Since we first met the Heidi team in the summer of 2024, we’ve watched that strategy pay off, as clinicians around the world adopted Heidi with incredible enthusiasm, and as health systems started to follow suit. Heidi’s supported over 70 million patient-clinician interactions since their launch (in Feb 2024), and ARR has grown over 7x in less than 12 months. The product has been met with user love across a wide range of geographies, from traditional US and Canada healthcare systems, to UK GP practices and — more recently — continental Europe.

We’re thrilled to announce today we’ve doubled down — with our breakout fund Latitude — on Tom, Waleed, Yu and the rest of the team in Heidi’s $70m Series B, led by Point72.

From the beginning, we said Heidi’s bottom-up motion would keep its product accountable to users. As the UK’s now become the first market in the world to regulate AI scribes as medical devices, Heidi’s consistent engagement with every level of the NHS community is poised to pay off. We’re excited to help Heidi’s UK team prove that innovation and regulation can go hand in hand, and demonstrate responsible, at-scale impact to clinician wellbeing and healthcare capacity in the NHS.

We’re excited to welcome Paul Williamson, previously Head of Revenue at Plaid, and Dr Simon Kos, previously Chief Medical Officer of Microsoft, to the Heidi team. Their experience, combined with the raw talent, energy and empathy for clinicians that the entire Heidi team displays in droves, is set to cement the company as a category leader.

Finally, we’re also happy to see Heidi’s new brand unveiled. Conceived here in the UK, it’s a testament to the staying power of UK design in the AI age.

Doubling down on Heidi was originally published in LocalGlobe Notes on Medium, where people are continuing the conversation by highlighting and responding to this story.

Most software ventures into healthcare prove fatal to start-ups, and can even dent the reputation of some of the world’s biggest companies. Microsoft HealthVault, Google Health, Apple HealthKit, Amazon’s Haven…all of these solutions failed to produce the kind of impact we’ve come to expect from these Silicon Valley giants. And the only software that has managed to be deployed at scale in healthcare, Electronic Health Records, is hated by almost everyone who uses one. Yes, even the one Larry Ellison spent $28bn acquiring and turning around.

But over the past year, something has changed. It is testament to the power of generative AI that a software product deployed in healthcare has finally not just been embraced, but met with user love. Medical scribes have become one of the most prominent applications of LLMs, and it seems that there is now one scribe in every country, medical field, and VC portfolio. At LocalGlobe, we’ve met perhaps a dozen excellent teams working on this all over the world. We are absolutely thrilled to announce today we’ve picked (and invested via our follow on fund Latitude) one we hope wins the category: Heidi.

The first thing we noticed was different about Heidi was its growing organic traction here in the UK. It wasn’t just numbers on a deck. Heidi was the one name in common all competitors seemed to mention. Heidi was being talked about by a minister on TV. Heidi was the first or second comment to any doctors’ Facebook Group post asking for medical scribe recommendations. We saw pure bottom-up, product-led growth in motion and immediately knew something about Heidi was special.

At LocalGlobe, we hold the perhaps contrarian view that bottom-up PLG is not just possible, but desirable in healthcare. Whilst value is eventually mostly derived from enterprise contracts, we believe bottom-up adoption fundamentally benefits Heidi by:

• Keeping the product culture accountable to users. In a free product, every blemish is constantly exposed. Heidi has to be good enough in any clinical setting, including a hospital wart with bad wifi or on mobile; theres no bait and switch, no hiding behind a sales person and their careful demos. The user noise is inescapably loud and continuous — good or bad — you get it straight.
• Turning super users into product team members. A key belief behind Heidi’s PLG is that doctors want their notes to look exactly as they intend them to. The ability to set up templates has extended Heidi’s product team to its users, who often already are “influencers” within their expertise area or geography.
• Building dense brand awareness fuelling organic growth. Because medical scribes feel like magic, clinicians talk to each other about them in their communities. In some countries, Heidi’s brand recognition is hitting escape velocity.
• Leveraging users as advocates in enterprise deals. This wave is happening too quickly for doctors to wait on their procurement departments to pick a tool. By going bottom-up, Heidi’s being used by many even in settings where the official tool is a different scribe. Heidi’s won the user in the short term, and hopefully that’ll mean winning the buyer in the long term.

You could summarise all of these points by saying bottom-up, product-led growth is startups’ natural selection. Intense usage, constant feedback, and rapid iteration are in our view already making Heidi into the best product in its category. But what’s really exciting is of course the almost limitless potential opportunity that can be addressed from this vantage point. Clinician notes can form the basis for all the non-clinical work that happens in the system, from updating records to referrals, to billing. In 2025, we will see agentic AI emerge from medical scribes to truly transform healthcare.

Finally, we think it’s almost impossible to deliver products for healthcare without having experienced its complex workflows, peculiar jargon or high pressure decisions. The best tools we’ve seen, in and outside of our portfolio, were all built by teams with high numbers of former clinicians or built at the heart of one or more practices. Heidi’s co-founder and CEO Tom is a former surgical resident, and over 20% of the team have clinical backgrounds. In this sense, in Heidi’s office just like in a hospital, it’s really quite hard to tell the difference between a product team member and a user.

P.S. With thanks to Michael Tolo @Blackbird for introducing us to the Heidi team ❤

Our investment in Heidi was originally published in LocalGlobe Notes on Medium, where people are continuing the conversation by highlighting and responding to this story.

I’ve been at LocalGlobe for five years now, and have been able to “lead” my own investments for two. I still have no idea how good an investor I really am. But I’ve recently wanted to share more about how I’m learning. I hope people that are at a similar point in their VC careers start to share too. And I hope my insights are useful to you if you just got your first VC job, realised there’s no onboarding of any kind, and are thinking: now what?

I’m going to spend time on my top three priorities to get better faster: calibrating your bar (or more simply, picking), working with your firm, and developing your edge.

Your first priority should be calibration — establishing a bar for what great founders look like, and constantly raising it. Yes, sourcing is fundamental, but I think many new VCs (including me) often over index on sourcing vs picking. That’s natural, because as more junior members of the team, sourcing is often our key goal. But if you don’t at least even mentally practice picking from early on, by the time you’re leading investments, you’ll back the wrong people. So yes, source for your partners, but also try and decide whether you’d pick that founder before they do.

The most obvious way to establish a bar is to meet as many founders as possible. Some firms set targets — 10 new founders a week, for example. Early on, this is helpful. In my first couple of years, meeting that volume of founders helped me build a baseline of what “truly great” looked like. VCs are naturally optimistic; we get excited about technology enabled versions of the future. When you’re new, it’s easy — or at least it was for me — to build conviction on a founder that meets a high enough quality bar.

But volume only gets your bar so far. Over time, you become more discerning in founders, products and markets. You realise it’s not just about seeing more founders; but about looking for extremely rare qualities or technology pedigrees (more on this in, perhaps, a different post). That means getting better at qualifying leads, rather than meeting any founder you can. You need to move from casting a wide net to a more directed search. Volume is good for establishing a baseline, but once you’ve got it, focus on finding the special ones and giving them a real reason to speak to you. An extra tip for understanding “great” is spending time with later stage portfolio founders.

The last way I’ll mention to raise your bar is making your own mistakes. Many venture job posts have the phrase “if you’re looking to lead investments soon after you join, this role isn’t a fit. Instead you’ll get a chance to learn”. But here’s the truth: even at greatly collaborative firms, the relationship between a VC and the founder they back is often extremely personal. Conviction is extremely personal. There is just something elusive about what makes for a good VC that I think can only be learned by first hand experience in its most extreme interpretation. Seasoned VCs often say it takes many millions of dollars to train a GP, and they’re right. This isn’t about being reckless. Firms that let junior VCs lead deals aren’t just burning money — they’re making themselves generational firms. They’re giving money to people who still see spaces as opportunities rather than graveyards. Look for a firm that’ll give you this agency after 2 or 3 years.

Second priority. There’s a lot of emphasis in venture on building relationships with co-investors at other firms. Deal attribution means you’re often competing with your colleagues in sourcing and picking the best deals. It means VCs at other funds become the ones you talk to about themes, founders, experiences.

That’s important, and personally, I’ve invested in relationships outside of LocalGlobe that are non-transactional and extremely authentic. But it’s often easier for your own team to give you the unvarnished experience of venture. It can’t be stressed enough that we VCs are sales people, and working together with the colleagues in your own shop is not only the best way to learn but also the best way to maximise overall performance.

Work with as many people on your investment team as possible. Watch how they build conviction to inform how you do it. Push yourself to be open to radical candor. Uncomfortable questions and critiques from your team — when raised in order to support you rather than stop you — are essential for ensuring your conviction isn’t just hype.

Your third priority is focusing on developing your edge. It’s been my experience that many more senior investors will advise you to pick a theme or a geography to focus on. This approach works well in firms that are more competitive than collaborative, because every investor is fishing in a different pool. LPs want to invest in diversified strategies, and GPs can have legitimate claims of knowing a wave.

As junior or mid-level VCs, we’re deployed to the beach with the goal of spotting the next wave. Truth is, if we could do that, we should be founders. I’ve honestly always pushed back on specialising early on. It’s likely that by the time you and I have spotted a wave and developed a thesis, it’s already too late to back the winner, especially at seed stage. Here’s what I suggest: instead of focusing on a niche, focus on finding exceptional founders. Your edge comes from the founders you back, not from picking the “right” sector. Let founders show you where the waves are. When you back a successful company, that win will give you access to a network and insight that’s far more valuable than any artificial niche you could carve out early on.

Over time, your edge will emerge from the types of founders you back and the way you support them. The best founders will seek you out if they know you’re someone who can really help them succeed. Build your reputation around the kind of support you offer (this too can and should be personal, whether it’s strategy advice or customer intros or talent access), not just around a thesis. Founders you’ve backed and meaningfully helped will help your sourcing and winning 100x more than a thoughtful thesis post on X.

One final piece of advice. Until you become a GP, you’re not locked into a firm. Staying somewhere long enough to learn is important — continuity matters. I’ve been at LocalGlobe for five years, and I’m still learning. But don’t stay somewhere if your learning rate slows. This is a business built on exponentials. Your learning curve should be one of them.

Thanks to my fellow middle of the road LocalGlobe partners Ash, Emma, Tom, Yvonne and Ziv for reading versions of this.

Within this context, companies, governments and other organisations across the globe all face similar challenges: cost, complexity and control. How do you avoid getting locked into one hyperscaler with excessive fees? How do you orchestrate data between the cloud, on-prem and the edge? How do you guarantee resilience whilst optimising cost? How do you comply with data sovereignty rules or policies? To sum it all up, how do you exert your control over this escalating data generation?

The founders of Cubbit know these challenges intimately well. Whilst at university together, they started a video sharing platform, and whilst they were thrilled to see it used by a growing number of users, they worried about the cost and resilience challenges associated with storing an increasing amount of data. The solution they came up with has become their business today.

Cubbit’s software solution, the DS3 Composer, allows anyone to set up their own geo-distributed S3 cloud storage compatible with any infrastructure and policy framework — from hybrid cloud to the edge. The software shards data objects into redundant chunks, and then distributes these chunks within a geo-fenced network, accessible within a single data domain. This allows for sovereign, resilient, cost-efficient, and more environmentally friendly data storage.

Cubbit leverages an existing universe of partners (including MSPs, ISVs, local telcos, system integrators) to package their solution for SMB and Enterprise end customers. It also works directly with customers across industries, having found success particularly in spaces where its advantages are very attractive, such as in defence. We were fascinated by the vision that Leonardo, one of the largest defence companies in the world, had for partnering with Cubbit: the enablement of a cloud-edge digital continuum across assets on the ground, in the sea and in space.

Having found success with over 350 enterprise and SMB customers mostly in Western and South Europe, we’re excited to back Cubbit alongside ETF Partners to take DS3 Composer to customers in EMEA and beyond.

This also marks LocalGlobe’s first investment in my home country of Italy (although we’re already proud to have a number of Italian founders in the portfolio). It’s been exciting to see the Italian ecosystem come to life in last couple of years, and produce a number of technology teams with global focus and ambition.

Our investment in Cubbit was originally published in LocalGlobe Notes on Medium, where people are continuing the conversation by highlighting and responding to this story.

In this context, technologies that were once fringe ideas have become a key part of any climate mitigation plan. Chief among them is DAC: direct air capture, achieved by machines sucking air through fans and then trapping CO2 with specialised filters. There have traditionally been several concerns that, despite progress made by start-ups like Climeworks and Global Thermostat, have held us back from making an investment into this category. Then we met Thor and the team at Sirona, with an ambitious approach to finally address these head on.

Traditional Concern #1: It’s hard to find the right DAC technology

We’ve met with many teams over the years piloting new technologies for carbon capture, from solvent-based, to sorbent-based, to electrochemical systems. Like in other deep tech categories, it can sometime feel that the right investment is in a specific technical innovation found after a thorough survey of the entire landscape, perfectly timed on the TRL development roadmap. Our deep tech investments have taught us that can be a red herring, and that not too differently from our software portfolio, it is often true that amazing founders win over amazing technical moats. Sirona’s approach is a reminder of that. We’re not betting on a technology we’ve never seen before, but on an approach that prioritises fast iterative cyles and a modular build, where different technologies, whether developed in house or by external parties, can be swapped in and out depending on their changing techno-economic profile. We love to back teams that are dogmatic about the goal, but pragmatic about the way there.

Traditional Concern #2: DAC is too slow and costly to scale

The focus on iteration, inspired by Thor’s former workeplace Tesla, also means the Sirona team has an edge in speed to market. While most other companies in the space create a new version of their machines on average every 18 months, this team has shipped 3 prototypes in the last 12 months, each capturing 10x more CO2 than the last, and a 4th prototype is going live in the next few weeks. Each prototype brings new decisions to reduce the ultimate cost of carbon removal. Sirona’s modular machines also mean their technology is not just faster to market, but faster to scale. Cheaper modules can be tagged on in response to new demand.

Traditional Concern #3: DAC has no co-benefits

One thing we love from nature-based solutions for carbon removal is co-benefits. For example, projects aimed at ecosystem restoration such as the ones developed by our portfolio company ERS work in close cooperation with local communities. An important part of Sirona’s strategy is the deployment of its DAC machines in Kenya’s Great Rift Valley. There are many reasons why this is an attractive place for DAC. The deployment of these machines there means better energy access for local communities (whose needs would otherwise be insufficient to justify investment in new renewable capacity).

Traditional Concern #4: The DAC buyer pool is too small

Addressing the above concerns really matters: de-risked technology, lower cost, faster time to market and scale, modular designs that are easier to fund, and co-benefits for local communities are all essential to grow the buyer pool for DAC beyond the current community of climate-positive tech companies (something that our portfolio company Supercritical is also on a mission to do!) This is the kernel of this bet: that a Tesla-level-of-ambition team can make DAC technology mundane, affordable and ubiquitous.

Our investment in Sirona was originally published in LocalGlobe Notes on Medium, where people are continuing the conversation by highlighting and responding to this story.

Sam and Allister, who started Sylvera in early 2020, met each other a few months before in our Phoenix Court office, during the first climate-focused event we hosted. At the time, the carbon markets were a long-established but small cottage industry, and carbon offsets an opaque mechanism that many in the room, despite an interest in climate, were unfamiliar with.

A lot has changed in the past three years: the voluntary carbon markets have scaled past $2bn in annual traded volumes; world bankers like Mark Carney and politicians like John Kerry have championed them; most corporations and many consumers have purchased or at least heard of a carbon credit. But with scale and fame, scrutiny has also increased, and the market now stands at a critical crossroads between dysfunction and value.

No two carbon credits are created equal, and there are indeed too many instances of projects failing to deliver the carbon savings they promised to, or that are outright fraudulent. Verification of the project’s results is complicated by the fact that projects most often happen far away from credit buyers (usually in developing countries within the tropical rain belt), and by the fact that our gold standard measurement methodologies — such as allometric equations — have very high error rates (30–50%). The carbon markets’ traditional infrastructure players, such as certifier Verra, have been slow to react and too lenient on “subprime” carbon credits. As a result, the growth of the market is now in peril, with some players such as Nestle, withdrawing altogether.

Sam and Allister were pioneers in calling out these issues, and founded Sylvera on the belief that technology could provide a real time, thorough assessment of carbon projects. With a deep technical moat and an incredible team, they have since built the reference agency for carbon credit ratings. Corporate buyers can now purchase carbon credits with confidence, and access up to date information behind the individual project’s quality rating. Project developers and certification standards are taking note, and we believe that this is driving a new supply stream of high quality projects to the market.

But is the reputational damage too grave to fix? Will the issues that Sylvera set out to address kill the market before quality wins? Whilst abatement of carbon emissions should be the first step of any net zero strategy, the inescapable truth is that there is currently no credible global pathway to net zero without a huge quantity of carbon offsets (or as they are now more and more often called, climate contributions). This is why we believe that carbon markets deserve a second chance.

We’re not alone in this belief: Sylvera’s customer logo and revenue growth demonstrates buyers are committed to high quality projects. Investors across asset classes have designed enormous mandates for the climate transition, with climate contributions playing a big role. Recently, the Commodity Futures Trading Commission said it would make policing carbon offsets a priority. In this push towards high-integrity carbon markets, Sylvera is best positioned to lead.

Finally, Sylvera’s vision goes well beyond carbon credits, and makes it one of the most ambitious software investments we’ve made. As carbon is financialised, the cost of emissions and value of credits become a factor in every business and investment decision. Sylvera can thus provide a climate-informed view of any business or transaction.

With this series B financing, the team will further develop Sylvera’s platform to provide more data that helps organisations better benchmark, measure, invest in, and deliver real climate impact toward societal net zero. The fresh capital will also go towards growth in new markets, starting with the US.

We first invested in Sylvera from LocalGlobe, and we’re excited to double down in their Series B from our sister fund Latitude, as we continue to support Sam and Allister in driving climate-positive decisions through unique, reliable data.

Our investment in Sylvera was originally published in LocalGlobe Notes on Medium, where people are continuing the conversation by highlighting and responding to this story.

But, whilst tech stocks in general have declined substantially on Wall Street in the past 18 months, for InsurTech stocks the decline has been a bloodbath. A focus on profitability has meant impressive growth rates now matter less. Investors have instead renewed scrutiny of high CACs sustained to accomplish them, and of loss ratios that — despite the promise of better data — haven’t yet outperformed incumbents, who rely on decades of customer history. As capacity providers have diminished risk appetites, the market has hardened, leaving InsurTechs less space for manoeuvre in terms of product freedom and growth.

To navigate these stormy waters, many InsurTechs have beefed up their teams with industry veterans in previously lighter weight functions such as Underwriting or Claims. More traditional teams, a less risk-prone approach and branching into non digital forms of advertising and even old fashioned brokering are making some InsurTechs look more and more like the incumbents they set out to disrupt. Valuations have simply followed suit.

So, is the tech disruption story in insurance over? We don’t believe so. Not only do we think that some of the category leaders mentioned above will come back into favour, we also believe that the many ways in which technology can disrupt this sector have only just started to play out. First generation unicorns displayed the most obvious — but also the most challenging — way to take insurance on: bettering its UX. There is however a second generation of leaders, mostly still private companies, that are using technology to disrupt insurance in much subtler ways.

Tech to underwrite new risks

Novel and specialty insurance segments offer an even playing field for risk taking, with technology playing a meaningful role in providing a new data model for pricing. In the US, our portfolio company At-Bay has become a leader in the fastest growing specialty segment, cyber risk insurance. At-Bay question, analyse and monitor the cyber risk of every company in their portfolio not just once but continuously, a fundamental ability in a space with always evolving threats. In Europe, companies like Descartes Underwriting and our portfolio company FloodFlash have ushered in climate risk insurance. These companies use a wide set of data sources (incl. satellite imagery, IoT sensors, stationary sensors, radar and sonar data) and analytical tools to build live climate risk models for corporate, SME and public sector clients. InsurTechs have a formidable edge in these types of insurance vs incumbents.

What’s even more exciting is that — once brokers are familiar with these propositions — specialty products can act as a backdoor into established segments. Cyber can be sold together with other commercial lines by the same broker. Climate risk can be bundled with other P&C lines. There are also opportunities for alternative distribution or further monetisation with these new categories, by allowing customers to access and use risk monitoring tools.

Tech to better power incumbents

But tech disruption doesn’t just mean building a new insurance company from the ground up. Many InsurTechs are using technology to modernise the industry from within. Shift is using AI to help insurers better identify fraudulent entities and claims. Tractable is using computer vision to help assess, repair and protect cars and homes. Our portfolio company Canopy is allowing open access to insurance data. Others are using technology to facilitate, automate and speed up all kinds of processes inside the insurance world, from sourcing excess insurance capacity, to cleaning customer data, to publishing pricing models.

In an environment with less growth, companies old and new are also looking for new, high margin revenue streams and ways to monetise their existing customer base. Embedding insurance at the point of sale is a great option for retailers. If done well, this can both enhance customer experience and increase basket size. Tech-enabled players like our portfolio company Open offer an easy way to design, launch and manage great digital insurance experiences.

Be it using specialty segments as a backdoor, working with incumbents to modernise or finding new ways to distribute existing insurance products, the path forward for tech to disrupt insurance seems not to be leapfrogging, but sneaking in. The change in strategy doesn’t make the category any less exciting for us, or the market: whilst deal volume declined by 38% from 2021, 2022 was still the second largest ever year for InsurTech fundraising, with $8.5bn going into the segment. We’ll say it again, we think insurance disruption is just getting started.

InsurTech: From Leapfrogging to Sneaking in was originally published in LocalGlobe Notes on Medium, where people are continuing the conversation by highlighting and responding to this story.

Carbon as a liability

Let’s look at carbon as a liability first: governments around the world are setting net zero targets and implementing a range of policies aimed at reducing emissions, including carbon taxes, climate transition investments and subsidies. All of this means that for any company, there is an increasing cost associated with emitting carbon. An example of government intervention that makes this cost very real is what is known as “compliance markets”. Compliance markets — such as the EU’s Emissions Trading Scheme (ETS) — are cap and trade schemes where companies are given credits that represent emissions budgets they’re allowed to use. These credits are subsequently traded between companies: those who emit less than predicted can sell to those that need to emit more, so that the total of emissions in the EU remains as planned. Companies that are in scope of these schemes have historically belonged to sectors where emissions are easy to keep track of, such as the energy sector. But now, these schemes are being expanded to the rest of the economy and might potentially apply even to non-EU companies exporting to the single market.

Carbon as an asset

Now, let’s look at carbon as an asset: companies can pay for activities that reduce or offset emissions, such as reforesting a degraded area or using a direct air capture plant for carbon removal. Companies that do this receive “carbon credits” in what is known as “voluntary markets”. Unlike with compliance markets, companies are not yet mandated by governments to participate in these, yet many are doing so more and more to demonstrate goodwill and as part of their Net Zero strategies. In these strategies, offsets are used as assets to “net off” carbon emissions. Like compliance markets, the scope of voluntary markets is also evolving, with new types of companies entering these markets in the past 2–3 years.

The opportunity set for tech and fintech

Growth in the financialisation of carbon comes with a wide set of problems, and there is an immense need — and opportunity — for technology to address these. The opportunity is compounded by the urgency with which carbon markets need to scale in order to meaningfully mitigate climate change.

1- Establishing trust

The biggest problem facing carbon markets today is trust. The methods we have traditionally relied on for measuring carbon are often inaccurate.

• “Emission factors” that companies often use to calculate their emissions can be based on wrong assumptions, total calculations can fail to even add up for companies and even entire countries, and scope 3 emissions calculations (those that arise from a company’s indirect activities, i.e. from its supply chain) can be off by as much as 50%.
• The situation is even worse on the asset side: recent analyses of projects that issue carbon credits have shown that a majority fail to deliver on their carbon targets despite being certified and traded. As such, the risk of buying an offset today might outweigh the benefit — at least reputationally — for a company.

The need for accurately measuring and offsetting carbon emissions, as well as carbon offsets, has brought about a wave of new climate tech startups, with the goal of making carbon markets more robust. These include carbon accounting and reporting tools, tech-enabled project design and certification players, and carbon ratings providers. At LocalGlobe, we’ve been lucky to invest in some of these innovations, with companies like Supercritical, ERS and Sylvera.

2- Managing complexity

Other opportunities will arise from the complexity of carbon markets. The voluntary markets for example can today be accessed using complex infrastructure such as provided by Xpansiv. Exchanges of this type are often complex and can be difficult for non-experts to navigate. What’s more, we expect the complexity of carbon markets to increase rather than decrease:

• For example, if regulators admit a certain type of offset (e.g. REDD+) to be used by companies to net off surplus emissions as part of a compliance scheme, that will inevitably increase the price of credits associated with such projects.
• Likewise, if a carbon project successfully produces additional benefits beyond carbon, such as increased biodiversity or social benefits to local communities, it might also see the price of its credits rise.

As such, companies will need to navigate not only buying projects of differing quality and price, but also managing their carbon liabilities on an ongoing basis, including price fluctuations. New tools might serve this need in a similar way to modern treasury management systems.

3- Tech-enabled carbon finance

In a world where carbon markets are trustworthy and accessible despite their complexity, we see even more opportunity at the intersection of finance and carbon. For example:

• Climate lenders, who link instruments such as green bonds (already used by a wide range of borrowers — from Prada to Camden Council) to the price of carbon or use climate data and AI to adjust interest; or — like Enduring Planet — who tweak models such as revenue-based financing for the needs of climate companies.
• New infrastructure to fund carbon removal, such as Stripe Climate and again Supercritical, and new instruments, such as OTC contracts for forward carbon to fund capex-heavy investments in tech-based carbon removal solutions such as direct air capture plants.
• Regenerative Finance, or ReFi, players. Whilst still in their infancy, carbon tokens might come to play a role in helping both large and small buyers to engage with carbon, with lower barriers to entry and more transparency.
• Tools that help assess and price carbon or climate risk, such as Cervest or ClimateX, to help companies become more resilient.
• New Insurtechs, such as Kita and Oka, to help protect offset buyers against the risk of projects not delivering on their reduction targets.

We believe the financialisation of carbon is now inevitable, and signals of its momentum — from the SEC saying it will require emissions disclosures from public companies, to Bank of England former governor Mark Carney championing carbon markets — are compounding. With this transition, an exciting new area of opportunity in Fintech is born.

As Carbon is Financialised, a new Frontier Opens up in Fintech was originally published in LocalGlobe Notes on Medium, where people are continuing the conversation by highlighting and responding to this story.

A quick Google search will be enough to reveal that these markets are not working as well as they should: carbon offsetting projects don’t always deliver the reduction or removal in emissions they were designed to, there are project types currently allowed to generate carbon credits that really shouldn’t be, project certification bodies are slow and inefficient, companies might use offsets to greenwash activities that should be decarbonised….the list goes on.

So, why invest in technologies for the carbon markets? One fundamental belief we have is that in order for climate change to be mitigated, the economics of our global system of production need to incentivise climate-friendly decisions. By associating a cost with offsetting emissions, carbon markets can play an important role in doing so. Despite the flaws, many companies have embraced this same way of thinking as part of their Net Zero planning, leading to more demand (and a supply crunch) for carbon offsetting projects.

As part of a credible Net Zero roadmap, the world needs carbon markets to scale to $50bn in traded volumes by 2030 according to McKinsey. For that to happen, we first need a rapid increase in the supply of verifiably high-quality projects. Enter ERS, a new certification standard that leverages technology to a) measure and verify impacts of offsetting projects on climate, biodiversity, and livelihoods, b) enable lower cost certification removing barriers to smaller projects, and c) enable faster certification allowing for the rapid increase of project supply needed.

Before investing in ERS (then known as Wildsense), we met with dozens of teams working on the problem of scaling carbon markets supply. What won us over was Thibault and Priscille’s incredibly mission-driven mindset; their closeness to and intimate knowledge of project developers; time spent with local communities; and, finally, their awareness that the road to scaled, high-integrity carbon markets would be long and require feedback from all relevant stakeholders. On this note, a public consultation on the new standard will open on March 21st: if you’re a carbon markets participant, we would love for you to take part here.

Our investment in ERS was originally published in LocalGlobe Notes on Medium, where people are continuing the conversation by highlighting and responding to this story.

The climate crisis requires a fundamental shift to a more sustainable economy. The scale and urgency with which this shift needs to happen is to us, and the founders we back, an enormous opportunity. Here, we outline the framework we use to talk about the challenge, the possible technology solutions, and the companies we’ve either backed or admired bringing these solutions to market. We’re excited to look for more founders, co-investors and partners to help solve what we’ve started to call the Climate Equation.

How it works — the framework

On the left hand side of the equation, we have:

The historical damage we’ve done

• For example, from a carbon perspective, this is the sum of all historical emissions (2,500 Gt of CO2 eq)
• Historical damage is of course a variable we can’t change

The damage we’ll still do (Solutions = Reduction or abatement)

• The global economy is growing, and quickly using up the budget of emissions we have left (another ~400 Gt total — we currently emit ~50 Gt/year) to limit warming
• We need to reduce this, fast. This involves leveraging all the opportunities associated with the decarbonisation of our economy.

The damage we will reverse (Solutions = Removal and restoration)

• This includes any carbon we manage to pull out of the atmosphere
• We need to scale this, fast. This involves removing pollutants and restoring our natural resources (our carbon sinks).

Then on the right hand side we have:

The residual damage (Solutions = Resilience and adaptation) :

• For example, the residual carbon surplus and its effect, e.g. the current 1.2C global warming.
• This is what the world will look like as a result of the equation, and what we will need to be prepared for and adapt to. Also known as resilience and adaptation

Solving the climate equation

We’re conscious that climate change is largely a problem to be addressed with hardware rather than software. We think both have a role to play.

• We think hardware most often acts as a direct lever in tackling climate change, e.g.: a less carbon intensive approach or technology that replaces an existing climate-damaging product/system, or has a direct drawdown effect.
• Software often acts as an indirect lever: enablers of the direct levers, e.g. a demand-response clean energy system.

As mentioned, we think that the urgency with which variables in the climate equation need to change (emissions need to be reduced from 51 GT per year to net zero by 2050, removal needs to scale 20,000x by 2030), makes for one of the strongest tailwinds we’ve ever seen. We think this turns opportunities that would typically not be suited to venture (such as energy or materials) into venture ones. It’s important to stress though, we believe that in order for solutions to truly scale and succeed, they need to be better on metrics that don’t just relate to climate performance (such as economics and convenience).

Reducing the damage we‘ll still do: Reduction or Abatement

The abatement challenge is: how do we keep the world’s economy not just going, but growing, whilst reducing our current 15bn metric tons per day fossil fuel consumption to zero in less than 3 decades?

Electricity

The opportunity:

2/3 of electricity comes from fossil fuels today. We need 2–3x today’s capacity over the next few decades, but from clean inputs. We’ve already made a lot of progress in decarbonising the grid (solar, wind and batteries). Still, in order to reach net-zero, we need 50% of electricity to be from zero-emission sources by 2025 and 90% by 2035.

What we want to invest in:

Direct levers we can pull to decarbonise the grid include clean energy sources (renewables), improving energy storage and improving the energy system’s efficiency. Amongst these, battery storage is still underdeveloped, which is why we’ve invested in {we haven’t announced this one yet!}

Indirect levers accelerate adoption of the above direct levers. For example, data for grid planning, demand response and project financing. Noteworthy companies in this space include Pelm, Enode and Leap.

Industry

The opportunity:

Materials represent roughly a third of emissions, mostly from iron, steel, cement and chemicals. Buildings, roads, factories, packaging, textiles — these are fundamental building blocks of our economy. They emit carbon as a byproduct and are energy-intensive. We don’t have sufficient and practical low-carbon ways to make them at scale, yet.

What we want to invest in:

Direct levers include new ways to make materials with a lower or negative emissions profile. In this case, the scale at which they are used can make for an immense removal opportunity. Interesting companies in this space include Solugen, FabricNano and Concretene. A material that drives emissions not just when it’s made, but also when it’s disposed of (if incinerated) is plastics, which is why we’ve invested in Shellworks.

Indirect levers include ways of accelerating alternative materials (or decelerating incumbent approaches). For example, smart ways to plan infrastructure projects or heat buildings to reduce waste, engage consumers to push for low-carbon products, or allow businesses and consumers to recycle and reuse more materials. In these spaces, we’ve invested in Alcemy and nPlan. Other interesting companies include Cirplus and Sourceful.

Food

The opportunity:

Growing food represents another near third of emissions. If cows were a country, they’d rank 3rd under China and the US. Beyond raising animals, there’s unsustainable soil management, fertilisers, and food waste.

In order to feed 10bn people by 2050 without increasing food-related emissions by two thirds, we need to become much more efficient with food.

What we want to invest in:

We can think about direct impacts to decarbonising our food systems: alternative ways of growing, creating or preserving food. This covers the likes of alternative proteins or foods (plant-based, cell-based), regenerative agriculture (e.g. no-till farming, bio-fertilisers, soil carbon management), vertical farming and ways of cutting down food waste. Our investments in this space include Infarm, whilst other interesting companies include Higher Steaks, Perfect Day, and Loam Bio.

Indirect levers include enabling technologies and tools, such as our investments Breedr, Biome Makers and {we haven’t announced this one yet!}, or companies like Cradle Bio, enabling bioengineers to programme enzymes.

Transport

The opportunity:

Passenger vehicles are responsible for around half the problem. EVs have come down the cost curve quite substantially thanks to advances in batteries (87% decrease since 2010). But they can’t yet fully compete on convenience and cost.

Bigger vehicles — buses, trucks, planes and ships — are fewer but much more emissions intensive on a per vehicle basis, and difficult to decarbonise (the best lithium ion battery packs 35x less energy than gasoline). Electrofuels and biofuels are the more attractive option but carry large premiums (often 2–3x).

What we want to invest in:

Direct levers cover alternative or lower-carbon transport approaches: EVs, alternative fuels and carbon capture. A notable direct lever is carbon capture for hard-to-abate vehicle transport (enter Remora and Seabound). Other game-changers for this category we like are Heart Aerospace and Prometheus Fuels. There has been some debate about the impact of “e-mobility” companies: we think our investments in Voi, Cycle and Laka are going at least some way in encouraging the transition towards more sustainable transport.

A great example of an indirect lever is charging infrastructure, including both the physical charging points (enter Volta), and the software making it easy to find them (enter Bonnet).

Reversing the damage already done: Removal + Restoration

The reality is, even if we meet our ambitious reduction targets, we are still likely to overshoot our carbon budget. And beyond carbon, we’ve already damaged the natural world, for example with plastics. Thus, we must get to work on restoring nature, by scaling carbon removal and regenerative solutions.

Removing pollutants and restoring sinks

The opportunity:

Carbon removal is still far from being permanent, cheap and scalable. Nature-based solutions (protecting and growing our existing natural carbon sinks) are cheaper and easier to scale, but often lack the data to be more credible and structurally scalable. Tech-based solutions (such as direct air capture) are nascent and expensive. Carbon markets at large lack liquidity and transparency around project quality, performance and price, even as they have started to rapidly scale.

What we want to invest in:

Direct levers are nature-based and tech-based. Example companies include The Future Forest Company, Climeworks, Heirloom and Charm Industrial. We also need to support the clean-up of our planet beyond carbon (enter CleanHub).

Indirect levers include data that allows nature-based solutions to be trusted, funded and scaled, accessible exchanges for carbon market participants, marketplaces that match supply and demand for removal projects, and more. In this category, we’ve invested in companies including Sylvera, Supercritical and Wren. We’re also following companies like Evergrow, Kita and Toucan.

A note on damage measurement:

For businesses, accounting for damage done (starting with emissions) is the 1st step. We are now observing the emergence of two distinct types of solutions: tools that target SMEs/tech companies, with relatively simple footprinting and often focused on offsetting (e.g. Watershed, Normative, Plan A), and tools that target enterprises with complex supply chains, with more complex footprinting and often focused on abatement / insetting (e.g. Altruistiq, Sweep, Emitwise, Sinai).

Adjusting to our residual damage: Resilience + Adaptation

The opportunity:

There are many tools — from finance to biology — we’ll need to use to become a more resilient society in the face of more or less extreme climate change.

What we want to invest in:

Direct levers for adaptation are still underexplored, but we’ll need technologies that make our built environment more resilient to extreme weather events, our food more efficient at tolerating increased heat or more unpredictable precipitation, or our coastline less exposed to rising sea levels.

Indirect levers include data analytics for climate risk assessment and insurance policies to protect against that risk. In this space, we’ve invested in FloodFlash, and are following companies such as Cervest, Climate X and Descartes Underwriting.

Our ecosystem approach

At LocalGlobe, we’ve always been supporters of ecosystem collaboration, and this rings particularly true in climate. We can only solve the climate equation if shots on goal are maximised, and massive pools of funding and expertise join together. As such, we’re building and will continue to build a network of founders, co-investors and network partners (please reach out!) We should also stress that — as a generalist, not a thematic investor — we back surfers not waves: we welcome founders that are building solutions that we haven’t thought of as part of this framework.

This work is the result of a few months spent with Jack Bartlett, learning about and mapping the climate challenge and the climate tech space. I am grateful for the input and feedback received from so many more: Alex @ Lowercarbon, Cara @ The Climate Map, Chris & Mona @ Valo Ventures, Clara @ Transition, David @ Voyagers, Kobi @ CTVC, Ophelia @ Tiny, Tom @ ReGen Ventures, Sam @ Sylvera, and last but not least my LocalGlobe team.

Our framework borrows ideas from: How to Avoid a Climate Disaster, by Bill Gates; Speed & Scale, by John Doerr; Third Derivative; CTVC.

The Climate Equation was originally published in LocalGlobe Notes on Medium, where people are continuing the conversation by highlighting and responding to this story.