Climate and Cleantech Investing 101

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Hey there, solar warriors. I’m Nico Johnson, and this is SunCast. Each week, I pull back the veil on the life and business insights of clean tech entrepreneurs, building the most noble and impactful companies of our time. I hope what you learn from this conversation is a catalyst for your own growth. So thanks for tuning in and welcome.

Hey, Solar Warriors, welcome back. If you’re new to SunCast, I just wanted to say, thank you for giving us a chance to earn your attention by lending us your ears. I’m the only non renewable resource that you possess. That is your time. Today is the Climate and Cleantech Investing 101. If you’ve been wondering what is going on in the world of climate and cleantech investing today’s entrepreneur, Mr.

Craig Lawrence, is going to give you The 4 1 1. I had so much fun interviewing Craig. He is an OG, legit, and you’re going to enjoy the stories and the insights that Craig shares from his wealth of experience, both investing in, growing, selling, and now investing again in clean tech 1. 0 and 2. 0. I hope that you are subscribed to the show.

So that’s going to ensure that you won’t miss out on our twice weekly content just like this. Like this, of course, you can always check out more than 550 episodes in our back catalog, clean energy founders, stories, and startup advice, just like what you’re going to hear today from Craig Lawrence. That’s all over at mysuncast.

com. For now, get ready to tune up your skills, Solar Warrior, as we tune into another powerful conversation here on Suncast. Over the last year and a half to two years, I have Done an inordinate amount of research into the world of energy and climate tech investing. If you’ve been following along at all, you know that we have talked about it here on the show through companies like Energia and Finite.

A ton of other platforms that are popping up, including our own Climate Avengers, which you’ve been listening, paying attention. We just launched that podcast. So I want to lean into an area that many of us potentially feel vulnerable or completely ignorant around how the money works and how this all can spur the kind of economic growth that we all believe is possible.

Thanks to. Climate action and the kinds of companies that we want to invest in, which is essentially the more important aspect of all of this. One of the folks that I really am grateful to count as a mentor and a friend recently came into my life, a guy named Craig Lawrence. And if you have no idea who Craig is, he’s got 25 years in venture capital, engineering, product development, executive roles, and some of the most notable companies you’ll no doubt.

Recognize some stories that we’ll dig into that maybe haven’t been told in public before. He has led venture capital investing in Silicon Valley with companies like Excel partners. We’ll run through the list. I’m sure with Craig and he and his partner, Neil have recently been on the journey of venture investing themselves with their own fund called Energy Transition Ventures.

Here to enlighten us today is Mr. Craig Lawrence. Thank you for taking time to be on the show.

Craig Lawrence: My pleasure, Nico. Been looking forward to this for a long time.

Nico Johnson: Yeah, the feeling is mutual, my friend. So I’m going to start out with something that I haven’t done before. I was just chatting with you a minute before we hit record that one of the things that I collect is are quotes.

I don’t know why. I just love quotes. So I have a rolling desktop back. backdrop that gives me inspiring quotes every day. It actually changes like every 30 minutes because I, maybe my rabbit brain needs that kind of of inspiration, but I’m going to start sharing my quote of the day or favorite quote, and I won’t ask you to give yours and prepare you, but.

But the listener beware, if you’re soon to be on the show you are going to be asked to share an inspiring quote at the beginning of the show. Cause I think it’s, I just think they’re wonderful. I love gleaning from the wisdom of others. And Williams Jennings Bryan says the way to develop self confidence is to do the thing you fear apropos, because the thing that I probably leaned away from the most in my career is finance and investing.

And today we’re going to dig into that topic and how it has changed the lives of many people. In our sector yours among them, how would you Craig describe the problem that you’ve created ETV to solve? Talk to me as though we’re at a dinner party and I have no idea what field you’re in.

Craig Lawrence: That’s a big question.

So we, we were very deliberate in naming our firm. And. As you mentioned, I’ve been in and around the what we’re now all client calling the climate tech space. But has had various other names including clean tech probably most recently. For a while and as we were forming this company, this firm we spent a lot of time thinking about what it is we wanted to focus on, what problems we wanted to solve, was good.

What was bad about cleantech that we were both a part of, and we’ve honed in on this concept of the energy transition, which interestingly now is a very common term Yeah. Used everywhere. Three years ago, it was not that it was not a, it was not a term of art. Really you heard it in some corporate boardrooms particularly in the traditional energy companies.

They liked the term because. Using the word transition makes it feel like they’re not going to be disrupted, that they actually get to just gently transition into the new world. But, so we are really focused on that. And this is a journey, I started 20 years ago before we were talking about climate change as a society.

And what I saw happening 20 years ago is what I’m still focused on today, which is I saw a new set of technologies emerging that felt like they had the potential to rewrite how we produce and consume energy. In a positive way both economically clean I grew up in the seventies of the oil crisis.

It felt like, Hey, like we need to get off this juice that is causing so much, geopolitical trouble. My partner, Neil’s been on a similar journey. He’s been in it even longer than me. And and so we narrowed in on this energy transition. It’s the journey I started 20 years ago.

It’s the same one today is we are at in the very early innings of a massive economic political transition off of fossil fuels, which has been the primary driver of growth and technological advancement and civilization for the past decade. A couple centuries and we see a world where a new set of technologies, a new set of tools to produce and consume energy are going to dominate.

And so that’s what we’re focused on. We’re focused on finding and investing in the entrepreneurs and the technologies that are going to drive that. Now, in the meantime, climate change has become a, obviously a massive topic and is a massive driver and something, we care about quite a bit, but really it’s not the fundamental driver of what we do.

We see this as a we see this as a, a transition that was going to happen with or without. The backdrop of climate and that climate is an accelerant for this transition, the sort of urgency around the need to do something is purely tailwinds for the type of things we would have been investing in anyways.

Nico Johnson: A couple of things that you said there, I love and I want to highlight fossil fuels. Being the primary driver of growth and civilization over the last several centuries, and I think that’s something that is not, it’s not really internalized by a lot of folks it’s in my, in many ways, something that lays as a secondary layer in everyone’s life.

From literal clothes that you’re wearing and watch on your wrist to all of the things that encompass the way that your vehicle transports you around town in, in very physical manifestations the rubber tires to the fuel inside of the engine. To the plastic visor and rear view mirror, the petrochemical industry and the fossil fuel industry has truly powered the industrial revolution and and been at the heart of it.

And so it’s really important that we understand Craig is saying here, and this is the second point, climate change is not the primary driver. For the change that energy and energy transition funds are investing in. It is an inevitability regardless of the fact that Miami your hometown will be underwater someday.

We would see if Miami were going to be lifted out of the water, we would still see an energy transition. It is not the threat of global warming that is driving this energy transition. It is simply. The natural knock on effect of technological advancement. It is the passing of a baton.

Craig Lawrence: And to be fair there are a large number of people, my peers who, for which climate change is actually the driver of what they’re doing. It’s extremely important to what we’re doing. So there, there are some people, and I actually think it’s we’re running an interesting in the world of venture capital and finance broadly.

We’re running an interesting experiment, which I don’t know that we’ve done in any major industry is we’re laying on a new metric, ESG or carbon, tons of carbon, a new metric to quantify investment opportunities that are not directly financial metrics, right? And it’s, I think it’s.

Going to be really interesting to see how that plays out for the financial community and the investment community. We, we do not do that. I do not have, for our fund, we do not have a requirement that every company we invest in has to show that they can abate X billion tons of carbon, a million tons of carbon.

All of the companies we invest in are going to have a tremendous impact on carbon emissions. They are all going to, but we don’t, we choose not to layer that as a investment requirement because fundamentally, I believe that the most important thing I can do is build successful companies.

And to do that, they have to be able to raise capital. They have to be able to deliver product. They have to be able to deliver all the things that typically investors they have to, have revenue and profits. And this is where. We focus our filtering criteria on opportunities.

And our belief is that if we bet on those companies and they succeed, they will have, very large carbon impacts.

Nico Johnson: We’ll get to the size of the fund in a minute. I want to talk a bit about kind of the investment thesis through the eyes of, or the lens of the kinds of companies that you’re investing in.

Those who listen to the show regularly will have listened already. Perhaps, I hope, to Karin Calvino from RenewCO2, whose episode published last month in March, and she is exemplary of the kind of forward leaning but synchronistic ecosystem that you guys carving out. So in the world of VC, there is generally at a fund level, or maybe you can help explain this for those who are VC novices, a fund thesis and how you decide where and how to filter who you invest in.

So maybe use Karin as an example. An example of the kinds of smart folks that you are engaging with and that inform how you think about the best way to channel the the investor money that you have raised into the energy transition ventures fund.

Craig Lawrence: Sure. And yeah the little VC one on one, which, you know, frankly I, I.

My career, most of my career was as an engineer. I came later in my career to finance. My partner, Neil, is a true finance genius. And I’m glad I’m a partner with him because I’m, I still refer to myself as an engineer, even though I haven’t designed anything in years, we’re capital allocators, right?

This is generally not our money that we’re investing. Although we do My partner and myself, we do actually contribute to the fund. So we do have skin in the game. Our investors require us to do that because they, they want us to, they want us to feel, they want us to feel the pain and the urgency of returning capital.

So we have investors all funds have a thesis, right? That thesis, involves what sectors they invest in, what stage they invest in. They all have a sort of portfolio strategy, which is what size check do I write? What, how many companies am I trying to get into my portfolio? So there’s, there’s some magic around, around doing that.

We. Call ourselves an early stage fund. So we are typically looking for, we will invest at the earliest stages of an idea. And I think Karen and renew CO2 is a great example. This is a university technology. They come out of Rutgers university. You’ve got a couple a few very smart PhDs along with a professor who had been doing this sort of electrochemistry work.

And I won’t bother to, say a ton of what they do, but essentially they have a They have a technology that will convert carbon dioxide into complex hydrocarbons, plastics, plastic precursors. , using an electrochemical process. So it’s really magic. It’s instead of making plastics from natural gas which is where the carbon comes from for a lot of plastics it, they make it from carbon dioxide itself.

So you could take waste carbon dioxide from a power plant, from an ethylene plant, from a. From any source and actually turn it into plastics, but make carbon negative plastics. And but they are, it was a university. They hadn’t really officially formed the company yet.

They hadn’t signed the technology license agreement with the university. So we got involved at that, that very early stage with them. And and have been helping them along the way. As best we can they’re awesome. We also invest in things that you would consider later stage, but in the world of investing are still early stage, right?

So we have a company called ZiteView used to be called DroneBase that that just rebranded and just announced a large financing round that when we got involved, they already had revenue, they had product, they were growing. It was a, a later stage, but still in the realm of early stage venture capital.

So we’ll cover that whole spectrum. And we are a little different than some other firms. We’re a small fund. We are what I would call just high conviction investors. We’re not taking a strategy of make, 25 investments and hope one or two win. We are making a small number of investments that we believe very strongly And that, we believe in ourselves that we have the ability to pick those at a higher percentage than our peers.

Time will tell. Historically we’ve done well in our previous lives, both Neil and I. Yeah, so that’s a little VC 101. And it’s a long term game. You have to be very patient. Sometimes I struggle with that, like a company like RenewCO2, they’re in the lab, right?

It’s going to be, years before they start to have real measurable impact. And but I’m looking forward to watching it.

Nico Johnson: So a couple of quick questions. And first, I didn’t realize that ZiteView that DroneBase had rebranded to ZiteView. That’s fascinating. Just like a week

Craig Lawrence: ago. So you’re forgiven for not knowing.

Yeah.

Nico Johnson: Yeah. At the time of this recording in February for sure it was, it is fresh news, but I would have, Expected our friend, Mark Culpepper to have reached out and and mentioned it. No, I’m kidding. Mark I know he’s a listener. Actually, his wife is a more regular listener than he is, but that is fascinating.

I’m gonna have to find out more about that. So I know that sort of drone base is a much later stage business when we talk about. The stages, could you give me like the 32nd primer for anyone who just has no idea they hear series a and all that, but they don’t understand it. I’m really curious if you’ve found a way, like this would take Neil a lot longer to answer probably, but could you give me the engineering answer for the various stages and relative size of the check?

And then if you, to the extent that you can package it easily. The level of sophistication or progress of the company at each stage.

Craig Lawrence: And this is a very fluid thing. We joke all the time. We’ll see a company raising a series A and we’re like, that doesn’t look like a series, that looks like a precede to me.

And so all these terms are have different meanings to different people, but they are indicators. They’re supposed to be indicators of where you are in your company’s life. It’s Is it in the

Nico Johnson: company or in the product? It’s like product market fit.

Craig Lawrence: It’s a little, it’s a little of everything.

It really is. It really is supposed to be in, yeah, where they are in their revenue generating life cycle, right? A lot of this emerged around traditional tech venture investing and clean tech, climate tech, energy transition. It’s a, these companies are different beasts. They don’t behave the same way.

They have different, right. product and sales and revenue life cycles. So it’s really, yeah, it’s really hard to apply these things, but just, really quickly companies usually start, yeah, they start their life by taking, angel investors, which are, pre institutional, but these are usually high net worth individuals, friends and family.

People could be writing them 1, 000 checks or be writing them 100, 000 checks, you’re typically raising sub 1, 000, 000 in your sort of pre seed stage. And often a pre seed, you may just have an idea. You may have a product built and it just it just really depends.

This pre seed is I don’t know if it’s a relatively new thing. I think it’s similar to an angel round. It’s you’re not ready for a seed, which is usually where.

Nico Johnson: It’s a made up term because nobody likes to use the term bridge.

Craig Lawrence: Oh yeah. And and so you go through the projections, but through the progression, precede, seed a B and in, in theory, there are got guidelines around what, what it means in reality, what happens is I need to raise my next round. So I am going to up the level to the next level, whether or not I’ve you know, met the criteria for that, the imagined criteria for that or not. So the stage names really have little meaning to me right now.

I look at where the company is at. Do you have customers? Do you have a product? Do you have a technical proof your thing works? Are you growing revenue? And then, and all, so at the end of the day, that name really doesn’t factor in the name of that round. What matters is. What price I pay for the company what’s the valuation of the

Nico Johnson: thing I was going to ask you.

The valuation is the metric of whether you are moving to another round. But then, if you have a down round, you can move to from an A to a B and have a down round because your relative valuation goes down. Ah, we could get into that. The way that funds work and it would take a whole damn hour. And you want

Craig Lawrence: to talk to Neil about this because like I said, he is the true finance person.

I’m the engineer playing, playing playing finance right now.

Nico Johnson: I’m going to have some time with him in Houston and we are going to dig deep into it because I know he can just geek out for a while. So generally speaking, I have understood angel and pre seed is usually pre institutional. Seed is where you start to get your first check from institutional investing.

It’s usually a strategic, right? Somebody who sees value in the end product and wants to invest early so they can have some sort of a pathway to commercial, help commercialize it or have some sort of level exclusivity. That’s what I’ve seen at Pre Seed at least. And then you’ve got your traditional seed round, which kind of used to be the step after Angel and Series A, both of which, depending on the type of company, I’m stating this on my understanding, asking you to maybe clarify.

So for me, Pre Seed or Seed and Series A typically. Are around product market fit. Do you have something that you could potentially offer in the marketplace and get someone to say yes to send it to them and have them use it and tell you if it works and then B is you get to go do a series B when you’ve got something that looks like.

Solid product market fit. You’ve went narrowed the focus of the five or 10 possible ideas of how you could sell it and you’re going, okay, we need this stack of capital to go sell it this way for the next, maybe 12 to 18 months and see if we can really scale and grow this revenue, does that sound right?

Craig Lawrence: Yeah, that’s right. When you’re getting into the B and above, you’re in, the way it’s supposed to be is you’re investing in growth not growth means different things to different people, but you’ve got something that you want to start scaling more. The, like I said, the difference in climate and cleantech is you’ll have, companies doing sort of deep technology development who will be raising a series E and have never shipped a product or gotten any revenue.

Yeah. And it’s just because it was the next letter in the alphabet and we need more money. Renu CO2 is an interesting example. I would call what we did a pre seed probably. They may skip the seed. It just, who knows, right? It just depends on where they get.

They’re in the lab, right? So they, but they have strong customer interest, right? What they’re doing is unique. And very valuable. So if you’re a plastics company and you’ve got pressure to decarbonize or change your feedstock there’s not a lot of stuff, it’s not a lot of options and this is a very exciting option to them.

So they are, they’re interested now they’re, There are companies that are involved in their pilots and in their demonstrations and that are providing some funding. And we’ve got it, although we don’t, it’s really impossible to say we have product market fit with this company because they’re in the lab.

We know that there is customer interest if they can deliver what we believe the technology can deliver, there are going to be people to buy it. We’re getting that feedback from the market. So that’s for a lot of deep tech type of things. That’s the kind of thing you’re looking for. Do customers want to invest?

Do they want to fund pilots? Are they going to willing to commit to pilots? We have we have another company that is pre product shipment called Resilient Power here in Austin. That’s doing some really exciting. Power electronics technologies, they’ve got purchase orders prior to, prior to having the product ready to ship because customers are so interested.

So these are the sort of indications you look for when you don’t have You know, a nice simple, revenue graph up and to the right that you can rely on as you would if it was a straight software company, for example.

Nico Johnson: If there’s any, so a couple of quick touch points for listeners who this just sparked all kinds of fire balls in your brain and you’re thinking, how do I dig deeper?

We did a deep dive with Karen on how and why she shows investors and how ATV has benefited them. And how much they’ve raised, what the process was, this team that she built prior to and after the raise, we really did dig deep, but the other one that I would point you to, and the person who has given me the most insight as an entrepreneur into their fundraising process was this guy, Wimbo, she at Singularity Energy in Boston.

And you gotta go listen to that episode. We publish it at the end of February. And it is a phenomenal insight into the process as a CEO, building a thing and getting other people alongside you to fund that thing from idea to customer. And and so I just want to highlight those two episodes because it’s really important for folks.

If this stuff, which we’re going to move on a little bit into more of the commercialization conversation. But if this stuff is firing off ideas and questions in your brain and you’re looking for more content, please go listen to those episodes because we’d go deep into it there. And I’d be remiss to not point you to that.

Craig Lawrence: investment categories, right? It punches way above its weight. If you think about, I wish I knew the numbers, like the percentage of investment capital of all the investment types in the world that it goes into venture capital is pretty small. But it produces a lot of impact financial and otherwise.

And it also gets a lot it’s sexier than a lot of the other categories, right? Cause you’re talking about ideas, turning ideas into reality and entrepreneurs taking risk and venture capitalists like to paint themselves as we’re not just investors. We actually help, right? Some don’t.

And so it, it has an aura, but I got to tell you, we, we get a lot of companies reaching out to us probably on the order of 20 plus a week. That we are filtering through and meeting and talking to, and many of them would be better off with not raising venture capital. It is not path for every company particularly some of these deep tech areas that are, you really you really might be better off focused on grants and department of energy programs and other things, other Other things that are available because venture capital is patient capital, but it’s typically not 20 year patient capital.

It’s, five to seven year patient capital. And some of these things just take longer than that to really get to scale.

Nico Johnson: So one of the things, as you mentioned, you’re looking at, the pattern recognition is an important piece of being a good investor. And that pattern matching is a skill built over decades.

We’re going to talk about your skills and Neil’s Neil in, through the course of this conversation, but I’d love to know, one of the things that came, became apparent to me when, in that conversation with Karen is how how intentional you all are about looking at the complimentary cross section between the companies that you invest in from the advisor network that you can plug into to help them down to the fact that Omium is an electrolyzer company and RenewCO2 uses electrolyzers, right?

Yeah. Can you unpack a bit? Some of the things in that light that, you’re in interesting conversations with smart people all the time on the heels of the inflation reduction act and deploying capital at a scale that we have only dreamt of. What conversations are you in right now that you can share a bit about?

Insights that around trends and opportunities for capital deployment that get you excited that perhaps listeners would benefit from.

Craig Lawrence: So it’s funny you do mentioned we’ve got these sort of two electrochemical investments for new CO2 and Omium. I do think as far as like an area, electrochemistry.

I think we feel is poised to rewrite a whole host of industries. And so I tweeted this out a while back, if I was advising, if I was advising young me who was, who studied engineering, what category of engineering to To pick, I would say, do something around electrochemistry.

And of course, I was a mechanical engineer, which is not that. Although, electrochemistry companies need mechanical engineers too. This idea, if I think about what RenewCO2 is doing, they’re using electrochemistry to build complex hydrocarbons. It’s, it’s amazing. They are literally, what we’ve normally had to dig out of the earth, We can create, and there are biological pathways for this as well, too, that people are very excited about.

We get particularly excited about electrochemistry. I could imagine starting a fund just doing electrochemical, batteries are electrochemistry too, right? So a little bit different than what RenuCO2 and Omea were doing, but it’s the same kind of concept. And this is an area where we got excited.

You mentioned pattern matching. When we look at a company like Omium, which is doing hydrogen electrolyzers, we now have a couple decades of, the clean tech boom around solar and batteries which are things that I think, and I was there in, 2005, when there was really Very little solar very little energy store, there were batteries, but not for storing electricity on the grid really there for your, for your products and your devices and have watched how those industries exceeded all expectations.

I don’t know. I’m sure there’s someone out here who’s going to. Point me to a study they did in 2008 that predicted the volume of solar we’d be installing in 2020 and 20, in the 2020s and the volume of battery storage that we’d be installing. And it is orders of magnitude bigger than I ever expected.

In fact I think about residential solar scenario, you and I have talked about I was in a part of an early investment in Sunrun when I was at Excel partners. And I can remember the projections. And in fact, I can, I have some of that of like the success case of like how big the market would be the U.

S. residential solar market. And it is much bigger than than projected. Do you

Nico Johnson: remember anecdotal numbers?

Craig Lawrence: We were not talking gigawatts. We were talking a significantly lower market size and I don’t remember what, I don’t know what the US did in residential solar last year, but I think it was a couple, few gigawatts.

Nico Johnson: Yeah, it’s 500 megawatts a quarter .

Craig Lawrence: Yeah. So there you go. Look so that all happened and I bring that up to say, there’s a new set of technologies that people believe can potentially have the same kind of impact and people are being a little more aggressive at forecasting.

So hydrogen is a great example. Green hydrogen. And we looked at Omium and their approach and they are following the energy storage and solar playbook, which is. And there were lots of different technical pathways. People have been looking at for both of those things. There, there was a time back then when it was not clear that Silicon solar cells would be the dominant solar technology where we sit today, there was concentrating solar, there was thin film solar.

There were a whole host of different technology pathways. Same with batteries. Flow batteries and different types of chemistries here. We are today. We have 2 juggernauts of silicon, solar and and lithium ion batteries and we look at hydrogen and we’re like, okay, why did these technologies win?

And it’s really it’s not, there was not really much change in the core technology over the last 20 years. They’re the same and they’ve improved. They’re more efficient, higher energy density batteries, but it’s high volume manufacturing, right? These are products, right? They’re not projects.

They are products that are mass produced in a factory. And deployed on site with very little, we call EPC, very little sort of project work around them. There’s always some project work to do a big thing, but you’re not building a chemical plant, right? Which is a, customized bespoke project.

You’re just dropping and placing these modules. We, I see the same thing happening in hydrogen. And so we made a bet on Omium, which is taking a small modular, high volume manufacturing approach using a, fairly well established technology but making substantial, technical improvements and system level improvements and and providing a new way to think about building hydrogen and building, a chemical plant, right?

Which is making hydrogen essentially. But treating it like as if you were building a battery storage farm or a solar farm and and that was our pattern recognition and why we pick that approach versus some other approaches that are out there getting funding. Which are taking a bit of a different a different strategy to how to deploy these technologies.

Nico Johnson: Thank you for that. That’s actually super insightful. I hope to, I really want to get Ahmad on the show. It’s a long time bucket list, so I’m going to lean on you guys to tell me when the timing is right. But I don’t know if he does podcasts. It’s interesting. He’ll, I will fly to San Francisco and get a model on this show.

Okay.

Craig Lawrence: You may have to, yeah, you may have to fly to Europe. It depends on where he’s sitting these days. But fantastic. Arnie, the CEO of of m met Arnie in 2005. , I was working at a company called ideo which. Your listeners may or may not know but that’s how I got into this space.

It’s a product design kind of innovation firm in the that was in, in the Bay Area and is still around and still very successful. But Arnie was working for a company called Ion America, which people now know better as Bloom Energy. So they rebranded but when we interacted with their Ion America, they were building fuel cells, solid oxide fuel cells, which Arnie was a head of engineering and he hired IDEO to help with sort of industrial design and some productization stuff around this bloom box that there wasn’t called the bloom box and what it’s now called the bloom box, which is the really first successful commercialization of a solid oxide fuel cell.

And so I met him back then. Obviously I know Ahmad who’s involved with Omium from he was my boss at SunEdison for several years. And these guys put together a super powerful team probably the best team we’d ever seen in the space. And yeah, so encourage you to talk to either.

Nico Johnson: Absolutely. I of course want to. I want to chat with Arnie as well as his time at Bloom alone is informative. I want to, there’s so many conversations to be had, but you mentioned Arnie as the CEO. One of the things that you, I think is gotta be just a simple pleasure of being in the position you are with the 20 plus pitches that come at you.

You get a chance to interact with. CEOs who are early in the life cycle of the business and who are eager to to be challenged in many ways to answer questions about technology that, and ask questions about how to become. Successful, like how to actually commercialize materialize success around an idea or a product as such, you must hear a lot of very insightful and thoughtful questions, but I want to ask a slightly different version of that.

Of this and that is what are the kinds of questions that CEOs looking for investments should be asking you, but often aren’t the things that you sit there going, are you’re asking the wrong question. And what are those?

Craig Lawrence: I would say that the relationship between a venture capitalist and the CEO is is an interesting one.

It is a it is a true relationship. You’re getting into a, What could be a 10 plus year relationship, which is, longer than I think the average marriage lasts here in the U S. You do that, who that person is and how you get along with that person is quite important. And again, I would, we should have done a duel with Neil here, but Neil has a great talk on all the mistakes the first time founders make, and it just so happens that all of our portfolio companies today.

Our first time founders, first time CEOs. We didn’t intend that to happen. That wasn’t, we didn’t go out seeking that. It just so happens that they all are. And we love them all for very different reasons. I think, and I’m not sure if this is where you were going with this question, but the problem I see for a lot of companies is that.

Who you pick to be your investor in the early days, which includes, angels and seed and individual investors, pre institutional really does matter. A term that we talk about all the time is the cap table, which is the, Capitalization table, which is basically a table that shows who owns your company, like who owns what percentage of your company.

And when we look at a company, one of the first things we’d want to see is the cap table, who owns the company and a lot of founders particularly first time founders aren’t really like to them. They just need money. It doesn’t matter. Really where it came from, or maybe even what strings are attached to it.

And we, one of the very first things we do when we’re excited about a company is show me your cap table. And I want to talk to all the people who have invested in you, and I want to understand. Why they invested in you and the normal who are you? And I understand, I want to know what their intention is.

Do they plan to continue to support the company? And a lot of times for angel investors, they can’t write Hey, I wrote my check and that’s all I got. I’m not I don’t have a fund. I can’t just keep funneling money into this, but a lot of times you’ll see Companies that have a cap table with some really strong names on it.

And and with, lot funds larger than ours. A question we ask is why are you coming to me to raise money? You’ve got more money than you need around the table. So to, I think to bring this back to your question is if I the question, I’m surprised how many times that founders don’t know when we go to ask their investors about the company.

A founder should know what your investor is going to say, right? Like you need to know what your investor thinks about you, what their plans are for you, what their future capital are. And I’m out, I’m often surprised at how few have thought about that. And you’re referring to in the

Nico Johnson: diligence process

Craig Lawrence: in the diligence process, right?

And so who you put around your table matters a lot. And we see this play out all the times. It can be the difference between success and failure, because when things get tough and it’s hard to raise new, bring in a new investor, because maybe we’re in a market condition like we are today, which is, Hey, we’ve had a little correction in the market venture.

is slowing down. It’s a little harder to raise money than it was certainly a year, two years ago. Are the people sitting around the table going to support you, right? Are they going to be there for you either with capital, with help? Are they available to talk to you? Because you’re going to be highly stressed.

You’re going to be, the emotional turmoil of being a founder can be tough. And I would just say I have never been a founder. I’ve never been a CEO. I learned very early on. who I am. That’s not what I am. I couldn’t do, I couldn’t do what those folks do.

And I have a ton of respect for them. And that’s one of the best parts of this job is just meeting these people. Like I said, I’ve taken 20 half hours. These people are distilling their life’s work into a half hour for me. And and I feel for them because they’re probably doing 10 of these calls, that day.

And they’re just, it feels like a meat market, right? And I feel for them. And so I, I have to, knock on wood, knock on my head to remind myself every day to be, this is an optimistic time and an optimistic industry. And I I love meeting these people, even if it’s not a fit for us, we will tell them why most of the time we will try to, if we’re going to pass, we’re going to try to, give a reason.

And And and respect the work that these people do and the effort that it takes and the, and just the guts that it takes to go out into the world and try to create.

Nico Johnson: I want you to think about if this were a soundbite that you would want to send out to everybody who’s pitching you to say, Hey, listen to this and come prepared.

Before you’re 30 minutes with us, what do you think is the biggest error in strategy that clean or climate tech founders consistently make, particularly with fundraising? In that seed to series a stage, what do you see as the biggest error in strategy that limits their ability to succeed and grow?

Craig Lawrence: I think most people don’t do their homework when they come to pitch us. Some people do, but most don’t, which is they don’t know who we are. They don’t really know what we’ve invested in. Even though we, we go talk on podcasts like this and we, we write a blog and. We try to put all our investments on our website.

And my LinkedIn is an open book. My Twitter’s an open book. Like you, with a little bit of work you can find out. And what happens so many times is they’ll launch into their pitch. They’ve got, we’ve got 30 minutes, maybe sometimes an hour and 15 minutes in. I have to interrupt them and say, what do you do?

Because they are telling me, they’re telling me about climate change. They’re telling me how important it is, how screwed up the world is and all this stuff. And I’ll try to be patient. I’ll try to be patient. But at some point we just interrupt. It’s what do you guys do? Like I already know all these problems.

I know the market, right? This is my job, right? I don’t, yeah. You don’t need to. Now if you’re going to a general tech investor, you might need to explain all that stuff. But if you’re going to a climate tech, clean tech, energy tech investor, get to the point, right? Tell us why you’re special.

Tell us what you’re doing. Tell us how important it is. And so people, I think people are trained to. You go through this pitch process that is got define the problem, how big the market is and sometimes your audience knows that already. And and when I’m taking, eight of these a day, I know climate change is a problem.

Got it. Yeah, thanks.

Nico Johnson: I think that’s a really good point. And it’s actually just a, and it’s a public speaking one on one too, right? Know your audience, understand that you have to change your message. Yeah. For the, and tailor it for the audience. And I have a question. So if I’m a battery tech company and I’ve done the homework and I know that you’ve got a background in microelectronics, is it fair to start the pitch in the first minute by asking a question like how detailed would you like me to get into the actual background of the battery tech industry?

Or would you like me to jump straight to the problem? Is that a fair question for a founder to say at the beginning?

Craig Lawrence: For me? Yeah. I’m very happy. I do it’s funny because a lot of founders will call in and say, Hey, look, I’ve got slides, but I just want to talk. And sometimes that’s okay.

I do want to see your pitch, right? Like I do want to see your pitch because how you pitch is an important is an important sort of criteria for me because my expectations, yeah, that’s right. You’re going to be going out.

Nico Johnson: You’re judging the CEO’s capacity to communicate.

Craig Lawrence: Yeah. So I do want to see your pitch.

I’m just saying if you’ve got 10 slides on the general problem space, maybe you can, for me, you can quickly go through that and get to the point, but yeah, no, if and I have a lot of times it’s useful, I think really polished founders, a lot of B, a lot of them will try to gauge with questions at the very beginning, where I want to focus.

Yeah. And if it’s in, an area that you and I know pretty well, like solar, It’s I don’t want to focus on how big the solar market is or that I just want to get to what you’re doing, like as fast as possible. So you can go through that stuff quick with me or you can just skip it.

And I’m very fine to have that conversation. At the beginning of the, at the beginning of the pitch.

Nico Johnson: So you’ve mentioned Twitter and I was going to bring this up at the beginning. I thought I’ll wait till later, but we met on Twitter. It’s one of those interesting things. I can probably say that your first person I actually met, got to know, and eventually invited to actually be a guest on the show exclusively through our Twitter engagement.

Which is Which is crazy in context because we have so many mutual friends on Twitter. Yeah it’s,

Craig Lawrence: It’s amazing we didn’t meet through another context prior to that. Just, I remember that, the first time we talked, I didn’t really fully understand how deep you were into solar and you brought up something.

I I hesitate to even bring it up from my past. A startup company that I got involved with, it wasn’t, maybe wasn’t the, wasn’t the best decision of my career and it was like, Oh, you knew all about, I thought like everyone, nobody, anybody, I thought everyone was dead who remembered that era of solar or had moved on to other things.

I’m like, Oh God, everything and everybody, so I need to be careful. I need to be careful here.

Nico Johnson: It’s like me and Eric Wessoff, like we remember the gravestones.

Craig Lawrence: Yeah, no, and Eric and I were, I got to know Eric back in that old time period. And, I’m sure he jousted with you quite a few times on Ready and other features.

I don’t. He and I had a tough time because, I he was one of the first in the media and just in general to really catch on to microinverters. So he was obsessed with them. I was obsessed with them too, at the same time. So we Bonded over that. I ended up going to work for a microinverter company, solar bridge.

And he called me up and wanted like the scoop. And unfortunately, I had a boss and a CEO, which was like, look, we don’t need to tell the world what we’re doing. We’re, like he always want to know how many units have you shipped. And I remember going boss, can I’m like, can I tell him?

And then, and my boss was like, the CEO was like, no, You can’t. So he would call me thinking he had the inside scoop and I’m like, I can’t tell you. And he’s I don’t want to talk to you then. I’m not going to write a story about you. Got I need some information that I remember. So we jousted and I think he hated me for a while.

But he’s, he is he has been around as, as long as anybody.

Nico Johnson: He certainly has. I’m curious how intentional or not is Craig Lawrence’s use of social media as a platform?

Craig Lawrence: I would say it’s intentional. It’s certainly intentional. It is very, work focused in the sense that I really Try to just talk about energy related stuff, and I’m not on there opining about politics or other social issues.

Although, occasionally I would say it’s so it’s intentional in how I use it. I don’t think I have any intentional strategy in what and when I post, it’s just. When it comes to me I post something and so in that sense I imagine like people who are truly intentional have a strategy to get, gain users and drive engagement.

I don’t really think about that. I have a pretty small following in the grand scheme of things. But it is, I get to become a valuable source of meeting people

Nico Johnson: like you. That’s what I was going to ask you. I get the feeling though, that it’s about documenting your thinking. And have it in a place where, you know politicians write books, right?

So that they can have a historical reference to say this isn’t a new idea for me. I get that sense for, from you and I’ve really enjoyed following you because you do document your thinking through Twitter and you are able to distill it. You ask thoughtful questions of the few who follow you, as you put it.

But I’ve seen myself as an example that it seems to be a great inbound strategy for you as a result. And I’m curious what led you to focus on Twitter? Because as I recall, you were among other things, a top contributor to Quora. So can you talk a bit about like the dance around different platforms and how you decided Twitter is where you’re going to spend your time?

Craig Lawrence: Yeah. So yeah, I have thoughts and things to say, right? So for a long time, I was an early adopter of Quora. Again, you’re, many of your users probably don’t know what Quora is. And I spent a tremendous amount of effort over many years writing. So Quora is a question and answer site.

So people ask questions. People write answers it’s, like a Reddit and it’s a, it’s closer to Reddit than Twitter it’s interactive not intended just to spit out but to actually answer questions, and I’d see questions on solo, it’s oh, I know the answer to that.

So I’d write an answer. And I, and I just kept going and I kept going. And then I became a top writer on Quora. They give you a little, I don’t get any money for it. I just got a little award or whatever. I got, I think they sent me a certificate one year. I’m like in the mail And and so I start to write long form answers to questions.

Everything is like very specific technical questions like how much, how much energy will if I have a, my, my house and. Indiana, how much energy can I produce or like how much solar shade, like I’d actually do math on there. And then other ones would be more, a little bit more philosophical.

I did this for years and years. And finally, at one point I remember I started to get onto Twitter more. And I’m like, I’m getting way more value out of this Twitter engagement than I am out of Quora. I’m not getting anything out of it other than I enjoy the writing. Literally no business leads, no money, no, no relationships really.

Maybe one in the whole multi year time. I just stopped and started to focus on Twitter because and then the interesting thing about Twitter is I somehow fell into this EFT community, which I think stands for energy finance, Twitter. So there’s a group of mainly oil and gas people who write about finance and energy.

And I somehow stumbled into this world and was following people and then they started following me and I’m not exactly their cup of tea, right? Like they’re not like renewables. They’re traditional energy people. They’re like, private equity and oil and gas hedge fund traders and all those kinds of things.

And I started engaging with them. And I found kind of a voice in how to interact with this world. Yeah. of traditional energy and it’s been hugely valuable actually in moderating my point of view. Actually, I actually listen to people who engage thoughtfully. There’s a lot of, a lot of crap on Twitter, but I actually have, moderated some of my views about oil and gas because I got to know some of these people are working in their thoughts and I feel like I’ve had a similar impact on some people.

And so it’s been really satisfying Transcribed And then there’s the interactions with people like you that led to a podcast that’s going to lead to more people hearing my voice. I’ve had startups meet me through there and get pitches that I wouldn’t have otherwise probably gotten. I’m seeing the value for me personally.

And I enjoy it still, even with, all the Elon craziness around Twitter. I’ve never like really threatened to leave. I tried mastodon for a day and I couldn’t figure it out, and I’m like, I’m going back to Twitter. Yeah yeah so I enjoy it. And like I said I don’t know, I don’t know, like I’m waiting for that one day where I actually have a viral tweet that gets me like a lot.

I see people in, there’s a lot of venture capitalists who have. tens of thousands, hundreds of thousands of followers. Yeah. And I’m like, I don’t really know why. I think cause they’ve had, I think they’ve had, some big success to point to, and then it’s okay, Hey, I was an early investor in Facebook.

I want to follow that person.

Nico Johnson: I don’t presume to note anything about scaling on Twitter. So what I share with you is through. The other, one of the other podcasts I routinely listen to, My First Million, and the guys that run that podcast talk a lot about Twitter and claim that going viral on Twitter is easy.

So my advice is listen to Sam Parr. He suggests that there’s a formula and it’s around writing good threads. Yeah. And I’ve never been able to figure out how to write a good thread that got any traction, but Sam actually his his co founder of the, my first name podcast created this community very recently in the last year that got hundreds of thousands of followers through using Sam’s like thread strategy.

So there’s free advice that, I’ll check it out,

Craig Lawrence: But I will say it’s not like an it’s not really an aspiration again I like what I have, I like what I’m doing on it and I like the interaction and it is growing. So I’m just like, Hey, I’ll just do the slow, steady growth.

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I want to pull back to 30, 000 feet a bit. I want to talk about like you getting into the tech and investing and then and then solar sector. Can you put me in a place in time in your career where you discovered that this is what you wanted to do?

Craig Lawrence: It is burned in my brain. Again, I was I studied mechanical engineering.

I was a hardcore mechanical engineer for the, first half of my career. I did a PhD in mechanical engineering. I was working at this company IDEO. And again, I encourage everyone to just go to IDEO. com and just look at some of the cool stuff. That they do. It’s been that way for 40 years or maybe 30 plus years.

There’s a long history of very smart people engineers, designers. Behavioral scientists like figuring out how to make products for people. And so I was happily doing that. I was working on medical devices, designed a really cool device to monitor your metabolism. I worked on furniture. I designed an office table that is, I still see today when I go into some conference rooms, I’m like, that’s my table.

I worked on that. I designed appliances. I designed consumer electronics, all kinds of cool stuff. And it’s project work. It’s consulting project work. So company comes in, hires you, put together a team, do this project, deliver it to them, move on to the next one. I was sitting is probably 2005 or six.

I was sitting at maybe 2005 sitting at IDEO and the person running the front desk called me up and said, Hey, I have someone here. Who wants to talk to someone about a project and I just was friends with her at the front desk. So she thought of me and it was the CEO of a solar company and he wanted to he wanted to talk about doing a project, some work with us.

And it turns out this was Mike Ahern, the CEO of First Solar at the time right either right before or right after their IPO. And so I didn’t know any of this. Like it was just, just a guy came in to talk to us. And so I met with him and I didn’t know anything about solar. He explained their technology and what they did.

And I was like, wait, so you’ve got this pane of glass and the sun shines on it and it just produces electricity. That’s how it works. No moving parts, no nothing. And he’s yeah, he goes, that’s what it, that’s what it is. I’m like, that is magical, right? That is magic.

That’s not technology. That’s literally magic. And and I worked on this project. It was first solar. Very early days of First Solar, what Mike wanted to look at was, should we be in residential solar with our technology? And we were, we were known as a firm who could figure out what consumers want and figure out how to innovate around, products.

So we did a. I did a deep dive kind of probably not a long probably been 4 month project. Did a deep dive into the residential solar market in 2005, which was, this was pre everything right that we all know and love today. Solar city and Sun run and was Mon, Pa, dude with a truck installing some solar panels and so we basically put together a strategy for first solar to get into residential solar and it involved the thing we were leaning on was their solar panels are beautiful, right?

I don’t know if you’ve looked at a first solar panels, particularly back then. They’re all glass frameless and all black. And the other solar panels back then look like conference tables, right? Exactly. Yeah. And so anyway, so after that project, I was like, there’s this magic technology. I longer story about how I believed it could scale and become very cheap because Mike convinced me of that.

And it turned out to be true. But I said, this is what I’ve been working on all these different things. This is the kind of stuff I want to work on. And so I started an energy practice at IDEO. I said, I’m just going to find more clients like this. And we found bloom energy. We did work for some utilities, some electric car companies, fuel cell companies.

So that, that was sort of it. And I basically, from that point on, I’m like, this is the, I really have no interest in working in any other area. But that was as an engineer, or as a, project product person the falling into venture capitals is a whole nother story, but I can tell it if it’s interesting to your listeners.

Nico Johnson: I think we’ll get there. I wanted to hear that. And it’s fascinating because as much as we’ve talked, I didn’t realize the story for Mike was to actually help them launch a Resy business. And it perfectly aligns with my next question,

Craig Lawrence: by the way, which they did do. They ended up investing in SolarCity.

I don’t know if you remember that period of the world where Definitely. SolarCity deployed

Nico Johnson: a ton of first solar panels. Yeah.

Craig Lawrence: And it turns out they were breaking them all because they don’t have frames and they’re difficult to lug around a roof. And it just, they’re not, they weren’t very efficient back then.

And so just, I think it just fizzled.

Nico Johnson: I was at the tree. So here’s a fun story that I think I talked about with Flanagan when he was on the show for their Earthos episode. But I was on the team at Trina that launched Trina Mount and Trina Mount was Mike Muscovsky’s second bite of the apple outside of Canadian solar of getting a major Chinese vertically integrated solar panel manufacturer to integrate the ZEP rail into the manufacturing process.

And our biggest clients were solar city and Vivint and. We both know the story, so Yep. We were able to successfully go lock in a 365 day terms like SolarCity in exchange for agreeing to use tree amount. Got 365 day payment terms on there. This is 10 years ago, so I don’t mind sharing. But at like then current prices.

So at that point I wanna say it was like 98 cents a wat Greg. Oh, it was insane. But they, hadn cheap, had a year pay for it. That’s how cheap.

Craig Lawrence: Yeah.

Nico Johnson: And they converted. All of their entire installs to train them out traditional crystalline product away from first solar. And then 18 months later acquired ZEP in an effort to slow down their then biggest competitor Vivint.

Craig Lawrence: Which is why

Nico Johnson: companies like Pegasus exist today.

Craig Lawrence: Yeah, I, yeah, I was deep in the mix there. I love ZEPP, by the way, and actually there’s a ZEPP IDEO tie. One of the early guys ZEPP worked with was a, is an IDEO an IDEO product developer who Was involved in helping them not through IDEO, but just on the side, helping them with that product.

The other thing, I, SolarCity was the the white whale for microinverters for whatever reason, they were anti microinverter they just did not believe in the technology. So I was trying to sell them for feels like years trying to convince them just even to try our product.

Meanwhile, Vivint was all in microinverters, right? Like they only did ZEP and microinverters and and I think it’s, it was a very interesting world back then.

Nico Johnson: Here’s one interesting tidbit, just like total geekdom, but the reason. That the acquisition of ZEPP set Vivint back so far was that ZEPP had integrated the microinverter into the rail.

And so not only did Vivint have to figure out a new rail strategy for mounting their product because SolarCity wouldn’t sell them anymore. They had to figure out a new microinverter installing. Strategy. And it was a like total conundrum. It was like the, it was the chef’s kiss. Like it was the most, I was never in this

Craig Lawrence: cold

Nico Johnson: move, man.

Craig Lawrence: That was just, it was the most

Nico Johnson: vicious. I still think it was like the most ice cold, vicious acquisition move in the industry that I’ve witnessed and been able to be like, Holy smokes. This is just a. Complete knockout punch, but it didn’t obviously Vivint did really well. They did really well in part because they had other alternatives to to grow their business.

I want to get into something actually that we could connect a million dots here, but I have a really interesting question. When I was at the same time working in the industry, I was doing a whole lot of C& I for SunEdison. And I was talking with our buddies there who were trying to figure out a strategy for expanding SunEdison.

But one day they told me that they had this residential strategy, and I was just like I Really need to better understand this cause we weren’t focused on resi at all. And lo and behold I found out now 15 years later that you were behind that move. Now I have a very simple question, a simple, not easy.

How did you talk Ahmad Jatilla into launching a resi division at SunEdison?

Craig Lawrence: Oh man. Okay. Yeah, this is this is. Craziest time of my life, by the way many books should be written about SunEdison such a great but complicated organization. After IDEO, I had gone to Accel Partners, the venture capital firm to do cleantech investment with them.

And this was back when a lot, they call this now Cleantech 1. 0. This was the big wave of venture capital that just flew through thin film solar, battery materials, flow batteries, fuel cells. I had just, a couple years earlier come off this first solar project and working on energy projects.

I was really excited about residential solar. I was always excited about residential solar. I just felt like it was going to be a thing. It was going to be a mass market thing, and it was just a matter of how and when. And so we, I told the folks at Excel, it’s I want to back someone in this space.

So we went through everybody. We looked at clean power, finance, solar city. They were all raising venture capital. Sunrun there, there were a whole host of Sungevity. There were a whole host of these folks. Met, got to know everyone, looked at all the different strategies. We ended up investing in Sunrun which was a, we made the right choice.

I’m Although SolarCity probably would have been a good out financial outcome as well, too, but we made the right choice. It was a great thing to be involved with. But I Excel after that, as well as another very relatively successful investment, Opower Excel was we’re not going to do clean tech, like we we just don’t see it for us.

And so I needed to move on. And so I started to look for a job and I got introduced to Ahmaud and then Carlos, who was SunEdison had already been acquired by MEMC. So Ahmaud was the CEO of MEMC, Carlos Dominic was running SunEdison. I think his title was president of SunEdison and MEMC had their solar and semiconductor materials businesses.

In addition to SunEdison, it eventually rebranded the whole thing as SunEdison. But anyway, so I met with these folks, I got introduced by one of their investors, and I was talking to them about my excitement in residential solar. And their reaction was that business sucks and in fact, if you look at the origins of SunEdison, there were some solar companies that had been acquired or merged and many of them had done residential solar in their early days.

And viewed it as a bad just a bad business. And everyone wanted to do bigger systems, right? It’s Hey, you still have to do all the permitting and interconnect and stuff. Why not do a bigger system, do a CNI system, right? Yeah. That eventually morphed into utility scale system. And I said, and I explained to him what was going on in the industry.

They didn’t know I won’t say who, but one of the senior executives kept on calling it sun city instead of solar city, like you didn’t even know the name. And I made an argument using data pulled from the who are the guys that did the rebates in California that had all the data online the CSI database.

I pulled up this data. I basically made two points. One was. First of all, they’ve stolen your financing model, right? SolarCity and Sunrun were both doing these PPAs and, leases. They basically copied your third party financing model that, that SunEdison pioneered and applied it to residential in a way that worked.

And by the way, this is, residential’s a just fundamentally different business. And I graphed on a graph, I graphed. SunEdison, because you could get the state of their California, like their installs over time. And it was just a sort of choppy, bouncy line, right? Like some quarters they had a ton, other quarters it went down to zero because they were doing large projects.

Projects get delayed, projects get pushed. And meanwhile I plotted Sunrun and SolarCity as these sort of smooth curves that were just showing growth. And they were smaller than. Then SunEdison, but I was like, I said, in five years, these companies are going to be bigger than SunEdison. Here’s the intersect point.

I just said, this is going to happen. And they’re like, bullshit, that’s not going to happen. I said, this is going to happen. They’re like, okay if you really believe that, why don’t you come in and help us? We’ll, we’ll hire you, we’ll give you a desk and you can, we’ll give you like a person.

I had a like a partner in crime that had been at Sun Edison for a long time and knew the ropes there. And it’s you guys pitch us a strategy to do this internally. And so I did and we launched a residential business. Now the. history of SunEdison, as in Edison Residential Solar is quite sorted. I was at the very start, but collapsed multiple times and was rebirthed multiple times with different people involved, culminating in their attempt to buy Vivint, acquire Vivint, which, again, amongst other factors led to their downfall and their ultimate bankruptcy as a company.

Yeah. I’m just trying to do too many things. And my, my part of the SunEdison residential story is pretty small. It lasted about probably a full year of operating this business. We raised a fund from a major financial institution. We were doing leases. We partnered with OneBlockOffTheGrid, a name you’ll probably remember, but many of your listeners may or may not remember.

They were doing lead gen and customer acquisition for us. OneBlock was

Nico Johnson: the lead gen platform.

Craig Lawrence: We had a network of installers. And it was going pretty well until factors outside of the residential business conspired to have one of many sort of financial hiccups in SunEdison’s history that basically the then CFO basically said, this is great.

You’re not profitable. So why should we keep investing in this? And I was like I’ve been doing it a year, like nobody’s profitable. And this is a long, a little bit of a longer term game. He’s like, all right, you can keep doing residential, but you can’t do this financing. I’m like, without the financing, we don’t have anything because that was what was needed to be in the market at the time was a third party financing product.

So when they said I couldn’t do that, I was like I can’t, I definitely can’t get profitable then. So I’m going to, I’m going to have to leave.

Nico Johnson: You evaluate the cap table, you evaluate the team. And you talk about, SolarCity, Early Days, Sunrun, Early Days SolarBridge, Enphase, SunEdison, all these companies where you had a chance to look and develop the pattern matching we mentioned earlier, when an early seed to A round company comes to you what’s your preferred batting order in terms of the structure of the early team that you want to fund, what skill positions you want to see filled and in what order in terms of what usually are indicators of the right early team?

I don’t know if there is one, but I’m curious if you’ve found something that might be indicative.

Craig Lawrence: Yeah, it’s not an easy, it’s not an easy question. Obviously the team is extremely important. Different businesses demand different things, right? If you think about a Sunrun, it wasn’t, it wasn’t a technology play at all.

It was a financial, it would be called a the, yeah. Sunrun at a series B when we invested would be called a fintech company today, right? Just happened to be operating in solar, right? They weren’t building anything. They weren’t, they were, they had a finance product.

Literally. That was it. Yeah. And a unique one and a novel one that worked really nicely. And a go to market strategy that works. So really, you’re looking for, you’re looking for a team that looks like they can go Build a business like that, which is very different than a renew CO2, which is they’ve got to build an electrochemical box.

That’s going to, turn A and B that at some point they’ll have that box. And then they’re going to need a team that can actually, go out and sell and go win against what will likely be a competitive environment. So it really varies, but we are looking for people. There’s obviously It goes without saying, but just integrity is very important.

Because again, it’s this 10 year relationship, we’re minority investors, venture capital model is to be a minority investor. We don’t take ownership, so we do not control the company. We can advise we’ll have often have a seat on the board and have a vote, but we do not have a majority. So at the end of the day, once we’ve written our check and signed our documents.

We don’t control the company. All we can do is influence. So the, that relationship with those people, you get along, do they listen they don’t always have to do what we say, but do they at least listen and make try to, get other points of view. So these kind of soft things are very important, but then, if it’s a true, like deep tech thing, we’re looking at the tech, we’re looking at the technology team more than anything.

It’s can these guys. Can these guys ball, can they, can they, do they look like they have the horsepower to take this from whatever it is when we’re investing to a awesome product, right? And and yeah, there’s always going to be missing pieces and do we feel like those pieces will get filled, meaning people who are good in those spots will want to come work for these folks and work with these folks.

If it’s more of a. If it’s more of a Sunrun kind of, business model innovation or a soft product I’m looking for indicators that these folks can deliver, and it’s not always easy. You have to take a chance at sometimes.

So a lot of it becomes down to a gut feeling about the individuals.

Nico Johnson: I’m wondering if there are. Any particular salient lessons or takeaways from early mentors or experiences that had a profound impact on you or the way you view the sector that you now pass along as you now, as you mentor the companies that you lean into?

Craig Lawrence: Yeah I don’t, I didn’t know how lucky I was to have fallen into Excel Partners as my sort of introduction to to venture capital. For a couple reasons. One is they are very good investors. And I encourage anyone go to, accel. com and look at their portfolio. It’s like unicorn after unicorn, successful exits.

They were early in that for, I think first institutional or very early into Facebook and companies, lots of companies that, when I was there, we did a. What I would call a pre seed investment into Slack which many of your users, many of your listeners are probably using today.

And I watched that whole process unfold and I was like, these got, these folks are smart. They didn’t have religion around clean tech or climate tech, right? So my, and they didn’t have a dedicated fund that they had to deploy. So what was happening every time I brought in a company, whether it’s an Enphase or Sunrun or Opower, it was getting compared against the other opportunities they had in front of them, which were not clean tech, which was Slack or, whatever it is, that the other areas that they focus at, and they knew very well, and they knew venture very well. It’s an old firm where, you know, one of the one of the handful of successful where there was generational passing down the torch and mentoring and teaching.

And so there was just a lot of history, a lot of institutional knowledge on how to do venture. Going back to the early days of venture. So I didn’t realize I was getting a lesson from some of the best in the business. And so the thing that stuck with me is when I’m evaluating an opportunity, it’s not, is this the best clean tech opportunity?

It needs to be the best venture capital opportunity. And at the end of the day, the people who invest in our fund, Ultimately, what’s going to matter and whether I can raise another fund or whether they are happy or satisfied customers is what my returns are to them. I can point to how much carbon our company’s abated, but if I didn’t make them any money, they’re not going to give me any more money, right?

Like they’re just not. And so I, I learned this sort of discipline and again, we did two investments in two years seeing thousands of deals. I learned this discipline that I don’t think a lot of. investors in climate tech have today, which is I’m not just picking the best climate tech. This needs to be a venture.

This needs to be a have the ability to be a successful venture capital deal. And I think people lose sight of that. And so that, that lesson for me and thus, we are not high volume investment shop. Like I don’t think there’s a hundred great climate tech investments right now.

I don’t believe there are, I think there might be 20 that will deliver sort of fund, fund the, fund making returns. And my job is to go find those 20 and get into as many of them as I can. It’s not to just spray and pray. And I think I think there’s a range of different people investing in the space with different philosophies, but like every time, like we have not done a software investment in.

Energy transition, climate tech, yet a pure software investment because everyone that comes in, I look at it as if I had my Excel hat on, which is, what’s your ARR, what’s your growth rate, what’s your customer acquisition costs, what’s, and if you’re not in the range of being a a top tier software outcome in venture, I can’t justify making an investment no matter how much I love what you’re doing and how important I think it is.

And that’s the hard part because people who tend to invest in this sector, have religion. I have religion, right? I believe, right? I believe it’s important for society to reduce our and ultimately eliminate our carbon emissions. And I think it’s important. It’s sort of part of my mission in life.

But if I lose sight of the financial aspects of what we do then I’m not going to have a chance to do it anymore, right? So it doesn’t do anybody any good for me to lose investors money in this sector. Because they’ll leave the sector like they all did last time. And I, so I do worry we are, we’re in a bit of a bubble climate tech bubble, people are going to get burned and people are going to leave the sector again.

And we’re running a marathon, not a sprint here.

Nico Johnson: I’m so glad that we were able to get to eat, to get to that point. And it actually, there’s a lot when I say this, that we’ll understand between one another, I’ll leave it in the interview, but it gives me some insight into companies.

I know you’ve said no to, and and the filter through which you’ve made the decision. And it’s interesting too. And I would acknowledge that as founders, there’s often. When you are rejected at the funding table, the way that Enphase was by Excel, it’s easy to take it personally. And I just want to encourage people listening to not take it personally.

There are so many other factors that go into how and why you are rejected. You are chosen. That is as complicated as finding a mate, as Craig mentioned earlier, it is just as complicated and important as getting married because you are getting married for a long time. And I find that a lot of founders do because it’s such an emotional process, they take it personally.

And it takes a while to build that. Muscle that thick skin,

Craig Lawrence: yeah. And I I, like I said, I have, I said earlier, I have tremendous amount of empathy for that role of the founder of the CEO. It’s not something I think I would do well at. So I just, anybody who’s just willing to give it a shot and put their, their career, their life, everything on the line for it.

It’s not easy to say no. Sometimes it is, sometimes it’s this is just a bad idea. Yeah. Sometimes it is that I would say not most of the time. It’s not most of the time. Like I could. Of the thousands of years for Neil, then you, it is a little easier for Neil, but I, I could craft a, I could craft a rationale for investing in almost all the companies that have pitched us, I could craft that rationale.

And and the thing is it’s the, and it’s not just my decision. I have partners and, like we have to all get bought into this. And yeah, I’m sure I guarantee that many of the companies we’ve said no to will be successful and they’ll call me up or they’ll see me or they’ll tweet me and be like, ha, I told you and I will be very happy for them. I will be really happy for them because it’s good for everybody for

Nico Johnson: them to use that as fuel. Yeah. Yeah. Use it as fuel. Just know that Craig is going to be happy for you and not going to feel like he missed an opportunity. I will feel like I missed the opportunity.

Unless it’s an in phase.

Craig Lawrence: I will feel like I missed the opportunity, but I’ll still be happy for you and I’ll learn and it’ll be another, it’ll be another data point in my education, right? That’s cool.

Nico Johnson: What if any resources have been really helpful for you? As you come up the learning curve on the venture side of this business.

Is there a book or a blog or something that you’ve turned to or referred people to time again?

Craig Lawrence: And that’s actually a great question. It’s interesting because my partner Neil just finished up a four part series. It was a talk that was filmed. So I don’t know if it’s published yet but we’ll get

Nico Johnson: the links from, yeah, we’ll get the links.

It is going to be published for sure. Yeah.

Craig Lawrence: Yeah. Where, it is chock full of information. It’s not just Neil talking. He’s got guests as a four part thing. And it’s chock full of information about venture capital and startups. So that I will point people to that when I have the link and we’ll get you the link.

But It is a it is a opaque, nebulous world that, that doesn’t have a lot of structure or, now, there are tons of podcasts and resources and stuff now, I tend to I don’t know what’s going on. How useful all of them are in terms of actually providing like actionable information if you’re either for a startup founder, or if you want to get into venture I don’t know how you get into venture, I’ll be honest, I know how I got into venture, it’s not a replicable process, I knew somebody.

Like I, I knew somebody was in the, like literally at the right barbecue at the right time, met somebody and just hit it off. And I, and all of a sudden I was in and but that’s not a, that’s not a strategy. And I, I talk to people all the time. In addition to getting startup pitches, I get people calling me wanting to be, get into venture.

And I had a coffee this morning with a. undergraduate at University of Texas at Austin, who’s trying to figure out how he gets into venture. And he’s a math major, just graduated. And we had a long talk about it. And then the end of the result was like, I don’t know exactly how you get into venture, but talking to people like me is a good start.

Talk to as many of people like me as you can.

Nico Johnson: That’s helpful. Is there a book that for you has given just outsized leverage on how you think about leadership or. Maybe even life. Is there something that you gift the most to friends and family?

Craig Lawrence: I’m not one of those people. I love those people.

They give me books and everything. My education has been, finding myself in some of the most amazing places on earth, right? IDEO is, the people who know IDEO, when I say I worked at IDEO, There’s a group of people who will know what IDEO is and that is MBA students because IDEO is taught as a case study in lots of MBA programs, including like Harvard, right?

I don’t know if it still is, but it was. And I got to be, I got to be there. I got to be at Sun Edison. I got to be at Excel. And the people, that’s where I’ve, that’s where I’ve learned I’ve learned the most. The

Nico Johnson: greatest learning is doing. I will

Craig Lawrence: say, in the last five years, it’s been podcasts for me.

So you’re on my rotation and they’re in the, I tend to listen to podcasts from the industry, from my industry. And, all the ones

Nico Johnson: that, who do you admire? I’d love to know if they’re who are the two or three, that kind of regular rotation? Besides Suncast. Thank you.

Craig Lawrence: Yeah. Yeah.

No Suncast, I listen to Shale and and you know those folks now. Catalyst? Yeah. Catalyst. And then what’s the other, oh God, I’m blanking on things. Yeah, carbon copy. I really these cause they get really good people on and I learned something. I remember the, I think it was shales or maybe, I don’t know if it was carbon copy or callus where they had a guy talking about fusion and I didn’t know much about fusion.

And I got out of that thing going Oh my God, I actually know a lot more about fusion than I did when I started. And and so I’m constantly trying to educate myself that way. I

Nico Johnson: appreciate that ShaleCon is one of those guys that just has been such a giver and really does in the way that we have at Suncast, like Shale with Intersect and Catalyst and the team they have over at PostScript, like they really do try as we do to pull back the veil and introduce people to real thinkers, like deep thinkers and how and why they come to conclusions they have.

Craig Lawrence: Yeah.

Nico Johnson: I appreciate that. Thank you, Shale. Thanks, Steven.

Craig Lawrence: Yeah. No, but it’s all, it’s there’s a lot of, there’s a lot of good stuff out there. And I think, I think what you’re doing is incredible. What I love about it is because, particularly I have this, I’ve been I will tell this to your audience.

We have not done a real sort of solar investment yet out of the fund, which to me is drives me crazy every day. Drone base now site view does do work in solar. That’s a big part of their business. I spent nearly over a decade of my life in and around that industry. And so if you’ve got a cool solar startup, I want to hear about it and there’s lots of good ones out there, right?

I’ve said no to, to many that I hope my hope I was proven. I hope I get proven wrong. There’s a couple that I, was really hard. No. And but I so I’m still looking and what I love about, your podcast is your, your inside knowledge and the people you get that are, maybe not always the, like celebrities in the space, but that are, yeah, that, this industry is made up of people who have been dedicating their life to it for decade plus and they they have something to say, and you pull it out of them. It’s a really enjoyable thing.

Nico Johnson: I really appreciate that. Thank you. I’m going to make a little clip mark here for my team to go back and make a commercial. This is why we do what we do. Yeah. If folks are so inclined and they want to pitch you or just ask for coffee or find you on Twitter, how do you like to engage?

Where can you best be found?

Craig Lawrence: DM on Twitter is gonna get me in your handle, a message on, yeah. It’s at c Lawrence, C-L-A-W-R-E-N-C-E. LinkedIn. I’m on. I haven’t for some reason haven’t mastered the LinkedIn, but I will get your message there. , we I open every info at Energy Transition ventures dot energy transition vc.com, which is basically the form on our website.

It’s, obviously if you’re hearing this, you can go right straight to Twitter or LinkedIn, but I open everyone, I read it, I respond to every single thing that comes through there, including my

Nico Johnson: emails, info at

Craig Lawrence: energy transition, vc. com, or just fill out the form. On the website, that’s what comes, yeah.

Nico Johnson: We’ll link to it.

Craig Lawrence: That’s what it comes through to me in my inbox. Fantastic. And fantastic. And I look at all of them. So yeah, I’d say one of those, one of those three. And I just, I my, my advice, if you’re, if you wanna pitch us. Is just do a little bit of homework on us, right?

And just know that what we know about and what we don’t just based on our public profiles and persona and our website and and just, don’t feel like you need to explain climate change for 15 minutes to me. I’m sure I’ll learn something in there that I hadn’t heard before, but at the end of the day, it doesn’t move me closer to investing in your company.

Cause I’m already a believer, like

Nico Johnson: that’s awesome. One, one final question. Thank you for all of this and for such deep insights. This is a longer episode and it’s one that I genuinely believe that people should be listening all the way to the end. So if you’re gotten this far, thank you for sticking around Craig, let’s end today with a bold prediction.

And I’m going to change it slightly than I normally do. What sector do you feel will benefit the most from this next wave of, spot spawned by IRA and other headwinds or tailwinds this next wave of climate and clean tech investing. And what’s in your crystal ball.

Craig Lawrence: I’ll go back to what I said earlier.

I think it’s electrochemistry. I think we are moving into an electrochemical world where the traditional, chemical producers and I use chemical broadly whether that’s hydrogen, whether that’s hydrocarbons. very much for joining us. Are going to be impacted greatly by by electrochemical innovations and that, that includes batteries, right?

So we are about to go, we’re at the beginnings of this world where smart engineers and scientists are going to be able to create materials and substances and chemicals with electrochemical processes that use Instead of fossil fuels as your feedstock, they can use lots of things, right?

Water, carbon dioxide, oxygen, whatever it is. And they’re going to build, chemical factories of the future that will be able to be run off of renewable energy. And that’s where it come back, comes back to us because none of these things, like the reason people get excited about like green hydrogen, you hear that all over the place.

The reason people are excited by it now is because renewable energy is cheap as hell. And that wasn’t true 10 years ago. But it is true today that we believe that essentially electricity prices are going to the floor that we are electrifying everything from transportation to chemical production, to, to heating.

And we believe that ultimately the price of carbon is going into the floor to, carbon is going, there are going to be lots of opportunities to bury, convert, use carbon dioxide. Whether it’s sucked out of the air or pulled off of a power plant or a chemical plant to create, new and interesting things.

And so all and all of these things are enabled fundamentally by very low cost renewable energy. And and I just think it’s an exciting world. This is the transition that I kind of hope for. We’re still at the beginning. Like I said, if you go to my Twitter feed, half the people there tell me solar doesn’t work and wind’s a scam and batteries don’t work.

And I’m sitting here living it. I’m driving a Tesla and I’m, I’ve got solar on my roof. I’m like it actually works. It does work. Is it perfect? No, of course it’s not perfect. Are fossil fuels perfect? No, they’re not perfect either. We are gonna, we are gonna be in an interesting transition and I just, I’m excited because I think it’s going to happen fast enough that in my lifetime I’m going to see massive shifts, meaning the thought of buying an internal combustion engine, hopefully I’ll live long enough to be like, that’s just a weird, that’s just a weird idea. Like, why would you do that? And so I’m looking forward to continuing to watch it.

Nico Johnson: I love that. Chef’s kiss. That was a beautiful way to end the interview. And I really am grateful for not only the time, but the the insights that were shared here. Anyone else who invested time I’m sure is coming away with a great return on that investment.

Craig Lawrence is. Co founder partner in energy transition ventures, along with Neil Dykman, who we will have on the show. I hope very soon as well. And I’m super grateful to call you friend and mentor and industry colleague. And I’m so grateful that you’ve joined us on Suncast finally.

Craig Lawrence: My pleasure and keep doing what you’re doing and keep growing your empire over there.

It’s exciting to watch.

Nico Johnson: Woo! That is a wrap on today’s practical insights from this Solar Warriors journey. And I’d love to know, what did you learn from my friend Craig Lawrence? Are you going to go and tweet it out? I hope you will. I hope you’ll tag Craig. He just gave you his Twitter handle. So go ahead and do that.

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Audio Extra: Kee yah, Solar Warrior!