Hype, FOMO, and Why VCs Lose The Plot | The Compass (May 2024)
Our firm is intently focused on earth systems investing, which is to say we strive to work with companies that are building business models that are not only trying to drive strong financial returns but are also deliberately prioritizing the health of our critical natural and human systems, including climate, water, land, natural resources, energy, agriculture, biodiversity, etc. That said, we try to be students of the investment world more broadly, and are always trying to glean lessons from investment strategies and patterns across sectors – technology being one of them.
It’s fascinating to watch the billions of dollars currently being funneled into AI. I don’t consider myself a luddite, so I certainly understand and support the pursuit of innovation, disruption, and creating new and better ways of working and living. The technology sector is such a powerful force because of its bold optimism and ambition.
But a critical eye has to ask – as Goldman Sachs projects global AI investments will reach $200 billion (yes with a "B") by 2025 and Big Tech companies drop billions of their own into AI initiatives in order to pull ahead in the contentious global AI race – just how useful is AI? What precisely are we trying to solve for? Are we methodically and meaningfully addressing societal issues…or are we just chasing a shiny object because everyone else is chasing it too?
In the case of AI, it’s certainly too early to tell. But too often, Silicon Valley embodies the mentality of, “We’ve got a solution, let’s look for the problem.” A new technology du jour emerges every few years (if not quicker), whether it was the Metaverse, crypto, or now AI, and investors flood the zone. Enamored by big TAMs and flashy demos, and hungry to get in on “the next best thing,” investors throw money at companies without always completing the necessary due diligence, research, and strategy. VC culture has become accustomed to simply chasing the next 10x return, and has strayed from trying to invest in companies that are actually out to solve real, pressing problems (I wrote about this in a recent blog reflecting on the 5th anniversary of Beyond Meat’s IPO).
Being a VC comes with myriad challenges, but it’s a privilege to be able to partner with promising entrepreneurs and deploy significant capital that can materially help their businesses grow. With that privilege, it’s imperative that we don’t lose the plot. We must stay grounded and seek to use capital to elevate companies that will make our world better. We must be patient. We must reevaluate what success looks like and consider whether every investment needs a 10x return. And to be true stewards of our beautiful home, we must balance planet and profits.
Our focus is, and will remain, to be a venture builder – whose highest ambition is to support the development of durable companies that are thoughtfully designing business models that partner with nature in order to meaningfully displace our most damaging human activities.
What We’re Reading
5 takeaways from the global negotiations on a treaty to end plastic pollution
THE HILL
The recent global negotiations on a treaty to tackle plastic pollution in Ottawa concluded with some significant progress, marking a shift from idea-sharing to actual negotiations on treaty language. Key points include the contentious issue of limiting global plastic production, ongoing negotiations until the next meeting in South Korea this fall, and the recognition of the frontline role played by waste pickers in combating plastic pollution. Despite challenges, negotiators aim to finalize the treaty by next year, fueled by growing momentum and diverse support from various stakeholders, including businesses, environmental advocates, and affected communities.
Read More
The rise of the carbon farmer
WIRED
"Carbon farming" is a practice that prioritizes regenerative methods to restore soil health and fertility while combating climate change. By employing techniques such as cover crops, minimal tilling, and diverse crop rotations, farmers can not only enhance biodiversity and produce nutritious food but also sequester carbon dioxide from the atmosphere back into the soil. While the exact potential impact of regenerative agriculture is debated, proponents argue that it could mitigate a significant portion of global emissions if widely adopted.
Read More
Ocean heat has shattered records for more than a year. What's happening?
THE NEW YORK TIMES
Ocean temperatures have been breaking records consistently for over a year, with 2024 continuing the trend of surpassing previous highs by significant margins. While long-term global warming from greenhouse gasses is a contributing factor, the current extreme records exceed expectations, prompting questions about attribution. Factors such as an ongoing El Niño event, reduced aerosol pollution from shipping, and the aftermath of a massive underwater volcanic eruption in 2022 are believed to play roles, though their combined impact still doesn't fully explain the unprecedented warmth. Scientists are working to understand these complexities better, with results expected in the coming months.
Read More
Third Nature News
Why decarbonization isn’t enough
JASON W. INGLE
Decarbonization is one of the most popular terms in sustainability right now. From the SEC's climate disclosure rule to corporations’ net-zero emissions pledges to a new wave of cleantech startups striving to help enterprises reduce carbon footprints, decarbonization has significant momentum. But while reducing carbon emissions is crucial — it’s not a silver bullet. We must also address other critical sustainability measures, such as biodiversity, water conservation, and resource scarcity.
Read More
Our Companies in the News
Where to taste New England's wave of eco-friendly seafood
FOOD AND WINE
Lobster rolls and fried shrimp are long-standing favorites in New England for good reason — they’re delicious uses for local ingredients. But as the climate changes, fish stocks relocate or dwindle, and classics like Maine shrimp become off-limits, a wave of innovators is popularizing important additions to restaurant menus and grocery store shelves, including seaweed. Atlantic Sea Farms, whose model of providing kelp seed and buying the harvest results minimizes financial risk for fishermen, continues to develop unique kelp products at its headquarters in Biddeford, Maine. “We aim to make our products not only delicious but also easy to use and accessible” so they require little to no preparation, says CEO Briana Warner.
Read More
The most exciting advancements in fabric innovation right now
FASHIONISTA
The fashion industry is well-aware of its daunting environmental impacts, from its carbon emissions to its water pollution. Material innovation has been a cornerstone of brands' sustainability strategies, a big one being opting for recycled nylons and polyesters versus the virgin, plastic-based fibers. Companies like Keel Labs have stepped in to address that need. Keel Labs' algae-based Kelsun looks and feels like a natural fiber, and has already appeared in collections by Stella McCartney.
Read More
Keel Labs' Tessa Callaghan Introduces Kelsun Kelp-Based Textiles
EARTH911 PODCAST
The fashion industry is responsible for as much as 10% of annual CO2 emissions and an immense amount of waste that chokes landfills, rivers, and beaches worldwide. Too much of our clothing is made from oil-based textiles, like polyester. Tessa Callaghan, cofounder and CEO of Keel Labs, has been recognized as a Forbes 30 Under 30 leader for her contributions to plant-based fashion. The Morrisville, North Carolina-based early-stage startup has developed a kelp-based alternative called Kelsun. According to the company, Kelsun is a compostable, soft natural fiber that can be integrated into the clothing production system with no changes. The result is clothing as comfortable and durable as those made with water-intensive cotton or oil-based textiles.
Listen Here
[VIDEO] “Seaweed is the most generous material on Earth”
IMAGINE5
Plastic is overflowing out of landfills and washing up on our shores. While plastic is a super useful material that has helped build the modern world, it often outlives its intended use by thousands of years. Enter Julia Marsh and Matt Mayes, co-founders of Sway, a company designing seaweed-based replacements for plastic. Growing up with a deep connection to the ocean near Monterey, California, Julia has always marveled at the generosity and abundance of the ocean.
Watch Here
 |
|