In 2017, investor and entrepreneur Chris Sacca decided to hang up his spurs. An early investor in Uber, Twitter, Instagram, and Stripe through his venture firm Lowercase Capital, Sacca just wasn't feeling the passion for investing that he once felt. As he recounted at Fast Company's virtual Most Innovative Companies Summit last week: "I would be on Shark Tank--and I loved that experience--but I would say 'OK, great pitch, amazing kitchen gadget'--but is this really what I want to do with the next 50 years of my life? Is this why I want to tell my kids I can't come out and play? Because I'm working on your little kitchen gadget?"
That existential crisis led Sacca to launch Lower Carbon Capital, which has raised more than $800 million to invest in climate tech startups that tackle things like kelp farming, lithium mining, fusion power, and zero carbon cement. In Sacca's words, businesses that are making real money, "sucking carbon back out of the sky and buying us time to unfuck the planet."
The fact that the climate tech businesses in Lower Carbon's portfolio are making money represents a shift in the economic viability of the sector, Sacca says: "That first generation of climate tech VCs were investing in companies where the root economics just didn't make sense. The companies were too expensive to start." Those VCs, he says, had to rely on lobbying for government subsidies and regulatory changes to make climate tech viable. But now, advances in technologies like cloud computing, machine learning, nuclear fusion, and synthetic biology have given companies fighting climate change a leg up. And that means huge returns for investors.
Take, for example, Heart Aerospace, an all-electric passenger plane company in Lower Carbon's portfolio that promises to have its all-electric passenger aircraft commercially certified by 2026. When its founder, Anders Forslund, came to Sacca a few years ago to ask for an investment, he promised to build an all-electric 19-seater plane with a team that could fit inside.
When Sacca gut-checked the viability of this plan with Boeing and Airbus, the airplane giants said it wasn't possible. But computational modeling suggested otherwise. Instead of starting with the task of building an actual test plane, Forslund rented a hangar in Sweden, and sat in a corner with computer scientists and aerospace engineers. "They built the whole damn plane on the computer, running simulations that would have taken over a decade in real life," Sacca says. On a budget in the "single digit" millions, Heart Aerospace was able to use that digital model to build a working prototype, which lifted the company from zero dollars in revenue to billions of dollars in pre-orders, including from Mesa, a United Airlines partner.
The technological advances that have created more efficient startups might just be key to turning the tide on climate change. Because now that climate tech is viable, says Chris Sacca, it's a huge money-maker.
"The wealth that is being generated in climate tech right now will wildly eclipse all of the wealth ever generated by the Internet total," Sacca argues. "I mean, we have companies in our portfolio right now that we believe will have multitrillion-dollar market caps. Whether you look at energy transportation, food, building materials and management, industrial chemicals--whatever it is--every time you take carbon out of that equation, you've just left yourself an opportunity to make a lot more money."