CleanTechies

#91 How Keyframe is Bridging the Gap from Pure VC to Pure PE Financing for Hard Tech COs w/ Ethan Goldsmith

Apr 5, 2023

53:03

Today we have a pretty interesting capital provider joining us. Ethan Goldsmith is an Investment Partner at Keyframe Capital and helped found TeraWatt Infrastructure (the fleet charging behemoth).

We went through the usual stuff around his background, early career, what they are doing, how they source deals, and their unique points but the core of this conversation in my opinion is really in their model.

Since their inception, they saw that ClimateTech would require more flexible capital structures given that the pure equity model wasn't going to work given how capital-intensive most of these technologies are. They set up their fund to include those flexibilities.

As an example, they might find a firm that is in need of funding, they could write a check in return for equity, but then in a few months, they might issue a specific project finance product for that use case. If the portfolio company needed to raise that in the form of equity for dollars, they would quickly be eradicating their cap table space.

This to me is the most important aspect of this entire conversation and I'm glad we had the chance to speak with Ethan to go through it. There are other interesting topics here but this is key for other fund builders to consider.

Enjoy the episode!

Topics:

1:57 Intro
7:35 What led them to recognize the infra -- VC Gap
14:27 Getting into PE/VC
19:13 Building TeraWatt
24:47 Key Takeaways from starting TeraWatt
26:47 Differentiating their model through flexible capital
31:36 Their Verticals
38:11 Managing deal flow
40:58 They spend a lot of time in the market before investing because of their model
42:32 How they help their portfolio co's
45:45 Advice to hardware and capital-intensive startups in ClimateTech
48:36 Obvious Prediction
50:47 Final thoughts

Links:

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