses finding carbon reduction solutions and pool them in impact portfolios.
The USDA announced climate-smart projects budget raised from $1B to $2.8B (and anticipated to surpass $3B in the future). The raise comes after unprecedented demand and interest in the program. The projects highlighted in the article range from using innovative finance mechanisms to accelerate the uptake of climate-smart farming practices to meet private sector demand to streamlining soil data collection and modeling.
For many, the last few years or months, depending on your perspective, have been a rollercoaster of events. While we could quickly view the speed bumps or setbacks we face as purely bad, this was a great reminder on how to approach entrepreneurial endeavors and life in general. Good Thing, Bad Thing, Who Knows?
In line with our 2022 prediction and the talent influx we are experiencing, the following article, Move over, Silicon Valley. Engineers are quitting for climate tech articulates what we are experiencing.
AND in the energy world now about 50% of energy jobs are related to clean energy technologies, according to the latest IEA report on World Energy Employment. We especially liked the graph below.
One of our favorite (and unfortunate) facts from the IPCC report on climate change adaptation (SPM.B.1.2) is about half of species globally have shifted polewards or to higher elevations in response to climate change. In this podcast, the BBC looks at other ways animals have adapted to climate change. Reinforcing the message that humans should look to do the same.
Buoyant Venture Updates
Allison joined Dimitry Gershenson, CEO and Co-Founder of Enduring Planet, to talk about planning your fundraise and share advice.
Amy Francetic was hosted by Redwood Climate exploring areas where software can be applied towards climate solutions.
For fun (since you’ve made it this far…)
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The Lighthouse is a resource for climate tech updates and a channel for us to regularly share our perspective on Buoyant’s investment thesis and industry sectors. We know we are not alone in producing great content and will amplify the voices of others by highlighting those resources we find thought-provoking.