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💸 "Crossing the Valley of Death"

Catalyst with Shayle Kann

Photo by Andrey Grinkevich / Unsplash

Table of Contents

Host: Shayle Kann
Guest: Scott Jacobs | Co-Founder | Generate Capital
Category: 💸 Investing | Valley of Death

Podcast’s Essential Bites:

[3:49] “The original idea [of Generate Capital] was really to try to address what we saw as a broken capital market for sustainability broadly, and specifically for the area where we thought the biggest need was within sustainability, which is deploying the infrastructure of sustainability solutions.”

[5:03] “There are a number of accounts […] of something called the Valley of Death, which really describes the lack of capital for deploying newer solutions that are less well proven or less mainstream in the eyes of the capital markets. […] And certainly in 2014, when we got started, there were few folks offering capital for especially distributed infrastructure opportunities. You saw capital flowing to large scale solar and large scale wind, but you didn't really see any attention focused on some of the additional solutions we need to solve climate change, whether it's in other areas of the power sector, like distributed technologies for example, micro grids, battery storage, energy efficiency, or […] hydrogen vehicles, […] electric vehicle infrastructure, and even in waste and agriculture, which are important parts of the climate solution space.”

[16:35] “Capital is always available if there's a good project, with good people managing it. That was true in 2014 and that's true today. […] And so the question is, what's the right type of capital? And what's the right set of other criteria that need to be in place in order to successfully deliver against the promise of the opportunity? […] In particular, I believe capital isn't scarce for sustainability solutions, when they are good solutions, good opportunities with good people involved.

[21:41] “The cost of capital is definitely higher in today's environment versus six months ago, and it's likely to continue to rise given inflationary concerns. [..] The cost of capital is an important input to the economics of an individual project and thus, the number of projects that might pencil for any of these project developers and their customers. It is also true that in the areas that we have been active, there is less debt available, because there are fewer financiers willing to go into these projects. […] I also think, though, that when we're talking about the macro environment, we'd be remiss in non talking about the supply chain questions. […] The supply chain and the cost of supplies have gone up far more than the cost of capital has gone up so far. And that volatility in the supply chain has been much more troubling for our partners than the cost of capital changes has been so far.”

[28:52] “There are a number of interesting opportunities that people are just not yet mobilized to address at the speed and scale we were talking about. […] One for example is electric bus leasing. […] I definitely think there are a whole range of areas in the waste category that fit that description. We [have an] involvement in organic waste streams, like food waste, or animal waste, and turning those into either renewable natural gas or renewable electricity. […]. Plastics recycling, tire recycling, these are other areas we expect to see a dramatic growth in, because of the customer demand and the sustainability benefits, but require real system change, to bring that complexity down and to create more simple solutions that are financeable.”

[46:53] “I think it is depressing to look at the facts and the science today, and the progress that we still need to make against the problem of climate change. Despite the increasing momentum, and great success stories that we can share about the last decade or so and in particular the last couple of years in terms of climate solutions, their readiness, their adoption, the demand for them from customers, the support for them from the capital markets, we are just so far away still from actually mitigating the climate change problem in a way that saves humanity. […] We have focused a lot as a globe on policy and on capital and on technology, we have focused far too little on the thing that brings it all together, which is people.

Rating: ☁️☁️☁️

🎙️ Full Episode: Apple | Spotify | Google
🕰️ 51 min | 🗓️ 07/14/2022
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