About episode
The thing that’s most exciting for us working in climate is that we are witnessing one of the largest societal transformations that we’ll probably ever see. And we’re right at the start of it.
Over the next decade, we’re going to see an explosion of growth and opportunity in this space. Last year, over $40 billion in venture capital went to over 900 climate tech companies. To put that in context, that’s double what it was just the year before. And yet, this is just a fraction of climate entrepreneurship. In addition to these hundreds of venture backed startups, there’s hundreds of thousands, maybe even millions of small businesses, turning their sights to climate impact. Most are not a fit for or interested in venture capital, but they still have financing needs.
This is the market that Dimitry Gershenson and Erin Davis are serving with their startup, Enduring Planet. They offer non-dilutive funding on founder-friendly terms. While there’s a ton of coverage of the venture capital market, Dimitry and Erin bring unique perspectives to the incredibly diverse and expansive field of climate entrepreneurship. Full disclosure: I’m a big fan of Enduring Planet and recently made a small investment in their seed round. I think you’ll see why I’m so excited by their potential. Here we go.
In today’s episode, we cover:
- [4:30] What is Enduring Planet and what problem is it aiming to solve
- [6:02] The type of companies that Enduring Planet is looking to invest in
- [8:05] What it means to be founder-friendly and non-dilutive
- [11:08] The market size and exciting areas for non-dilutive climate investments
- [15:06] How many companies Enduring Planet is looking at and the current reach
- [19:24] Serving underrepresented founders through corporate DNA
- [24:12] The breadth of companies emerging and the generational shift
- [27:37] Fixed income intermediaries as a missing piece of the climate innovation puzzle
- [31:18] What is revenue-based financing, how it works, and why it’s the first product
- [35:26] What revenue-based financing means for business and viability
- [39:04] Using technology to improve the process of evaluating investment opportunities
- [41:09] Enduring Planet’s growth goals for the next 3-5 years
- [44:30] Advice for individual investors interested in climate
What is Enduring Planet and the problem they’re aiming to solve
Enduring Planet is a FinTech lending platform for the new climate economy. The company offers flexible, fast, and founder-friendly capital for entrepreneurs across the climate ecosystem. Whether folks are running small or medium-sized startups, Enduring Planet has credit offerings for them.
When a company is venture-backable, they often have just venture capital available to them, which is expensive, diluted, complicated and biased. For small or medium size businesses, there are even more limited funding options because they are generally just looking at bank credit instruments. Further, those products are generally reserved for profitable companies with long operating histories that can offer collateral and personal guarantees. Dimitry points out, “When the world is on fire and we desperately need to build and grow solutions quickly, we can’t really depend on antiquated models of capitalization for these businesses.” Enduring Planet is looking to change that.
What it means to be founder-friendly and non-dilutive
Erin explains that Enduring Planet is building their whole brand around being founder-friendly. At this stage, they’re offering entrepreneurs capital that they likely can’t access. Typically, companies can only access VC funding or grant funding, which is either expensive money-wise or time-wise to go after. In addition, they’re supporting entrepreneurs and companies coming into their portfolio, and those not coming into our portfolio, by providing introductions to help with fundraising. As Enduring Planet expands both their product offering and two different types of products, non-dilutive products in particular, they’re also looking into expanding the support, networking and all of the other things that go into building a company.
Founders will have a lot to look forward to in their interactions with the Enduring Planet platform and team. The application for funding takes about 10 minutes to complete. If financials are connected through their secure API, founders can get a term sheet in about a week, which is incredibly fast. The rest of the process might take about two to three hours for responding to diligence questions, which is dramatically less time than raising any other capital. In a month’s time, founders can see funding in their bank account. The contractual process to sort out the legal agreements is very short and simple, so hefty legal fees and excessive back and forth between lawyers doesn’t have to be something to worry about. Given that the funding is non-dilutive, Enduring Planet doesn’t ask for personal guarantees or collateral. There are no complicated covenants, so they’re not restricting how folks manage and run their business.
The market size and exciting areas for non-dilutive climate investments
We know that venture capital in climate tech has been growing incredibly quickly. We know that companies of all types are making climate commitments, but Enduring Planet is looking at a different kind of investment opportunity here.
Dimitry says that quantifying the number of climate-oriented businesses in the existing market is pretty difficult right now, but he goes into all of the data third-parties are currently compiling on this episode. Simply, he suggests the number of businesses that Enduring Planet is looking at is in the millions. Any small business related to solar, wind, or energy efficiency is in scope, alongside those reducing emissions in other ways. So for example, if there’s a company that does HVAC and they exclusively work on heat pumps, that would be in scope for Enduring Planet. They are also including things that are adjacent, but are still incredibly necessary for climate transition, like mechanics that work exclusively on EVs. Most folks would not put those businesses into the climate bucket like they would, so the universe is actually pretty broad for them.
Enduring Planet is excited about the entire transition; a broad range of startups is needed to tackle the climate crisis. It doesn’t matter if you’re selling low-carbon diapers, have a SaaS business that’s marketing to corporations, or you’re doing solar sales lead generation – that’s all exciting for them. When it comes to their revenue-based financing product, there’s a few business models that work particularly well for now and those are anything in software, especially with recurring subscriptions. Hardware coupled with software and e-commerce businesses are also notable mentions. Ultimately, any business where revenue is consistently growing with healthy margins month over month, sometimes quarter over quarter, can also be accommodated.
Resources Mentioned
Connect with Dimitry Gershenson and Erin Davis
Connect With Jason Rissman
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