#192 Catalytic Capital, Hiring a CFO, Inclusive Financing, Grant Funding Gaps, & More w/ Dimitry Gershenson (Enduring Planet)

Dimitry Gershenson is the Co-Founder and CEO of Enduring Planet. A fractional CFO and Non-Dilutive Funding service for ClimateTech Entrepreneurs. As for funding, they provide working capital for founders who have landed grants or who have government contracts. 

It's great to see more Climate-Specific service providers to help continue supporting the ecosystem. 

Today, Dimitry shares his story, and we discuss:
**The importance of and when to hire a fractional CFO
**Funding underrepresented founders
**The importance of Catalytic Capital
**The Grant Funding Gap and Solving it

And much more.

Enjoy the episode!

Resources Mentioned:
**Climate Curious
**Streamline Climate
**Pacific Northwest Climate Week

Email Dimitry: dimitry@enduringplanet.com

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Topics:
**2:3 Introduction and Overview of Enduring Planet's Services
**4:10 The Importance of Supporting Climate Entrepreneurs
**8:47 The Gap in the Ecosystem for Finance Expertise in Climate Tech
**10:23 The Need for Early Financial Planning and Analysis
**12:31 The Importance of Getting Finance in Order Early
**14:51 Timeline for Bringing in Fractional CFO and Hiring Full-Time Finance Talent
**17:22 Navigating Finance Challenges in Hardware Climate Tech
**18:18 Introduction and Pricing
**19:18 Lending and Transparency
**46:17 Building Local Climate Communities
**50:47 Addressing Capital Gaps in the Climate Ecosystem

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Links:
**Dimitry Gershenson | https://www.linkedin.com/in/dgershenson/
**Enduring Planet | https://enduringplanet.com/
**Follow CleanTechies on LinkedIn
**@Silas & @Somil_Agg on X 

Chapters

• 2:30 Introduction and Overview of Enduring Planet's Services
• 4:10 The Importance of Supporting Climate Entrepreneurs
• 8:47 The Gap in the Ecosystem for Finance Expertise in Climate Tech
• 10:23 The Need for Early Financial Planning and Analysis
• 12:31 The Importance of Getting Finance in Order Early
• 14:51 Timeline for Bringing in Fractional CFO and Hiring Full-Time Finance Talent
• 17:22 Navigating Finance Challenges in Hardware Climate Tech
• 18:18 Pricing
• 19:18 Lending and Transparency
• 46:17 Building Local Climate Communities
• 50:47 Addressing Capital Gaps in the Climate Ecosystem

Transcript

**Silas Mähner (00:00)**

Alright, welcome to the pod, Dimitri. How are you doing today?

**Dimitry (00:02)**

So good, man. Thanks for having me.

**Silas Mähner (00:04)**

Yeah, absolutely. Really a pleasure to have you on. I've heard a lot about what you guys are doing. Some people are very big fans, so we're excited to uncover it a bit more. Tell us, what's the high-level summary of you and what you're doing?

**Dimitry (00:18)**

Yeah, so I'm the co-founder and CEO of Enduring Planet and we provide a mix of working capital and financial advisory services to climate entrepreneurs. Most of our working capital work is really focused on climate entrepreneurs that currently work with government. So folks that have large government grants or sell to government and they're looking for cash flow or liquidity support for those projects because generally the government tends to pay on pretty long timelines and that can be really painful. It also can impact the speed with which companies can execute on those projects. It impacts their ability to do their core work as well outside of those engagements. And so we provide pretty critical liquidity support, cash flow support for those companies with our sort of government advanced product. And then as of January, we started providing fractional CFO services to climate entrepreneurs as well, because we saw a really deep need in the market and had built a lot of expertise internally around doing that work through our lending business. It's been going really well so far.

**Silas Mähner (01:35)**

Nice, man. Well, why is this important currently? Why is this type of business and this service super important now?

**Dimitry (01:42)**

Well, I think that the needs are slightly different across the two businesses. You know, within the sort of working capital universe, there's just not enough money in this space. And there's particularly not enough money supporting climate entrepreneurs to do this kind of work. You know, most founders, their options are either raise really expensive dilutive equity capital to support their working capital needs, which is not good, lots of reasons. We're not a replacement for VC money, but we are a means for companies to dramatically reduce dilution and sort of their cost of capital. And then for the CFO work, I think our experience in the market has been that one, there's not enough of this kind of help in the ecosystem, but also the help that is available from some of the larger, more established players is often not tailored enough to the sort of the needs of climate businesses, right? It's a lot of kind of template cookie cutter bullshit that just isn't good. And it doesn't help people make good decisions.

**Silas Mähner (02:42)**

So specifically on the topic of like why fractional CFO just for climate tech, you're saying it has to do with some of the specific things that they tend to deal with on a regular basis or is it also that plus the combination of the big guys just don't want to work with them because they're not familiar?

**Dimitry (03:12)**

So, I mean, I think you can hire the likes of Pilot and Bench as any company, right? But what you get is this kind of like... I don't know what to call it, whether it's a template or a premade model. And I think in a lot of cases, that works fine. If you have a really standard SaaS business, you sell B2B, you have one type of customer segment, you have three plans, whatever, that will probably work for you. Although I still have questions about the quality of the models and the assumptions. But as soon as you start to introduce complexity, which is really common in climate businesses, right? Maybe they sell to government and they have different pricing regimes for different government clients and different onboarding processes with a pilot and then, you know, phases and all this stuff. Maybe they get grant income. Maybe it's a hardware business and they want to do hardware as a service and want to introduce complex financing to model out what a working capital facility looks like for financing heat pumps, or maybe they are a carbon rule company and they need to add project finance to their model. Or maybe it's like a really young technical founder, or not even a young technical founder, just a less experienced technical founder who doesn't know a lot about finance. A lot of the elements of building a model, thinking through the pricing structure, thinking through the assumptions, thinking through the different levers that a company... that they can pull to drive revenue or reduce costs. Like that tailored help is not available in the market except from very limited number of very, very high quality specialized fractional CFOs that we personally know, but they only have capacity for three to four clients at a time. Right. And even they don't want to do accounting. They don't like, it's not also a great use of their time to build models necessarily. Like those people are expensive and their expertise and value really comes from that like hands-on working with the CEO, et cetera. And so what we found is that there's a pretty big gap in the ecosystem for this type of expertise around accounting, around FP&A. There's also all these accounting needs around grants and sort of reporting for government funds, which most bookkeepers are not really well positioned to do. And I think we do pretty well. And so I think in general, it's a question of like one availability of high quality services at our price point that's accessible to startups, which I think ours is very accessible. And then two is this like tailored, customized, bespoke help where what you're getting is like something that truly represents your business. as opposed to this like cookie cutter thing you get from everyone else.

**Silas Mähner (06:10)**

Yeah. And I guess just on the high level, what are the – you mentioned a number of things there, but what are the high level categories that climate tech businesses, especially in hardware, have to deal with? What are the topics that they need to be familiar with when it comes to this kind of financing?

**Dimitry (06:27)**

Maybe you can help me understand the question a little better. When you're talking about like, what is unique about raising money for these types of businesses, or are you asking what's unique about having to think about internal finances for these businesses?

**Silas Mähner (06:41)**

Yeah, what are the specific finance topics that somebody has to be familiar with to really navigate climate tech, especially as a hardware founder, well, like project financing, you mentioned some specific accounting things around dealing with obtaining grants. What are those key categories that you guys see?

**Dimitry (06:57)**

Man, it's, it's the list is long, right? Like having, yeah, I think that oftentimes people put off thinking about their finances at any level of detail until like the series A. We see a lot of founders who sort of get by with the bare minimum. And then, you know, decide like, we'll, we'll think about this when we have more resources. This isn't. You know, we need to really think about product. We need to really think about the customer. And I actually would argue that understanding your capitalization journey and in detail is important from day one and decisions you make really early on as a founder can shape how you get to build your company in perpetuity. So whether or not you buy equipment or lease it, whether or not you start to create structures for off balance sheet finance early. what you track and how you track it, how you price things and how you structure relationships with customers to get sort of the margins that you want. What are reasonable margins to target? How to think about product development so that you have a business that is financeable, right? I think a common example that I use is I used to work at a very large tech company and people want to look at my LinkedIn and figure out who it is they can. But I used to work at a very large tech company and they were very big bet on providing internet to areas that are unserved with some really complicated drone, wifi technology. And they spent $2 billion on that project before they built a financial model to understand the cost basis and how it would work over time and how to actually have a competitive offering to other services available in the market and they only figured out after two years and a couple billion dollars that the project would have to have a cost decrease of over 100X in order for it to be competitive with even the worst product. And at that point, they scrapped the project. Okay, they could have done that analysis a billion and a half dollars prior. Maybe not all the way at the beginning, but much earlier. And I think like that's a good anecdote for climate entrepreneurs is like, get your finance house in order early, spend the money. You don't have to spend a lot of money. But I would say like, if you've raised a pre-seed round and you don't have fractional CFO help, where they're building you a vision of your future that's relatively detailed and allows you to think about what assumptions drive outcomes in your business, then you should get one. It doesn't have to be us, but like you should get help. And then probably like around... the series A, that's when people start getting full-time talent. But I would honestly hire that full-time talent less for their ability to model or do accounting and more for their like strategic capacity. And then you still can use outsource help for sort of building models, doing accounting work, stuff that's like relatively, like it's hard work. But if you're going to hire CFO level expertise, you don't want them spending their time doing that work. They can guide the development of the bottle. They can tell, hey, analyst, build me this thing. But if you have a really expensive person who

 costs, I don't know, whatever, 250 grand a year plus, it's not always a good time. And it's not always a good use of their time to.

**Silas Mähner (10:16)**

Yeah. So broadly speaking, what you're saying then is there are so many different challenges in this space, especially depending on the business model itself, that it's as a founder, unless you are a wizard with finance and you've already done this stuff before, you probably should have some external support as an advisor because you're likely... There's a lot of, I don't know what I don't know going on.

**Dimitry (11:01)**

Yeah, and it's, you know, people are so willing to spend money on like a fractional product person or a fractional marketing person or, you know, just like so many places where people spend the funds. And this is a place that I find is often overlooked. Like people will do the bare minimum. And I think that's a mistake.

**Silas Mähner (11:22)**

Yeah. And just to clarify, what do you think is the typical timeline for somebody to bring in a fractional CFO and when does that typically taper off? You mentioned a couple of things around that when to hire a full-time person, but how do you typically view it with the average hardware climate tech startup?

**Dimitry (11:38)**

So yeah, so we have clients that range as early as like pre-seed, you know, maybe they've raised some angel money. Maybe they have actually raised a formal, you know, pre-seed round with institutional investors. I would say that's a good time to have. at the very least really good accounting help, but ideally like what I would call FP&A, financial planning and analysis, where you have an operating model that you update every month, where you track cash flow really carefully. You should be able to answer in any given moment to any outside party, whether it's a new investor or your board or whoever, questions around how much runway do you have? What are the factors driving that runway? What are your top expenses? How's your revenue growth working? Like, how are your margins looking? Like a lot of CEOs that we talk to don't have good answers to those questions. And that's like, that's a thing that you should be comfortably able to do. Starting at that point, right? As soon as you have any outside money, you better be very, very cognizant of how these numbers work for your business. And then, you know, some of our clients are as late as like kind of like late series A, early series B. In most of those cases they have internal finance talent already. So they'll have a VP of finance or a CFO and we play a supporting role because our time is less expensive than their time. So, you know, obviously generally folks people have outside accounting teams unless they build an in-house accounting team for quite some time typically until series BEC. But in terms of that FP&A function, I think oftentimes people will hire FP&A talent. to support their CFO. And that's like not always a great investment. I think that unless you have a lot, like let's say you are a project development business, right? And you have to build models every time you spin up a project and you have more than, you know, a handful of projects every month and you have to do a lot of diligence. Then like, yeah, you probably want to have an internal FP and team. But I think oftentimes it's overkill and people then expend a lot of resources on talent that...

**Silas Mähner (13:26)**

Yeah. Well, I mean, also, we've seen really, really commonly that until like even series up to series B, a lot of hardware companies, like especially if they're doing deep tech innovation,

**Dimitry (13:52)**

is that their cost basis doesn't justify the value.

**Silas Mähner (14:05)**

They may not know what business model they want to pursue in the long term. So you would hire a different CFO type depending on the business model you're pursuing. So why hire a full-time CFO when you don't even know which direction you're heading and you need somebody to help you kind of figure that out and plan for the options basically, whether you're just going to license the technology or you actually plan to build a facility and produce it. So I think it sounds like I do not want to be the person having to deal with this. I'd much rather outsource it to somebody like you. So I think that it lines up with what we've heard in the pods, I'm trying to say. I guess one thing I want to understand is just broadly speaking for people who aren't familiar, how do you make money on this? Is it just a consulting service and then on the lending side, it's just like an interest rate? Is it pretty straightforward how you guys make money?

**Dimitry (14:51)**

So to your question, we try to keep our pricing really simple. So we have a standard. On the CFO front, we have a standard monthly fee. People can either take the accounting package or the accounting plus FP&A package. And then we have add-ons for deeper advisory work. You know, a team might need help with an acquisition, in which case we would provide sort of billable hourly standard work. It looks more like a subscription than it does hourly billing for the core parts and we find that this is better for a lot of teams. Oftentimes accountants and FP&A providers will say, hey, yeah, we'll do this work for you, but we'll bill hourly. And so you don't have any certainty in how much you'll pay and that can get out of hand really, really fast. And so we have some core offerings that are included in those packages. And as long as we're working on those core offerings, people get like, we'll do as much or as little work as needed to get that done. And then things outside of that are billed hourly. And for the lending work, we actually publish our term sheet on our website. So people can see the origination fee, the interest rate. It's really clean, really simple. We try to make it as transparent and obvious as possible. That's one thing that differentiates us from a lot of other lenders is they'll advertise their interest rate, but they won't advertise all the fees. And so you'll think you're getting something cheaper. than someone else and then when you actually get the full agreement, there'll be a servicing fee and an ACH fee and a monthly verification fee. They'll just keep adding this stuff and all of a sudden your 13% loan is actually a 22% loan. And that's something that we find really frustrating in the ecosystem. So we don't do that.

**Silas Mähner (16:26)**

Yeah. Yeah, that makes sense. I think it's a, there's just a general principle of being upfront about these things. Because yes, it may be, let's call it less attractive if you are upfront, but at the same time, if people, if you are being, you know, kind of a deceitful at the beginning. People are going to find out eventually, right? So why not just build things that make sense for your clients right away? And I wanted to understand also the connection to enduring ventures. Is there a connection to, I assume, based on the name? So can you just explain that and how this came about then?

**Dimitry (17:08)**

Yeah, so we have a very close relationship with Enduring Ventures. We actually came out of the venture studio that sits at Enduring Ventures now almost a little over three years ago. So they helped incubate Enduring Planet and then one of the co-CEOs of Enduring Ventures Xavier Helgeson still sits on our board. And I personally have, you know, I sit on the board of another Enduring of a incubated climate tech company called EcoSafi, which is backed by lower carbon. So we're all pretty close, and they've been a really incredible resource for us as we've built Enduring Planet.

**Silas Mähner (17:50)**

Yeah, that's cool. I just want to make sure I got the connection there because it wasn't explicitly necessarily mentioned. But I do at this point, I think it might be helpful. How did you end up getting into this in the first place? Give us a little bit of your journey and kind of how you became an entrepreneur and how you ended up in this role.

**Dimitry (18:06)**

Yeah, man, where should I start? Well, I've been working in climate since 2009, so about 15 years now. I started my work in emerging markets, so I lived and worked in Latin America for a couple years and worked on everything from clean cooking to rural electrification with solar to sustainable agriculture. And then I ended up in Berkeley, doing a graduate program that was sort of at the intersection of energy access and emerging markets and finance and kind of really started to understand the role of blended and catalytic capital in the ecosystem. I think that that's a space that has since become much more popular. But at the time, there's very little discussion about how creative financial instruments could be used to unlock private financing in these ecosystems or at the very least like it was very theoretical and at some point kind of right at the end of my masters and I was starting a PhD and I got a call from Facebook and they said hey, we're that's big connectivity effort. We'd like to explore ways in which we can drive energy access in developing countries because obviously we can't connect people if they don't have electricity and so we're gonna hire for this position and I said well man if I can have access to Facebook resources to do this work like that's way more exciting to me than doing a PhD and asking the same questions over and over again and

 so I gave up my National Science Foundation graduate research fellowship and went to work at Facebook and built the energy access program there. We ended up doing a lot of catalytic finance work, invested about $15 million in mostly financial intermediaries like SunFunder, Lendable, Responsibility, who now jointly manage billions of dollars of clean energy and climate finance in emerging markets. And we were often their most catalytic capital. So taking first loss positions or providing guarantees. It was really impactful work. I think with our money, we unlocked close to, we unlocked electricity access for people who previously didn't have power for about 3 million people, which is pretty crazy to think about. We also helped support the development of really frontier tech in the market. We made some sort of, I would say, startup investments, supported some open data plays. We actually built a data product that helped the World Bank identify distribution grid infrastructure all over the world using satellite imagery. So it was fun while it lasted. And then I ended up doing some other sort of... I'd say like impact related partnerships work at Facebook for another year and a half. And then in 2020 I left, ended up joining Enduring Ventures as an operating partner. And I did some M&A for them and helped run around their portfolio businesses and the infrastructure space. Also helped incubate EcoSafi out of the venture studio. And then in 2021, I transitioned out of my operating partner role and the EV team said, look, if you want to build a company. We want to back you. So just tell us what it is. And I said, well, I want it to be in climate finance. Give me a month and I'll come back to you. Initially, the idea was actually going to be to finance, start by financing carbon credits. So basically, if you have, you know, the future strip of voluntary carbon market offsets, like we would lend against it. But it took me all of two weeks to figure out that that wasn't a great idea. And which I think has been in some ways, maybe one of the most pressing things I've ever done because the voluntary carbon market has been having a really hard time with integrity over the last three years. But the thing that got me really excited was that there was this really massive working capital gap in the climate ecosystem, especially for earlier stage companies. And so we said, OK, well, if we're not going to do offsets, why don't we? Why don't we find other capital products that can benefit from a technology stack where we can make faster loans that are more equitable and accessible and inclusive that support really critical needs in the ecosystem. And that's how we got started. And so my co-founder, Aaron, joined me in July of 2021. That's when we really started the business.

**Silas Mähner (21:33)**

You

**Dimitry (21:41)**

Initially, the idea was actually going to be to finance, start by financing carbon credits. So basically, if you have, you know, the future strip of voluntary carbon market offsets, like we would lend against it. But it took me all of two weeks to figure out that that wasn't a great idea. And which I think has been in some ways, maybe one of the most pressing things I've ever done because the voluntary carbon market has been having a really hard time with integrity over the last three years. But the thing that got me really excited was that there was this really massive working capital gap in the climate ecosystem, especially for earlier stage companies. And so we said, OK, well, if we're not going to do offsets, why don't we? Why don't we find other capital products that can benefit from a technology stack where we can make faster loans that are more equitable and accessible and inclusive that support really critical needs in the ecosystem. And that's how we got started. And so my co-founder, Aaron, joined me in July of 2021. That's when we really started the business. 20 people and we don't just do lending anymore we're doing lending at CFO and it's been a wild journey so far.

**Silas Mähner (23:00)**

Did you have a lot of kind of idea or insight to this whole grant funding thing prior to going into that month-long dive or did you just kind of figure it out while you were diving in?

**Dimitry (23:11)**

So yeah, I did not. I did not. So initially when we started Enduring Planet, we were doing something called revenue-based financing, which at the time I was very bullish on in retrospect. I think we've learned a lot about the market and how that instrument works to feel very differently about that as like a credit tool. But about...

**Silas Mähner (23:12)**

Mm-hmm.

**Dimitry (23:32)**

A month before we launched publicly, we were sort of six months into our ideation building journey. We had done a couple RBF loans and had raised some debt funding. And we were ready to go out to market and really push hard. And we started getting inbound interest from folks who said, look, we don't have revenue that you could finance with revenue-based financing, but we have grants with the government. And it's really low risk. Will you lend to us? And we were like, no, no, no, no, no, that's not what we do. They kept coming and at one point we said well wait a second why don't we do that and I think at the time we were really worried about focus because we were trying to do rbf really well but the demand was just so strong that we were like okay well let's pilot one or two of these and see what happens and it was almost immediately evident that we had found a product that had the right, like with credit, I think oftentimes what folks struggle with is that the... is like aligning the instrument with the incentives of the borrower and making sure that both sides are getting the right value given the risk. And I think with the advanced product that we've developed, we were really close to that, like way closer than RBI. And I think there's still a lot of learning to do around structure and pricing that I think over time will evolve. But in general, it's pretty close and we've done, you know,

**Silas Mähner (24:39)**

Mm-hmm.

**Dimitry (25:00)**

almost 50 transactions now and call it two years. And I think that's a pretty good testament to it being the right tool. And we actually ended up deprecating revenue-based financing. We don't do that anymore. We haven't done it in over a year. And so the exclusive focus has been on lending against grants. And then now we figured out that the same problem exists for anybody who sells to government too. So there's about 20 billion a year in state and federal grants for climate in the U.S.

**Silas Mähner (25:12)**

Mm-hmm.

**Dimitry (25:30)**

But procurement of climate tech by government is way bigger. There's not great data on it, but it's like well over 100 billion a year. And in all of those cases, you have to deliver the product or service to the government. They have to validate that it's been delivered because obviously they have like taxpayer responsibility. And so, you know, maybe you're getting paid 30, 60, 90 days after you don't go to work. But if you don't have a big balance sheet, if you're not a big established company like GE or whoever, kind of need working capital finance for that work. So you can pay subcontractors, so you can buy inventory, so you can invest in your tech, whatever it is. And what's interesting is that at the tail end of the market, the really big players who get these big contracts, they have plenty of work in capital internally. Like either on their balance sheet or from lenders to do the work. And so little players have a much harder time competing because they don't have the liquidity. Right. But we offer them that liquidity. And, and that means that people can start on projects faster. They can do more of the project faster. they can actually win other contracts because they are not stuck having their cash locked up in one project to then be able to start a second. And so.

**Silas Mähner (26:47)**

Mm-hmm.

And I guess, so this is, you're talking more about on delivering services to government, but I guess on the grant side, I'm still curious a little bit of what are the biggest challenges in landing grant funding? Are you guys helping with that at all or just mainly once they've landed the grant, then they're going to get paid for it in a bit and you're going to land up front?

**Dimitry (26:50)**

It creates all of these different opportunities for folks to just do more and do it faster.

Yeah, so today we do not help folks win grants. We do have lots of partners that we send people to. There's groups like Climate Finance Solutions that offer really hands-on, bespoke service, and they're very, very effective. I think they win over 90% of the grants they apply for. There are players who use a more like AI automated support system like Streamline or Pioneer. And so we actually partner with all of those. players, we send them all opportunities. And then we help once people have won. So we will provide liquidity once they have a contracted grant. And then we will also provide fractional CFO support for folks who want our help tracking, you know, expenses and labor and doing reporting and whatever. I would not say we're like a full-fledged government compliant CPA shop yet. that's going to take some time, but we can do most of the work. And then we have partners that we recommend to folks who can help with the really, really like bespoke like

 audit and reporting requirements, you know, gap analysis. There's like all this stuff that, that the government requires that we then support.

**Silas Mähner (28:13)**

Mm-hmm.

Got it. Okay. Yeah, that makes a lot of sense. That's really helpful. I think it's interesting that nobody had really solved the working capital part for the...

services to the government rather than grants. I think that obviously being a huge opportunity, it's interesting that nobody was, nobody already came up with this, right? Like at least not for the small players.

**Dimitry (28:54)**

Yeah, so there are definitely providers of working capital for folks who sell to government, but they generally focus on bigger deals and none of them really focus on climate and like are proactive in supporting climate entrepreneurs. I would say there's more in the defense ecosystem. That's a space where the defense budget is very large and there's a lot of procurement. So there's a lot of working capital support, but... I think, you know, with climate, I think there's also this notion that it's temporary and it's administration specific. And I actually think that's false. And if you look at spending by government on climate related, whether it's grants or procurement, regardless of who's in charge, money keeps flowing because well, you know, the world's only getting more on fire and you still need to do wildfire management, you still need to do improved agriculture, you still need to improve grid resilience. There's all these things that are, and then also the military spends an insane amount of money on climate tech and nobody's ever cutting their budget.

**Silas Mähner (30:07)**

Yeah, I think it's interesting when you see the the the military general saying that climate change is one of the biggest issues that they worried about You know that they're gonna do do things about it. So that's it's a really cool I guess space you I shouldn't say uncovered per se but to me it's something totally new so I'm new to the space but one point you you guys mentioned on your website is you

make a point to highlight that you are an inclusive funding partner, right? And I'm just kind of curious, is there insight as to why you had to put that explicitly? Is this a problem that a lot of people run into where they can't raise funding for these types of things because of some silly rules? What's the background of that?

**Dimitry (30:45)**

Do you know how much VC money went to black founders last year? Correct. Yeah. So that problem is the same for women entrepreneurs. It's the same for entrepreneurs of color. It's the same for LGBTQ founders.

**Silas Mähner (30:50)**

Less than a percent, I believe, right?

**Dimitry (31:03)**

If you are a cis white male, it's way easier to raise venture capital. It's way easier to get really any kind of, much easier to get any kind of financing. And that's a really unacceptable element of our like financial ecosystem. Now the metrics are slightly better in climate tech. Although I haven't seen anything like official, I just anecdotally, it feels slightly better, but it's marginal. And... for both myself and my two co-founders, like that was not an unacceptable reality. And so we prioritize providing financing to underrepresented founders, diverse teams and companies serving marginalized communities. And today over 90% of our portfolio hits one of those three targets. So now... Will we lend to like an all white dude team? Sure. Yeah, happy to. But our credit process and our pricing actually does benefit those folks.

**Silas Mähner (32:05)**

Yeah. Well, one of the things you had mentioned was on specific schooling backgrounds, educational backgrounds. Are there other parallels in this space where people... You could only get this kind of advanced funding or advanced money when you have a government contract if you are part of these... There's small bureaucratic...

rules that have been in place for other things? I was curious about that.

**Dimitry (32:25)**

no, no, no, it's more around just the fact that VC is a really discriminatory model. And oftentimes founders have to use VC capital to fund this type of work because there aren't other options available. Right. So I would say that like within the credit ecosystem, there's way less discrimination that's outward.

**Silas Mähner (32:42)**

I see.

**Dimitry (32:52)**

But you do have to think about it in other ways too, right? Because often credit follows equity or credit has requirements around liquidity where equity is required. And so if you look at more traditional lenders in the ecosystem,

**Silas Mähner (33:01)**

you

**Dimitry (33:09)**

they will have very strong or strict collateral and personal guarantee requirements, which by nature are discriminatory, right? Like, because if you have to personally guarantee a half million dollar loan and you don't come from affluence, it's gonna be really hard for you. Or if you look at the venture debt ecosystem, venture debt has to follow a venture round. And so if an industry is only doing, you know, half a percent of its deals with black founders, that means that

venture debt is also not flowing to Black founders in a way that's representative. And so that's just an example, obviously, like, it's not just about Black entrepreneurs, it's about women, it's about entrepreneurs with disabilities. You know, there's like a whole universe of people who capitalism has decided it does not care about.

**Silas Mähner (33:40)**

Yeah.

**Dimitry (34:00)**

And we think that as a impact aligned provider of financing, it is our duty to do better. And so we do better.

**Silas Mähner (34:11)**

Yeah, I mean, this might be something you don't want to comment on, but I'm kind of curious having kind of some exposure to space. If you have...

ideas on how this can actually be solved at the core issue, like with the VC money going into underrepresented founders. Is there actually any type of way to really get around some of these kind of biases that are existing and just money's not going to them?

Because I want to bring up one other point that I've seen is that, I don't know where exactly I saw this, but it was something around women founders tend to actually perform much better in many cases. Like if you look at the data, which makes no sense why they wouldn't get more money. You know what I mean?

**Dimitry (34:33)**

Man, yeah.

Yeah.

Yeah, so I mean, so many thoughts here. So there's plenty of data that, and it's not just women, really, underrepresented founders perform better than their white male counterparts. There's this concept that I found really helpful here, which is called distance traveled that...

folks like Kapor Capital will talk about a lot, which basically looks at how hard a person had to work and how far they had to go to get to where they are. And that should be a thing that people think about. Like it is not the same for a low-income founder of color to start a venture-backed company. You know, if you were to compare them with a, you know, legacy Stanford grad, whose parents are wealthy. Like, it's just not the same path. And I think that investors who actually care, it's really not that hard for them to build a portfolio of underrepresented founders and diverse teams or companies serving marginalized communities. However you want to define your sort of DEI lens, it's really not that hard. You just have to care.

**Silas Mähner (36:09)**

Huh.

**Dimitry (36:09)**

The reality is that most investors don't. It doesn't matter what they say. Like it doesn't matter how they talk about it on their website. What only matters is what does your portfolio look like and what does your team look like? And, you know, I always find it really funny when investors talk about inclusion, but all the partners in the firm are white guys. All the principals in the firm are white guys. The only underrepresented investment professionals on their team are analysts or associates. And there's no investment decision-making being done by people who look different. And so when you build a firm that all looks the same, of course they're going to make investment decisions in people who look like them. And I have like zero patience for investors in this space who don't do a better job. Like it's just not acceptable.

**Silas Mähner (36:44)**

Yeah.

if you have...

**Dimitry (36:49)**

And I have like zero patience for investors in this space who don't do a better job. Like it's just not acceptable.

**Silas Mähner (36:59)**

Yeah, I appreciate your thoughts there. It's really helpful to hear somebody who's kind of gone through thinking this through and has a kind of perspective on it. So I appreciate that. I want to ask again back to the macro level of this grant funding. My understanding is there's a lot of hardware companies that get grant funding and also I'm assuming many government partners, whether that's municipality or even potentially the federal government in some cases, that are piloting their projects or buying from them. Do you have any high level data on how many climate tech startups tend to either get grant funding or sell to governments? And if that number is going to continue to increase as new solutions keep getting innovated? Or is it going to at some point level out where it's like, okay, every year we'll have roughly this many startups, at least in the US, that tend to use this? Do you have any data points there?

**Dimitry (37:48)**



So there's a lot of aggregate data on like sort of public spending and climate. It's not very high resolution and it's pretty hard to break it down by number of companies backed. But the overall total funding amount has grown pretty substantially over the last decade. It's definitely grown also, like I think it's important to delineate state and federal in places where the federal government might flatten or slow down. States often compensate. And so California and New York have incredible programs for supporting climate innovation through the California Energy Commission, Cal Fire, Cal Recycle, NYSERDA. Like there's so much work happening at the state level and not just in California and New York, there's big programs in Washington and Oregon and New Jersey. Massachusetts, there's a lot of investment happening at the state level. And honestly, like I think that, you know, there's a lot of concern right now about the incoming potential new incoming administration TBD on like how the election plays out, right? But I think that it's actually unlikely that spending on climate will dramatically decrease even under a new administration because again, like these are really complicated budgets that big agencies maintain where, you know, I don't see the Department of Defense having a cut budget under a Trump administration, but they're a huge funder of climate. I don't see a massive cut to the DOE budget. Maybe like the loan programs office does less, but I think a lot of that stuff is still protected and it benefits red states. And so if you look at like Obamacare as an example of a large federal policy where there's a lot of spending, where there's significant Republican opposition, well, if you look at what's happened to Obamacare, like the pieces of it that have been gutted are not the spending bits, because the spending bits benefit red states. And so I have a lot, I actually have some optimism. I mean, it might get slower, it might get more painful. to win that funding. But there's big programs that are very hard to unwind. But that's just in the US. I mean, if you look at Europe, if you look at Canada, if you look at other markets, like Korea just announced a massive IRA equivalent that they, I think, are either just past or planning to pass. Europe has a big sort of green new deal. And so I expect the funding to grow and... Honestly, like even if there's a four year slowdown on the grand scheme of things, like the world is only getting to get more on fire. And so I think that government is only going to double down because private markets are not keeping up with the reality.

**Silas Mähner (40:01)**

Mm hmm.

**Dimitry (40:02)**

Yeah. Yeah. Yeah, well, I guess my one thought on this is that I do agree that it seems as though the red states tend to get a lot of the benefit, but I just want to make sure that the companies who are getting this funding, it's going to help them, are going to make it happen at a very swift... way so that people realize the benefit because if it is helping them but they're not seeing the jobs, they're not seeing the growth, then they're not going to notice and it will be less sticky, right? If they're focused on some of these other areas where they're not getting the benefit, it's not going to be as sticky and people will just be less interested in keeping it around, right? That's the biggest thing I guess. I'm not sure if the money has actually hit the right hands by this point, but we'll see. It is going to be a little bit interesting. I just don't think you can overall... get rid of the idea that at a smaller level, government still recognizes their problems. There's a lot of discussion around this with what Colorado is doing, for example, with some of the immigration issues. They're actually turning kind of like some, they're getting lemons and turning into lemonade by doing some really cool, innovative things. And I think a lot of states are doing that with climate issues too. And they will because they're not willing to sit around and let big government take forever. They're just going to do something on their own and make solutions. So. Anyways, enough about that. I want to talk before we run out of time. I want to ask about your kind of co-founding of the, I forget you called it, the Climate Curious Hub in Portland. Can you just tell me more about your experience doing that and what are some of the bigger themes or things that you've learned from founding that and being part of it and what you see in people?

**Dimitry (42:23)**

I'm going to take as little credit for this as possible because I'm like probably the least active co-founding member of Climate Curious in Portland. But in short, Climate Curious is basically a local community of climate professionals that has, I would say it's not just a meetup. There's a formal organization. There are very regular events. There are large conferences that we put on. big conference in April called Wings that was very successful. And the idea is just to build greater cohesion among climate people in this area. I think that what's become pretty clear for us is that those social connections are incredibly valuable for both entrepreneurs and practitioners, operators, whatever you pick, right, investors. And unless you live in like New York or San Francisco where there's very, very established, like regular in-person things, you kind of need to build something. And so... It started out as like a happy hour bar meetup and now there's lectures and co-building events and there's even discussion of an in-person co-working type of space like Nine Zero in San Francisco or soon Nine Zero in Seattle. And so, yeah, it's been really great. I will take almost no credit. I think Tofer Burns and... Jordan are probably the most responsible, but it's been a really big community effort. There's a ton of folks involved and it's been actually really exciting to see it sort of grow and succeed.

**Silas Mähner (43:57)**

Yeah.

Yeah, I'm quite curious. I really like anything that has to do with in-person connection. Having had the benefit of being in New York for a while and getting to experience that with the climate community there, I'm just curious if you have any macro takes on how smaller localized communities like this end up plugging into the, let's call it at least the national climate ecosystem because these problems are... The companies solving these problems aren't just solving them in one particular region, right? They're solving them for the entire country. So do you see any of this happening where people are finding these local communities that help lead them to the hubs where all the VC money is coming from or all the innovation is coming you see anything there?

**Dimitry (44:48)**

Yeah, I mean, so the Climate Curious team is collaborating with the sort of Pacific Northwest Climate Week stuff that's going on this week. There's also been some discussion about interfacing with other regional groups. I think that in the end though, like, There are folks solving for that national kind of unity or regional unity. I don't think that it's necessarily the responsibility of the folks building local community to do that, right? Like it's just too much.

**Silas Mähner (45:12)**

Mm-hmm.

Yeah.

**Dimitry (45:24)**

You can't solve for local connectivity, regional, sub-regional, state, whatever. It's just too much. And so I think that folks who do manage those groups should be open to bringing in representation from some of those larger things to have, hey, all of you who are members of Climate Curious, you should check out this national network and plug into it. Or, hey, there's this thing happening at the Pacific Northwest. We should all be aware of it at the very least.

**Silas Mähner (45:24)**

Yeah.

**Dimitry (45:53)**

But I think that, especially with volunteer organizations, it's really hard to get people to work on stuff that's not local. And that's okay. I don't think we should try to solve everything.

**Silas Mähner (46:00)**

Yeah.

Yeah, I'm a huge proponent of these kind of networks. That's why I'm always curious how you can get them to work together and benefit the entire community because you might have some of the best talent in your network, but the job that they really need is with a company based out of Georgia or New York or something, right? And getting those other people from other places aware of your community so that they know how to advertise your job boards or things like that. That's something I'm always curious about, but we've only got time really for one more thing. What if you weren't doing Enduring Planet today, if you had to go build something else and it couldn't be the same thing, what would you be doing? What are the business ideas do you have in climate?

**Dimitry (46:42)**

And it couldn't be the same thing?

**Silas Mähner (46:44)**

Could not be the same thing.

**Dimitry (46:45)**

It's a good question. Honestly, I don't, I thought about this a lot when you sent it over before, and I'm going to give a really disappointing answer, which is that I don't really think about other things right now. Like this is all I think about. This is all I work on. I think that addressing the capital gaps in this ecosystem is so critical.

So I guess maybe the answer is like, well, if it's not lending or CFO, I'd find other ways to address fundamental capital gaps. I think that specifically providing catalytic finance is incredibly important. So, but I don't think that's a startup. Like I think that's a ultra high net worth, you know, family office play is people who don't care about the financials return on their dollars. Like if you currently manage philanthropic or quasi-philanthropic capital and climate and you're

 not doing catalytic finance work, you're doing it wrong. Like if you're listening to this podcast and that is not something that you do, you should really rethink your strategy because it has the highest leverage of impact per dollar. We collectively have accepted that like capitalism is gonna have to solve climate change because we're not actively working to dismantle it. And so if you are operating like the impact investment ecosystem, like doing direct deals with your charitable dollars is not a good use of money. What you should be doing is catalytic finance work largely with financial intermediaries where you're unlocking other people's dollars. And sometimes that can happen at the sort of individual project level. That's cool too. You know, folk is a big space for catalytic finance right now. But yeah, that would be my call to action for people who manage money that doesn't need traditional financial returns.

**Silas Mähner (48:33)**

Yeah, that lines up with a lot of things that people have said and I think it's a good place to end on. Hopefully some people get around to listening to this in that space. We've had some people in the philanthropic space before. So hopefully it gets to the right ears. But anyways, man, any final things you want to mention or where people can reach you.

**Dimitry (48:50)**

No, this was great. I really, really appreciate you having me on. Folks can find us at enduringplanet.com. If they want to reach me personally, I'm Dimitry at enduringplanet.com. It's pretty, pretty simple. You could probably put in anything at enduringplanet.com and it will reach me eventually. And so, yeah, we'd love to hear from folks who are either looking for working capital or looking for some what we would call fractional CFO help. And if you're in climate, we'd love to work.