When we’re asked about what makes us optimistic about the climate transition, the number one thing is always the quality of human capital that is now rushing into this space. This is at all levels, entrepreneurs, policy people, engineers, but also investors. This is absolutely the case with At One Ventures, who recently closed their $375mm fund II. I am very pleased to say that Keeling Capital participated in this fund via the climate venture fund-of-funds, making it amongst our first few investments. 🎉
At One was founded by Tom Chi, who was one of the founding team of Google X, started his career doing astrophysics research, and did a bunch of product development in tech in-between. He was joined right at the beginning by two amazing partners, Laurie Menoud and Helen Lin, who bring amazing experience and a true diversity of perspective from biotech / industrials and private equity / economic development respectively. As a firm they take a broad interpretation of climate to cover environmental sustainability as a whole, and are laser focussed on investing in technologies with the disruptive financial and environmental unit economics to upend existing industries or, in some cases, create new ones (bee vaccines anyone? De-extinction?). I had the great pleasure of attending At One’s AGM last week in the Bay Area and was inspired to showcase them here. Here’s me taking the floor (because of course I had a question) 👇 and together with Tom and one of my partners Tony Lent.
Instead of summarising our investment memo here (very thorough, but not that exciting), I want to turn to some of the excellent content the team have put into the public domain. This is just the tip of the iceberg, but should give readers a glimpse into why we’re so excited to be partnering with them.
The Three Epochs of Ecological technology
Happily, At One have made Tom’s keynote from last year’s AGM public. It illustrates brilliantly both his first-principles thinking and long-term vision. This talk is structured around the evolution of ecological technology / green tech from where we are today, to where we should ultimately strive to get to, possibly only many decades from now. The whole video is well worth a watch, even if it is long. The (highly) distilled version:
Epoch 1: Material Productivity - this is where the vast majority of opportunities exist today and really revolve around efficiency. How can we get the stuff we need (or desire) by using less energy or water, or producing less carbon or other pollutants? Portfolio examples: Mojave, Revterra. The tenets of the first epoch are:
Resources are commodities with practical limits
Financial leverage via more judicious use of materials
Economic indicators linked with resource efficiency, e.g. GDP per tonne feedstock / pollution, etc
Epoch 2: Enriching Ecosystem Metabolics - in a word - regeneration. The idea behind the second epoch, which we’re just now at the start of, is that nature produces value sustainably over time; trees grow, top soil regenerates, ecosystems heal. There is some early appreciation of ecosystem services, but the high leverage we get from nudging nature in the right direction is wildly underestimated, or under-appreciated. Hilarious example - world’s biggest DAC plant now under construction, has the same carbon sequestration potential as… 200 beavers. Portfolio examples: Dalan Animal Health, Dendra Systems. The tenets of the second epoch are:
Resources are created by health ecosystem metabolics (verbs)
Financial leverage via protecting / enriching via sensing / actuation
Economic indicators linked with metabolic health, e.g. trophic cascades, watershed health, nutrient cycles
Epoch 3: Maximisation of Diverse Nutrient Flows - looking forward to the future, how do we work towards a profound understanding of metabolics to maximise the value of every input - drop of water, nutrient, photon - in an ecosystem. This takes some explaining (again, the video is well worth a watch), but if you think about the difference between sunlight hitting rock (no organisms benefited) vs hitting a plant (benefiting the plant, the soil, any herbivore that might eat the plant, any carnivore that might eat that herbivore) you start to get the idea. A practical example of what it looks like to savour every water molecule is the traditional Hawaiian water management system called ahupua’a, by which every section from the watershed down to the sea has different rights and responsibilities for the water (see below example of terraces used to filter sediment before the water moves downstream). Early glimpse of this in a portfolio company: MiraTerra Soil. The tenets of the second epoch are:
Resources are created by a profound understanding of metabolics
Financial leverage via savouring every photon and water molecule
Economic indicators linked with organisms benefiting per photon
Helen’s recent appearance on Tech 4 Climate podcast
The importance of unit economics:
In general, it is safe to assume that “people suck” and will be motivated by self interest and economics and can’t be depended on to do the right thing. [Knowing Helen and the team, and they are not misanthropic as a rule, but this is a certainly a prudent maxim for an investment thesis.]
Regulations can be helpful, but can’t be depended on. Technologies need to deliver meaningful savings and margin expansion to end customers to remove market risk and have the ability to meaningfully scale.
Portfolio support:
In order to support many diverse technical portfolio companies, At One asked their companies what their main problems were and hired a platform team in-house who are fully dedicated to portfolio support. The things that came back were hiring (enter VP of Talent, Lisa), marketing (cue head of marketing, Ana), fundraising (fundraising support via Meryl), and manufacturing scaling (welcome, Dilip).
The valley of death:
Despite a proliferation of funds focussing on climate in the last few years, there still exists a valley of death for companies between the early stage investors (like At One) and later stage growth / PE investors or project financiers.
One of the real challenges is around hardware companies that need to build initial industrial commercial facilities $10mm+, where it equity starts to become punitively dilutive, but, because the company is pre-revenue they don’t qualify for most growth investors, and, because it’s a first-of-a-kind (FOAK), it doesn’t qualify for project finance.
Thesis around step-change improvements and mining.
At One tend to frame breakthrough tech as delivering some meaningful improvement across the metrics of matter, energy, and space/time. Can something be produced using less matter, or less time, or with a considerable reduction in time or land-use?
Mining and minerals are now one of the focus areas for At One. As EVs move up the adoption S-curve, it is creating an exponential growth in demand for certain metals and minerals. This involves moving a lot of matter and huge amounts of energy for processing.
One of the main challenges with mining is that, even as the demand grows, we are dependent on ores of decreasing quality (the low-hanging fruit has been picked / mined). So we require continuous new waves of innovation to scale production. [I wrote a bit more about this in the case of copper here, which is one of the most challenging ones as it is already mature and at massive scale.]
At One is looking at various parts of the mining value chain from extraction (Evove) to material recovery (Ascend Elements). They are also looking for opportunities in the processing step. There are meaningful energy savings to be made by moving from pyrometallurgy (using high temperature heat for processing) to hydrometallurgy (water-based processing) and opportunities to tackle the geopolitical risks of processing concentration (ahem, China) by making it more distributed.
If anyone’s interest has been piqued by the above, I’d encourage you to delve further via the numerous podcast appearances by the team or Tom’s talks on YouTube, or check out their News and Resources page. You can also feel free to reach out to me directly if you want to know more. Lets go!