The NatureBacked Podcast

Fixing the Mess We Created, Tackling Climate Emergency with Carbon13

May 09, 2022 Single.Earth Season 1 Episode 11
The NatureBacked Podcast
Fixing the Mess We Created, Tackling Climate Emergency with Carbon13
Show Notes Transcript Chapter Markers

Carbon13 backs early-stage climate founders in launching their business ventures, says co-founder Michael Langguth, making it one of the first climate-focused accelerators.
The next showcase day of Carbon13 teams is held on 24 May 2022 in Cambridge.
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A few key takeaways from Michael Langguth:
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"There are still a lot of climate tech startup investors that will only invest in software. And I think that's, that's a bit of a fallacy. You can't; you can't be a climate VC and just invest in software; you have to do some of the hard problems, as well."
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"If you think of the math, it's not possible for us to sequester so much carbon through nature-based solutions, or things like direct air capture, that we don't have to reduce the other bits. The truth is, we're not going to be able to do this. There are a lot of very hard-to-decarbonize sectors, like concrete, steel production, and others."
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"The other big thing is that we will be launching a Berlin cohort next year, we do see some inertia in European or EU-based founders coming to the UK, or generally, it's, I guess, some people want to start a business where they are. So we're coming to Berlin, to where we see a huge potential in terms of the number of people wanting to work on climate solutions."
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Tarmo Virki  0:08  
Welcome to NatureBacked podcast of Single.Earth. In this podcast, we are talking with investors about their vision of the new green world. My name is Tarmo Virki. And in this episode, I am talking with Michael Langguth, co-founder of climate tech can venture builder, or for the more traditional audience, a kind of accelerator, Carbon13. Enjoy the show. Hi, Michael, great to have you on the show.

Michael Langguth  0:35  
Hi, very happy to be here. Thank you very much for inviting me.

Tarmo Virki  0:39  
Let's talk a little bit about Carbon13. Where does the number come from?

Michael Langguth  0:47  
So carbon 13 is an isotope that is found in tree rings. And basically, it's an increase of that isotope is one of the first proof points that basically climate change is in line with the sort of industrial revolution and therefore, it can be seen can be proven that it's anthropogenic of nature. So yeah, that's why we have 13 is that we, we think that, you know, we created this mess, and we should fix it. And we have the tools to fix it. And we want to help with that. Also, the 13th Sustainable Development Goal is climate change. So there's another reason why 13.

Tarmo Virki  1:33  
What do you do? What is Carbon13? In addition to the scientific background,

Michael Langguth  1:41  
Basically, Carbon13 is the venture builder for the climate emergency. We are the first venture builder that is helping people that have made the decision they want to start a climate startup but don't yet have a co-founder or they don't yet have a full team. It's often also times that we have pre-formed teams, a team of two developers, a team of two technical people, or a team of two commercial people who have decided we want to start something together and maybe have even started working on the first sort of iteration of the business. And we, through the program, help them find other co-founders. And then validate that business idea; we then invest in some of the startups. So a subset of the startups that presented get created. And we then work with the ones that we have invested in for another four months and help them basically through a more of an accelerator-type model. Increase the customer adoption, customer traction, get ready for further investment, build out their product, but also, for us, it's very important, obviously, to make sure that they really understand the theory of change and how the impact will be created in terms of carbon emissions.

Tarmo Virki  2:51  
So maybe mentally, one could compare it to an accelerator. Well, there's also an investment element included.

Michael Langguth  3:01  
Yes, very much. So I guess there's, there's sort of three sides to carbon13. There's the venture, but a program that helps people find a co-founder and helps them get on the journey of starting their business and then help them start their business. There's a fund. So we invest $150,000, roughly, per startup in about 12 startups every six months. So we do about 24 investments preseed investments a year in the UK. And then, finally, there's the carbon 13 mark of quality of climate intelligence and climate knowledge. So the startups that we work with, the one thing that we want to make sure is that they are not there's no greenwashing, they really understand, again, the sea of change, they understand the impact this, they can make sure that that impact is the business model that they're pursuing is the best possible business model to achieve that impact.

Tarmo Virki  3:58  
What kind of teams do you take in?

Michael Langguth  4:02  
it varies. I guess it can be we have three very broad categories of people. So there are technical people that then sort of break down into software engineers, chemical engineers, bioscientists, food scientists, and mechanical engineers, and that's roughly half of the cohort will be technical. The other half comes from either industry, what we call venture catalysts. These people really have existing connections to industry and, therefore, can be catalysts for business in a certain space. And finally, commercial co-founders, that can be anybody from somebody from a startup background, a second-time founder, which we actually see more and more, but also people that come from a consulting background from an investment banking background and so on.

Tarmo Virki  4:53  
How many teams have graduated?

Michael Langguth  4:58  
We have now invested in 20 teams, and you asked like, what kind of teams, so maybe that's helpful to say. So the areas that we invest - net-zero materials and chemicals. So we've invested in four teams in that space. One is called Materials Nexus, which is an AI platform to discover new materials to help, for example, the automotive industry to come up with lighter materials to make cars or electric cars easier. But also in a company called BioZeroc, which is building or coming up with a new type of concrete that is basically carbon negative, which would be hugely impactful. So generally, we look at startups that have the potential to reduce global carbon emissions by 10 million tonnes. The two that I've just mentioned have the potential to go a lot further. And the total addressable carbon that they have as a business is not for them. But yeah, so net zero materials, Net Zero transport, where we've done a few investments, net-zero energy. And then enabling sort of platforms, that's green tech platforms, FinTech, green fintech platforms, or carbon markets, logistics, this kind of things. And finally, the net-zero food system. So what we've done quite a few investments in sort of net-zero food, both from the production of food at the agricultural space to how the food gets then consumed to how we protect the crops actually further already and then up to the point where the food might get discarded. And then how do we deal with food waste?

Tarmo Virki  6:39  
The net-zero is, of course, a weird concept. I mean, it's basically the logic that I pollute as much as I want to, and then I buy the indulgences. And then my net this year is zero, right.

Michael Langguth  6:54  
Yeah, I mean, that's obviously the negative way of thinking, of seeing this. But the truth is, it's not going to be possible. If you think of the math, it's not possible for us to sequester so much carbon through nature-based solutions, or things like direct air capture, that we don't have to reduce the other bits. The truth is, we're not going to be able to do this. There are a lot of very hard to decarbonize sectors, like concrete, steel production, and others. But we have to bring down every one of them to a certain percentage by 2030. And then we have to bring them down to zero by 2050. And then actually, on top of that, we have to sequester a lot of carbon because of the historical carbon that's already in the atmosphere. We have to bring that down as well. Otherwise, yeah, we're looking at very catastrophic possible outcomes. But the truth is, there's a lot of great innovation happening. And there are a lot of great people working on this. And we see so many amazing people that basically have made some money, maybe with a startup or a corporate career, and they have kids, and then they'll say, Well, actually, the next thing that I do has to be in climate change. Because otherwise, I can't look my kids in the eyes anymore. And I can very much relate to that. But that means there are a lot of great people going and working on this problem.

Tarmo Virki  8:21  
We often see the challenge that -- if people are starting to work on it today, we didn't know how to put it politely. But we messed up the climate badly over the last decades, and it's maybe in 20 or 10 years when these guys have a solution. It could be a little bit too late.

Michael Langguth  8:46  
Yeah, and I think, and I think that's a very valid way of seeing the world. It's somewhat pessimistic. I guess like I come from a startup background. And startups, yes, startups take time to scale, but sort of, you know, three to five years to 10 years. But then, we do have startups that can scale a lot faster. And often, they do things that are not as valuable to humanity. If we can scale climate startups as fast as we've been scaling other tech startups, then we have a very good shot at solving some of these really big problems. And, I mean, the truth is, I think that's why we now will find a solution where we didn't find a solution in the past because maybe sometimes in the past, it was a very academic discussion, like does climate change exist or not? Now you have entrepreneurs building businesses where they see, and they have proven value with, with customers, it's a lot of B2B problems that are being solved. And those entrepreneurs don't really care about the exact science of what we should do. They would just try to, you know, have The impact that they want to have and have that as fast as possible. And I think that is really changing the game.

Tarmo Virki  10:06  
I'm not horribly pessimistic, but I've worked as a journalist for a long time. So cynicism is, you know, it runs in the veins. So to say, and it's part of my logic even though I've been in the startup scene for a while now. Somehow I had to explain my logic. What's your vision for taking Carbon13 forward? I mean, now 21 investments have been made - how do you kind of plan to plan to grow the carbon empire?

Michael Langguth  10:45  
Yeah, I mean, we're very, it's a very exciting year for us. Because, as you just said, we've now made 20 investments. A lot of from cohort one, the vast majority, are now actually revenue-generating, and 75% also have; I think it's about that same number 75% of cohort one setups have now raised follow on funding and are preparing for bigger funding round later this year. So that's a very exciting time for us to see those startups progress. And I'm personally helping them quite a lot. And the whole team is helping them quite a lot from all angles. In our second cohort, we've seen them actually raise money faster because we have some great founders in there, but also our community of support or supporting community of other investors is coming closer to our startups early on. And then our next cohort is starting our third cohort starting next week. And there are some phenomenal founders in there. The other big thing is that we will be launching a Berlin cohort next year, we do see some inertia in European or EU-based founders coming to the UK, or generally, it's, I guess, some people want to start a business where they are. So we're coming to Berlin, to where we see a huge potential in terms of the number of people wanting to work on climate solutions, but maybe coming up with sort of, yeah, solutions that have some impact, but very minor impact, like some kind of e-commerce, helping e-commerce companies reducing their returns. I mean, yes, it's a good thing to do, but it's not really what we need to solve climate change. And yeah, so we're gonna Berlin, and we're also raising a larger fund to be able to invest with our startups ongoing. So yeah, all of these things are happening. And yeah, we're very excited about it.

Tarmo Virki  12:42  
It's an interesting dilemma, coming from Brexit background, I assume, that you have to go to Europe, right.

Michael Langguth  12:49  
Yeah, I mean, it's unfortunate. As a European in London, I have to say it was a dark day when it was announced, and I was quite astonished and disbelieving for quite a while. The truth is, the UK startup scene is as healthy as ever. I think the people who are being hit worst by the results are not necessarily startup people, even though finding employees is harder than before. But then I hear the same thing from friends in the US or friends in Germany about finding good employees. Yeah, it's difficult. So I'm not sure it's difficult to say where exactly the impact is, especially in our space.

Tarmo Virki  13:37  
I want to go back a little bit - you were saying how, how ideally, the carbon startups could scale as fast as some of the tech startups. I was just having a chat with one of the venture capitalists who was saying that the carbon startups take so much time, they don't really fit into the classical venture capital model of, you know, 10-year funds, and everything has to happen during that 10-year timeframe. Is there something changing? What gives you hope that the carbon startups could scale as fast as mobility startups?

Michael Langguth  14:19  
Yeah, and I mean, it's one of the sad things that I would always find incredibly sad. If you look at cleantech investments, and people talk about mobility, they bring in like the investments of the 10 Minute delivery companies. And I mean, that's not a cleantech startup. But I do think, so I guess what the main difference between clean climate tech and normal sort of software startups is? Climate tech isn't just software; we also have hardware solutions, one of our startups they have a way to recycle carbon fiber, which as of right now, is not being recycled, which is terrible because it's an amazing material. That can help us, again, make cars and planes lighter so that we can electrify that type of transport. These kinds of things, they need more money upfront. And they also need more time upfront for research, and sort of that R&D process is probably something that needs to be added on onto that timeline. Because yeah, we actually have, oftentimes people come to us where there's a scientific founder, and they have made a certain innovation, they've come up with something new. And now they're looking to sort of commercializing that. And that's actually the time when they talk to us, and at that point, it can scale very, very quickly, like you can there's a lot more knowledge in the VC scene now that how to work with hardware startups and biotech startups. I think that kind of knowledge, though, has to become sort of more widely spread; there are still a lot of climate tech startup investors that will only invest in software. And I think that's, that's a bit of a fallacy. You can't; you can't be a climate VC and just invest in software; you have to do some of the hard problems, as well. But they can be incredibly profitable. If you look at the first sort of wave of climate tech in the early 2000s, those companies have actually become very valuable. It's just a different, slightly different timescale. And if you think of some private companies staying private longer than actually, that sort of fits into that same timeline, where he pays companies might take 15 years, but then become very, very profitable, or very, very valuable.

Tarmo Virki  16:40  
I was thinking the one of the kind of potential challenges you mentioned, the science, and the research and all that part, which could take time for some of those climate tech startups, I have to say that I've seen actually also scientist teams working in a horrible ly different speed inside a startup when compared to you know, academia.

Michael Langguth  17:05  
Yeah, I mean, academia is, can be quite slow sometimes. This is, again, why I mean, I find it very interesting because we work very closely with different parts of Cambridge University and other universities around the UK. And we're now we're trying to do the same in Germany and sort of wider continental Europe. But I think it's one of the opportunities to take maybe some academics that have seen actually, if I keep doing this research for another five years, 10 years, yes, I can, I can, you know, get paid for that very well, and I have a nice job. But the truth is, if I work on something that should impact climate change, you should commercialize it now, like you need to find a way to find a program like carbon 13, or find a co-founder outside of that, and start having that impact work on that sort of the commercialization that the actually making it a reality now. Because yeah, it's otherwise it's too late.

Tarmo Virki  18:11  
Otherwise, it's too late. That's, that's a good and strong point. If you look at the climate tech companies applying to carbon 13, or kind of growing inside the carbon 13. How do you see the kind of trends or sectors, you kind of splitting the companies earlier? A little bit, some of them were doing materials and somewhere, some other stuff? Are there some strong trends within that climate tech world that you know should be mentioned?

Michael Langguth  18:49  
I mean, I think there's a huge list of opportunities. If anybody, any of the listeners, if you want to find a really good list of what to work on, there's a company that has a book called speed and scale by John Doerr. He's sort of writing OKRs for climate change. And going through each of the emitting sectors and talking about how much we need to shift and there's, there's a lot of opportunities, there's a lot of opportunities in b2b, right? A lot of big corporates, corporates have committed from a strategic point of view to net zero, somewhere between 2030 and 20 2050. But very few of them have all the solutions to those, you know, to make that a reality. So, startups that have a solution to helping reduce energy help reduce sort of emissions in some way, shape, or form to big corporate. They can know that the corporate has made a strategic decision to do this. So they will find open doors, and I would strongly recommend looking at b2b opportunities. There's a lot to be done in the way we produce and consume food; there's a lot to be done in the way we reuse and recycle any kind of material from a, again, in a b2b context, but also in a b2c context. We have to electrify everything we have to make all electricity green. So there's a lot to be done.

Tarmo Virki  20:21  
Yeah, and especially in parts of Europe, turning the electricity green these days is, is actually like very high also on the agenda of the politicians, right.

Michael Langguth  20:32  
Yeah, I mean, it's, it's, it's the best way to go make ourselves independent of despots and autocratic regimes around the world that, you know, have power over us, if we have to buy oil from a company from a person from a country, then they will have power was right. And if we, if we get it from the sun or the wind, it's a very different story. And it's also for free. And it's also cheaper. I mean, that's the most amazing thing in this is that it's switching costs, right. And there's a lot of people that have gained right now still from not switching. But genuinely, solar power is now the cheapest energy out there. Actually, onshore wind is the cheapest electricity out there. And then solar, and solar, the 20, I think there's a there's a rule, that with every doubling of capacity, like production capacity, we go down 20% in price. So over the next few years, there's no way that anything can be in any possible way cheaper than solar. And we just have to then find ways to roll out that electricity in different places and then use it. And obviously, there's a lot of other things that have to be solved around sort of how to store that energy and how to work on bringing that into the right place. But there's only one way in my opinion, and we should have done this a lot earlier again, but I'm not one to dwell on the past.

Tarmo Virki  22:13  
Your startup background is speaking there. I can hear the basically that if there is an eager founder without an idea this summer of 2022, one should launch an alternative energy startup.

Michael Langguth  22:34  
I mean, there's, there's a lot of companies that do that help, for example, solar as a service, sort of like solar energy as a service. And I think there are still places in this world where you can launch that same business model and just do it in Kenya or do it in the know a friend of a friend who's doing it in Spain right now. I mean, which feels like a very obvious place where there's so much sun, but also Germany and like many other places around the world. I think I would try to engage with the community; if I was an eager founder, I would apply to Carbon13. I would read those books like speed and scale is a good one. The Ministry of the future is another good one. There's a lot of obviously lot of great literature out there. There are a lot of great newsletters around climate tech startups. And again, I guess we're coming out of COVID restrictions, and there should surely be meetups again and so on.

Tarmo Virki  23:40  
Yes, there will be meetups again, I have been already attending a few, and we will have a bunch of conference startup conferences coming up and starting from next week until deep into the summer. Every week, there are some big events in Europe, the having the mixed period between the COVID variants, right.

Michael Langguth  24:05  
What you gotta do what you gotta take what you get.

Tarmo Virki  24:10  
Yes, exactly, exactly. Okay, we spoke about Carbon13 about the future a little bit we spoke a little bit about the kind of climate tech scene in general. Maybe one kind of I doesn't know the overall question about that carbon. Talking to many people in this sector, I feel that carbon is the red hot sector of the startup world at the moment. Do you see the same? Wouldn't you be as happy to launch SaaS13 for b2b sales or something like that?

Unknown Speaker  24:59  
And I mean, I should say carbon. And when we talk about 10 million tonnes, we talk about CO2e. So it includes methane; we have a startup called Blue methane that works on methane capture and reduction. That was just a super, super important topic to work on. Would I do something else? No. I mean, I would really, I was really I think like every smart person should work on either climate mitigation or climate adaptation. Like working on trying to prevent whatever possible way, we can supplement climate change. Obviously, it's already underway, but like, try to minimize the impact, but also then finding ways to help the world adapt to the change that will already happen, that will happen because of what happened in the past. I think I think those are the two most important things to look at. Obviously, there are other areas like health and other sorts of social impact topics. But for me, the one, the most urgent one, is this. And actually, it's also the best the biggest business opportunity that we will have in the next decade or two. So if you like money, you should also do it; if you like impact, you should do it. And if you care about your, your maybe your grandchildren or your children, because there is the bad things happening. It's not 100 years away, it's more like 30 years away, like so. It's your kids, not your grandchildren.

Tarmo Virki  26:46  
Exactly. Thanks, Michael. I think the source a nice call to action for anybody who wants to change the world. Thank you. And good luck with Carbon13 efforts.

Michael Langguth  27:0  
Thank you. Yeah, thank you very much for having us and having me on the podcast. Also, like just want to say that we're running these Angel Investor funds, so whoever, if anybody wants to invest in startups, please reach out to me. Also, we have a community showcase Day coming up on the 24th of May in Cambridge. Again, if you want to attend, you can send me a message to Michael@carbonthirteen.com. And otherwise, yeah, have a look at our website and apply and join us on our journey.

Tarmo Virki  27:34  
Great. Good call-to-action to end the show. Thank you, Michael.

Tarmo Virki  27:37  
Join us again for the next episode. Thank you for listening. If you liked the show, please give us a good rating and leave the feedback in your podcast player so others will find it too. We will be back next week. Turn on to nature backup podcast.

Transcribed by https://otter.ai

(Cont.) Fixing the Mess We Created, Tackling Climate Emergency with Carbon13