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CleanTechies
#104 From Restaurants to ClimateTech: Building a Carbon Capture Concrete Company w/ Tim Sperry (Carbon Limit)
What happens when a successful restaurateur decides to tackle climate change? Tim Sperry, CEO and founder of Carbon Limit, joins us to share his incredible journey from the restaurant business to creating a carbon capture technology company. With a mix of passion and business acumen, Tim offers valuable advice on finding the right investors, joining industry organizations, and navigating the regulatory space.
Discover how Carbon Limit's innovative carbon-capturing concrete works and the potential it holds for reducing air pollution. Tim gives us an in-depth look at the company's transition from manufacturing to an IP play, licensing their unique materials and formula. We also explore the unit economics of licensing technology and the potential of generating carbon credits.
Learn from Tim's experience with Techstars, fundraising, and the importance of mentorship and maintaining relationships throughout his entrepreneurial journey. From strategic grants to creative financing, Tim's insights and advice are invaluable for anyone interested in the climate tech space. Don't miss this engaging conversation about Carbon Limit's mission to create and commercialize carbon capture technology for the built environment.
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**Connect with Tim: https://www.linkedin.com/in/tim-sperry-57b14aa/
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Reach out to Goodwin Law today; the law firm of choice for hundreds of ClimateTech Entrepreneurs worldwide. They have you covered from funding docs to offtake contracts to IPO and M&A support. GoodwinLaw.com (and tell them CleanTechies sent you!)
Always raise a little bit more than what you anticipate needing. If you think you need a million dollars, raise a million and a half. Raise two million, like. It's always better to raise more than less.
Speaker 2:Welcome back to the Clean Techies podcast, where we interview climate tech founders in VCs to discuss all things building and investing to solve the biggest challenge of our generation climate change. Today, we are joined by the CEO and founder of Carbon Limit, tim Sperry. Carbon Limit has developed a carbon capture chemistry that allows concrete to, once poured, capture carbon and mineralize it into the cement, creating a stronger product. This reduces the need to mix liquefied CO2 into the cement, which removes a logistical concern that many other similar technologies have. In this conversation with Tim, we discover how he went from the restaurant business into climate, how he eventually ended up in the carbon capture space, specifically why they decided to shift from a manufacturing play to an IP play, the importance of finding the right investors, the value of being inside of certain organizations, including accelerators, his outlook on the regulatory space, and much more. I really think Tim offered a lot of great advice in this episode, so I'm very excited to be able to share it and I hope you enjoy this episode.
Speaker 2:All right, welcome. Welcome to the show, tim. Super excited to have you.
Speaker 1:Thank you for having me on Great to be here. Great to be here.
Speaker 2:Yeah, I think we'll just start at the beginning. Tell us a little bit about yourself. I noticed when I look at your LinkedIn that you went to University of Madison, Wisconsin. Are you from Wisconsin originally?
Speaker 1:Actually from San Diego and then somehow made it to the Midwest because I couldn't afford my own rent in California when I was five. So I had to make that transition and grew up there and kind of went through most of university and then came down to Miami halfway through So big shifts from West Coast to Midwest to Southeast, which is the globe from where I am in Miami.
Speaker 2:Yeah, exactly. No, that's. That's fair. I mean, i'm originally from Wisconsin People listening, they know that and I moved to New York City right before COVID, so a bit of big changes as well. But it's usually people leaving the country going to the city, not going from the city to the middle of nowhere. I guess it's Madison is in the middle of nowhere, but it's Wisconsin, so it's not that big Wisconsin.
Speaker 1:Yeah, definitely.
Speaker 2:So keen to I guess maybe just give us a kind of a quick intro to yourself then and how you ended up getting into the space that you are now Sure.
Speaker 1:So actually kind of started at university where I was going down the path of material scientists and chemists and ended up seeing a huge gap between where science was and where commercialization is and the bridge of those two. So I actually switched to business and pre-law and always been a scientist but an entrepreneur at heart and loved inventing things and creating things and kind of always wanted to be my own boss. So came out of university, started some different businesses and actually got into the climate space from a restaurant. Now didn't really plan and it wasn't really my you know driving goal to get a restaurant. but ended up getting a restaurant and realizing I didn't want to spend my life force on doing something that really wasn't passionate about and really didn't draw me but taught me so much and ended up starting my first climate tech company and business while I was at that restaurant, in the process of selling it and getting out of it. So ended up really doing it from and really changing my perspective, because I'd always been an entrepreneur looking at things from a perspective of, okay, what's hot, what's going to make a lot of money right now, you know a lot of bandwagon kind of as things are coming to you, as things are coming into the climate space right now. let's say that people are seeing that it's hot, they're jumping in, and they're doing it because it is hot, because I think they can make money and I've always looked at it from that way. And then when I got the restaurant I kind of switched my focus to say, okay, what am I passionate about, what do I love doing? And then finding a way to commercialize it and make a business out of it.
Speaker 1:Well, you know, wisconsin's pretty nature-esque, but actually wasn't in Madison the whole time, came from outskirts of Milwaukee and it's very farmish and very country And love nature, just love being outdoors and lost some family members to lung cancer from someone else polluting their air and just always had an affinity for wanting to solve big problems like that. So started my first company where my mission was to solve air pollution and then it kind of scaled down to solving emissions from vehicles and then I started to integrate it and exhaust filter tip for cars and trucks And that ended up turning into taking that technology that I ended up inventing and putting inside of there and putting it into an air purifying paint. And that first company had a flagship product of paint that could absorb and sequester CO2 and other air pollutants inside of home. that turned into other products and a technology, which will now call a negative energy that you can integrate into other things And exiting. that company got bit by the carbon capture bug and started carbon limit And really like that was the progression to starting carbon limit, where the whole idea was we wanted to create something to reach the gigaton scale of carbon removal.
Speaker 1:And what better way to do that than going into the built environment where a lot of our emissions come from and then, more specifically, diving into concrete and carbon limit. right now We're all about commercializing, creating and commercializing carbon capture technology for the built environment. That simple flagship product is our carbon capturing concrete. Hey, there.
Speaker 2:Quick break to remind any founders or VCs listening. If you are looking for deal flow, seeking to raise funding, looking for partners to help service your needs, or perhaps you're looking for corporate investment partners, feel free to reach out to us through our Slack channel, which can be found in the description. Because we meet a lot of people in this space. We set aside time each week to make introductions to the various people that we encounter. This is something we do free of charge in order to help these incredible companies solving climate change to scale. Looking forward to hearing from you in the Slack channel. Yeah, it's a pretty interesting background. I don't think I'm trying to think of. Anybody else has come on that had a background in restaurants and then went into carbon.
Speaker 2:And there's been a lot of interesting things. You would be surprised of people where they started and where, how they ended up doing climate. So that's really fascinating. It's also interesting you mentioned the paint company that captures carbon that we had somebody on that did similar stuff and they're trying to do that at a gig at scale. But I'm kind of curious to get into the technology at TAD. So keep this kind of simple for people who aren't chemists don't understand these things, myself included. How does your technology work? What's the kind of basic principle of it? Maybe give us a little bit of education on the carbon capture space in order to use for people who aren't as familiar with it.
Speaker 1:Sure. So yeah, carbon capture space is obviously really exciting, getting really popular, and there's a kind of a few different avenues that you can go down from ocean to biochar, to soil sequestration, to direct air capture, which now is being seen and people recognize it as these giant fans outside that are sucking CO2, putting through this solution And then they're separating out the CO2 and injecting it underground. A way to store it in perpetuity is the idea. But there's a lot of different forms of carbon capture. Carbon capture can be done via enhanced rock weathering, where it's kind of an enhanced version of what nature does to sequester atmospheric CO2 via precipitation or some other injection format into minerals as well. As there's other ones where you're using wood mass or biomass to create biochar And that's the question, the CO2, into something where you could do soil amendment and enhancements, and there's a lot of really cool ways. So we created something that's kind of a hybrid of direct air capture and carbon mineralization. So we've taken what would be considered a.
Speaker 1:In concrete you have cement, which is the glue that holds it together, and the rest of the concrete is sand, rocks, water and air, and you put that together and you get our roads, you get our bridges, you get our homes, you get all these different concrete structures. Well, cement is the big 800-pronged gorilla that's causing most of the CO2. So the idea is you find a solution for cement which is causing most of the carbon footprint and you can really move the needle. The concrete industry is responsible for a shy of 10% of global emissions. For CO2 emissions, it's pretty significant.
Speaker 1:So we've taken the vegan alternative to cement, and these materials mimic cement properties and the ability to find the concrete together and the different performance requirements that are required out of cement. And the materials are simply active minerals that are selective and reactive to CO2, with a special catalyst that very novel to other solutions. Once you put it into concrete, capturecrete is what we call. Our technology gives concrete the ability to attract CO2 from the air into the concrete, where it's absorbed in there and reacts with the rest of the concrete materials to form solid minerals into the concrete. So we're effectively adding a simple additive to concrete, as you're making a road, a bridge, a building, whatever it is And then it gives that the ability to pull CO2 out of the air and then capture it and store it as minerals into the concrete. So we're mineralizing the air.
Speaker 2:So in this circumstance specifically, the carbon capture happens after the concrete is poured. So it's got, the cement is mixed within everything And then, once it's poured, it will capture the carbon. Are there any things that happen to it at that point, because I know a lot of these products tend to make the concrete stronger as a result. Are there any things that happen once that process goes through?
Speaker 1:Yeah, it's pretty much that as well. So it's in enhancing the properties, so it's increasing the compressive strength, making the concrete stronger, and has some form of self healing properties where, as cracks and micro cracks are starting to form into the concrete, this technology, as it's mineralizing CO2 from the air into the concrete, can be mending and healing those cracks. So there's a potential for increasing the shelf life of the concrete, making it stronger and last longer.
Speaker 2:Hey, there. Are you building a climate tech business and looking for very specialized talent? Consider reaching out to our sponsors, next Wave Partners. Next Wave are experts in talent acquisition, recruitment and retention across the climate tech, renewables and ESG spaces globally. So if your team is growing or you're looking to make a career change yourself, feel free to reach out to Next Wave at Next-WavePartnerscom or reach out to one of their consultants directly via their LinkedIn page. How does this differ from other? because I've noticed recently it actually just so happens that I'm working on a kind of a search in this space but there's a lot of companies popping up in this kind of cement space to solve the problem, because it is big right. What is the difference between your technology versus some of those other ones in terms of the way it works?
Speaker 1:So most of the other carbon capture into concrete solutions out there. You have kind of two categories. One is you're injecting liquid CO2 into the concrete mix as you're making the concrete, which has a similar effect that ours does, where once the CO2 reacts with the reactive materials in there actually form solid minerals, solid carbonates, in the concrete. So you're mineralizing again the CO2, where it's stored permanently in the concrete, similar to what we're doing, except instead of using liquid waste CO2 from a third party, we're using the atmosphere, we're using the air. The other way is you can take precast concrete like a concrete block, concrete tiles, put it into a curing chamber and you're exposing it to CO2, which mineralizes that CO2 into the concrete again, making it stronger, and then storing and mineralizing that CO2 into the concrete, similar to what our technology does, but just without that third party CO2 feedstock that's being required. So we're taking out the CO2 requirement and any equipment needed to inject or to cure the concrete with the CO2.
Speaker 2:Interesting. So it's kind of fascinating. So I guess, first of all, I just think it's interesting observation that even though CO2 is a problem emissions, carbon emissions there's actually some of these benefits to it, Like it's actually making this product stronger. So we're not just doing this because we want green concrete, right, We're doing this. It's better concrete and it's also helping solve climate change. I think that's quite interesting. I also maybe want to have you speak to. I'm assuming this is part of the reason why you guys went this route, but it sounds as though you've removing a logistical item from most of these right which, where you have to go find this kind of liquid carbon and then bring it there, versus something to cure, You're just pouring it in a road or a building and it has enough carbon in the air to just use it right there.
Speaker 1:Yeah, exactly So. it's just if you take our concrete with our technology and another slab of concrete without our technology, that slab of concrete may carbonize and may take in a little bit of CO2 via precipitation, very passively. right, our technology works very actively. It's actually got a negative charge. It's attracting the atmosphere, it's attracting the CO2 molecules to the concrete where it's actually pulling it in and then absorbing it and then reacting and mineralizing it. So it's accelerating that carbonation process. So that's the that's kind of the bigger difference on that piece.
Speaker 2:And then, so what is the? I know I think the goal would always be at some point to make something carbon negative in this is the is the objective here, i think. What? what does it actually come out to in terms of actual carbon reduction? you know, kind of comparing it to a conventional, to your concrete Sure.
Speaker 1:So we have two different products within our capture create. One is a partial cement replacement, so you're replacing some of the Portland cement and up to 30%. And then we have another one which is just an ad mix, which adds an ad mix that gives the concrete the ability to capture and store CO2. So when you're using our cement partial cement replacement, you're removing up to 30% of that carbon footprint of the manufacturing process. So you have some front end carbon reduction But then on the back end you're capturing anywhere from 0.01 to 0.1 tons of CO2 per tons of concrete, depending on the concrete design mix and the thickness, and there's a couple of factors to consider environmentally. That gives us the ability to quantify that carbon capture and storage. For instance, let's say we're pouring a concrete, we're pouring a road, a concrete expressway, and you have like nine inch thick pour versus a two inch thick driveway. The two inch thick driveway would have an easier time carbonating and saturating with CO2 on a percentage basis and capture quantity and capacity, versus a nine inch or 12 inch thick pour, which make carbonate halfway through or a third or fourth or whatever that looks like.
Speaker 1:So it's really challenging to fully quantify the aftermath, which I think is like a big, big need in the industry. You know, as you're looking at and the way I see it is, carbon capture is kind of like the gold rush right, everyone's running to capture carbon to. You know, dig that gold to get that gold during the gold rush, and you don't have enough people selling shovels and pickaxes to help those people do what they need to do. And the shovels and pickaxes would be your MRV, your, you know, your your measurement, reporting and verification of carbon credits. So there's a kind of a disconnect between point A and B, where you're capturing CO2, how you quantify it in a really great back and without someone also, you know, ringing the bell or raising a reg flag saying there's no additionality, or you're double selling, or you're not really capturing carbon, or you're not capturing enough, or you're not capturing what you said. So I think it's a really big opportunity with MRV and, even more so, digital MRV.
Speaker 2:Yeah, i do think that's an interesting point. I mean, there's a lot of people who are quite skeptical of the space because they're like, hey, well, you know, there's all these scandals that have happened. I think there was one just a couple months ago with that Guardian uncovered. There's all kinds of things that happened. But I think it's it's important from my perspective to just continue working on actually decarbonizing these things and kind of do get those things in place. But yeah, it is an interesting space. I do think that, for me, the thing that's always it comes down to that's really interesting is when you have a better product that is also green and the same price or cheaper, it's very good. It's like a no brainer, right? Hey there, thanks for listening to this episode.
Speaker 2:If you made it this far, it's likely that you're enjoying the show. So I wanted to ask your help. If you're enjoying it, please give us a review on Apple podcasts and share with somebody in the same industry who might find this interesting. And if you're interested in getting summaries of these episodes, go subscribe to our newsletter that comes out on LinkedIn and sub stack Links can be found in the description. Thanks for your help in growing through each of this show. So, speaking of money, can we talk about the business model? I want to understand kind of maybe, how you I became to walk through once you came up with the technology and had a like somewhat of a proof of how it's working. How did you go through to the phase you're at now? How do you make money along the way And what's that process like of building the business kind of from the financial perspective? How do you make it work financially?
Speaker 1:Yeah and look like for the founders that are listening and for everyone that's out there like this industry is so new and it's so fastly evolving and it's so interesting. And, to case in point, i was just at carbon unbound last week in New York City And one of the big things was talking about business models and how to adjust, how to put it out there, how to really fit into the marketplace and how to have the market adopt it. When we first started, we had taken this tangible, hard pack, this actual product, which is a powder, additive, powder cement or just a cement replacement, and we're like let's keep it black box right Because we don't want someone else to knock it off. We don't want someone else to copy us. Let's source the materials, let's blend the materials, let's bag it, let's tag it, let's ship it out the door, realizing that we're not materials. You know we're not specialists and experts at making and procuring and you know blending and doing everything and without huge catbacks, because if you're a startup, you don't have millions of dollars to throw into a facility and all the people you'll need to run and make it work.
Speaker 1:We did two projects Initially. One was a Department of Department of Transportation project, which was really cool, and by sourcing the materials and you know, trying to do it this, you know, kind of hard way is, i would say, pushing a rock up a hill We realized that it's possible but it wasn't maybe sustainable. We were making to your point too about, you know, if it's the same price and it's a no brainer, we were making it more expensive. Where it wasn't the same price, as you know, a cement would be. So if someone's looking at and saying, hey, well, my cement cost this much, your stuff cost three times or two times as much, i don't want to buy it.
Speaker 1:So we took the standpoint of selling materials to going back to the roots of being a tech company, where we're actually licensing the materials now And we're licensing the formula, which is our IP, and the method of enhancing the materials, which is also our IP.
Speaker 1:So we've kind of taken a different pathway And I heard a couple of folks at Carbon Abound talking about how they're doing their business now and they really want to get into the next few years transition to licensing And I'm like, yeah, i think, licensing for a company that doesn't have all of the ability to compete with a big material company or someone like a cement or concrete manufacturer which is our customer to actually go toe to toe with them and try to create it cheaper and try to do things that aren't in their wheelhouse, so to speak, because it's not in my wheelhouse to be a supply chain logistics specialist and expert, nor did I want to hire a whole team to do it And surprisingly, the cement and concrete companies were really interested in doing this licensing thing because they could secure the materials cheaper, they could do their own supply chain on quality control and things would just work out a lot easier.
Speaker 1:So I found a really interesting path with this licensing protocol and this is really where we're focused right now And then generating the carbon credits which we'll end up selling, sharing or whatever that ends up working out to with our licensing agreement.
Speaker 2:Interesting? Yeah, i think it. I think it's quite fascinating to look at that way. There's a, there's this sort of a stinginess that tends to happen in the space when you invent something new. It's like, hey, i don't want to share this, i'm afraid of it, because I came up with the technology and I want to sell it, sell lots of it, right, but it's always to me very fascinating Watch people kind of go to the discovery process where they're trying to self climate change, right, but yet they want to make sure they still capture the whole market.
Speaker 2:And it's like, ok, well, let's, you know, let's find a happy medium here. How can we make money and still actually make it work? Because if you had persisted on trying to sell this material, you know that's more expensive. Perhaps the company would die right, because you're, there's no, the incentives are on a line for the, for the end of buyer, and so it's interesting. You found that perspective. Could you talk a little bit I've never really gotten into the weeds with this If you're, if you're willing to chat about it the kind of unit economics of how does it actually work when you license out technology? Do they just pay a certain amount to be able to use your technology in improprietuity Like how does it actually work to make money from licensing tech?
Speaker 1:Sure. No, it's great question also for the founders that are out there listening thinking of maybe doing the same model. What we've found that has been palatable and acceptable and maybe kind of an industry thing that can work, is trying to go the path of charging a licensing fee up front. So you have some buy in and maybe do it based on you know in our business, based on volume. If you have a one size fits all licensing model, i think that could be a mistake sometimes because let's say you have a producer that's making, you know, 50,000 tons a year versus a million tons a year, why could they say that pay the same licensing fee? One may not be able to afford it And the other ones may be getting it for too little. So licensing fee based on volume or sales and then a royalty fee based on a percentage of revenues of product. That would integrate our technology.
Speaker 1:And we're unique in a sense where you know we're in the process of getting carbon credits verified. So the other piece of the equation is per deployment, per volume of concrete that goes out with our technology into it, we can generate carbon credits. So part of our leverage for negotiating and, i think, part of our leverage for accountability to where you mentioned. You know us trying to everyone trying to keep it so they can take over the whole market. No one else can get the material. Well, i think having a licensing where you have some accountability metrics, like a carbon credit, which if we're given half the carbon credits to the cement or concrete company and half to ourselves, and that's a way we have accountability for them, i think that's kind of a win-win because, one, they really want the carbon credits and they're valuable And, two, we do too And we're the ones that have them approved, so they need to come under our umbrella when it comes to actually generating them and actually having them.
Speaker 2:So with the carbon credits, then, is that always how it is? Is that whoever is responsible for getting the approval will end up kind of taking that credit and then you can sell it or you can do whatever you like with it?
Speaker 1:So not an expert in all registries and all thing carbon credits, but certain registries with different methodologies may have different caveats where whoever the carbon credit project owner is can be the recipient of it, or based on a licensing agreement, or based on an agreement with your project document, you can specify an equal distribution or an unequal distribution, so there is some molability in the space and flexibility to kind of push it around and just make it work. If you wanted to say let's split it 50-50 or let's go 90-10 and someone's getting 90% and you're getting 10, because you have to go in there and be the one to generate those and have all the project documents and everything submitted, like there's a value proposition there too for both sides.
Speaker 2:So was there a lot of legal innovation in that process then? because you're determining, hey, this is kind of a new thing Maybe you didn't come up with it, but maybe there were frameworks that you kind of came upon that at one point were a legal innovation with who's going to get these credits. Is it going to be project owner versus technology? because I could see it be kind of odd if I just from an outsider's perspective, that somebody who creates a technology and then is licensing it to someone else who's actually producing it, how does that licensing company actually get the credit versus the one producing it? So could you maybe talk about that a little bit with your law background?
Speaker 1:Yeah. So we used a consultant to help us in the process of getting carbon credits verified, developing our project documents, connecting us with the registry, making the submittals, doing the submittals properly, kind of walking us through the process, connecting us to a verifier and validator and then walking us through that whole process. We're really leaning heavily on those folks that know what the methodologies that are approved allow. So I think again, you know it really depends. The answer is it depends because each methodology might be different. Let's say you go to Pure O Earth versus gold standard and pure says no, only the person who actually has the concrete at the time the carbon credit is generated, they can get the credit versus another registry that says it's. However, you split it out.
Speaker 1:So it's still being kind of shaped and molded and kind of reconfigured from a lot of different perspectives And it's really, i think, a big challenge and an opportunity at the same time in the space because it's there's not as much uniformity. We know the methodology we're going after and we know what's allowable there. So we're playing within the lines of that, but going to another registry which we will end up having to do. I don't know exactly how that works either and maybe there's some room to play or maybe they have a very set way on how you do it. I mean, a chain of ownership is important too in the space, because if you're claiming you own it and then someone else is claiming they own it, is there two carbon credits that are getting generated And technically those two carbon credits are really just one multiplied and double counted and double sold. So those are some of the issues within the space.
Speaker 2:Yeah, it's kind of fascinating because, depending on who is getting that benefit, you would want to sell your technology, like your licensing, much differently. If you can only license and you can't get the credits, you'd want to sell for a lot more, because the person producing is then going to be able to get those credits. That is pretty fascinating. I'd be keen to see how this plays out. We'll definitely stay in touch on this afterwards. In terms of, i guess I'd be keen to go over with you the fundraising process. So when you first got started, seed money and just kind of go through that whole process in the phase and up to where you're at now and what your learnings from that were, what things you thought you knew, and then we're like, wow, that was completely wrong or what not. I'm just kind of keen to hear that process.
Speaker 1:Yeah, no, it's a good story too, because I didn't raise any venture capital with my previous company. It was more friends and family around. So, coming into carbon limit. One really cool thing did happen, which I recommend for you know, pre seed companies, early stage companies We actually got accepted into a tech stars program And we're down in South Florida and I moved my team from South Florida to Indiana, to Indianapolis, in September, so we were there for fall into winter. We got snowed on a few times, which again, living in Wisconsin, it did bother me, but some people that were on my team they'd never seen snow before. So anyways, i bring it up because, getting into a program like tech stars, we really got the opportunity to understand through the mentor madness process that they had, which was like 90 mentors within two weeks. It was nuts, but at the same time you pitched your business 90 times and you got feedback 90 times. It helped us understand, one, what investors were looking for, to how to pitch three. It also connected us with a bunch of investors.
Speaker 1:So coming out of tech stars and tech stars, by the way, is you know tech stars why? combinators? they're kind of the bigger behemoth from dear accelerator standpoints. They also kind of pre vet you. So when you have, you also have a lot of investors that are always snooping around tech stars companies. And why combinator companies? because they see them as pre vetted one, they see them as being selected, because they're only really selecting 1% of applicants for these programs. So we had a lot of action and attention, probably above and beyond what most founders will receive in these early days. So we actually were, you know, pursued by a lot of different investors coming through the process of tech stars, which is a three month program, and then coming out of it as well. So we we actually were in a really good position maybe a different position than a lot of founders that might be listening where we kind of got our pick of the litter of investors.
Speaker 1:And it's one thing that I do want to say, especially in the climate text space, which has a lot of money, probably more money than good deals, which is an interesting thing for us right now. So good for the founders that are there, you should really be intentional, and this is my advice for these founders to be intentional with who you want your investor to be And don't just take anyone's money. If you're intentional with who you want them to be one. It helps you kind of find them And you should really be intentional with with who's going to be invested with you, because they're going to be with you for likely a long time, assumably through your successes and through your growth. And having someone that is, you know, good energy match, a good personality match and the strategic match for you is important.
Speaker 1:So we initially, coming out of tech stars, had some big oil and gas companies that we were talking to and we were a little concerned to take money at a pre seed stage from a company like that because we didn't want to be seen as having you know, a greenwashing or event going on or hey, this oil company is putting money in here like this is, you know, something's not on the up and up. So we were a little cautious about that and ended up backing away and taking money from one VC who satisfied our whole round. We had raised for our pre seed round And this was right out of program and we pretty much got it committed right away. So I don't have like a lot of trial tribulation stories for the pre seed round for anyone. I just have that advice because we did have so many different investors and I think if you just kind of cast a really wide net, you're probably wasting a lot of time with the wrong investors which aren't going to be a good fit for you and you're not going to be a good fit for them. So it may also wear a lot of your time, energy and effort and confidence away. So by being intentional, you'll really focus on the right investors and and really hopefully pick the right group of investors to engage with so you can you can hopefully get that right match. So we did raise our pre seed round, which we thought was 18 months of runway.
Speaker 1:Another lesson that we learned It wasn't always raise a little bit more than what you anticipate needing. If you think you need a million dollars, raise a million and a half, raise two million. Like it's always better to raise more than less. And we had enough money actually for all of our milestones and all the things we needed to do. But when new things came along that were great opportunities, that were like conferences or we needed to buy tickets, flights, you know, do other things that added tremendous value to the business, we were almost short on capital And then we had a team member focus on grants for us and ended up getting a grant with the DOD, which was really awesome, really validating, really exciting because it was with, you know, faceted the DOD.
Speaker 1:That really helps with validation and verification of technologies And, you know, they're really strict on the guidelines and on what we could do, so that actually increased our runway to what we needed it to be, to take advantage of a lot of those other things. Right now we are raising some capital before our seed round and that's on a bridge and it's on a safe note, and it's kind of peculiar today to raise money on a safe note in some instances, but in the climate space, i think there's a lot more opportunity out there And we've just been kind of working our advisors and working our lead investor from our previous round, and that's been pretty successful for us as well. So don't, you know, don't turn a blind eye on the people that are right in front of you, because a lot of them can bring in a lot of really good people for you.
Speaker 2:You know, I think it's really interesting. So Techstars is not necessarily known for being a climate tech accelerator. What was your experience with that? Did they run a climate specific cohort, You know if you had the right investors there? it sounds like they must have done something along that lines, or could you talk about that?
Speaker 1:Sure, Yeah, No, you're right. So there was one program and this was 2021. When we got into the program, There was one program with Nature Conservatory in Colorado. We actually applied to that one.
Speaker 1:But another program within the Techstars you know realm reached out to us, which was the one in Indianapolis. It was the heritage group accelerator part by Techstars And it was a hard tech accelerator. So it fit what we were doing, but it didn't fit perfectly and it wasn't climate tech focused. But when you get into the climate tech space and when you get you know, put within the world of the climate tech startups and founders and then alumni afterwards, you're essentially on a pedestal in front of all the investors that are looking from across the board and checking to see what type of companies they want to invest in. So, yes, within the whole program, we weren't necessarily seeing climate tech investors coming out specifically from the program, but from, you know, the outer depths of the Techstars community. We were getting a lot of inbound from a lot of these other companies that were. So we ended up really not seeing it directly from within this program, but just from with the depths of Techstars and their investors and all the people on the outskirts, always looking for different investments.
Speaker 2:Interesting. Yeah, that is quite fascinating. I think it's about finding the right groups of people, because if you can get where the eyeballs already are, then it's very, very helpful. I think there's a number of good programs out there. Currently It's especially the continue to grow, so that's great. I guess I'm kind of curious and I appreciate all the insight. It's really, really helpful, especially on the fundraising bits. Within the next, you know, several years, what are some of the things that you look at, kind of where you expect there to be. Either these events might either help or kind of hinder the business model and the growth.
Speaker 1:So I would say it's probably more so now than it will be in the next couple of years, and maybe there's some that we can forecast too. But now for our space. Specifically, when you look at green solutions, sustainable solutions to cementing concrete, you have such things as ASTM standards, which are standards that give confidence to, you know, the developers, architects, engineers, everyone that's involved in the equation for the end user, consumer of the cementing concrete. They are looking to see something that they're not taking a risk on. And it's risky to implement a new technology, adopt a new technology, especially if you're building a building that needs to stand up for 100 years and the technology has been up for 100 days. Right, like, how are you saying, well, you know, is it gonna last 100 years? Yeah, sure, you know. It's like you have to try to find the right ways and pathways to build that confidence, to knock the first couple of dominoes over, and I think that's a big trick to it as well, and it's really just aligning with all right, who are the folks we need to interface with for regulations? You know, where can we be involved? Do we join ASTM, which we did, you know? do you join ACI, which we did, you know, and joining different groups that will help you, you know, meet the right people, be in the right places and find the ways to maneuver within that space.
Speaker 1:Because new technologies, although they're being heavily pursued, actually getting those deals done and getting the adoption and getting the integration, the timeline may be longer than you think. You know. We're looking at it like hey, you know, let's get this technology out there. You know, let's meet up with a concrete company A and let's get a deal inked up within the first 30 days. And now it's nine months. But now we're starting to get to a head. Some of them might be six months. So really it's hard to understand and set total expectations because it can depend and change.
Speaker 2:Yeah, that is quite interesting. I guess it's something not to consider. The technology itself needs to be approved, because I mean, you're building and building this a lot. I learned about this at one point doing a search on that needed a structural engineer and I learned about finite element analysis and understanding these like really technical things, and then it made me wanna be an engineer. But I never went back to school. So that's all right, but that's fascinating. So you're basically saying that you think it's a little bit difficult now but basically have to go through the process of maybe doing a pilot project and doing some tests to demonstrate the strength and get those approvals so that it can be used kind of unmasse. Is that correct?
Speaker 1:That's right. Yeah, you know, what we did was we leveraged our team to try to make the right connections which would, in essence, allow us to connect with the right people, to do a project with the Department of Transportation, which was like a project that was hard to find, hard to get, but getting into those right places and finding something where you have a credible conveyance and project that you can put out there, cause a lot of stuff happens in the lab and most people don't wanna take something from a lab and put it in the real world when they're the first ones. So it's just finding creative and strategic ways to find and to get those first projects out there, the sooner the better, and you know learning, you'll learn a lot quicker as well, and I think a lot of people take too much time perfecting things as opposed to getting them out there and just learning on the fly and continuing to improve and continuing to iterate and continue to optimize.
Speaker 2:Yeah, that's. That's interesting. One of the things you mentioned which I don't think I've ever heard anybody really say. It's something I have always been at this mindset. But you mentioned about getting into the right groups and joining the right organizations. Did you happen to have any pushback from your investors on spending money to be part of these groups or anything like that? I'm just kind of curious if you have any advice to other companies, whether or not, whether if it came to investors complaining about it or saying, hey, it's not worth it or maybe, just maybe speak to other founders about why it's important and maybe give them some tips on that.
Speaker 1:Yeah, i mean in the climate tech space. I think it's just so nuanced, so new. It's hard to do a one size fits all here. But I think there's a lot of value in joining some of these groups even without the blessing of your advisor or your investor, your investor more so. For instance, we joined ASDM and then we ended up making a connection there which bridged us into a department transportation project.
Speaker 1:If we were telling our investor, look, we're gonna join this thing, it's gonna cost thousands of dollars because there's people that are in the world, in this realm, and we anticipate getting a customer out of it, maybe they would have shrugged it off or maybe would have said, no, wait, don't spend the money. But finding that and then having that as a result, that was massive and that was so worth the investment. But it's just really hard to quantify that upfront. It's so challenging to make those qualifications that I had a schedule. I think if you're just really intentional and you're really strategic with how you're joining some of these groups and joining some of these associations, you really need to get out there and outside of your own bubble to try to make these connections and networks and find the right ones. To do that may lead to a pilot or a project and just go in there with the expectation hey, i need to find this right person and see if you can build off that network.
Speaker 2:Yeah, i do think it's fascinating, especially because of the fact that a lot of these hardware technologies or these climate tech solutions in general, are solving a problem inside of an industry that's already just very built out, right, it's just conventional space. But you can't just come in and be like fresh graduate with all these brand new ideas. It's just like walking into a brand new company on your first day and like, oh, i'm gonna change everything. This is, i'm gonna do it. But you gotta be aware of the room, right, read the room. I had a really good mentor when I took this job. Actually next week when I moved to New York said understand the landscape before you try to change anything. I think the same thing is true of climate tech startup trying to complete the up-end, the way things are done in conventional spaces. So that is fascinating to me about the groups joining those associations, even though it costs a bit of money, because if you can get the right people, you might actually have the sales made for you, right? So, okay, cool.
Speaker 2:I have a question for you. It's like a little bit more philosophical, i guess, but in the past six to 12 months we've seen a lot of really massive valuations rounds that were overpriced. And I'm just kind of curious, from your perspective as a pretty early-stage company, how do you kind of try to stay grounded in reality when I mean, maybe if you're raising now it's that's not the case People. The valuations are pretty low now. But what was your, what's your idea around how to stay grounded to reality with those valuations and thinking, hey, you know, if we raise at this valuation, we're gonna you know we, there's a pretty good chance we're gonna have a really hard time raising the next round or have to have a down round, like, can you talk a little bit about that for any founders who may have done that and or who might be going into the situation again?
Speaker 1:Yeah, i mean, it's a big. It's a big conversation And I think it's a challenging one too, because with climate tech companies, you have investors, especially new climate tech investors, that are coming in and they're trying to compare you to another industry or another type of a company which really doesn't fit or really doesn't have the full bearing. And then, yes, you know, you have those probably over, overpriced, overpriced rounds that happened a year or two years ago And now some people are reeling from that and you have a little bit of pullback as well. It's why we're raising on a safe right now, honestly, just so we can, we can try to be fair to both sides And we also don't have to potentially have a down round on the next round where we anticipate having a substantial up round. And you know, i think, i think the conversation around it just needs to be based on some reality. And it's it's difficult to like in our space like we're doing something different. Especially with the licensing protocol, it's easier to actually get to market, create a revenue, have something tangible, come in Once you get carbon credits verified, you have an equation that you can price on and you can create a performer.
Speaker 1:And then the challenge that I would, you know, see, is a company that's two, three years away from commercialization and from actually hitting the market. How do you price that today And are they comps that you're pricing it According to? and are those comps, were they overpriced and were they last year or were they the two years before that? Like, i think it's a really it's a really tough conversation. I think trying to just be creative with how you're raising capital right now is one thing that you want to consider If it's under a safe round or if it's under a note or if you're doing a price round. You know I I'm having a challenging time trying to come up with a good piece of device for companies that are still years away from getting revenues. But for companies that aren't, what we're doing is we're taking a licensee that will, you know, start generating revenue from now, and a secondary licensee and then creating two shadow customers on either side saying, hey, within the next 12 months, we anticipate getting you know X and Y, and then this is what the potential revenue is. This is the multiple, because we don't have any cost of goods and there's no capex involved. So just trying to work off of some established way of creating this valuation and the value proposition. It's how we're doing it ourselves.
Speaker 1:Again, you know, for those companies that are still far away from commercialization, maybe just get creative with the type of funding that you're getting and the type of round that you're doing. You know, we're really interested in finding strategic grants as well, because those grants not only is it, you know, under lewd of capital, but if you're getting the right grant, let's say from the DOE or the DOD or the DOT, if that could turn into a commercialization pathway, if that could turn into a project and federal procurement, like you also are adding value to your company too, and the money coming in is a little validation, verification and extending the runway. So I think, for the founders out there that might be having an issue with quantifying verification, quantifying valuation, you know, just be creative. Try to find, maybe, some grants, try to find a creative way to raise capital on a creative instrument, whatever that might look like.
Speaker 2:Yeah, that's helpful. One thing I'm kind of curious about is with the licensing technology. What is the difficulty to go So? usually in hardware, when you're building a project you just need to prove that the technology works and you kind of want to do a pilot project. Then usually private equity is like hey, it works and therefore it's a need. So let's go, you know, build a lot of these and then the valuation you can raise a bunch of money. But with a licensing route what has to be done to really get to that next level of confidence? Is it again just a pilot project with some partner who's doing the physical work and you just say, hey, look, it works. Or is there other like is it about the regulatory approval? Because I'm kind of curious, what is the milestone?
Speaker 1:look like Facing an investor, you mean.
Speaker 2:Yeah. So you know, you've got this idea of the technology in the lab, right, And then you were able to raise money on this, and then you go to the next stage. But how do you get to that point where you've, like clearly, quote unquote cracked the code and then you can go raise more money and just, really just blow the doors off?
Speaker 1:Yeah. So for us it's revenue in the door from a first licensee You know we're looking to. We have our first licensee and we're going down that path now. So getting revenue in the door from, you know, the licensing fee and then, even more importantly, from the royalty fee to establish how the product is selling, how it's commercializing, how it's getting out there over, you know, month over month, record over quarter, what is the performance of that, and then what does that look like from generation of carbon credits as well, because then you can really establish the full value chain for what we're offering.
Speaker 1:So once you knock over that domino, you can get some more licensees in that specific space where you know maybe they're a middle market company versus one of the larger producers, and then working on the larger producer to get them involved and engaged. You know the first deals may not be the sexiest, biggest, best deals and the most money that you're bringing in the door, but they're the most important deals because they bring the money in the door. Then you help, you know, understand and this is honestly for us too it's, you know, getting the first licensing deal, understanding the feedback coming from the licensee, understanding things that they're looking for, how to de-risk it, how to make it better for them, how to make it work for us, how to make everyone win in the equation. And just learning and then optimizing that licensing protocol so you can make it easily duplicatable, create a solid foundation and then I think the success comes out of duplicating that process into the next licensees.
Speaker 2:Okay, interesting. Yeah, and I guess it makes sense that you would probably focus on technologies where there doesn't need to be some type of regulatory approval for a building right Like you maybe roads or something, where you're not stacking a whole bunch of people inside this place and hoping that it's gonna hold up for a hundred years. Is that kind of? one of the aspects that you're playing around with is like, where can we use this? that it doesn't require all these extra kind of stamps?
Speaker 1:It's exactly right. Yeah, so really good point. So it's the low-hanging fruit projects as well, and the low-hanging least risk product integrations and project integrations, right. So for us it's a roadway, a sidewalk, something that's not vertical, something that wouldn't come with a degree of risk or something that the customer or licensee is gonna be on the hook for thinking, okay, well, i'll just put this new technology in there, let me pray that it doesn't fall over, crumble or something happens to it. So you're right. So, and then that also creates that calendar start date of all. Right, if we're integrating into a DOT project a roadway, now we're doing a sidewalk, now we're doing a one-story structure, then we can do a two-story structure. Like I think you need to still generate and build up that, at least for us as a company, it's finding those low-risk, low-hanging fruit projects and customers to just start generating and perpetuating those next deals and knocking down those next dominoes. So for that, yes, 100%.
Speaker 2:Yeah, i do think it's fascinating. It makes me think of, you know, back in the day when they started coming up with new things and new ways to build buildings. I highly doubt that they had regulation around any of this. Remember, just say, hey, let's try this out, throw it together. It's either way, you know, way stronger than it needs to be or just like falls apart.
Speaker 2:It's kind of interesting to think about some of the difficulties with regulation and new technology, which actually brings me to my next question. That's perfect segue is on the regulatory question. What do you like, what do you see is happening in the space? Is there a lot of specific regulation around green concrete coming? I'm kind of curious if you know anything in that space or what your thoughts are around it, because I would assume, as green concrete eventually gets to be more of a commodity, where it's not like, hey, this is not a novel technology anymore, we know how to do this. Well, do you foresee or do you promote that there would be regulation helping get people to green concrete or carbon negative concrete?
Speaker 1:Yeah, i definitely think there's gonna be regulations helping that adoption, but in the meantime the industry is innovating and growing at a pace that far exceeds the pace of the regulations such as your ASTM standards. That would be a way to certify and to de-risk and to give confidence for your solution. That process is way lagging behind the new technologies that are coming out. So there is definitely a disconnect between those two. But hopefully, like you said, as it becomes less of a less of really it's less of a novelty and more of just a standard, i think it'll be easier to fit into that and then hopefully the regulations and the ASTM standards will allow for a little more flexibility with entering some of these materials in there, for instance, two of our offerings that we have. One of them we can fit under an ASTM standard. The other one there's a standard that should be passing Soon we can fit under. So it's like there's vastly evolving conditions and those regulations are not moving as fast.
Speaker 2:Yeah, i mean, that's obviously the nature of it. I'm always interested to see because I think it depends on the technology, but sometimes regulation can actually really be difficult to get things moving. But in a case like this, where there's multiple use cases, you can easily get things moving and test out the technology. One thing that just comes to mind I'm kind of curious there's a lot of people who want to solve climate change. There's a lot of people who aren't building companies, who are. They work in government or they work in some other company. Is there some kind of way that you have found pretty easy to find those partners who want to be the first mover to try out your new technology and their roads and their cul-de-sac or something like? have you found a way to find these people? Is this kind of a where do you find them? Where do they come together, or do you just have to like look around and ask people? Yeah, i mean look.
Speaker 1:It's also part of why we joined those different committees and memberships and different subgroups that we're working on and we're fitting into and we're finding that network, thanks. It's also having to look and keep your finger on the pulse to try to find where those are happening. They are becoming less, fewer and far between. So they're out there, but when you have a novel solution and you're a novel company that's not always the case You have something that's brand new then you are not understandable. For 45Q, for instance, 45q has been greatly reorganized and allowing, for now, a startup to take advantage of it, but it stereotypes a direct air capture machine based on a textbook image that this textbook is kind of a few years old because the direct air capture machine is a giant fan that's sucking ambient air through a liquid anime solution that's desorbed and shooting it down a well. Well, there's new modifications of direct air capture facilities now that don't fit the exact transcript or what a facility and a piece of equipment under 45Q actually look like and would qualify under. So, yes, you can definitely have to have someone on your team hopefully keep their finger on the pulse and continue to check, but to network, to join these groups and to try to be out there, look, and I think one thing, too that I think is advice for everyone in the climate tech space is that I don't see that we have competitors.
Speaker 1:I see that we have partners, and I think everyone needs to come from that perspective. There's plenty of carbon to capture out there in the air, plenty of carbon for everyone, and I think there's plenty of market to go around. And when you find meaningful partners, even if they're considered quote unquote competitors, i think you can make a bigger impact, you can have a compounding effect and you can multiply positive impact together. And I think there's plenty to go around. The whole idea that if one person's making money, taking money out of your hands or your mouth or your pockets, whatever it is I think that that's not really the way to go about it, and then finding these partnerships can lead to more opportunities for both. So I think collaborations, partnerships and other things are critical in this space.
Speaker 2:Yeah, i think a zero sum mindset is really not. It doesn't really work with climate, because so many of these things are completely new business models. I always find it fascinating because I'm making come up with a legitimate new business model. You know, not just some kind of like crazy. You know like oh yeah, i have a database and you pay me 25 bucks and I'll name a star after you, but nobody else knows, just me, right, like those types of things. So, very good, i think this has been great. I don't really have I mean I could ask more questions, but I think that we've covered quite a lot Any kind of final thoughts or kind of call to action for the audience.
Speaker 1:Yeah, you know, i really think it was just that last thing we touched on. Like look to find people to collaborate with and like it doesn't need to be a competitor, it doesn't need to be anyone else. Like we'd look to. Like collaborate with a municipality, like you know, city of Miami, and do a project, even if it's free. Like look for opportunities to, i think, promote your new company somehow, even if it's not selling your first product for a project and giving it away, or if it's, you know, collaborating with the university we found a lot of success in. So just look for creative ways, especially when you're new.
Speaker 1:Don't just focus on bringing the first dollar in the door. That's important, but when you get those first projects out there and when you start to build confidence and we start to, you know, generate some press and PR around different projects you're doing. Not everyone knows if you've had it paid for or not and that doesn't matter. You're starting to get things out there. So just look for really, look for really unique ways and creative ways to just get your business out there, promote your business, be on social media, you know, do something and have a really great mission behind it and a clear mission that you can convey to everyone that's out there And I think you'll get a lot of warm reception and a lot of backing as a result of that.
Speaker 1:You know a lot of my team came in under our mission to hit the giga tensile carbon removal and all of them came in for their own reasons. You know you have a family with kids. You want those kids to enjoy the environment the way we have been able to enjoy growing up and it's not, you know, it's helping future generations or it's just doing something that you feel is solving a massive problem and you want to be part of that solution. Like, i think there's a lot of value out there with that.
Speaker 2:Yeah, I mean, I definitely agree. I think it's important. I've always found it to be very interesting how kind of serendipity plays out and you bump into people, right. You just you don't know what's going to happen, and it's important to be out there. I've had a lot of really great mentors pop up because I was willing to just kind of talk about what I wanted to achieve in life and I wouldn't be, you know, I wouldn't have been able to achieve the things I have so far without their help, right. So it's been really, really great having you on. I've quite enjoyed this and we'll definitely have to see how you continue to develop and how things go.
Speaker 1:Likewise. Yeah, thanks so much for having me on. This has been great.
