Watershed's moment on climate #46

Sit-down with Watershed, and BloombergNEF’s Factbook

Happy Monday!

As companies like Stripe (where Watershed’s co-founders met) heat up their investment in cooling down the climate, they need purpose-driven decarbonization tools as much as sales teams need Salesforce or finance teams need Netsuite. Hot off of their Series A led by Sequoia and Kleiner Perkins, Watershed has multi-decade ambitions to become the go-to corporate decarbonization platform and this week, we’re sharing behind-the-scenes with Co-Founder, Taylor Francis.

We also jump into a range of new fundings, jobs and a distillation of BloombergNEF’s new report highlighting 2020’s year in review.

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BNEF Executive (Factbook) Memo

Last week, the team at BloombergNEF generously dropped a veritable cornucopia of climate tech facts into the internet ether. Their second annual BNEF Executive Factbook details the formative events in power, transport, industry, buildings and digital, food and agriculture, and capital markets from 2020. At 100 pages, it makes for excellent weekend reading - but, given that it’s Monday, we’ve extracted our take on the top climate tech highlights and lowlights. Consider it your Executive Memo.

Highlights

✔️ 50%+ of global emissions now covered by a net-zero target (China, the EU, Japan, and South Korea)

🌎 $501B invested in the energy transition in 2020, with ~30% ($139B) to electrify transport

💨 76% growth in voluntary carbon offsets as major corporations commit to net zero (185.3 Mt CO2e)

🔋 89% decrease in Lithium-ion battery costs since 2010; $100/kwh expected by 2023

🚀 536 NEX all-time high (index of public climate tech companies), surpassing its previous record (462) from December 2007 during the height of Cleantech 1.0

Lowlights

📈 +400ppm of atmospheric CO2 concentration at highest levels in 800,000 years (!)

🔒 US carbon capture and storage rates peaked in 2016

💸 Just 11% of BlackRock resolutions voted pro-climate, the lowest shareholder support among its peers


Deals of the Week (3/1-3/7)

🛥️ Turntide Technologies, a Sunnyvale, CA-based company making sustainable electric motors, raised $80m in funding from Breakthrough Energy Ventures, FootPrint Coalition Ventures, the Amazon Climate Pledge Fund, Keyframe Capital, and Fifth Wall. More here.

🌡️ Therma, a San Francisco, CA-based creator of wireless temperature and humidity monitoring sensors for the cold chain, raised $10m in funding from Deciens Capital, G-Bar Ventures, Collaborative Fund, Govtech Fund, and Active Impact Investments. (NB: Sophie is also an investor.) More here.

⚡ VEIR, a Boston, MA-based business focused on high temperature superconductors for electricity transmission, raised $10m in Series A funding from Breakthrough Energy Ventures, Congruent Ventures, and The Engine. More here.

🍎 Outcast Foods, a Canada-based company focusing on food waste and reducing the carbon footprint of food supply chains, raised $8m in Series A funding from District Ventures Capital and BDC Capital. More here.

💵 TreeCard, a UK-based credit card startup that plants trees, raised $5m in Seed funding from EQT Ventures, Seedcamp, and Episode 1. More here.

🏢 Ecomedes, a San Francisco, CA-based product database improving building sustainability, raised $3m in Seed funding from M12, NOVA, Mission Innovation Networks, and AM Ventures. More here.

🥩 Future Fields, a Canada-based cellular meat startup, raised $2m in Seed funding from Bee Partners, Pioneer Fund, Narrative Fund, and Y Combinator. More here.

Later-Stage Fundings / New Funds:

DeepGreen Metals, a Canada-based EV battery metals maker, plans to go public via merger with Sustainable Opportunities Acquisition, a SPAC, in a $2.9b deal. More here.

Regeneration.vc is raising $50m for its debut fund, per an SEC filing.


In the Spotlight: Watershed

Last week we spoke with Patch about their plug and play solution for carbon removals. This week we hone in on the other side of the corporate net zero equation - decarbonizing operations and supply chains. Watershed raised a much hyped Series A round which brought together Sequoia's Michael Moritz and Kleiner's John Doerr as co-leads of the investment for the first time since 1999. In this conversation we probe Co-Founder Taylor Francis on how Watershed is enabling corporate decarbonization for customers such as Stripe, Shopify, and Sweetgreen. [We edited the newsletter version lightly for length; read the full interview here].

What’s the story behind Watershed? How did your team’s experience at Stripe influence the development of the platform?

Watershed emerged from a combination of a longtime passion for solving climate change and our experience building technology products and businesses. I first became both scared of and energized by the climate crisis after watching An Inconvenient Truth. I was part of the Climate Reality Project and spent high school presenting a local version of that slideshow to schools and community groups. Likewise, my co-founders are also long-standing climate change advocates - Christian’s first internet project raised money for environmental work, and Avi is an avid skier and environmentalist.

The three of us met at Stripe where we ran product, operations, and engineering teams. Christian led the creation of Stripe’s negative emissions commitment and carbon removal fund. That work taught us that companies can have a tremendous impact on climate, and it’s good business to do so—investors, customers, and employees all expect businesses to decarbonize. But it’s still extremely hard for companies to change operations to keep carbon out of the atmosphere. So we decided to start Watershed to build tools that enable companies to get to net zero - or negative - carbon.

What have been the key problems that companies face when trying to decarbonize? How have these challenges framed Watershed’s platform?

Watershed has three goals: Let companies measure their impact, take action to reduce emissions, and make reports on progress. Every ton of carbon that goes into the atmosphere can be traced back to a business making a decision, whether that’s energy supply, cloud computing, supply chain sourcing, logistics or transportation. Companies trying to have an impact on climate face two major issues: data and market.

The data problem is that companies don’t know the carbon impact of their decisions. The status quo in carbon accounting depends on industry average assumptions, which lends zero insight into how a company can make decisions in a different way to reduce emissions. So the first problem that we’re trying to solve at Watershed is providing more actionable data so companies can know the carbon impact of their decisions.

The second issue is a market problem. If you’re a huge corporation like Apple and the majority of your emissions footprint comes from aluminum, you can form a multi-million dollar joint venture to invent zero carbon aluminum. However, most companies don’t have that market sway on their own. We’re building a marketplace that matches companies on the journey to decarbonize with technologies for a zero carbon future.

Over the last decade, decarbonization has been led by large tech companies who have brilliant engineers, analytical resources, and market power. We’re trying to build the platform so any company can have that same actionable carbon decision making and market power by aggregating multiple companies to put their joint power behind clean solutions.

What’s the ideal profile of a Watershed customer?
We work with companies across different carbon-intensive supply chains including payments, healthcare, manufacturing, electronics, and food logistics. I’ve learned from working with our customers that one needn’t work directly with a cement manufacturer to decarbonize cement, or directly with a trucker to decarbonize logistics. Think about all of the technology companies building huge offices, all of the produce moving through the supply chains of Imperfect Foods or Sweetgreen, or all of the commerce delivered by Shopify. There’s this much more extensive carbon network, which companies can have a big impact on though their decision-making.

We’re excited about companies trying to do climate in a new way. The old, slow model of decarbonization that’s focused on measurement and offsets isn’t the right recipe for getting us to zero by 2050. We’re enabling a new model for companies to start measuring and reducing as soon as possible. Our customers share a new DNA of corporate climate action; they deeply understand their carbon network and don’t bucket their emissions into Scope 1, 2, or 3 because it’s all emissions that they’re responsible for.

Walk us through the Watershed value chain. How do your customers get integrated and on-boarded to the platform?

The Watershed platform drives decarbonization through three steps: measure, reduce, and report. We help companies measure their footprint in days (not months) and can trace emissions to their origins to see how they stack up to other industry players. On the reduction side, we recommend steps for companies to cut carbon and help them actually execute on that plan. Companies use Watershed to engage suppliers on their carbon impact and help them set targets if they haven’t yet done so. Companies can also offset and remove carbon through our marketplace, where they can buy clean power and fund impactful carbon removal projects. The final step is handling all reporting so companies have the means to engage their employees and customers, alongside best in class climate disclosures.

So, why is Watershed best equipped to help companies do that hard internal decarbonization work?

Every function or organization within a company has come to rely on purpose-built software to accomplish their goals - sales & support, product & engineering, supply chain & logistics, the list goes on. Climate is the most important function at every company over the next decade, and the teams working on climate need best-in-class tools.

Fundamentally, it comes back to the data and market problem. On the data side, companies need to know where they stand, set goals, and have a common language to prioritize initiatives and make sure results are being delivered. Watershed is providing climate teams with the same type of high performance, data-driven, real-time tools that organizations expect for every other function of their business.

On the market side, we’re doing the hard work of identifying the most promising low carbon technologies so that through Watershed it’s point and click for companies to put together a portfolio of carbon removal supplier partners or clean power developers who are adding new green power to the grid. We’ve helped companies buy clean cement for their offices, or - in the case of Sweetgreen - use Watershed to buy sustainable ingredients. Oftentimes, people think about the marketplace for decarbonization as offsets or credits, but the Watershed marketplace is much broader - companies are using our tools to decarbonize everything from salads, to semiconductors, to Bitcoin.

Watershed raised a hot Series A round from some powerhouse investors including Sequoia’s Michael Moritz and Kleiner Perkins’ John Doerr, who also joined your board. What have you learned about generalist investors’ current appetite for climate tech investing?

Throughout the raise we optimized for bringing on board partners who have experience building multi-decade enduring companies because we view Watershed as a multi-decade project. Between John and Mike, they’ve been a part of an astonishing array of transformational companies. We’re really grateful to have them on board with Watershed. It’s exciting that the time is finally here for all of those climate technologies to not just be good projects but also good businesses.

Read the full interview

Want to build the next watershed moment in climate, whether that’s building software, coaching customers, or scaling an organization? Watershed is hiring across the business - and is particularly eager to talk to engineers and sales leaders.


In the News

CTVC friend Jigar Shah was tapped to rev up the Department of Energy’s loan office. The loan program boasts $40B in capital to speed the low-carbon transition – creating jobs by investing in EVs, carbon capture, advanced reactors, and much more.

Exxon now sees a $2 trillion “addressable market” in carbon capture and storage by 2040 - and that it is well positioned (gasp!) to capitalize on that market. Meanwhile, rumor has it that ESG activist investor Jeff Ubben of Inclusive Capital Partners is being considered for a seat on the board.

With China causing 30%+ of all global carbon emissions last year, Bloomberg highlights four key climate numbers to watch in China’s Five-Year Plan if the country is to meet its 2060 net zero goal.

The Biden Administration reverted to Obama’s $51/ton for the social cost of carbon, with the expectation to go higher after further review. The SCC reflects the dollar price to society for every new metric ton of CO2 emitted and factors into policy decisions like EPA regulations and government spending.

Want to take a joy ride in your EV from Chicago to Orlando? Utilities hope so. Six utilities formed a coalition to build DC fast chargers across the midwest and the east coast.

Xcel Energy announced a $1.7b investment into transmission expansion in Colorado. The 560-mile investment ($3m per mile!) will unlock valuable but hard-to-access renewables for the utility.

FedEx made a $100m delivery to Yale to launch the institution’s Center for Natural Carbon Capture which aims to "develop interventions that enhance the Earth’s abilities to store carbon and other methods that model natural processes."

The SEC plans to boost examinations of fund managers promoting “environmentally-friendly” investment approaches and review how public companies have complied with climate change disclosure requirements.


Pop-up

USPS’s delivery vehicle unveiled last week isn’t its first foray into EVs... a CTVC reader sent us this snap of her electric USPS van from 1980 and clued us into the wild backstory of these polygons on wheels which used to be the best selling EV in the US before the Model S came along.

Carbon County, Wyoming is setting its coal-rich pride aside to host one of the US’s biggest wind farms.

Asian heirs are pouring their fortunes into impact funds like I(x) Investments run by… Howard Buffet?

Striking graphics of the dramatic dangers of The Cold Blob to the weakening Gulf Stream from the NYTimes.

When Seville gives you (too many) oranges… turn them into electricity?

Petaluma, CA has put its foot down on the (electric) pedal and become the first US city to ban new gas stations – favoring electric charging stations.

Opportunities & Events:

🗓️ ClimateTech Intern Fair: Join Greentown Lab for their annual (virtual) intern fair which focuses on connecting students with GTL’s network of climate tech startups on March 11th.

🗓️ FSIcon: Register for Brown University's annual student-run conference on sustainable investing on March 18th and 19th, which seeks to bring together students, professionals and academics to discuss how the capital markets can be leveraged for sustainable development.

💡 NextView’s Health & Sustainability Accelerator: Seed stage consumer and SaaS B2B companies leveraging digital technologies for the health of our planet and people can apply by March 9th.

💡 X Genesis: Are you an experienced entrepreneur looking for your next opportunity at the intersection of impact and ROI? Apply to X Genesis: Water and Climate by March 15th.


Jobs

Climate Change Specialist VP @Morgan Stanley

Sustainable Finance Thought Leadership Director @Morgan Stanley

Investments & Research Associate @Third Derivative

Berkeley Managing Director @Activate

Food Team Consultant @Rockefeller Foundation

Sr Associate Carbon Free Buildings @RMI

Project Manager @Yale Carbon Containment Lab


Feel free to send us new ideas, recent fundings, or general curiosities. Have a great week ahead!

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