I enjoyed learning how businesses seek funding and when this is a good idea. Bryan’s outlook on fighting climate change is a positive one. He made me realize no matter how big a problem is, we stand a chance if we stick together.
Bryan Hassin is the cofounder of Third Derivative, the world’s largest climate tech accelerator that finds, funds, and massively scales the world’s most-promising climate technologies with unprecedented ambition and speed. Bryan recently stepped away from Third Derivative which now has enough funding.
Here’s my talk with Bryan.
How do you like to practice sustainability in your daily life?
My money is in a bank account that’s very climate positive. Anyone can do that by just moving your checking account over to ATMOS financial, and it’s going to businesses that are climate positive. In fact, some of the interest you’re earning is being shared with nonprofits in the climate space.
I make investments in the house where I live. Sometimes they’re not even great financial investments, but they’re very good at climate sustainability and energy investments. Whenever we make a decision that we think is good, we have to ask ourselves first: What’s the climate impact? Am I living my values if I make this decision?
How bad is our climate change right now?
It’s bad. Of the 16 forecasted climate tipping points, for decades, scientists have thought that if the climate gets too hot, these tipping points can be activated, and it becomes a self-reinforcing cycle. Nine of them are already active, which is advantageous for several reasons.
This means that even if we stopped putting greenhouse gases in the air today, there’s already enough warming inertia that the climate will keep warming for a while. That’s why a lot of innovation is happening now to help expedite the process of returning to a healthy, sustainable balance.
So the simple answer is bad. The good answer is that when entrepreneurs see something bad, they don’t see a crisis; instead, they see an opportunity. I’ve always found entrepreneurship to be a form of empowerment.
Since we can’t rely on governments or NGOs to fix the climate for us, entrepreneurs are out there doing amazing things. I’ve just finished two years building and leading the largest climate technology to energy transition technology and innovation ecosystem in the world. That gave me a chance to look at a thousand entrepreneurs working on really interesting things, everything from new types of batteries in North America to electric vehicles in India to cold chain logistics.
What’s cool about what entrepreneurs are doing right now, especially in startups, is that they’re unconstrained by conventional wisdom. They don’t follow the rules, such as just staying in their lane. Let me give you two specific examples.
One is a company I heard about on the My Climate Journey podcast, Coal Fleet Zero, which is trying to electrify shipping. Shipping is one of those sectors that everyone says cannot be electrified; we have to pursue other pathways to decarbonize it. But one of the ways they’re doing this is throwing out the old model of shipping, which travels halfway around the world on one tank of fuel, and instead transitioning to more frequent stops and shorter haul. So they’re changing the paradigm and throwing out the rules.
Another one is a materials company called Dexmet. They’re making advanced carbon-negative materials, meaning the more they make, the more carbon is captured and stored in that material, displacing dirty incumbent materials like steel. So they’re breaking the conventional wisdom that we can’t change steel by finding greener ways to make it happen; they use carbon-negative materials.
When is the best time for an entrepreneur to seek funding? Where is the best place for them to start?
Before I started Third Derivative, I was a career climate tech entrepreneur who built, led, and scaled many businesses. Some of them failed, but some were really successful, creating about half a billion dollars worth of enterprise value. That journey raised the better part of $100 million from several different sources along the way.
I would say the best capital to raise, and one of the most underappreciated is customer finance. This is about getting your prospective customers to pay you in advance for a product you haven’t built yet. At Third Derivative, we had a lot of success with that.
By the time you’re done with it, you have a great customer success story that you can use to attract other customers as well, which is much more valuable than just having an investor on your cap table. Crowdfunding is essentially the customer finance version for B2C startups.
If you execute a crowdfunding campaign, you can find yourself with the capital you need to build out your product or scale up your venture with a bunch of customers who are already pre-committed, can advocate for you, and help you attract other customers as well.
The challenge of crowdfunding is that it’s not as simple as most people think it is. Successful crowdfunders usually take about three times as long to prepare for a crowdfunding campaign as it does than actually executing that campaign.
For instance, if you’re executing a 30-day crowdfunding campaign, that means you need to spend 90 days in advance to prepare, like setting up PR that you’re going to launch, daily emails that you’re going to be putting out there, etc. If you want to get the critical mass you need for the crowdfunding platforms to recognize that you’re onto something, finance or crowdfunding is not the right deal for you.
Instead, you can fund through equity investment. I think it’s key to make sure you have value-added investors. So, investors who can do more than just write a check, have some domain expertise, or something more valuable, can open some doors for you. So we have different alternatives.
What are the unique traits of successful businesses?
Startups that I see succeeding are not afraid of the hard stuff. They’re not shying away from doing something challenging because they recognize that it’s what the scale and the scope of the problem that we’re up against require, especially in the climate space.
John F Kennedy inspired the entire nation to all get in line and do something that seemed impossible at the time, like going to the moon. He said that we chose to go to the moon to do the other things, not because they are easy, but because they’re hard.
That goal will serve to organize and measure the best of our energies and skills if that challenge is one we are willing to accept, unwilling to postpone or one we intend to win. This gives entrepreneurs greater success in pulling in customers, investors, and even employees who want to work on something really meaningful.
What’s the biggest obstacle you faced when building your business and what tip do you have for new/current entrepreneurs?
I recently built Third Derivative, a climate tech accelerator, and ecosystem that was also initially a startup. When I was first out raising money for it, all I had was a PowerPoint and a vision.
One of the great challenges we had was that we were launching right in the middle ago. So I had to build a team that needed to perform at an incredibly high level to pursue some extremely ambitious goals and at a speed never before attempted.
None of these people could see each other in real life. So we do adapt on the fly pretty quickly to find ways to make virtual and remote collaboration a feature, not a bug. We instituted many different systems and processes and cultural rituals to do that.
There were still challenges and drawbacks, but at the end of the day, I’m proud of what we did in a very challenging and short amount of time. There will always be challenges and obstacles in entrepreneurship, like raising money and finding a product-market fit. But it’s up to the entrepreneur just to roll with it. Always try to find the good and the opportunity, rather than dwelling on the public challenge.
I hope you enjoyed my talk with Brian and that you took away some value. If you want to listen to the entire interview, click play below or head over to your favorite platform (Apple, Spotify, or Google.)
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