MCJ Collective LP Report: Fund V (Q4 2021)
MCJ Collective LP Report: Fund V (Q4 2021)
Dear MCJ Collective Family,
For the last 4 quarters — since the launch of the MCJ Collective venture fund in Q4 2020 — we have been publishing a quarterly update to our MCJ fund investors.
As the new year rolls around, we have taken inspiration from the spirit of Erika Reinhardt’s recent tweet about reporting accountability and realized that we not only should start sending an update to the broader MCJ community, but that it is our duty to do so in service of the collective spirit to which we all ascribe.
No better time to start than the present!
This quarter’s report is skewed toward our fund activities as it is a public version of our quarterly fund report; we are committed to sharing all that is appropriate from a confidentiality and regulatory perspective. From next quarter and beyond all of our reporting will be inclusive of all three pillars of MCJ — content, community, and capital.
For now, hopefully you’ll find our fund reflections helpful, and as always, we can’t wait to hear your feedback and suggestions for improvement.
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MCJ Fund Investors,
As we reflect back on 2021, we are filled with deep gratitude for your support and with awe for the market that we saw develop around the climate tech movement with which we identify.
This year saw climate tech grow into a significant venture category. When we started the My Climate Journey podcast in 2019, climate tech wasn’t even really a phrase. Most conversations about the category were focused on the rearview, as in “the cleantech bubble of the late-aughts” and “the cleantech crash of the 2010s”.
2021 ended that.
We saw top-tier funds launch dedicated climate vehicles and/or bring on investment team members to specialize in the sector. We saw the continued gravitational pull of top-tier talent into climate solutions. Climate policy emerged as a flashpoint in US domestic politics and in global discourse with COP 26. And we saw a 3x increase in the amount of venture capital invested into the sector year-over-year (per PwC).
At MCJ Collective, we are but a fraction of this deployed capital, but when we look across our three pillars of activity – content, community, and capital – we believe that we punch above our weight class in terms of impact. The influence of our My Climate Journey podcast audience gets us access to meet with some of the industry’s leading startups and founders, many of whom have gone on to open access to their financing rounds and cap tables to our fund(s). The engagement of the MCJ member community serves as a critical onramp for talent and as a dot-connector for builders and influencers in the space, including our portfolio companies. And all of you – the MCJ LP base – frequently lend your skills, expertise, and relationships to MCJ portfolio founders in a way that allows us to legitimately market you as a key differentiator to prospective portfolio companies. All of this helps us increase the scale of impact we all collectively bring to climate solutions. Thank you for that!
We experienced our own profound growth in 2021. MCJ started as Jason’s own climate journey and has evolved into all of our journeys. Thai evolved from Chief of Staff to Principal to Partner. We added Cody as Partner. We added David as Chair, Antonia as part-time COO, and Yin as Operator-in-Residence.
And we grew our capital base substantially, roughly tripling the MCJ Core Fund over the course of the year and adding the MCJ Opportunity Fund to our capital stack. Each investment we announce attracts more great dealflow and more high quality LPs. This virtuous cycle has helped us increase the breadth and depth of our collective impact on climate change.
We view MCJ Collective as a movement. A movement of talent. A movement of influence. And a movement of capital. All of this comes together as a movement of collective innovation around climate solutions – a movement that breaks down silos and unleashes problem-solving capacity.
We believe we’re just scratching the surface of the impact that this movement can have. We are fired up for 2022, and we are grateful that you are on this journey with us.
Sincerely,
Jason, Cody, Thai, Yin, and David
Team Updates
This quarter we announced that Yin Lu has joined MCJ as our first Operator-in-Residence, providing strategic support to our portfolio, community, and across the platform. Having spent a decade in leadership roles in the edtech sector, Yin started Coursera's early community team and was responsible for scaling Khan Academy's international growth. Most recently, she worked at Sheryl Sandberg's nonprofit, focused on diversity and inclusion efforts. Yin and her family (partner and 2 daughters) are passionate about climate and split their time between the Bay Area and Vancouver, BC. Yin is also a fellow LP in the fund, to boot!
The Opportunity Fund is Live!
As we announced earlier in December, our new Opportunity Fund is now live on AngelList. We want to thank the many LPs from the Core Fund who have continued to support our mission by committing to this new vehicle, which is intended to invest in select follow-on rounds from our existing portfolio, as well as occasional exceptional later-stage opportunities. We have already earmarked our first investment from the Q1’22 Opportunity Fund in an exciting early portfolio company that we look forward to announcing when the company is ready to share publicly. If you would like to become an LP in the Opportunity Fund and have your commitments go toward these Q1 2022 investments, feel free to reach out.
Also, just a reminder, we have included Opportunity Fund LPs on this distribution list (and will have one LP report going forwards, at least initially), but the new investments listed below all come out of the Q4 2021 Core Fund.
2021 Climate Tech Trends
To put Q4 performance in context, we thought it helpful to share some broader trends we’re seeing in climate tech.
Notable Capital Increases With over 10% of venture dollars put toward climate startups, 2021 represented a banner year for climate tech investments globally: in the first-half alone, more than $60B was invested in the sector, representing a ~3x increase over the prior year.
(Source: PwC’s “State of Climate Tech 2021”)
This amount was raised by more than 600 climate tech startups, and represents a record in terms of investment volume and growth.
(Source: PwC’s “State of Climate Tech 2021”)
Leading Sectors: Transportation, Enablement, Agriculture and Energy
Reflective of the broader landscape, among 2021 U.S. VC-backed climate tech investments, four categories represented the prevailing recipients of capital: transportation & logistics; “enabling technologies;” agriculture & food; and energy & power.
Source (SVB's "The Future of Climate Tech")
The rise of Climate & Crypto
Q4 saw the launch of a few high profile projects at the intersection of cryptocurrency/Web3 and climate. Most prior dialogue about this intersection focused on the extraordinarily high energy usage of proof of work blockchains used by Bitcoin and Ethereum (including arguments for and against these technologies and their relationships to climate change). The October launch of KlimaDAO took the climate and crypto worlds by storm as an attempt at a carbon-backed currency. Since launching in late October, KlimaDAO has nearly 14M tons of CO2 in its treasury and garnered the attention of Macquerie Group and others when carbon credit retirements on the Verra registry saw a substantial spike in retirement. The credits in Klima’s treasury are currently bridged on-chain via Toucan, a separate protocol designed to enable multiple use cases for on-chain credits. Within weeks of KlimaDAO and Toucan launching, a new ecosystem of carbon-backed crypto projects began to emerge. All of this is being referred to on Twitter as #ReFi (Regenerative Finance) and we are seeing early innings experimentation with multiple projects in this space, including on-chain carbon futures markets, MRVs, climate data marketplaces, activist hedge funds, NFT projects, and more. At MCJ we certainly don’t have the answers as to whether or not these technologies will be a force for good, so we are doing our best to engage and participate in this space as it emerges in order to learn by doing. Check out Jason’s podcast episode with the Toucan founders and Cody’s Twitter musings to follow along with our climate + crypto journeys. The #climate-blockchain channel in the MCJ Member Slack is also a great resource to stay in touch with the latest. And just this month, the Wall Street Journal leaned in to cover developments in the space.
Peering around the climate corner
As recently reported in The Wall Street Journal, 2021 saw a further coalescence of capital across asset classes being put toward climate tech. With this backdrop in mind, we expect strong investor interest in the sector and opportunities for liquidity to continue. While this bolsters our confidence, we are also cognizant that, given the U.S. finds itself in the midst of the longest bull market in its history, there will invariably be corrections on the horizon. Notwithstanding, we believe that our vision of MCJ as the leading high volume, highly diversified early stage climate tech investment platform will provide resilience in the face of whatever turbulence may befall discrete segments of the sector and the financial markets as a whole.
Q4 in Review
As with the prior quarter, Q4 was marked by active deal flow across a breadth of categories. In total, we deployed $2.91MM — representing 99.9% of the Q4 fund and a ~14% increase over the prior quarter — in 14 impressive companies (2 of those are Q4 deals but awaiting legal paperwork to be finalized). Two of the investments were follow-ons in existing portfolio companies, underscoring the growing need for our Opportunity Fund. Heading into Q1, we are as well-positioned as we have ever been with a strong pipeline of deals and access for both the Core and Opportunity Funds, respectively. You will find further in this report a recap of the portfolio to date along with trends.
Fund Update
Select Portfolio Updates
Charm Industrial (Fund Q4’20 and Q2’21) announced it has removed 5,000 tons CO₂e since January — believed to be the largest permanent carbon dioxide removal delivery of all time.
Co-founder Peter Reinhardt also officially announced that he was leaving his CEO role at Segment to serve as CEO of Charm full-time.
BlocPower (Fund Q2’21) met with VP Harris in November and was the recipient of a $5.5MM grant from the Bezos Earth Fund to create an open source energy model data set as part of the Building Data Collective.
CEO & Founder, Donnel Baird, is a former senior staffer on President Obama’s ‘08 campaign.
Dispatch Goods (Fund Q3’21) announced its $3.7MM seed round, led by Congruent Ventures with participation from Incite and other investors.
Arcadia (Fund Q3’21) announced it will take part in rolling out one of the largest community-solar projects in Massachusetts.
They also announced Arc, a technology platform creating unprecedented access to the data and clean energy needed to decarbonize the grid.
Investment Framework
Having launched our new Opportunity Fund, we have refined our investment framework with updates highlighting how both the Core and Opportunity funds operate in tandem.
From our Core Fund, we will primarily look to invest $100-250K in pre-seed, seed, Series A round companies. For follow-ons from our existing portfolio, we will generally invest up to $250K in pro rata, with any remaining allocation coming from the Opportunity Fund.
From our Opportunity Fund, we will seek to write $1m+ checks in select follow-on opportunities from the Core Fund portfolio. We also may occasionally participate in later stage rounds for exceptional companies we have not previously backed in the Core Fund, but we expect those to be the minority. The early quarters of this new fund will serve as our “MVP,” and we expect to fine tune the approach as we get more learnings, similar to the approach we have taken with the Core Fund.
Asks from the Portfolio
With so many LPs like you volunteering their help supporting the portfolio companies’ needs, we asked our founders to give you all some homework, and here are some of the responses we’ve received.
(Rheaply) Seeking help with key talent hires and customer introductions.
Seeking candidate referrals for Engineers & VP of Sales or CRO (see Careers page).
Introductions to companies in retail, big tech, construction, and manufacturing with contacts in procurement, sustainability or real estate/facilities.
(cirplus) Hiring for VP Growth and Lead Product Manager among other roles
See Careers page
(Lightship) Seeking 1) values-aligned DEI advisor; 2) insights on how to scale a company remotely; 3) intros to RV industry contacts.
Seeking a DEI advisor who can help with inclusive-culture building and diverse recruiting.
Intros to anyone deeply involved in the RV / motorized outdoor recreation industry (power users and / or professionals).
(Yard Stick) Seeking candidate referrals to a variety of job openings and intros to a number of companies.
(Overstory) Intros to contacts at new market opportunities.
Overstory is seeing significant traction with its vegetation management platform for electric utilities in the US. It’s now exploring potential future markets and would love to get in touch with (re)insurance companies, fire emergency, and large land & property owners to explore wildfire risk mitigation strategies.
(Scoot Science) Seeking intros with individuals and institutions across several areas in the finance sector.
Private equity (e.g. KKR); Structured credit (e.g. JP Morgan); Debt (e.g. private debt funds such as KKR); Capital allocators (e.g. family offices or pension funds); in-house resources covering these areas (e.g. Canadian Pension Plan)
(Living Carbon) Seeking 1) insight from those with real estate expertise; and 2) intros to various industry contacts
Introductions to heads of sustainability/companies interested in carbon credit purchases in the following industries Automotive, Mining, Textiles, Apparel, Air/Ground Transportation, Pharma, Software, Construction.
Intros to landowners of abandoned mine land or large unforested or previously forested areas of >100 acres in Appalachia, the great lakes region, and the southeastern U.S.
Anyone connected to procurement and manufacturing of electric vehicle batteries and/or stainless steel (Ford, GM, Panasonic, Sony).
Portfolio Summary
Since the inception of MCJ Collective in October of 2020, we’ve deployed ~$10MM in 55 investments, representing 47 companies across a breadth of entry points and climate categories.
Nearly two thirds of our investments have been done at the Pre-Seed to Seed+ stage, followed by Series A/A+.
Per our “climate index” strategy, our investments run the gamut in terms of category.
To date, companies headquartered in the U.S.A. represent the majority of our investments. Given climate change is a global issue, we are not limited in our geographic scope and hope to develop both the ability and access to invest in companies around the world.
Companies Backed in Core Fund V (Q4 ‘21)
We invested in 14 companies in Q4, though only 3 have been announced publicly as we follow our portfolio companies’ lead with respect to sharing financing details. Many of these will be announced in the weeks and months ahead.
cirplus: $250K (Seed)
Reducing plastic emissions by scaling brands’ use of recyclable plastics
Co-investors: Pale Blue Dot
Announcement: “Our Investment in cirplus”
Moment Energy: $200K (Seed)
Reducing EV battery waste and scaling renewable energy storage and adoption by repurposing batteries
Co-investors: Version One Ventures
Announcement: “Our Investment in Moment Energy”
Evergrow: $100K (Seed+)
Making it easier for carbon projects to get financing by serving as the world’s first carbon offtake company
Co-investors: First Round Capital, XYZ, Congruent
Announcement: “Our Investment in Evergrow”
Fund V (Q4 2021) Total Capital Deployed (net of fees): $2,910,000
Capital Remaining (which will roll over to next quarter): $1,290.36
In our future reports we plan to share comprehensive updates on the state of our content platform as well as our member community in addition to our fund updates. Collective innovation takes all of us working together like never before to realize the systemic changes we need to make to not only reset our planetary boundaries, but to help us achieve a world that not just survives but wholly thrives. Every day we are more and more optimistic that together we can all make the difference that the world needs.
Note: several images were included in the original report that didn’t fit in this substack due to size limits.