Icon: Fast Lessons From One Of Today’s Hottest Climate Syndicates

Many venture capitalists today see climate as a high-impact, high-return sector. “The world’s first trillionaire will be made in climate change,” tweeted investor Chamath Palihapitiya. Still, the shadow of climate investing from the early 2000s can loom long. So how do we learn from others to capitalize on a potentially booming sector? Take it from one of today’s most prolific and under the radar early-stage climate investors: Sundeep Ahuja. He’s a special blend of founder empathy and investor rigor. Below he shares how to help pick the next climate unicorn.

Brendan Doherty: Sundeep welcome to Icons of Impact! As we both know, I sought you out for this, impressed by your curated climate investing. For those who are not familiar with you, share some about your background and what first pushed you toward investing? 

Sundeep Ahjua: The short answer is my dad worked as a public servant for 40 years and that’s the tree that I fell from. He raised us to want to give back. The turning point for me personally was when I was helping launch Kiva.org. It was my “Aha!” moment. I realized I could merge the person I wanted to be, with this platform of technology. And that was exactly what I wanted to do for the rest of my life – be at the intersection of technology and impact.

Doherty: So that’s the intersection where you’re investing?

Ahuja: I’m primarily investing through two funds. The first is thematically focused called Climate Capital. We’ve been investing since 2015 and invest pre-seed and go all the way up as needed. The second is Duro Ventures, which we’ve been working with since 2013. Duro is non-climate, but focuses on healthcare, marketplaces, and disruptive e-commerce brands. 

Doherty: But you started as an entrepreneur, does that help you more closely serve and empathize with founders?

Ahuja: As a 3x entrepreneur, I’m well-versed in the founder’s journey. When I started in 2010, my goal was to get people to care about the environment, to shift consumption patterns towards sustainability. Each of the three companies I founded had their own mission statement and specific problem set to solve, and we just figured it out – that’s the fun of problem solving.

Doherty: Lately you’ve been focusing considerably more on Climate Capital – why? What made you decide to make that change? 

Ahuja: As I learned more, I realized that the climate – if not properly protected – will worsen all the other challenges we face. An unprotected climate makes poverty worse, disease worse, inequality worse, every single issue that I was attracted to help solve – I realized they’d be exacerbated by climate change. So I decided that this is what I’m going to work on. I wrote a novel about a post-climate change future. I did a TV pilot where we went to the Maldives to capture the story of rising sea levels. We even had an accelerator and incubated companies like Twelve (formerly Opus 12), Rainforest Connection, and others. Then in 2018 it all changed. All of a sudden — the capital was there, the founders were there, the talent was there, and things started to change. That’s when I launched the Climate Capital brand. And since then, I’ve mostly been focused on climate.

Doherty: There certainly is more capital flowing into climate investing again. Before we go further into your investment approach, you’ve also tried your hand at producing climate films. You shot a pilot in the Maldives to use entertainment as a way to move people toward action. Using the global “we,” do you think we are doing this well? What else do we need to do? 

Ahuja: There’s just so much more opportunity. I’ve found that some of the best movies or books that I’ve read around climate are not fear mongering. Instead it’s where climate is mentioned as an ancillary piece of a really good story. The reader realizes, “Oh, right, we got to this situation because of climate change.” The good news is there are companies that are doing that now – finding the intersection of entertainment and behavioral science.

Doherty: That is great news and a sweet spot for storytelling. Returning to investing, how do you like to vet your start-ups and successfully diligence them?

Ahuja: It’s so exciting and certainly long overdue. For me, it’s diligence in the founder and diligence in the market. There are three distinctive buckets I like to look at. First, if it’s a founder who I know – or one who is strongly referred to me – then I’ll run the diligence process myself. Second, I’m also building a team called C3 with partners who meet weekly to collaborate and co-invest. And third is our external partners – we’ll ask “Who in our network is an expert in this area that we can lean on?” Thankfully, there’s a menu available. 

Doherty: What was your first angel investment?

Ahuja: Goodreads –  which is what made me think I might be good at this. While that one was “easy,” my second angel investment went to zero and taught me that it’s not so easy [laughs].

Doherty: Often those are the more insightful scenarios! What did you learn from that? How does it affect your thesis today and your approach?

Ahuja: Both times I was investing in one of my best friends – I believed in this person and wanted to back them – and I wouldn’t change that decision. His third company actually became venture-scale. I couldn’t even invest in that one because it was so oversubscribed. So, what I learned was to bet on the right person, even if it isn’t the right idea initially. And that’s kind of what I do now at the early stage of investing. The founder market fit at the pre-seed seed stage is significantly more important than product market fit. Series A is looking for product market fit. But at the earlier stage, the question is “Is this person the right person for this broader opportunity?”

Doherty: Would you say picking the right founding team then is the most important?

Ahuja: In my experience, that is 100% the most critical component. Both as a founder and an investor — it all comes down to who you’re working with. Through all the pivots and growth you have to have the right people to, hopefully, get you where you’re trying to go.

Doherty: What makes the right founder — is it technical expertise, a track record, tenacity?

Ahuja: All of the above. Sure, I have developed some sort of intuition around who to invest in after having done it so many times, both for better or for worse. But here’s my checklist:

1. Is this person the best person in the world to be starting this company? 
2. What makes them uniquely qualified to go after this specific opportunity? Or is this just a business plan? 
3. If it is a business plan, how are they going to go to market in a way that even if they’re not the founder born to do this, they figure out the way to do this?

It’s a lot of soft checkboxes. In the early stages, founders are presenting visions of the future.

Doherty: Are you bringing to bear more than just the check? And if so, what does that look like?

Ahuja: We try to punch above our weight class in a few ways. We’re very responsive to investor asks. Every time there’s an email we provide the resources needed. Also, we generally evangelize on their behalf in the climate space, helping to create a synergy and interconnection. Also, our investor base. If there’s a critical ask but it’s something I can’t help with, I’ll go to the LP base and ask. 

Doherty: Ok, so who do you look up to in this space? 

Ahuja: Honestly – everyone. I’ve been here since 2015, and there are so many incredibly smart people who have been here longer. Even those that are new, come with such expertise that they come in with a unique view. For example, the team at Lower Carbon and then Shayle Kann at Energy Impact Partners. There are so many people I just love learning from.

Doherty: Share a future space you’re watching that most readers might find surprising?

Ahuja: The first that comes to mind is nuclear energy, which may seem like a “bad word,” but the way we are innovating in that sector is interesting. There’s even a company called Living Carbon that is developing super trees to pull down more carbon. What’s most interesting to me is how climate is everywhere and in everything. There’s no sector untouched – pick an industry and there are people figuring out how to address climate change.

Doherty: I believe too that nuclear absolutely has a role in our clean energy foreseeable future. I’d like to thank you for sharing your heart and strategic thinking with us today; I enjoyed our time!