Momentum investing in VC + Convective Capital’s Bill Clerico | E1627

TL;DR

Convective Capital, a specialized venture firm, has raised $35 million to invest in early-stage startups focused on creating technology to detect and contain wildfires for climate resilience.

Transcript

hey everybody it is Sunday we hope you had a great week we're kicking off the next week with our liminal space kind of show the Sunday episode we have a great VC Sunday school coming up on momentum investing this concept is somewhat over now that there's not a lot of momentum happening but there was an interesting Twitter thread that kicked off thi... Read More

Key Insights

• ❤️‍🔥 Fire tech startups that focus on early detection, prevention, and containment of wildfires are addressing a critical need for climate resilience.
• ❤️‍🔥 Specialized venture firms like Convective Capital can provide tailored expertise and networks to support startups in the fire tech sector.
• 💗 The market potential for fire tech startups is growing due to increased awareness of the impacts of wildfires and the urgency to address climate change.
• ⛽ Landscape management and fuel treatment are essential aspects of wildfire prevention and resilience, offering opportunities for technological advancements and innovation.

Questions & Answers

Q: Why did Convective Capital decide to focus on investing in fire tech startups?

The founder, Bill Clerico, was inspired to take action after experiencing wildfires near his property and recognized the need for innovation in wildfire prevention and containment. He saw the opportunity to apply proven technologies, such as AI, robotics, and satellite imagery, to the specific challenge of wildfires.

Q: How does Convective Capital approach its investments in fire tech startups?

The firm takes a concentrated approach, making larger investments in a smaller number of companies to have a more significant impact. Convective Capital aims to catalyze innovation and company building in the fire tech sector by providing specialized expertise and network connections.

Q: What are some examples of startups in Convective Capital's portfolio?

Overstory is a company that offers software to utilities for monitoring power lines and transmission networks to mitigate fire risks. Burnbot is developing autonomous robotic devices that can be used for controlled burning to create firebreaks and conduct fuel treatment. Pano AI focuses on fire detection through camera-based systems using AI algorithms, while Rain is developing autonomous drones to extinguish fires.

Q: How does Convective Capital view the market potential for fire tech startups in the face of slow-moving incumbent players?

While the market includes large, slow-moving entities such as utilities and insurance companies, the urgency of addressing wildfires due to climate change is driving a demand for new solutions. Convective Capital sees this as an opportunity for startups to offer innovative technologies and services, as established players recognize the need to adapt and invest in new solutions.

Summary

In this video, the host discusses various topics, including VC Sunday school, momentum investing, climate startups, and more. The host also mentions sponsors like OpenPhone and Microsoft for startups, and introduces guest speakers. One of the guest speakers, Bill Clerico, talks about his new venture fund, Convective Capital, which focuses on backing early-stage startups that create technology to detect and contain wildfires.

Questions & Answers

Q: What is VC Sunday school and why is it gaining popularity?

VC Sunday school is a concept where fans of the show put together curriculum-like materials based on the show's content. This has gained popularity as it creates a valuable learning resource for those interested in venture capital and entrepreneurship.

Q: What are some tips for becoming a successful angel investor, according to Andrew Chen?

Andrew Chen, a general partner at a16z, shared five tips for becoming a successful angel investor. One of the tips is to follow the momentum, meaning that if a company has a lot of hype and seems overvalued, you should run towards it instead of away from it. Another tip is to aim for quantity in your portfolio, as having a diverse range of investments increases the chances of hitting an outlier. It is also advised to look for companies that are growing at least 3x a year, as this indicates strong growth potential.

Q: What is the importance of bet sizing in venture investing?

Bet sizing is crucial in venture investing as it determines the potential returns and risks. Typically, venture firms put a small percentage of their fund into a large number of companies, aiming for one or a few companies to generate significant returns and make up for the losses incurred by other investments. Angel investors should also consider bet sizing and aim for a portfolio with a sufficient number of bets to increase the chances of hitting an outlier.

Q: How can founders avoid using personal phone numbers for their businesses?

Founders often make the mistake of using their personal phone numbers for their business, which can lead to unwanted spam and loss of data if the number is reassigned. To avoid this, founders can use business phone services like OpenPhone, which allows them to get business phone numbers for themselves and their team that can be easily managed on existing devices.

Q: What are some challenges faced by founders when it comes to phone numbers?

Using personal phone numbers for business purposes can lead to privacy and data security issues. Additionally, if a salesperson leaves the company and was using their personal phone number, the entire customer history may be lost. It is important for founders to separate personal and business phone numbers to avoid these challenges.

Q: Is it advisable to invest in companies just because big-name investors have invested in them?

While big-name investors can serve as a signal of potential success, it is important to consider their motivations and track records. Some investors may be focused on deploying large amounts of money rather than aiming for high returns. It is crucial to evaluate investments based on their own merits and conduct thorough due diligence, rather than simply following the crowd.

Q: How can founders build resilience in the face of climate change?

Climate change poses significant challenges and risks for businesses. Founders can build resilience by incorporating climate change considerations into their business strategies, investing in technologies that help detect and contain wildfires, and adapting their operations to mitigate the impact of climate change. This may involve using innovative solutions, investing in infrastructure improvements, and collaborating with other stakeholders in the climate resilience ecosystem.

Q: What led Bill Clerico to launch Convective Capital and focus on backing startups related to wildfire detection and containment?

Bill Clerico became interested in wildfires after experiencing the threat firsthand near his property. He started volunteering with the local fire department and speaking to various experts in the field. Through these experiences, he realized that there was a significant need for technological advancements in wildfire detection and containment. This led him to make angel investments in startups in this space and eventually raise a fund, Convective Capital, to support early-stage companies working on wildfire-related technologies.

Q: What types of companies does Convective Capital invest in?

Convective Capital invests in early-stage startups focused on addressing the challenges of wildfires. The fund's portfolio includes companies that provide software solutions for utilities to monitor power lines and transmission networks, robotic devices for controlled burning, and other innovative technologies aimed at detecting and containing wildfires. The fund takes a targeted approach, making larger investments in a smaller number of companies in order to catalyze innovation and company building in the wildfire resilience space.

Q: How can utilities benefit from Overstory's software?

Overstory provides software to utilities that helps them monitor their power lines and transmission networks. By using satellite imagery and advanced analytics, utilities can identify lines that may be at higher risk for causing wildfires due to factors such as vegetation proximity, weather conditions, and previous incidents. This allows utilities to better prioritize their maintenance and inspection efforts, ultimately reducing the risk of electrical failures and wildfires.

Q: What is Burnbot and how does it contribute to wildfire prevention?

Burnbot is a company focused on developing robotic devices for controlled burning. These devices can drive along the ground and perform prescribed burns to create firebreaks and reduce fuel loads. By automating controlled burns, Burnbot aims to increase the efficiency and safety of this wildfire prevention method. The technology has the potential to be a valuable tool for forest and land management, helping to protect communities from the risks of wildfires.

Summary & Key Takeaways

• Convective Capital is a specialized venture firm investing in fire tech startups for climate resilience, with a focus on early-stage companies working on technologies to detect and contain wildfires.

• The firm has raised $35 million for its first fund and plans to make strategic investments, providing large checks to a few selected companies.

• The portfolio includes companies such as Overstory, which provides software to utilities for monitoring power lines, and Burnbot, which develops robotic devices for controlled burning in fuel treatment.