Raising a VC fund in public + Brilliant Planet's Raffael Jovine on the power of algae | E1552 | Summary and Q&A

TL;DR

Brilliant Planet uses seawater and algae to grow massive blooms that sequester carbon and produce high-quality carbon offsets.

Key Insights

• 💗 Growing algae blooms is a highly efficient method of carbon sequestration, with the potential to sequester more carbon than forests.
• ✋ Brilliant Planet's business model focuses on creating and selling high-quality carbon credits to companies.
• 🏝️ The scalability and adaptability of the technology allow for global implementation, making use of empty coastal desert land.

Transcript

welcome to Sunday get your coffee get your latte have a bagel relax put your put your air pods in your Google pixel buds your Air Max Pro Plus over the ear whatever jams whatever you're into and relax you're into and enjoy VC Sunday school we're going to talk about raising a fund in public 506c is our topic today yep if you are a fund manager a bra... Read More

Questions & Answers

Q: How does Brilliant Planet grow algae blooms for carbon sequestration?

Brilliant Planet utilizes seawater and local algae in empty coastal deserts to create optimal conditions for algae growth, which sequesters carbon. The algae is then harvested, dried, and buried to permanently remove carbon from the atmosphere.

Q: What is the business model of Brilliant Planet?

Brilliant Planet plans to work with local governments and companies to install algae ponds and create high-quality carbon credits. These credits can be sold to companies looking to offset their carbon emissions.

Q: How efficient are the algae blooms in terms of carbon sequestration?

Algae blooms grown by Brilliant Planet can sequester 30 times more carbon per square meter per year than forests. The goal is to sequester hundreds of thousands of tons of carbon annually.

Q: How does Brilliant Planet ensure the environmental impact of their algae blooms?

Brilliant Planet uses local organisms that are not harmful or genetically modified. They also work with models to anticipate and assess any potential impact on the environment, ensuring a responsible approach to scaling the technology.

Summary

In this video, the host discusses the process of raising a fund in public, specifically focusing on the differences between the 506b and 506c designations. They also interview the founder and chief scientist of Brilliant Planet, a company that uses seawater to grow algae in ponds and sequester carbon. Additionally, there is a conversation about ESG and its importance in the climate action space.

Questions & Answers

Q: What does Brilliant Planet do?

Brilliant Planet is a company that grows algae in ponds using seawater. They have found that algae blooms are much more efficient at sequestering carbon than trees. After drying out the algae, Brilliant Planet buries it to sequester carbon at a mass scale. They then turn it into high-quality carbon offsets and sell them on the open market.

Q: What are the differences between the 506b and 506c designations for raising funds?

The 506b designation does not allow public raising of funds and prohibits any mention or promotion of the raise. It is meant to protect investors from risky investments and requires self-certification from investors. On the other hand, the 506c designation allows for public solicitation and promotion of the raise. It also requires investors to go through a verification process to prove their accreditation or qualification.

Q: Why was raising funds in public previously considered secretive?

Fund managers were not allowed to disclose the amount of money raised or the investors involved because it required certification that all investors were qualified purchasers or accredited investors. This was necessary to comply with regulations and protect investors from risky investments.

Q: What is the benefit of raising funds in public?

Raising funds in public allows fund managers to openly discuss their raise and attract potential investors more efficiently. It also provides more transparency and allows fund managers to share their vision and plans for the fund. Additionally, it can help forge relationships with investors who align with the fund's goals and values.

Q: Are there any limitations or challenges with raising funds in public?

One limitation is that the number of qualified purchasers and accredited investors a fund can have is limited. This could fill up quickly, especially in the case of accredited investors. Fund managers may also face additional work in verifying the accreditation or qualification of each investor. However, these challenges are generally seen as a cost of doing business and worth it for the benefits of raising funds in public.

Q: How do fund managers determine the capital requirement for working as a VC?

The capital requirement for working as a VC varies depending on the fund and the expectations of the LPs (limited partners). It is common for LPs to expect VCs to have a stake in the fund to align their interests. The percentage of the fund's capital that VCs are expected to contribute typically ranges from 1% to 3% and is agreed upon in advance.

Q: Why would fund managers avoid having too many investors or LPs?

Having too many investors or LPs can create challenges and potential issues, especially if they are not aligned with the fund's goals or values. It could lead to difficulties in decision-making, increased administrative work, and potential conflicts among LPs. Fund managers often prefer to have a manageable number of investors who can actively contribute and align with the fund's vision.

Q: What are the different elements of ESG (Environmental, Social, and Governance)?

ESG refers to the consideration of environmental, social, and governance factors in investment or business decisions. Environmental factors focus on a company's impact on the environment, such as carbon emissions or resource usage. Social factors involve how a company operates with regard to its employees, customers, communities, and other stakeholders. Governance factors pertain to the leadership, policies, and practices that shape a company's decision-making and accountability.

Q: Why is it important to separate ESG into its components?

Separating ESG into its components allows for a more nuanced approach to each aspect. By addressing environmental, social, and governance factors separately, companies can better address specific issues and make meaningful improvements. It also helps avoid diluting the importance of each component and ensures focused attention on each area.

Q: Is there a common ground between the two sides of the political spectrum when it comes to climate change?

The host believes that nuclear power could be a common ground between the two sides. Nuclear power is increasingly accepted as a viable solution to address energy needs while reducing carbon emissions. This could lead to collaboration and support from both sides, provided there is a comprehensive approach that includes renewables and natural gas as a bridge to nuclear energy.

Q: How can companies address diversity and inclusion in a meaningful way?

Companies need to be intentional and invest in initiatives that promote diversity and inclusion. This can include upskilling programs and removing unnecessary filters or biases in the hiring process. It is important to recognize the benefits of diversity in driving innovation, reaching a broader customer base, and improving decision-making. Slowing down, being intentional, and doing the work can lead to better outcomes and stronger businesses.

Takeaways

In summary, the video discusses the process of raising funds in public and highlights the differences between the 506b and 506c designations. It also explores Brilliant Planet's innovative approach to sequestering carbon through algae growth. The conversation touches on the importance of ESG and the need for a more nuanced approach to address environmental and social issues. Additionally, the video emphasizes the potential for nuclear power to bridge the gap between different political perspectives on climate change. Lastly, the importance of diversity and inclusion in businesses is emphasized, highlighting the need for intentional efforts to create diverse and inclusive environments.

Summary & Key Takeaways

• Brilliant Planet grows algae blooms in ponds using seawater to create optimal conditions for carbon sequestration.

• The algae is harvested, dried, and buried to remove carbon from the atmosphere.

• Through scalable engineering and partnerships, Brilliant Planet aims to sequester billions of tons of carbon annually.