You’ve probably heard of unicorns, and you may have heard of soonicorns. But have you heard of gigacorns?
Unlike its other more common cousins, the term “gigacorn” doesn’t refer to valuation. Instead, it tells us how well a startup can help fight carbon dioxide emissions, climate change and its implications.
According to venture capitalist Christian Hernandez, who coined the term, a gigacorn is a company that has managed to lower or sequester CO2 emissions by one gigaton per year while being commercially viable.
Hernandez describes himself as a gigacorn hunter, and he’s not hunting alone. The venture capital firm he co-founded, 2150 VC, counts among its limited partners Crédit Suisse, sovereign funds from Norway and Denmark and the venture arms of BMW and Toyota.
With $312 million to invest, 2150 VC’s goal is to find and fund future gigacorns in urban tech. “We think of our scope of investment as being the broad ‘urban stack,’” 2150’s partner and co-founder Jacob Bro told TechCrunch.
Some might feel this focus on urban tech is counterintuitive, but 2150 is taking the view that cities are here to stay.
Its scope is also broader than it may sound. This so-called urban stack covers “all the inputs and outputs and the operations of a city from the materials that we use, the proteins we consume, the energy that powers the city, to how we heat and cool our homes, how we move things around and keep citizens healthy, safe and secure,” Bro said.
“We need all hands on deck. No single solution will solve the climate crisis, and we need to back thousands of parallel bets.” Jacob Bro, 2150 partner and co-founder
2150 VC’s portfolio includes companies such as carbon accounting platform Normative and Leko Labs, a Luxembourg-based construction startup that’s developing sustainable wood-based building materials. It also has investments in firms focusing on biodiversity, cooling and energy efficiency for buildings.
To better understand where and why 2150 VC is betting, we spoke with Bro and Hernandez about impact investing, regulation and the growing number of funds dedicated to climate tech.
Editor’s note: This interview has been edited for length and clarity.
TC: Your thesis seems to be that countries won’t stop developing cities, and that the focus should be on mitigating the impact on climate caused by urban areas. Can you explain why you took this approach?
Jacob Bro: The founding partners of 2150 come from different backgrounds — from technology and real estate to corporate innovation and venture capital. We partnered around the same realization: that the urban environment consumes the vast majority of natural resources and generates 70% of greenhouse gasses.
Cities can’t be stopped. Urbanization is accelerating given the concentration of prosperity, education, healthcare and culture in cities. So we need to solve the “urban prosperity versus energy” paradox urgently.
Christian Hernandez: In the words of the UN Secretary General [António Guterres], ”Cities are where the climate battle will largely be won or lost.” We want to direct our capital and efforts to the hardest to abate sectors; those that can have the greatest impact.
Buildings and industry represent 60% of emissions, yet they received only a quarter of all private equity and VC funding. Decarbonizing concrete (8% of emissions) and steel (7%) is hard, but it’s critical. According to the International Energy Agency (IEA), over half of the technologies needed to achieve net-zero by 2050 are available today. So we are very much focused on identifying and scaling the most impactful ones.
We often talk about “carbon now” versus “carbon later,” meaning that the value of reducing carbon emissions at scale today — given the 25 gigatons we need to cut by 2030 — is much greater than the value of reducing carbon in 20 years.
Within climate tech as a whole, which verticals are you most bullish about?
Bro: Within the urban value chain, we rank the biggest problems and opportunities. We consider impactful areas, including cooling, window technologies, cement and concrete, alongside enabling technologies like carbon accounting.
You once wrote that “policy and regulation will make or break our investments.” Can you explain?
Hernandez: Policy is an important component of the work that we do, which is why we recently brought on board Christopher Burghardt, an experienced climate tech entrepreneur who has served as head of policy for the likes of First Solar and Uber.
Regulation and policy play a key role in accelerating (or inhibiting) the deployment of the technologies that we back. As an example, New York state passed the Low Embodied Carbon Concrete Leadership Act (LECCLA), which mandates a lower carbon footprint in concrete poured for state-funded projects to accelerate adoption of lower carbon cement and concrete.
On the other side of the Atlantic, each European country has its own processes and regulations for the testing and approval of cement mixes, which can take six to eight months and inhibits the adoption of new technologies.