Drawdown Fund: Scaling the Impact of Climate Technology
Aug 14, 2024
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Erik Snyder is the founder and CEO of the Drawdown Fund, dedicated to financing climate tech startups. Paul Hawken, an influential author and editor, co-established the fund to combat climate change. They discuss innovative investment strategies for sustainable solutions, including impactful initiatives in urban infrastructure and mass transit. The conversation highlights the challenge of food waste in climate change, emphasizing the importance of strategic funding and the need for scalable technologies to create meaningful environmental change.
The Drawdown Fund focuses on mid-stage investments in sustainable technologies to achieve both financial returns and significant climate impact.
Unique incentive structures tie team compensation to measurable climate outcomes, promoting alignment with environmental goals and innovative financial practices.
Deep dives
The Origin of the Drawdown Fund
The Drawdown Fund was established to tackle the urgent need for solutions to reverse climate change, sparked by a thought-provoking question about leveraging wealth for global benefit. Paul Hawken, frustrated by the lack of answers and actions addressing climate change, founded a nonprofit in 2014 that led to the creation of a comprehensive guide known as Drawdown. This initiative involved extensive research from 75 fellows globally who evaluated peer-reviewed data to identify scalable solutions capable of reversing global warming. The culmination of this two-and-a-half-year effort was the publication of a groundbreaking book that highlights actionable strategies for mitigating climate impacts.
Investment Strategies and Areas of Focus
The Drawdown Fund differentiates itself by targeting mid-stage investments, specifically looking for sustainable technologies that fit within a defined range of $10 to $50 million. This approach focuses on 54 identified solutions from the Drawdown analysis, identifying opportunities that could achieve both financial returns and significant climate impact. The fund emphasizes solutions that support sustainable cities, resilient systems, and energy transitions while avoiding earlier stage ventures that lack market validation. Among the highlighted investments are companies using artificial intelligence for mass transit decarbonization and community solar initiatives, stressing the importance of proven impact in driving investment decisions.
Innovative Impact-Linked Compensation
The Drawdown Fund implements unique incentive structures for its team, linking compensation to measurable climate impact outcomes to encourage alignment with environmental goals. This involves creating comprehensive 'impact memos' that outline expected emissions reductions and other benefits as part of their investment strategy, audited by industry experts. The fund’s philosophy is rooted in changing traditional financial practices to promote a sustainable approach, incorporating both financial returns and meaningful climate interventions into their operational model. This method ensures that if the impact targets are not met, the carry is redirected to other philanthropic efforts aligned with their mission.
Future Directions in Climate Finance
Looking ahead, the Drawdown Fund believes that addressing climate change presents vast opportunities across all sectors, urging individuals to find their passion and engage in climate-focused careers. As the need for approximately $27.2 trillion over the next three decades becomes clear to tackle climate challenges, the fund highlights the importance of adaptation alongside mitigation strategies. They identify water solutions, such as those that provide potable water from air, as crucial for both climate adaptation and emissions reduction. The conversation continues to evolve, demanding that climate finance not only focus on innovation and investment but also contribute to long-term resilience in the face of climate impacts.
Erik Snyder, Founder and CEO of Drawdown Fund discusses financing climate tech startups
through growth equity. He describes how he started the Drawdown Fund with Paul Hawken, editor of the New York Times best-selling book on climate solutions called Drawdown, and the strategic choices that set their fund operations apart from others. He also describes some of the fund’s portfolio companies: from sustainable packaging, community solar to decarbonizing mass-transit with AI.
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