David Aronoff, Chairman and General Partner at MCJ Collective, discusses his journey from traditional VC to purpose-driven investing. They explore his transition, creating MCJ Collective, and their approach to venture capital. They also share insights on fundraising progress and motivations for climate activism.
David Aronoff transitioned from traditional venture capital to focusing on climate, combining purpose and profit.
MCJ Collective emphasizes the importance of community collaboration and engagement with startup companies.
MCJ employs a unique strategy of complementary capital and diligence to drive impact in climate change.
The team at MCJ is more than halfway toward their target fundraising goal, with a mix of investors including high net worth individuals and family offices.
Deep dives
Overview of the Podcast Episode
In this episode of the MCJ Capital Series, David Aronoff, Chairman and General Partner at MCJ Collective, shares his journey from traditional venture capital to focusing on climate. He discusses the transition, the mission of MCJ, and the intersection of purpose and profit. The episode also touches on the fundraising process, building an enduring firm, and the unique strategies employed by MCJ. Throughout the conversation, the importance of community, connectivity, and impact in addressing climate change is highlighted.
The Transition towards Climate Focus
David Aronoff discusses his shift towards working full-time as a VC focused on climate. He shares the thought process and conviction that led him to believe that working on climate is the right thing. The podcast explores his background in traditional venture capital and his decision to combine purpose and profit. The conversation also delves into the journey of finding MCJ and the role of community, content, and capital in promoting solutions for climate change.
Fundraising and Building an Enduring Firm
The episode delves into the process of fundraising for MCJ and creating an enduring firm. David highlights the importance of structuring the firm and establishing a strong foundation. It discusses the unique approach MCJ takes in portfolio construction, focusing on being complementary capital and driving impact in climate change. The episode also touches on the role of diligence in evaluating companies across various sectors.
Strategy and Diligence in a Diverse Portfolio
The conversation covers the strategy of MCJ, which involves building a diverse portfolio across climate sectors with a focus on early-stage companies. It emphasizes the intersection of impact and market-rate investing. Diligence is viewed through multiple layers, including the expertise and backgrounds of the MCJ team, as well as learning from past experiences. The podcast explores the importance of founder qualities, team dynamics, and market potential in the diligence process.
The Power of Community Collaboration
One of the main ideas explored in this podcast episode is the importance of community collaboration. The speaker emphasizes the incredible value of an organic and supportive community that actively engages with startup companies and provides expert opinions. The community benefits from meaningful conversations with founders working on various climate-related solutions, while portfolio companies gain valuable insights and connections with potential customers or partners. This collaborative approach not only helps in due diligence and building expertise, but also fosters a sense of giving back and avoiding a perception of taking advantage.
Team Roles, Decision-Making, and Scaling
Another key point discussed in the episode relates to the roles and responsibilities within the team, the decision-making process, and future scaling. The five partners in the firm each have their functional roles, such as community engagement, portfolio support, finance, and investing. The decision-making process follows a majority rules approach with a focus on open and candid conversations. As the team scales, they plan to hire additional members for investor relations and portfolio support. They anticipate expanding geographically and maintaining their strategy with a relatively stable fund size. They also aim to demonstrate their ability to add value, maintain relationships, and deliver results for their portfolio companies as key metrics for future success.
Fundraising Progress and Market Trends
The podcast episode also provides insights into the ongoing fundraising efforts and investor dynamics. The team shares that they are more than halfway toward their target fundraising goal of $125 million for their fund. They highlight the growing momentum and aim to reach a final close by the end of the year. They discuss the mix of investors, including high net worth individuals, single family offices, multiple family office managers, and fund-to-funds. While they acknowledge that traditional institutional LPs may not form a significant portion of their investor base, they aim to build relationships with them for future funds. Additionally, they express the need for liquidity events, IPOs, and notable acquisitions within the climate tech space to further attract larger capital allocators.
Surprising Discoveries and Personal Motivations
The episode concludes by discussing the speaker's personal surprises, including the openness and collaboration within the community, as well as the emergence of novel business models within climate tech. The speaker emphasizes the importance of finding one's purpose and committing to a cause that aligns with their values. They highlight the desire to make a positive impact for future generations and express gratitude for the supportive network that has helped guide their career transition. The speaker also encourages others in similar positions to be intentional, explore different opportunities, learn from diverse perspectives, and seek guidance along the way.
This episode is part of our new Capital Series hosted by Jason Jacobs. This series explores a 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.
David Aronoff is Chairman and General Partner at MCJ Collective.
David has been in the venture space for nearly 28 years and joined MCJ a few years ago. His role has transitioned from LP to advisor to executive chair, and finally the last two years plus to his current role and chairman and general partner.
Jason and David go in-depth, not only into David's journey, but also into the transition he made after a long career in traditional VC towards seeking more purpose, how he combines purpose and profit more squarely in this next chapter, plus his journey to finding MCJ. Then we have a fun grilling session where Jason gets to role play and ask David all the questions we get asked from LPs as the partners have been out raising the fund.
Enjoy the show!
In this episode, we cover:
[3:56] David's background and decision to join MCJ Collective
[9:42] His journey exploring climate and solutions
[13:00] David's thoughts on MCJ's early rolling funds
[20:02] His mission-driven transition back to full-time work and building MCJ Collective the firm
[24:01] The thought process behind the launch of MCJ's traditional fund structure
[29:32] David's previous fundraising role vs. his role at MCJ
[33:00] His thoughts on MCJ's stack, data room, and preparation
[38:48] MCJ's overall strategy
[44:33] David's perspective on ownership and MCJ's portfolio math
[49:04] The diligence process
[55:21] Time allocation of MCJ's five partners
[58:38] MCJ's decision-making process
[1:00:16] David's views on how the team will scale
[1:02:32] MCJ's fundraising status to date, investor breakdown, and closing plans
[1:08:36] David's thoughts on the future of MCJ's venture fund
[1:20:10] The "why" behind his work at MCJ and who he wants to hear from
*You can also reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded on August 14, 2023 (Published on August 23, 2023)
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