Season 1 Episode 15: Amory Poulden – Edited Transcript

Conversations on Climate Season 1 Episode 15: Amory Poulden Edited transcript

Section one: starting up 


Chris Caldwell: Thank you so much for taking the time to come and speak to us.

Amory Poulden: Not at all. Absolute pleasure to be here.

Chris: It’s actually the first time talking to a fellow podcast host on this program. I’ve listened to some of your shows, really interesting stuff! I highly recommend it. I will put the link in the notes.

Just to get us started, careers in startup companies will typically have an inflection point where you’ve got a choice between success and failure; things that either go fantastically well or amazingly badly. Is there an inflection point in your career today that you could tell us about?

Amory: Yeah, absolutely there is. It’s such a clichéd inflection point, but the inflection point for me was when I had our first child. I mean, my wife and I had a child together. Up until that point my career had been predominately in finance. I’d been working in investment banking across the whole energy space, but really mainly on the oil and gas side. At that point, I had one of those quarter-life-crises. It was a bit of a reflection in terms of what I was doing with my career and what my children were ultimately going to think of me when they grew up. That started a grand pivot away from traditional energy towards renewable energy and towards climate tech more broadly. So that is probably the most impactful zig on the path.

Chris: Okay, fantastic. So that was the genesis of you looking towards climate and sustainability and also tech. What’s the intersection between climate and tech?

Amory: That’s a great question. I think tech, at the moment, is a bit of an all-encompassing term. As a fund, we look at a lot of ‘tech-enabled’ businesses. Where I draw the line is we’re most interested in product-based businesses as opposed to service- or consultancy-based businesses. The reason for that is product-based businesses, when they work, can scale enormously and can create a huge impact as well. Whereas service businesses are really defined, or have the potential to scale, more in terms of how many people, how many bodies you’re adding, so they tend to scale more linearly. So that’s the intersection between sustainability and tech for us as product-based businesses in the sustainability space.

Chris: Speaking of businesses, do you see any parallels between your own career and the types of businesses that you look at and invest in?

Amory: I think you see increasingly founders who are coming from different backgrounds moving into the sustainability space. I see a lot of people who appear to have gone on a similar personal journey towards the space and, I think, that’s reflective of the entire sustainability space and, more broadly, the entire climate tech space becoming more mainstream. There are a lot of people going through that kind of awakening in terms of thinking of what they’re doing with their lives and ultimately where the next big growth area is as well.

Chris: For a while I’ve been thinking that this whole climate space is one that’s very important but it’s also the greatest wealth creation opportunity of our generation. Are you particularly interested in it because it is a wealth creation opportunity or because it’s a particular point of passion for you?

Amory: It’s a great question. My job as a venture capitalist, and as a venture capitalist who looks across multiple different sectors, is to identify where the big trends are going and where are the huge tailwinds. A lot of VCs will talk about what you favor more: do you favor founder or do you favor idea? I have a particular perspective on that, but what I really like to see, regardless of which side of that debate you come on, is that you have a huge market tailwind behind you as well because that can cover up and help absolve a lot of other problems if the general direction of travel is in line with society. So that’s the most important thing for me. And the fact that it makes us all feel great as well is a huge added bonus. 

It’s far more exciting to me that this is the logical place for businesses to build and to make money and to be financially viable companies, versus if you rewind 10-15 years ago, the sort of impact focused businesses where there was an implicit trade off between financial returns and social impact. What’s really exciting about this moment in time is that there isn’t a trade off. The two are completely aligned.

Chris: I absolutely agree. 

Once you had your moment and you thought okay, I want to make this change, I’m sure there would have been people queuing out the door and around the corner to have you joining their firms and joining their funds. Instead you took the big leap to go and raise your own fund. Why did you do that? What particularly did you want to achieve? What makes your fund different?

Amory: I guess the motivation behind wanting to launch my own fund is I’ve always had this entrepreneurial itch that I wanted to scratch at some point. On a personal basis, I’m conscious that life becomes ever more complex as you wait. The time is never better than now, so I wanted to go out there and build something.

I will say I felt a degree of imposter syndrome among founders as a VC not having ever built something of my own and saying, okay, I actually want to go into the trenches and do something. That was the sort of personal driving force behind me. Then, in terms of the thesis behind D2 and the idea behind D2, over the last five or ten years it has become an order of magnitude cheaper and faster to launch a business and to test and iterate new ideas regardless of which sector you’re in. And yet, the venture industry has moved in the complete opposite direction, especially in the last couple of years, in terms of piling more and more equity finance into businesses very, very early on. In our view, this creates a ton of risk and a ton of waste and ends up with founders owning very small shares of that business and a lot of very good businesses going under because they were prematurely bruit-forced with equity capital.

At D2 we want to invest in efficient founders who want to own more of that business on exit and want to scale leanly, to stay lean from a cost perspective and build a sustainable, long term, viable business. And as a fund, we have a few tools in our locker to help businesses achieve that. Our pitch is, ‘we bring the right type of capital for the right business at the right time. ‘

Section two: Collaborative funding models for climate tech

Chris: Absolutely. And you do some very interesting capital models, not just traditional equity or direct debt. I thought the HERO model was very interesting. Can you tell us a bit more about the HERO model?

Amory: So the HERO is a bit of an experiment. The premise behind the HERO is that the type of capital you put into a business creates an incentive structure. That might be implicit, but whatever type of capital you put in – be it debt, be it VC funding, be it crowdfunding – creates a different set of behaviors in that business because that capital has a different set of drivers. The HERO is very simplistically a SAFE note, which is a convertible instrument. And if that company goes on and raises another round of financing, it converts into equity. So that looks exactly like VC equity; but if they never raise another round, then it converts into a revenue share. And that revenue share lasts for a couple of years and then falls away.

So what does that actually do in practice? If a company follows the venture path and continually raises rounds of equity finance, then it’s exactly as if they raised an equity round in the first place – so no difference, no trade off. If they don’t, though, then we think of two scenarios. The business may become a small profitable business, not a venture outcome in terms of how we think about outcomes that we aim for, but a good business. In that case, it becomes an off ramp, that revenue share becomes an off ramp from venture capital. Then the business is free to continue without the burden of having a shareholder pushing in a specific direction that isn’t right for that company. 

Then there’s the upside scenario where this business becomes a very large company and also a profitable business. There the revenue share component ends up being about 75% cheaper, even in a very aggressive growth scenario, than had that business raised conventional equity capital. The trade off for us is, if that business has been very efficient, we want to reward them. We want to incentivize efficiency. We want to incentivize raising the capital that you need rather than the capital that you can go out and get. And so, in that scenario, the HERO is almost saying, ‘look, here is the benefit of being efficient. Your cost of capital is coming way down. ‘

Chris: It’s an extremely founder-friendly way of looking at things, which is quite unusual. What’s also very unusual is that you put it all up on your website. You have your model. You have your documentation. This is exactly what it is. I love the transparency, but it is really, really unusual. What was your thinking about it?

Amory: The idea is we don’t always use the HERO. We use equity as well. And sometimes we use debt. We’re building that capability in-house as well. 

The ecosystem that we operate in is a collaborative one and it’s very rare that we ever do investments on our own. So we will be doing investments alongside other funds, family offices and large individual investors. Ultimately, what we want is for those investors to join us and to understand that this creates a better set of outcomes for founders. And the only way to do that is to open source it, to show everyone all of the levers and bolts behind the mechanism and to have other people buy into that as well.

Chris: Okay, that makes sense. Do you have a general group of collaborators that you normally work with or does it change on investment?

Amory: It changes on investment. Sometimes we work with a sector-specific fund; other funds are stage-specific or geography-specific. We work with quite a wide variety of other funds. There are some funds where we have close relationships with kindred spirits and we’re very open to sharing ideas, but we try to be very collaborative with everyone in the ecosystem. I think it’s the best way to ultimately build a franchise.

Section three: product-based sustainability

Chris: In terms of your portfolio of investee companies, climate tech seems to be two thirds, but it’s one of the four verticals that you look to invest in. Could you, first off, define climate tech? For us these two words are often put together, but they don’t normally hang too well.

Amory: Yeah, it’s a bit of an amorphous blob at the moment, that term, isn’t it? The way that we think about it, and it is quite broad, is companies that are either actively reducing emissions or seeking to mitigate the impact of climate change. That is intentionally broad. As a fund, we need to be guided by where founders are building, where founders are going. We have a view of the future of the world, but we don’t want to be dogmatic on that. If brilliant founders are building in areas that we haven’t thought of that could fall under that umbrella, we don’t want to miss the opportunity.

Chris: And where are the boundaries then? You have tech companies that would like to have climate attached to them and you have climate companies that would like to have tech attached to them.

Amory: I think it’s back to that point around product-based businesses. That’s the North Star that we won’t deviate from. So again, we wouldn’t be investing in a consulting business, we wouldn’t be investing in a services-based business. We’re looking for those companies where there is a tech component, where there is that kind of core product, be it either a physical product or software products, that once you’ve gone through that initial build phase, the potential scalability is non-linear.

Chris: In the climate space – I’m thinking of the carbon capture and storage side of things – there’s definitely technology in the broadest sense attached to it, but it’s not technology in the sense of sitting in front of a laptop. It’s a technology of how you extract this in an industrial process. Is that still a fit?

Amory: He talked about this briefly when we first met. We think about interesting opportunities on the spectrum of a barbell. On one end of the spectrum, we have software businesses where the scalability of software is well known. It’s enormously capital light if you’re running it in the right way. On the other end of the spectrum we look at a lot of deep tech businesses, which are very IP heavy. And again that IP creates a moat and creates huge scalability. In the middle, where you are dealing with an established process and established technology and you are seeking to bring that into the mainstream and you’re seeking to deploy that, it is less interesting. The middle’s less of a good case for venture capital. We try to think of things in terms of, ‘is it fitting into one of these two buckets on either end of that barbell?’ And if it’s not, it’s probably not the right fit for our model of capital.

Chris: Okay, so in reality then, what does a climate tech startup look like? I love the analogy, but in the real world…

Amory: Okay, so we have looked at several businesses on the software end of the spectrum this year that deal with carbon credits, be it either carbon insurance businesses, carbon trading platforms, carbon ratings agencies – those all fit under that software side. And on the other end of the barbell we’ve looked at businesses, for example, that are dealing with new processes for producing ammonia or businesses focused on how you can extract energy more efficiently from algae. That is more on the deep tech side for us. This gives you a bit of an idea of the bookends, as it were.

Chris: One of the biggest themes in public markets at the moment is the whole sustainability/ESG side. It’s how you measure it, how you understand it and how you recognize it. Even in the much larger companies, which have a lot of data and a lot of humans to throw at things and a lot of ways they can fill out spreadsheets, it’s really, really hard. How do you deal with that on the small side, on the venture capitalist side in the very early stages?

Amory: This may be a little bit of a controversial opinion, but I really hate the term ESG and the idea of producing a single number that in some way puts that company on a pedestal and says,  ‘hey, you’re doing a fantastic job.’ Because I think you are taking disparate strands of qualitative data, trying to quantify it, and then trying to establish an absolute metric across different pools, which is inherently dangerous.

Some of my peers in the venture industry try to apply that to early-stage businesses as well. In my experience, that tends to become a bit of a tick box exercise at best and, at worst, starts to push the company into quite a process-heavy model of reporting and, again, becomes quite meaningless. Our focus is actually on: what is this business’s fundamental purpose? What are they aiming to do? And is that making an impact in the sector that they are operating in? I’m not going to benchmark one business operating in ammonia production versus a business operating in carbon insurance because they are completely different companies. What I am going to look at is the impact that they can have in that particular sector.

Chris: Can we dig a little bit more into your process, such as what in particular you look for, what kinds of ideas are most exciting at the moment?

Amory: Sure. So our process: in the last 12 months, we’ve seen three and a half thousand opportunities. We see a lot of volume. And I think this is something that founders often don’t appreciate in that we have to screen very, very quickly at the top of the funnel. We have to winnow that three and a half thousand down to, let’s say, 350 with a minute or two on each opportunity, which means we have to make very fast calls and we’re frequently wrong as a result. Getting that opportunity set down as fast as possible is really important for us. 

Then, in terms of the actual process of making an investment, we usually have a long conversation with the founder, an hour with the founder. If we’re excited, we’ll start to dig in. We’ll do a bunch of research on the space. We’ll start talking to experts to understand the space and then have a couple of other meetings with the founder. Then we have an investment committee where we discuss every opportunity. And then we make a final decision on whether or not to invest. 

That process can be as fast as two weeks. To put that into context, in two weeks you make a decision that’s going to last for the next decade. So it is a really, really condensed process for the commitment that you’re making.

Chris: Hugely! So you have your investment people, but are there any sort of external advisors? Do you have lawyers and accountants? 

Amory: Yes, we do. We have sector specialists across a wide variety of different sectors. We sometimes go to our LPs when they have a specific set of expertise in a given sector. For example, we have the CEO of a carbon accounting business as one of our smaller investors in the fund. Whenever we look at a carbon-based business, we can send it past him. LPs are really, really helpful. And then we have kind of friends of the fund. So right now, we’re looking at a deep tech business and there’s a friend of the fund who did her PhD on that specific technology. It was really useful to get her perspective. So we definitely lean on people who actually know what they’re talking about when we’re talking about tech.

Section four: supporting businesses through climate tech-specific challenges

Chris: Are there any particular challenges that are specific to the climate tech space?

Amory: Yes, there are a ton of challenges specific to the climate tech space. The climate tech space as a whole is still quite immature. It’s come on a huge amount in the last, I would say, really five years and maybe more. But the counterparties that you’re dealing with are exactly the same as they were five, ten, fifteen years ago. So selling into large utilities, for example, has a very specific set of challenges and selling into large energy companies is also quite tough to navigate. You have an ecosystem where capital has moved on hugely, founders have moved on hugely, and the support network incubators, the accelerators have all evolved dramatically from where they were ten years ago. And society has moved on as well. But in many cases, your customer base has not changed at all.

I will always highlight that as the biggest challenge for climate tech businesses. Okay, you’ve got a great idea, you’ve got a really interesting piece of technology, you can get through the levels, you get up to seven or eight and you have to start interacting with your future customers. The whole thing starts moving out to the right.

Chris: That’s where capital needs to be very patient.

Amory: Absolutely.

Chris: There’s a segment of the market that is very fast moving and then there’s the inertia. It’s those guys, of course, and the big utilities. But it’s also governments; it’s also regulations; it’s also the planning controls. The whole system around it is just not set up for the speed of change that needs to be done here.

Do you have people within your fund that work with your investee companies trying to get them through these difficult times?

Amory: Great question. We’re still iterating as a fund. We’re very young. We’re eight months old as a fund, so we’re still trying to figure out exactly how we can be most impactful for our portfolio founders. At the stage that we invest, because we’re very, very early, we tend to be quite hands-on as investors. We spend a lot of time with our founders. Right now, where we seem to be having the most impact is helping founders source great talent at the C-suite level. We’ve successfully placed a couple of individuals into portfolio companies and helped with introductions to future funders: so larger investors, private equity funds, large growth-stage VC funds, debt providers in some cases as well. And then rolling up our sleeves on product. And that is really relevant in some cases, less so in others, but that’s actually acting as a sounding board for,  ‘okay, we want to build in this specific direction. We think this is the right path to go in.’ We are that test, that foil, that counterpoint for them. In terms of, as these businesses grow and when they’re actually interacting with these companies, I think that’s a little bit TBC for us at the moment.

I’m trying to balance, from our perspective, what the role of a VC should be with those companies. I think there’s a lot of voices that say we do everything badly, but we do everything. What I want to do is to ensure that whatever we choose to focus on in terms of support, that we’re the best at it and that we really, really lean into that. I think otherwise you just end up being a drag on the portfolio companies; not actually helping, just making a lot of noise.

Chris: And on your thesis that all businesses, to have a long-term future, need to be sustainable, have you had a hands-on basis already or would it be part of the plan to be trying to nudge businesses on along the sustainability route, advising that maybe you should do this or maybe you should look at that?

Amory: Yeah, I think there’s definitely a role for that. And you know, our perspective as an investor is we can never push a company to do anything. We can advise businesses, and we always do that. Our objective is to be that first call that a founder makes and to take not just the good news and to be the sort of cheerleader there, but also the bad news and be that sort of council. I think there’s definitely a role for us to play in terms of saying look, that decision that you’re making has potential long term negative impacts here, here and here and sort of thinking laterally. I think with founders, everything is existential for them and they are making a decision which in the here and now might make a lot of sense, but might also be laying the groundwork, to our earlier conversation, of actually creating a lot of pain for them down the track.

So should we take this particular contract? Should we build this particular feature? Should we go in that direction? I think it’s our role at that stage to say, ‘look, that’s a great revenue opportunity right now, but have you thought about how that might impact the future of the product and the durability of the business in the long term?‘ It’s our role to counsel the company, to help the founder think of that. Ultimately, if the founder decides that they want to go in that direction, it’s their business, it’s their company. If they choose not to take our advice, then fine.

Chris: That’s interesting. So the only kind of levers that you have to pull are purely advisory. They are based on your particular knowledge and perspective on things. Do you have any other levers? 

Amory: There’s a very big distinction here between early-stage investors like us and late-stage investors, be that either growth, VC or private equity.  By and large, we won’t take board positions. For example, we have the right to appoint a board position should a board be created, but these companies tend to be companies with 5 to 20 people at the time that we invest. Having a board is a sort of a laughable degree of process and formality for a business that’s changing on a week by week, month by month basis. 

We have a lot of power in terms of the nature of the shareholder agreement, but these are really brute force levers to be pulling and they very, very rarely get pulled. The softer side, the kind of the de facto power, that needs to be built with trust. And so it’s on us really to demonstrate that our advice is sound and that we create value and ultimately to become that trusted advisor that founders want to listen to, so that they take the advice on board and actually act on it. Doing a command-and-control strategy just doesn’t work at the early stage.

Chris: What’s the ambition from here? Is it just to continue to grow in the very early stage or would there be the idea of having a second fund? What’s the plan for that?

Amory: I think, like all VC funds, the core strategy is ultimately to create an enduring franchise and so to move through fund vintages to get larger such that we can make a bigger impact. I would love to continue exploring what we’re in the very early stages of doing on the debt side, such that we have lots of different sources of capital, of different types of capital that we can bring so we can fund a broader array of businesses.

Part of the limitation of where we stand at the moment is the same limitation that every VC fund has in that we can only look at a very specific type of business because of the nature of our capital. If we can diversify the types of capital that we have, we can look at a broader array of businesses. I think especially in the climate tech space or the sustainability space more broadly, there are a lot of interesting opportunities which don’t fit the model for venture capital but are eminently bankable for the right source and the right type of capital. I would love it if we can start looking at a broader array of businesses.

Section Five: Flavours of venture capital

Chris: This leads us on because we’re talking about different types of venture capital. Could you talk a little bit about your time in Shell Ventures, and about the difference between the VC that you are now and the corporate VC?

Amory: Absolutely. So corporate VC has a bunch of strengths and a bunch of challenges and financial VC has a different set of strengths and challenges. The strengths of corporate VC are that you have, first of all, evergreen capital, which especially in the climate space is really important. It can take a long time for these technologies to mature. Having a patient backer is really, really valuable. And the second element that I felt very strongly as a VC within Shell was you have the benefit of enormous amounts of industry knowledge and experience. If you’re looking at a new technology, chances are someone in the business has spent their entire career working on that specific type of technology, and you can bring that out. And then, I think, the promise of all corporate VC is the ability to secure partnerships and contracts for your portfolio companies into the larger beast. Without the ventures arm that can be really challenging. These are small businesses; those are huge enterprises. Having that sort of go between, that translator, between startup and corporate is really, really valuable. 

The downside of working in a corporate VC and corporate venture capital in general is you tend to have a lot more process, a lot more systems and controls in place, which means that it’s harder to work with early-stage businesses. It tends to be a better fit for growth stage companies just because of the timelines involved on the corporate side and some of the demands from a procedural perspective.

With financial VC, the advantage is you can move incredibly quickly. You can be very nimble. You can evolve with the market in real time. You can say, actually,  ‘I’m seeing this really interesting thing happening over here. Let’s go and explore this. Let’s do this.’ So you’re completely unencumbered in that perspective. You also have a lot more latitude in terms of how you can work with your portfolio companies, what you can say outside and publicly, and what you can do to support them.

The flip side is you are one of a litany of other funds. You don’t have the benefit of a big brand name. You don’t have the benefit of a business that can help support those founders. And so you need to help in different ways. And, to the earlier conversation about how you develop opportunities, you’re relying on building that network of people that can help you versus having that captive network behind you that’s always there.

Chris: Okay, perfect. What did you find the greatest advantage of being within that type of large organization as opposed to where you are, and what’s the greatest disadvantage?

Amory: I’m a very firm believer that in the energy transition especially, without the large energy majors playing an active role in it, it will just take that much longer. And so I think working within a company like Shell, you’re at the very sharp end of the spear of the energy transition and you’re arguably working in the place where you can have the largest impact. I really, really enjoyed that aspect of it and seeing a business of Shell’s size moving in that direction is really compelling. Vast resources are there at your disposal. For example, if you’re talking about a hydrogen business, you have Shell’s enormous global liquids distribution network there that’s coming to bear. That is an advantage to those hydrogen businesses. And for you, as an investor in those businesses, very few other companies, or funds for that matter, can actually really compete with that. So huge, huge advantage there and really exciting to see that transition happening in real time. 

The disadvantage is that there are always going to be disagreements in terms of how fast to move, in which direction to move and what to prioritize. Nobody, I think, has all of the answers at any one time, and so there can be a frustration where you say, ‘I think this is a really exciting direction, I think we should be going here,’ and other people are saying, ‘No, we should be doing this.’ That process is iterative. You don’t have that when you’re working in the smaller funds. You just say, ‘okay, we’re excited, we’re interested by this. That’s what we’re going to do.’ So there’s a lot more stakeholder management that’s required.

Chris: The move from the big with all the advantages to the small with a far more limited set of advantages: was it personality driven, was it because you felt that this would just fit better with who you are and what you want to do with your life?

Amory: I think it was this desire to create something, to start from scratch and to give it a shot and to have a much, much stronger personal impact in terms of okay, what can I do? What are the types of companies that we can invest in? How can I help those businesses and how can we move faster on all of this? If you ride a roller coaster, you ride an absolute roller coaster.  As a result of launching a fund and having started from scratch, I have got so much empathy now for founders who go through that process and go through that sort of fundraising dynamic. And the impact of every single one of my portfolio founders on my mood, their ability to shift my mood is enormous. You know, you get a good piece of news on a Friday afternoon and you are just flying for the weekend. And then there are setbacks and you focus and obsess and ruminate about how you can help there. It sort of consumes your thoughts. I’ve described it as the most visceral form of venture capital that you could have. Being a solo GP and a brand-new fund is wild, it’s a real roller coaster. I’ve learned a huge amount and I’m continuing to learn.

Chris: That’s a really interesting point. Your starting days, pulling it all together, doing the investment – how did that all happen? 

Amory: It’s a bit of a snowball effect, right? You start; you have an idea; you start to talk to people. Those people that you talk to early on have a huge, huge bearing, at least for me, in terms of where you’re going to take things. And their endorsement, their support creates that momentum and things start to just really spiral, which is fantastic. And then, when you make your first couple of investments, it starts to feel really real.

 The biggest observation that I’ve made is my feeling of commitment to each company that I invest in under the D2 banner is several orders of magnitude higher than I would expect any one in a larger fund or in a corporation to feel. We’re a small fund. Every single investment that we make really matters, really has a bearing on the performance of our fund, so we really, really work hard there. I think that’s an advantage for founders, right? That’s part of the reason for choosing a small, young fund or an emerging manager. You see, okay, this individual is really invested in us personally.

Chris: What was the point where you realized, oh, this is happening? Was it getting your first cornerstone investor? When did it go from people being supportive to saying, I’m actually doing this?

Amory: We had a large family office committed to investing in the fund who became the cornerstone investor in the fund. Their commitment got us to the point where we were a sort of viable fund. At that stage I said, ‘wow, okay, this is really happening.’ And at that stage some dominoes started to fall and another family office committed, and another family office committed, and things started to really gather momentum. 

It’s interesting how there’s an S-curve in everything. That first family office committing was the bottom of the S-curve. 

Chris: And are you still raising funds or have you closed this first fund?

Amory: We’ve closed this first fund and now we’re focused very exclusively on making investments and supporting our portfolio. We will probably make investments from this fund over the course of the next 18 to 24 months. The target is to do 20 investments out of this fund. We should close this year on five or six with a fair wind, and then it is a ten-year fund life with two years of extension. So we are right at the very, very start of a long journey.

Chris: Very good. You were saying earlier that you were interested in having more opportunities, having different funds and being able to look at different things. If you get two and a half thousand things to look at, I’m not sure you need many more.

Amory: A great question. I think there’s definitely a limit in terms of what a single individual within a fund can achieve. My aspiration is ultimately that we grow the team, that we’re bringing in high-quality individuals who buy into the mission, who are aligned in terms of cultures and behaviors with us. That’s how we start to really grow the impact of the fund. I’m very conscious, for example, that if we do 20 investments in this fund and we then have 20 portfolio companies to support and we continue making investments, at some point there is a trade off in terms of whether we can support our existing portfolio or we are then prioritizing only new investments or are we only supporting a small portion of that portfolio.

I’m very conscious that there is a limit on bandwidth to a single individual, to a couple of individuals.

Section Six: Mentoring and making connections in the emerging clean tech community

Chris: So changing tack slightly, one of the things that you were involved in that’s really interesting was the CleanTech Challenge with London Business School and UCL. Could you tell us a little bit more about that?

Amory: Yes. The CleanTech Challenge is a clean tech competition run by LBS. These are very early idea stage initiatives, some by students and some by people who are more loosely connected to that student ecosystem. What I love about that is it’s at that sort of point of maximum passion where someone has something that they have discovered, have uncovered and researched and they say, ‘you know, I think there’s the basis for something really, really exciting here.’ It’s really raw, it’s very unfiltered. I really enjoy it because the start of that entrepreneur journey is just total optimism and excitement. It’s fun to be involved in.

Chris: How long have you been involved?

Amory: Since 2019.

Chris: Was any part of that experience involved in your thinking, ‘Oh, I really want to get more into that?’ 

Amory: Yeah, absolutely it is. I think you only work as a venture capitalist if you’re passionate about startups. And I’m so very, very passionate about early-stage businesses. So if there is a way to give a bit of time and hopefully be helpful to some of these ideas and some of these individuals then, absolutely, that’s a great use of my time.

Chris: And any that you think, we should have a conversation? You know, I’ll take off this hat, put this hat on and say, come on over?

Amory: There’s always that in the back of my mind. Absolutely. I think a lot of people use the Clean Tech Challenge as a sort of experiment pool and are just testing ideas. So for us, the more interesting thing is the individuals versus the ideas and saying okay, you might be a very, very interesting individual to keep in touch with. It might not be this idea, but the way that you’re thinking about problems and solutions is really appealing to us. I’m more focused on the individuals at that stage than I am on the idea.

Chris: You also mentioned that you feel part of your role is to be introducing people and trying to get to: you should be working with those people. Have you found any connections you can draw from the CleanTech challenge into portfolio companies or associations?

Amory: Absolutely. We regularly make introductions. I make introductions for companies that I’ve interacted with either on the CleanTech Challenge or just actually more broadly where, you know, we’re probably not the right partner for you, but I know X, Y and Z who could be really useful from an investor perspective. And, also, what we’ve done a couple of times is to say, ‘you know, that’s not necessarily the right investment for us, but we know an individual who really, really understands the space who you should be talking to.’ Perhaps that individual becomes a board member or an advisor to that business. 

With my background, I know a lot of people, for example, who have worked in conventional energy, who have huge knowledge in, say, sub-Saharan Africa dealing with governments there who can be really useful for energy impact businesses operating down there. So, making those connections with these two sets of individuals from completely different backgrounds, who would otherwise never encounter each other. I think it’s pretty rewarding, it’s really great when that comes together and it creates a meaningful partnership. 

I’m a big, big believer in paying it forward. I think this ecosystem is tiny and if you do right by people and you make those connections where, really, it’s very easy for you to do that, it tends to have a way of coming back positively to you.

Chris: I follow the same philosophy myself. It’s a good one. Have you had any ‘aha!’ moments in the CleanTech Challenge, or somebody who just came across an idea that you thought would change the world?

Amory: Not yet. I remain really optimistic that that will come. I have seen a bunch of ‘aha!’ moments recently coming from some of the incubators and accelerators that are doing really, really good work on the climate side. I think Carbon 13, at the moment, is really starting to hum and produce some phenomenal companies and teams and Entrepreneur First is doing some interesting things around climate as well. I believe they are starting a climate-specific cohort, which, for a general accelerator, is a big thing, it’s a big moment. So we’re seeing some really interesting companies come out of those two and some of the European incubators as well.

Chris: As we roll towards the close, I would like to pick your brains on what you think the future might look like and also gets advice for the two different worlds that you work in. First on looking towards the future and what kind of trends you see in the clean tech market: what do you think it will be five or so or six years in the future, and what’s one of the big overarching things we’re looking for?

Amory: From a consumer perspective, I think decarbonizing heat and homes is one of the absolute imperatives. Obviously, we’ve made huge strides in electric vehicles. I think in ten years time it will be very, very unlikely that people will choose to buy an ICE vehicle brand new. I think everyone will be purchasing EVs and I think that will move far faster than perhaps as a society we expect it will. And the same with installing solar panels on your roof, etc. But I think heat, especially with the sort of the nature and age of British housing stock, is the real number one challenge in terms of people’s day to day lives. 

I would love to see more innovation happening in that, and companies really focused on actually rolling that out at scale. There are huge, huge challenges around supply chain and around installation capacity at the moment for things like ground source and air source heat pumps. There are a couple of companies working and doing some really interesting things in that space at the moment, which I’m excited about. 

And I’m interested also in how behavioral change at a societal level starts to impact upon consumption more broadly. Does air travel become increasingly unacceptable for society? Do people start to say guiltily, ‘well, you know, we’re going to be going on holiday down to southern Spain this year, but we’ll take the train,’ something like that. I think that’s really, really exciting. 

It’s also really interesting to see where people’s diet is going to head as well. There’s been a huge amount of enthusiasm for alternative proteins. I just haven’t seen it break through into the mainstream, but I remain…

Chris: Yeah, vegetables are better, seriously!

Amory: Well yeah, as a sort of vegan myself, I remain really optimistic that that is going to hit the mainstream at some point. 

And then more broadly, on the technology side of things, some of the businesses that are being built in very hard to abate sectors like steel, like ammonia, like hydrogen are hugely, hugely exciting. I think your average consumer isn’t really going to feel that impact day to day, but the system level impact some of those businesses can create is fascinating. 

The third area for me, because I’m a bit of a finance nerd – I’m super, super interested in the future of carbon markets, and how perhaps mandatory carbon markets and voluntary carbon markets potentially start to come together and what that future looks like. I think there is a huge role to play from a regulatory and government perspective in terms of applying carrot and stick on carbon and how that then informs business behavior and consumer choices. 

So I think there is some really, really fascinating stuff happening. There’s some really strong potential and how that then cascades down to what companies are doing beyond that is really intriguing.

Chris: Fantastic, thank you. Really brilliant summary.

Amory: Thank you.

Chris: And now onto a little bit of advice. So first off, what advice would you give for a potential founder, someone who’s looking to be going out and getting in, ultimately having a conversation with someone like you and getting a good investment. What kind of key message would you give?

Amory: I think the two key messages that I would give are first of all: be optimistic. Go for it, give it a shot. I think we are increasingly, as a country in the UK, adopting more of a Silicon Valley mindset in terms of it’s better to give it a crack than just to never do it at all. So be optimistic, be brave. The second element is: seek advice. There are a whole generation of people who have worked in the clean tech domain who have huge experience. I’m surprised a lot of founders don’t go back and seek advice from them. So I think there’s that optimism, that bravery – people saying, ‘I’m going to go in, I’m going to build this thing, but I’m not going to speak to anyone that’s ever worked in this space before.’ And I find that surprising. So, seek advice from a wide variety of people. Seek that experience and really, really understand your value chain because this market, this sector, is very different from enterprise software, for example. You’ve got a very, very complex set of stakeholders and you really need to understand that. And there’s a bunch of people out there who are very generous with their time and have spent their lives building in those domains. They can help!

Chris: And the last advice I would ask for someone who, let’s say, would be interested in coming and joining you or starting a firm or whatever else. What particular skills do you think that they should be trying to trying to hone in on?

Amory: So I think hustle, which is such a hard, intangible concept. I think you need to have the drive to go out and get something without a brand and without a name behind you. So often that just relies on, can you walk into a room full of people and can you try and meet every single person in that room by the end of that particular session? And can you get in front of people and put yourself out there, as it were? 

It’s a very, very nebulous concept, but it’s a really, really hard one to actually get good at. It just relies on you potentially running the risk of looking like a bit of an idiot sometimes and getting out of your comfort zone. But what I’m consistently amazed at in this space is how willing people are to talk to you if you just go up and introduce yourself and have that conversation. And so that grit, that determination, that ability to create something from nothing is the number one characteristic I think that we look for.

Chris: Fantastic. Thanks again for all this time, it’s been a brilliant conversation. I’ve really, really enjoyed it.

Amory: Thank you.


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