Interview with Benjamin Joffe, Partner at SOSV #45
SOSV: Two decades of deep tech investments
Greetings from Boston! I am attending the MIT Technology Review’s Climate Tech conference here. If you are in Boston October 13-16 or in NYC October 17-21, hit me up!☕
Today, it’s my pleasure to introduce you to Benjamin Joffe, Partner at SOSV!
SOSV is a global, multi-stage venture firm specializing in deep tech for human and planetary health.
In this interview, we cover SOSV’s investment focus and startup programs, the European energy crisis’ consequences on climate startups, overlooked climate problems and solutions, and much more!
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There has recently been incredible news in the climate (hardware) space!
⚡Form Energy, a battery startup raised $450M of funding for their multi-day iron-air battery.
🧪Deep Science Ventures is launching a new venture-led, diversity-first PhD programme, the Venture Science Doctorate (VSD) - combining research and entrepreneurship, to put venture creation at the heart of the PhD.
✨Breakthrough Energy, founded by Bill Gates, announced the second cohort of Breakthrough Energy Fellows. I made a Twitter thread of all the innovator fellows and their deep tech climate startups.
💚Entrepreneur First launched EF Climate. The first climate specific EF cohort will start in London in April 2023.
SOSV is a global, multi-stage venture firm specializing in deep tech for human and planetary health.
SOSV starts investing in startups at the pre-seed stage via its four programs:
IndieBio (human and planetary health)
HAX (hard tech)
Orbit Startups (emerging and frontier markets)
SOSV has $1.3B in assets under management. SOSV publishes an annual SOSV Climate Tech 100 list of its top climate companies, which currently have an aggregate value of $11 billion and have raised $3.8 billion. These companies include startups like Upside Foods, Perfect Day, and MycoWorks.
🌄SOSV Climate Tech Summit
SOSV organizing the SOSV Climate Tech Summit on October 25-26, 2022!
This year’s speakers include Chris Sacca, Managing Partner at Lowercarbon Capital, Sarah Hunter, Director of Global Public Policy at X, and Christoph Gebald, Co-Founder and Co-CEO of Climeworks.
The event is free and held online.
➡️ Read more about the SOSV Climate Tech Summit here
SOSV is also organizing for the first time this year a Matchup event between climate tech VCs and founders. Over 400 participants have already registered and started to plan hundreds of meetings.
➡️ VCs/CVCs can register here
➡️ Startup founders can apply here
🧠Wisdom from Ben
1. How was your journey to climate tech? Why do you work in climate?
SOSV has been investing in planetary and human health for 2 decades – initially as the family office of Sean O’Sullivan, our founder, whose first company out of college had gone public. Personally, while I appreciated the overall positive impact of our investments, it was only two years ago that I started to look at climate tech beyond the usual “climate disaster” scenario.
I began considering how countries, companies, and people aim to achieve resilience, security, and independence in energy, food, and industry with the help of technology. At SOSV, we started to look across our “biology” and “hard tech” verticals more systematically, and after conducting in-working with our climate portfolio.
I find climate tech extremely meaningful to work with. Today, some people will struggle to keep warm this winter or get enough food or their everyday necessities due to supply chain disruptions. Those issues have been exacerbated by the war in Ukraine, tensions between the US and China, Covid, and the increasing occurrence of extreme weather events. To me, this urgency is more tangible than any climate model.
2. What kind of companies do you fund at SOSV?
As mentioned before, SOSV focuses on investing in deep tech startups developing solutions for “Planetary and Human Health”. We have been investing according to this thesis already for two decades.
Today, climate and health tech are our two main investment themes, with well over 100 investments in each category (see our Top 100 in climate and health).
Our first checks are always at pre-seed in climate tech. Typically, we invest in a team of 2-4 founders with a working prototype that can prove the science behind the solution.
Climate startups can apply directly online to our IndieBio (biotech) and HAX (hard tech) programs. We generally hold 2-3 calls with the team in the application process. If we decide to invest, the teams can then join our program. The program includes access to well-equipped labs and support from our in-house experts while surrounded by equally impressive founders of other startups. This critical mass of people and resources makes a huge difference for deep tech founders who often felt isolated in an ocean of more conventional startups.
3. Europe has an energy crisis and expects to have a tough winter ahead. What are the consequences of the energy crisis on climate tech startups?
The current crisis has shown everyone - governments, companies, and people - that energy should not be taken for granted.
In my opinion, the energy crisis should lead to more government action through policy and financing in Europe. In August 2022, the US Senate passed the massive Inflation Reduction Act that will provide $369B in funding for energy security and climate change resilience. Providing this line of sight for companies and investors through increased government action could solve energy issues and create enormous economic and employment activity [Article: The Climate Economy is About to Explode - Atlantic].
For climate founders, this crisis is raising the interest of investors, who see the long-term need startups can address. But it doesn’t mean funding will be immediately available, as there is often a delay between a need and new resources made available. For instance, VoltStorage, one of our portfolio companies based in Germany developing long-duration energy storage for the grid, didn’t find investors very enthusiastic in Europe when they tried raising a series C [Article: The Next Hurdle in Europe’s Energy Transition: Being More Enticing Than NFTs - New York Times]. Eventually, they raised a series C funding of 24 million euros from a US corporation.
4. At SOSV, you’ve worked at HAX, SOSV’s hard tech program, and hosted the "Deep Tech: From Lab to Market"- podcast. What habits do the most successful hardware startup founders have?
Firstly, the most useful habit for a founder is to be able to constantly learn from everyone - peers, customers, investors, etc. No founder starts knowing everything.
Secondly, a founder must correctly evaluate the key milestones to pursue. Should you focus on improving your technology, finding your first customers, or perhaps hiring a key team member next?
Thirdly, a hardware startup founder must execute and communicate effectively. Hardware startup teams tend to have strong engineering and entrepreneurial skills but lack project management and communications skills. Without project management and communication skills, companies never ship or have a hard time finding customers and getting funding.
5. Which climate problems and solutions do you think are still overlooked?
Some very large and more traditional industries like shipping, construction, mining, and maintenance are less visible and have seen less innovation. There is a lot to do there.
From a funding perspective, investment in startups decarbonizing industry and buildings has lagged. Transportation, energy, food & ag have attracted most of the funding so far.
Another domain, currently beyond our scope, that I'm wondering about is geoengineering. Geoengineering means the modification of climate at scale, with solutions like marine cloud brightening and thinning, stratospheric aerosol scattering, or even space-based solutions. In the public discourse, geoengineering is still taboo.
Geoengineering is at the core of several sci-fi novels like The Ministry for the Future by Kim Stanley Robinson or Termination Shock by Neal Stephenson. You can hear Neal speaking at our SOSV Climate Tech Summit this month!
The business model for geoengineering is not immediately apparent. But a viable business model could emerge if you consider the costs of climate change and climate disasters to people and properties.
The biggest question with geoengineering is whether we can correctly predict its short-term and long-term consequences. But considering our current climate already seems out of whack, it might be a way to “stumble forward” rather than fall on our face. Some governments and universities are looking into it (e.g., UK, US, Nature). It will be interesting to follow whether a country, company, or individual tries to do geoengineering first.
6. What are your hopes for climate tech at large?
I am very optimistic, and I think I have good reasons for it.
First, technology and solutions do not spread linearly. They tend to follow an “S-curve”: slow at the beginning, then all at once. I think we already have plenty of great solutions in almost every sector. What we need is for them to go from lab or venture scale to ‘asset class’ scale, where they can reliably deliver profits at low risk: this is where the trillions in financing await.
Second, more and more people want to be part of the solution as the problems are literally at our doorstep. And they want to help not just by adjusting their behavior but by changing the course of their career to work in climate tech. There are various groups helping switch career, network, and reskill. Many jobs in climate tech now pay just as well as in other sectors, so switching careers is not even a sacrifice.
I recently discussed with an impact investor who said she hoped for people to have more courage to join the sector. I think the other part of the equation to facilitate that transition is to realize that the risk has turned into an opportunity: career risk and financial sacrifice are now much lower than they used to be. It could even be argued that it’s now the right investment to make for your future career prospects! In a great movie from 1967, Dustin Hoffman plays a promising young man undecided about his future. His parents organize a graduation party where one of his dad’s friends takes him aside and tells him: “One word: plastics”. Fifty-five years later, in 2022, maybe that word would be “Climate”.
Last, there is a phrase I like that says, “if you want to change people… change people”. In other words, you can’t change how an individual thinks, but you can look for a different person. People and generations come and go, and demographics are going to solve climate skepticism as millennials and Gen Z will turn climate anxiety into climate action.
As always, I’d love to hear feedback and connect with fellow climate people! Contact me at firstname.lastname@example.org, Twitter, or LinkedIn.
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