How to Make Your Sector Acceptable to Institutional Investors

This episode is part of our new Capital Series hosted by Jason Jacobs. This series explores a diverse range of capital sources and the individuals who drive them. From family offices and institutional LPs to private equity, government funding, and more, we take a deep dive into the world of capital and its critical role in driving innovation and progress. 

Temple Fennell is the Co-founder and Managing Partner at Clean Energy Ventures, an early-stage venture firm that funds disruptive capital-light technologies and business model innovations that can reshape how we produce and consume energy.

Temple has been investing in climate tech (or "Cleantech" as it used to be called) for a long time, and has the learnings to show for it. This episode covers the origin story of Clean Energy Ventures, their approach, the mix of limited partners that back their fund, and their criteria for investment from an impact standpoint and a financial standpoint. A broader discussion follows about the climate tech capital stack, some of the learnings from Cleantech 1.0, why Temple believes this time is different, the state of institutional capital as it relates to climate tech fund investing, as well as what it will take to get more capital flowing in this direction.

In this episode, we cover: 

• [02:56]: Origins and overview of Clean Energy Ventures
• [04:50]: Distinction between Clean Energy Venture Group (CEVG) and Clean Energy Venture Fund
• [07:20]: Temple's background, family investments, and the clean energy space in Charlottesville, VA 
• [11:11]: Overview of CREO (Clean Energy Renewable Environment Opportunities) syndicate
• [13:25]: Key learnings from Cleantech 1.0 
• [18:15]: CEVG check sizes, portfolio, and support for entrepreneurs
• [20:01]: History of CEVG's fund one and their use of SPVs (special purpose vehicles)
• [22:12]: Current investment focus and fund status
• [25:59]: Approach to impact measurement
• [30:20]: Approach to financial returns and causal link to impact
• [31:19]: Approach to selecting LPs
• [34:15]: Pension fund hesitance due to previous losses in Cleantech 1.0
• [38:18]: Why Cleantech 1.0 failed and how this time is different
• [41:02]: How limited DPI (distributed paid-in capital) poses challenges in attracting institutional investors 
• [43:23]: Pricing, exit analysis, and the need for top decile returns
• [46:17]: State of the broader market vs. climate tech market, risk assessments, and team dynamics
•  [48:56]: Gaps and opportunities in the capital stack, preference for capital-light companies, and importance of milestones   
• [52:21]: Who Temple wants to hear from 
• [54:58]: Closing thoughts on the differences between "Tech-tech" and Cleantech

Resources mentioned:

• Simple Emission Reduction Calculator
• Venture Capital and Cleantech: The Wrong Model for Clean Energy Innovation

Get connected: 
Temple Fennell Twitter / LinkedIn
Jason Jacobs
MCJ Podcast / Collective

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Episode recorded on May 26, 2023 (released on June 28, 2023)

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*Editing and post-production work for this episode was provided by The Podcast Consultant