Emerging Trend: Carbon Capture

With global warming from climate change accelerating there are a set of technologies and solutions emerging to hopefully address the challenge. NASA keeps a real time tracker of the effects of climate change here. One of the most direct and more science fiction like that is still nascent but in the pilot phase is carbon capture. Carbon capture is a set of technologies that is able to pull carbon dioxide from the air and store it back underground, hypothetically turning the clock back on global warming.

There are three startups on the cutting edge of carbon capture technologies - Global Thermostat, Climeworks, and Carbon Engineering. Their technology is based around exposing filters to air, that once saturated, are heated to free the carbon dioxide and pump it into tanks or back underground.

All three have working technologies that do this, the challenge right now is to find a business model that makes this a profitable activity. Substantial progress has been made in the last several years with the average cost falling from $600 per ton of captured CO2 to $100 a ton.

Critical to this effort right now are government tax credits that give back up to $50 for every ton of carbon stored underground. The improved efficiency of the technology and federal tax credits has captured the attention of big oil, who can use the recaptured CO2 to increase well pressure for oil extraction.

The next wave of carbon capture includes using the reclaimed carbon dioxide in transportation fuels by mixing it with hydrogen, reducing the carbon emissions of vehicle fuels by up to 20% in the next decade.

Currently the scale these firms are operating on is esmall but as they become profitable the hope is to scale up and start capturing noticeable amounts of greenhouse gases, hopefully slowing down global warming.

DroneSeed

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Overview

DroneSeed deploys drone swarms to aerially plant trees and other plants as well as cultivate and monitor them. They’ve initially launched the service to help reforest areas devastated by wildfires quickly recover. The team has received FAA clearance to fly lower than normal and carry heavier loads than the current 55 lb weight limit. Services include micro-precision planting of seeds, fertilizer and herbicide spraying as well as progress monitoring.

Current clients include timber companies and national forestry services. They are expanding their services to include commercial growers including vineyards, fruit and nut orchards. DroneSeed heavily modifies and retrofits industrial drone hardware

The team is based in Seattle, Washington.

Why I like Them

I like them because this is a very cool application of technology to helping solve the planet’s environmental issues. They make maintaining and expanding vast areas of fields and forests much more scalable and efficient than the current method of manually planting by hand to cover thousands of acres. The double bottom line here of cost savings for organizations as well as helping the environment in a more scalable manner is great. From a business perspective they have little competition and have already locked up long term government contracts.

The other part of this business I like is its much more defensible than it appears on first pass. Equipment and software needed for this are not off the shelf but are custom built by DroneSeed. The AI algorithms needed for mapping a landscape precisely, determining the best locations for seeds to be dropped, the seed packet mixture deployed, and then having the drones be able to spray the correct amount and type of herbicide for that area is not a trivial task.

Investor Discussion Series: Alex Ledoux of Ledoux Ventures

I recently caught up with eCommerce angel investor Alex Ledoux of Ledoux Ventures.  Alex is a serial entrepreneur and investor who has invested in Shop Succulents and Inventors Launchpad.

What do you look for when investing?

I look for smaller consumer goods and eCommerce companies doing $1-$4M revenue, preferably in fragmented industries.  I’m not a fan of pre-revenue companies.  It has to be a business that I can bring my skills, such as internet marketing and business development, to bear and accelerate the company’s growth.  I’m especially interested in companies that do poor or little marketing that I can step in with and rapidly scale businesses.

I aim to take a large minority stake and look for founder’s who are hustlers and willing to learn and improve.  Unlike a more traditional technology focused angel investment I generally look to grow and sell my investment within a 2 to 5 year timeline.

In terms of vertical I’m more opportunity driven than having a specific thesis I look to invest around.

As primarily an eCommerce investor what are your thoughts on Amazon?

Dynastic companies have been built in the past and will continue to be built.  Don’t be afraid of Amazon.  The companies I look at build a brand outside of Amazon but they don’t ignore it.  I’m fine with investing in companies that do a large amount of revenue from Amazon even though the problem there is you don’t own or have access to your customer data.  Amazon ideally should just be another channel but not your business’s core.  

In general, Amazon is slow to catch onto consumer trends so you can usually get ahead of them, at least for a couple of years.

Especially early stage for eCommerce - how do you test whether the product has any real legs or is just a fad?

I structure my deals in such a way to limit my downside if the product turns out to be a fad.

What consumer trends are you interested in investing in 2018?

I’m more opportunity focused and less into trends.  However, one area I’ve been looking at is getting involved in the board game space.

What are some resources you use to stay up to date on consumer trends?

Facebook, podcasts such as The Tim Ferriss show and eCommerce Fuel.

How do you source your deals?

Finding good deal flow is hard.  If you are doing things right in eCommerce you often times don’t need investors as your business will generate substantial cash flow. Given that, I put a major focus on bringing much more than just money to the table. I look to be seen as a partner with capital, instead of an investor. I look to bring marketing and business development to any business I get involved in. As far as sourcing deals, Reddit has been a shockingly good place to source deals and get referrals.  I also attend as many events as possible.  I’m planning to start a podcast to build more of a brand for my investment firm as well as partner with accelerators.  I’ve also had some success with cold outreach to companies I’m interested in.  I also want to get deeper involved with the angel community.  

Any investors you personally look up to?

A handful of angel investors that I’ve closely worked with.

Any predictions for 2018?

Amazon will continue to dominate. As an eCommerce business owner you really need to look at how you can best use Amazon’s growth to your advantage without becoming purely Amazon focused. From a marketing perspective, I also think Amazon PPC and influencer marketing are musts for 2018.

Anything else you think potential consumer investors or consumer entrepreneurs should know?

  • It’s amazing how many people I meet with good ideas but aren’t willing to make the jump to entrepreneurship.

  • On the other hand some people think if they just start something everything will just come naturally.

  • I’m constantly amazed by how few companies market correctly. Many companies blindly trust marketing agencies. Or they don’t even get the basics like having a high conversion optimized website. Many companies never take the time to learn who their customer is and look at he data.

  • Marketing and being data driven should be the first focus of any consumer company.

 

 

Big Trends for 2019

For the last 2 years ARK Invest has put out an interesting look ahead for the year focused on what they see as the big technology trends. You can find the latest for 2019 here. Some points I found particularly interesting this year are:

  • This has been apparent for several years but barely talked about in the media, but the cost of lithium ion batteries is dropping rapidly, allowing a transformation in how we consume energy and our electrical grid systems. Due to this they forecast electric vehicles will be cheaper by early 2020s than any comparable internal combustion engine vehicle.

  • They might be cherry picking their data but they do make the case that bitcoin and crypto demand is accelerating in emerging markets with unstable currencies.

  • The rise of digital wallet apps in the US grabbing market share, just like they’ve long been dominant in China with WeChat. They specifically call out Venmo and Square as evolving into the center of a consumers financial life.

Joymode

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Overview

Joymode is a subscription rental experience startup. They rent products to their members that are used infrequently, mostly based around experiences or utility. For example, one of their “bundles” is for camping where they deliver all the equipment you need for camping for a weekend.  Another is for apartment cleaning where they provide vacuums and more specialized cleaning equipment most people don't own themselves.

The benefit to the consumer is these are highly curated short-term rentals so members don’t have to make permanent purchases of items they will use infrequently. Joymode does all the curation for the experience as well as does free delivery and pickup of bundles.

Joymode business model currently is its member’s pay an annual membership fee and then a rental fee for each bundle they use.

The team is based in Los Angeles, California.

Why I like Them

I like Joymode for a few reasons:

  • Subscription membership model makes customers sticky once they sign up, with heavy loyalty incentives to be a long-term member.

  • Joymode knows its Millennial customer base. They are solving a number of well-documented pain points for younger generations including low disposable income as well as the trend of valuing experiences over ownership. It also dovetails nicely into the fact that urban consumers tend to have smaller living spaces and won’t need to store any of these products.

  • Strong cost saving to the consumer as Joymode’s bundles are less than 10% of what it would cost to purchase the products.

  • Good unit economics with Joymode publicly disclosing ~50% margins on a per reservation basis.

  • Interesting potential growth avenues for the company, especially for Joymode to work with brands to promote their specific products into bundles with Joymode’s young consumer base.

  • Low customer acquisition costs as most customers are via word of mouth as the experiences are naturally viral due to word of mouth marketing.

Joymode has the opportunity to be the Costco of the 21st century to today’s younger generations.