Investing in funds that focus on green solutions or companies already delivering solutions can de-risk your portfolio, build a corporate sector that addresses the climate crisis, and allow your assets to grow in harmony with the future.
High-net-worth investors can join angel networks like Powerhouse in Oakland, California, Cyclotron Road at University of California Berkeley, or Prime Coalition, a group out of Cambridge, Massachusetts, that works on early-stage investing. People like to use venture funds like ours as a platform for co-investing — they can see the companies and then, if they want, invest directly in future rounds. Expected returns are the same as for other types of venture capital investments.
We use a ‘trifecta’ to analyze which sectors to invest in to optimize for returns and sustainability. First, we follow the carbon. Next, we want to fix something that’s broken and really move the needle. Finally, if we look at a sector and the iconic names are 100 years old or more, it’s time to invest.
This leads us to transportation and energy, which are no-brainers. It also leads us to less obvious places, like food and agriculture. This sector generates some 30% of carbon and about 4 out of 10 people on this planet work in it. We just did an investment in Bellwether Coffee, which has a more sustainable method of roasting coffee, and Apeel Sciences, which uses a plant-based coating to keep food fresh for longer. I also like the agricultural data and analytics platform company Farmers Business Network, now in its pre-IPO round.
The circular economy — which aims to minimize waste and use of natural resources — is another appealing sector. We just had an IPO with The RealReal, which started as aspirational fashion but by the time it went public, the circular economy was a key theme for investors and customers. There’s a Los Angeles company, For Days, where you can buy organic clothing and send items back any time to be recycled and swapped for new ones at a very low cost. A company called Yerdle acts as the back office for companies like Patagonia and Eileen Fisher for recycling and resale.
Another way to play: I have always been a fan of the circular economy and am always game for an antique show, an antique barn or an auction. Old French and English porcelain, silver, furniture and such — things most millennials have little interest in — those are some of my favorites to collect. I also have a pretty good collection of Oscar de la Renta apparel, which I kept from my earliest career days.
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