The NatureBacked Podcast

Tapping Climate Mitigation Opportunities with Bethnal Green Ventures

June 27, 2022 Single.Earth Season 1 Episode 18
The NatureBacked Podcast
Tapping Climate Mitigation Opportunities with Bethnal Green Ventures
Show Notes Transcript Chapter Markers

Many startups are working on climate adaptation, but there are less-crowded opportunities around climate mitigation, said Dama Sathianathan, partner at Bethnal Green Ventures.

London-headquartered Bethnal Green Ventures has invested for 10 years in #TechForGood companies like Fairphone and over 100 other firms.

Learn more about open opportunities in the climate tech sector from the episode recorded on the sidelines of the Latitude59 conference in Tallinn.

In the NatureBacked podcast of Single.Earth, we are talking with investors about the vision of the new green world.

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A few key takeaways from Dama Sathianathan:
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I would love to see more (startups) around climate mitigation, like how do we think about disaster risk reduction in zones prone to natural disasters?
I'd love to see more climate mitigation products and services.
**
The number of times I see carbon offsetting platforms or ESG data platforms, I'm like, Okay, now calm down. We have seen 100 over the past year. Perhaps there is something else that needs addressing and looking into.
What are some of the needs we need to solve? There are loads around sort of conservation, biodiversity, even more, sustainable farming and agriculture practices, looking into increasing the security of our supply chains, when it comes to food supply chains, there are loads and loads of opportunities in this space.
**
There are so many amazing ideas out there. You just need to look. Go and find them.
**
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Tarmo Virki 
Welcome to the NatureBacked podcast of Single.Earth. My name is Tarmo Virki. And in this episode, I'm talking with Dama Sathianathan from Bethnal Green Ventures on the sidelines of the Latitude59 conference in Tallinn. Thanks for joining us at NatureBacked.

Dama Sathianathan 
Thanks for having me.

Tarmo Virki 
Tell us a few words about the Bethnal Green Ventures; what's the background of the fund?

Dama Sathianathan 
Bethnal Green Ventures has existed for a decade now; we're celebrating ten years of investing in Tech for Good. And what we mean by Tech for Good is backing really ambitious founders who are using technology to tackle pressing social-environmental challenges of our lifetime because we want to see better outcomes in the world, particularly around maintaining a sustainable planet. And I love to say, because it's the only planet with chocolate but also contributing to healthy lives. We're sort of looking into. There are quite a lot of intersections when it comes to the effects of air pollution, for example, and how that has an impact on people's healthy life expectancy. And then the other thing is really around contributing to a better society.
So, we're an early-stage fund. And when I say early stage, I mean really early. We usually invest in companies when they are pre-product pre-revenue through an accelerator program and then help them raise further funding up to Series A.

Tarmo Virki 
So basically, from pre-seed to seed level and then helping them to grow further. Do you have any particular focus? The planet is the focus? Or how do you define the focus?

Dama Sathianathan 
We talk about maintaining a sustainable planet because we fully appreciate the Earth has existed for however long, but we're getting to the point where a lot of the man-made harm that has occurred has a deep and deeply felt effect on people's lives, particularly when it comes to marginalized communities. So I, myself, come from Sri Lanka, a tiny island already reaping a lot of the effects of climate change over the last decades. And obviously, maintaining a sustainable planet can mean anything in that regard. But we're also particularly interested in areas around reducing electronic waste going to landfills. So we've invested in companies like Fairphone, who are also looking not only into sourcing material in an ethical fashion, particularly around harmful practices when it comes to mining, cobalt, and gold, for example. But also access to affordable energy, and looking into the shift of moving away from a quite harmful industry to more renewable energy.

Tarmo Virki 
You are coming from Sri Lanka, but the investment focus is in Europe, or is it global?

Dama Sathianathan 
Now, the investment focus is largely in Europe because one of our restrictions on investing is that they have to be a UK-registered company. But in that sense, they can be operational anywhere. So we also have companies who are based in Zimbabwe, actually, and in other African countries, where they're trying to provide better access to electricity by teaching students, for example, to build their own devices, which is really awesome. And that's a company called Open Energy Labs, for example, who are doing phenomenal work just to upskill young people into a greener industry as well, which is also necessary. But yes, they have to be UK-registered companies, but they can be operational anywhere.

Tarmo Virki 
How big is the portfolio? I mean, hearing you, it sounds like you've been involved with quite a lot of things.

Dama Sathianathan 
We have quite a large life portfolio. So over the last 10 years, we've invested in 166 ventures, and of those, more than 100 are active, which is really great to see. Largely 21% or more in the sort of climate tech sustainability space of those companies. They have gone on to raise further investment with over 100 million now, which is also great to see because a lot of times, the founders that we get to see are first-time entrepreneurs who really want to learn the ropes of pairing impact with profits. So I'm really interested in also building responsible tech products and services because ultimately, they're also thinking about the energy access level that I need to build this technology and maintain it for millions to use? But also, how do I ensure to do-no-harm with some of the behavioral change patterns you want to integrate? So, people, you retain users onto your platforms, which is another bigger piece of the puzzle, which was super, super interested in helping our founders.

Tarmo Virki 
Pairing impact and profit, that's probably like the eternal dilemma -- a little bit like, which was first the chicken or the egg, right?

Dama Sathianathan 
It definitely is, but it's quite fascinating. Because again, because we're so early stage. At the point when we see companies, we always ask the question, what impact outcomes are you trying to achieve? And how do you think you will measure them? And often, they don't have the answer to that. And that's absolutely fine because our accelerator program is really geared towards helping come up with the answers to that as well. But then the other question is also around, how do you think you will make money? And that is quite an interesting approach because often, people are just like, I'm gonna have affiliate marketing on the platform. And we're like, oh, big red flag, like, we've seen examples of how those types of business models have really done harm in the world. But then others are really thinking about, okay, how do I show you that I can validate someone's willingness to pay for this. And this is also something that we've seen with Fairphone, for example, so we invested in Fairphone back in 2013. So we're the first institutional investor in the company. They're now a profitable company; they are absolutely smashing it. I can talk about their product forever, especially around the impact validation. But at the time when they sort of started out with the idea, how do you actually source ethical material for building phones? Smartphone adoption was just on the rise. So 2012-2013, a proportion of people were getting smartphones, but it was not visible yet what the supply chain looked like. So what they did was actually quite clever. They actually just did a crowdfunding campaign and tried to see if there's enough interest for this as well. And their crowdfunding campaign was so successful, which showed us as investors and gave us enough evidence of strong demand for this type of product. There's not a market yet, but there's enough of a community to develop this new market as well. And the likes of Apple and Google, and Microsoft, at a time who also had a few phones on the market, were not interested in doing this sustainably. We see a lot of this now where they're like, Oh, you can bring in your phone and get it repaired. And you're literally like, well, you can also just build ethical modular smartphones and do it that way. So really looking into how at the inception of a product as well, and just doing it the right way.

Tarmo Virki 
So have they actually solved this blood minerals challenge of the phone industry?

Dama Sathianathan 
It's a really good question. Because it's not just the gold, for example, it is being mined in ethical sort of mining sites in, in Chile for example. But then a lot of the conflict material comes from the DRC, particularly cobalt, which is also sort of an unspoken paradigm in the industry because a lot of this is also going into electric vehicles. And when we, we all talk about how amazing electric vehicles are, we then are not looking into the supply chain and how we're mining these products as well.
But Fairphone, for example, just went to the industry and put a challenge out to the industry as well. And where basically like, okay, so how do we, how can we foster a more ethical and sustainable production in the supply chain as well and have built the Fair Cobalt Alliance, and have partnered with numerous organizations that are just trying to tackle the sort of effects of modern slavery and child labor, that are common sort of practices in the industry, and are trying to do the, to make it work, which I think is a good premise to sort of start on, but obviously you're not it's not 100% there yet, and, which is why they're iterations of the phones are also quite interesting to sort of look into the lifecycle assessments are being done. And they just recently published one on Fairphone Four, which is really, it's a 205-page report, which is quite a whopper. But it does sort of show that you can try to build businesses in a way that is responsible and take into account that we do not want to do-no-harm to the world.

Tarmo Virki 
I've spent like ten years covering the phone industry as a journalist, so that's why I'm passionate about this topic - that's really cool. How big is their impact today? I mean, I've heard of the brand. But how many are actually in the hands of the consumers?

Dama Sathianathan 
So it's an, it's in the six digits, I would say, if I get my math, right, right, yes. And at the day have sold quite a large quantity of handphones, for the smartphone four addition. But the really nice thing is also, particularly looking at the sort of lifecycle of any smartphone. Traditionally, industries are geared towards Oh, and like, once you have had your phone for a year or two, it slows down massively, and you're sort of pulled into needing to buy a new phone anyway. But they still, they still provide security updates to the previous editions.
There's a huge community on Reddit, which is kind of fascinating. Just helping each other out on specific questions like, Oh, my God, my favourite 2 has just given up. What do I do? It's just such a brilliant community behind it. But if you want the actual numbers, they've also published an impact report fairly recently.

Tarmo Virki 
Everyone can go and check it out online surely. You said roughly one-fifth of the portfolio is in climate tech investments. How would you describe the pulse of the climate tech scene today?

Dama Sathianathan 
So with the likes of Pale blue dot emerging and raising, having quite a lot of funding to deploy at the pre-seed and seed stages. And, generally, a lot of the activities under the regulation determine that we have to disclose all of our sustainable activities now as funds. I think there's large interest and more capital available. But there's a question like, who gets to decide on where capital is being allocated and who has access to capital? And then the other question is also, are these the right type of technologies we put our emphasis on? Because if it doesn't address quite a lot of the climate change problems or the results, the problems that have risen from more climate emergency, in sort of marginalized communities, particularly in low- and middle-income countries, then is that fit for purpose as well. So I would love to. Personally, I would love to see more startups receive funding for some of the cool stuff that is happening in South Asia, for example, around removing sort of ammonium levels in the water. So you can have access to clean water, which is a huge issue, or looking into how you can cultivate growing seaweed in these regions as well because that's, that's bread and butter of someone's income. So do loads and loads of intersectionalities around this as well, which I think is hugely exciting.

Tarmo Virki 
It is very much so. Some people with whom I've been speaking here on the series have been saying that in the climate tech sector today, there is more money than ideas or more money than startups. Do you see anything similar?

Dama Sathianathan 
We hear this a lot. And I think that's not specific to the climate tech sector. In general, people love to say like, oh, there's not enough in the pipeline. Well, then open up your pipeline; there is so much talent out there. And I was just speaking to someone who has built this amazing Dream Space Academy, it's called, and it's basically like a whole program to cultivate talent to become entrepreneurs, a young, modular community, refugees, and internally displaced people, for example. So people who don't necessarily have access to becoming entrepreneurs themselves and have just come up. For example, they've built this whole venture builder program in the north of Sri Lanka, which is why I'm putting this guy like, Oh, my God, is so amazing. But the founder of that Academy was just talking about some of the really cool sorts of ocean tech startup ideas that have emerged from there. I mean, these things are only things that you hear about when you open up access to capital and are quite actively looking in other regions. So I don't think it's a pipeline issue. Like there's enough. There are so many amazing ideas out there. You just need to look. Go and find them.

Tarmo Virki 
As an investor, how do you go and find them? We're meeting in Tallinn at the Latitude 59 conference. So are you coming from the UK from Sri Lanka originally? It is quite far away, right?

Dama Sathianathan 
Yeah. That's the thing. I feel like our VC fund is quite unusual. We are ten people full-time at the moment. Eight women, two men...

Tarmo Virki 
... a typical VC firm mate woman, two men, right? 80:20.

Dama Sathianathan 
Exactly. We had to hire a man into our team recently to address the gender imbalance. Exactly. But I think we sort of see this with founders themselves as well, especially when they come from underrepresented backgrounds; they also want to see more representation in funds themselves. So then they're also more likely to go to X Y Z fund if they also see themselves represented there. It's sort of the traditional model of like, it's only white men, with the decision-makers and who are ultimately going to decide yes or no, I want to invest, then, yeah, it's a slightly skewed picture. So we need more representation in VC funds as well, which ultimately will also hopefully lead to more access to capital for underrepresented founders.

Tarmo Virki 
A couple of weeks ago, I had the pleasure of speaking at a conference on a diversity panel. There were three females, and I was representing the minority of middle-aged white men in that panel.

Dama Sathianathan 
Yeah, they needed diversity of thought. Right.

Tarmo Virki 
Exactly. But it's an interesting, interesting field. And interesting how diversity at the investment firms and the investor base is actually important for the startups to raise capital.

Dama Sathianathan 
Definitely, so we see quite average diversity when it comes to people from all walks of life. And particularly when it comes to sustainability, or anything focused on climate as well. We see a lot of people, obviously, who are like, are watching this David Attenborough documentary. And I'm now really compelled to do something about those because I can't see any more sea lions falling down a cliff. But obviously, we then also have people who are really living the consequences of climate change and bearing the brunt of the climate emergency. And you're basically like, I cannot afford to live on a planet that is just about to die. And that is decaying. And I don't want this for the future generations either. So I'm going to actively do something about this because we're already seeing the repercussions of this, and I want this to go away. I want things to change. And that conviction is really amazing to see, particularly in founders.

Tarmo Virki 
There's a lot of it. I've noticed that inside our team also that there are a lot of people who are 40+ and have done something already in their life and joined the climate tech startup because they want to impact the world.

Dama Sathianathan 
Yeah, definitely. And we also see more people who have previously built different types of businesses and have made good money and good returns. And they're now in a very comfortable place to bootstrap some of the companies that are now focused purely on driving positive outcomes for people on the planet. And that's refreshing to see because it just shows that people care. And time is really rife with inequality and problems arising from the climate emergency as well. So yeah, even though at BGV, we like to call ourselves practical optimists. So even though we sometimes are quite cynical when we see some of the investments being made into companies and some of the industries that are getting a lot of traction right now, we're quite hopeful, and we're quite, quite adamant that we think the future FTSE500 companies will be the ones that are driving positive change.

Tarmo Virki 
That sounds good.

Dama Sathianathan 
But we have to be practical because there's still a relatively small fund.

Tarmo Virki 
Yes, exactly. Yeah. The much bigger funds are basically just optimists, right?

Dama Sathianathan 
Yeah. Or like, just really just focused on the returns and don't care.

Tarmo Virki 
Very practical. Exactly. If you think about any, is there any advice you could give to those people who may be just looked at that David Attenborough movie and think that I want to leave a better planet for my kids and, you know, I need to do something about it. What's a good place to start from.

Dama Sathianathan 
Okay, so that's a good question. There are loads and loads of resources out there, particularly from the Ellen MacArthur Foundation and Forum for the Future. So there are loads of loads of NGOs and civic and public sector organizations. They put out a lot of research and put out a lot of resources around what are some of the circular economy business models, for example. So the Forum for the Future has published a whole deck around ten archetypes in the circular economy, and when it comes to the business models, what they have.
So one big piece, I would say, is just to educate yourself. Look out for what already exists in the market and do not reinvent the wheel. The number of times I see carbon offsetting platforms or ESG data platforms, I'm like, Okay, now come down. We have seen 100 over the past year. Perhaps there is something else that needs addressing and really looking into. What are some of the needs we need to solve? And there's loads around sort of conservation, biodiversity, even more, sustainable farming and agriculture practices, looking into increasing the security of our supply chains, when it comes to food supply chains, there's loads and loads of opportunities in this space. And I feel like it's a good thing to sort of focus on the problem. But love the problem that you want to solve, and not the product. So don't be too vested in your heart on wanting to build something for the sake of building something, but build something that is going to be adopted by the people you're trying to serve.

Tarmo Virki 
That's very often one can still see in the startup space; people are passionate about the product and try to squeeze their audience to fit the product, not the other way around. When you travel, what kind of companies you're usually looking for?

Dama Sathianathan 
Um, great question. So I usually look at a really, very, very early stage. And the founders we get to see come from, again, from all walks of life, which is really nice. But it's often sort of geared towards... in the climate tech space, I see a lot more than as focused on climate adaptation and I would love to see more around climate mitigation, like how do we actually think about disaster risk reduction in zones that are prone to natural disasters? And what are some of the things that we can do that are looking into some very sort of traditional sort of cultures from different communities that are then embedded into tech development as well.
I had the pleasure of going to Kenya a couple of years back for a conference around social enterprises, and there was this amazing founder, female founder who was basically talking about the pastoral communities who in order to find water, because access to water was also deeply affected by aluminium, just less than five years, over five years ago now. And then, there were some pastoral communities that had different sorts of community practices in order to find water. And she then used that practice and embedded technology into it in order to make it easier for those communities to be able to access water and groundwater, fresh groundwater as well. Hugely fascinating. And there are so many practices across South Asia, for example, in East-West Central Africa and in different regions that are bearing the brunt of the climate emergency, where people look at rising sea levels. And when it comes to flooding, the kids are just running back and alerting the elderly who have sort of risk responses ready. So how do you then embed a layer of technology if the infrastructure exists into those community practices that would make for amazing, scalable solutions? So yeah, I'd love to see more climate mitigation products and services.

Tarmo Virki 
Cool. I hope our listeners are out that build them. Yeah. Thank you for your time, Dama.

Dama Sathianathan 
Thank you so much for having me. I hope to see many more of these episodes. Thanks.

Tarmo Virki 
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 that others will find it too. We will be back next week. Turn on to nature backed podcast.

Transcribed by https://otter.ai


(Cont.) Tapping Climate Mitigation Opportunities with Bethnal Green Ventures