About episode
Given the enormity of climate change and the unprecedented opportunity for innovation that comes with decarbonization, I love learning about ambitious efforts that really take seriously the speed and scale at which we need to invest in change. I’ve long been a fan of New Energy Nexus – an organization that aims to make clean energy accessible to everyone by supporting 100,000 climate entrepreneurs. They take an ecosystem approach, recognizing that entrepreneurs need not just cash, but supportive networks to succeed, and they’ve been building up ecosystems all over the world to support diverse entrepreneurs.
I was thrilled to learn more about New Energy Nexus and one of their best-known accelerators Third Derivative, which is a partnership with RMI. In this episode, you’ll hear from Nexus’ founder and CEO, Danny Kenedy, and Third Derivative co-founder and CMO, Elaine Hsieh. We talk about their backgrounds, the work that Nexus and Third Derivative are doing, their approach to ecosystem building, the importance of justice, equity, and inclusion in climate investing, underhyped and overhyped spaces in climate tech, and much more. Third Derivative is currently accepting applications through March 21 for its next two cohorts – so if you’re a startup founder, consider putting in an application. For everyone else, hope you enjoy.
In today’s episode, we cover:
- [3:43] Third Derivative & Elaine’s role
- [4:31] New Energy Nexus & Danny’s role
- [5:07] Danny’s path to starting New Energy Nexus
- [8:15] Elaine’s path to starting Third Derivative
- [11:28] Nexus’ large-scale approach
- [14:48] Nexus’ country-level programs in practice
- [18:41] Challenges & learnings from setting up programs in other countries
- [20:41] What makes Third Derivative different & important
- [25:53] Underhyped & overhyped spaces in climate tech
- [31:54] The climate justice lens that informs Nexus’ & Third Derivative’s work
- [37:10] Recent growth & continued interest in climate investments
- [41:07] What needs to change to address today’s climate crisis
- [44:10] How listeners can get involved with New Energy Nexus & Third Derivative
Third Derivative & Elaine’s role
Elaine is the co-founder and current Head of Marketing and Growth at Third Derivative (D3), a global startup accelerator program under RMI. RMI, previously known as Rocky Mountain Institute, is a nonprofit organization that focuses on the global energy transition. D3 helps entrepreneurs in the climate tech industry find a more efficient path to market through a collaborative and integrated ecosystem-oriented approach.
New Energy Nexus & Danny’s role
Danny is the Chief Energy Officer of New Energy Nexus, a global network consisting of incubators, accelerators, and funds that share a similar mission as Third Derivative. Danny’s role involves adding energy to the organization and running programs to support diverse entrepreneurs to drive innovation and promote equity in the global clean economy. New Energy Nexus operates in approximately a dozen countries and played a role in setting up Third Derivative by partnering with RMI.
Nexus’ large-scale approach
Danny explains that New Energy Nexus’ aim to support 100,000 clean energy entrepreneurs stems from the pressing need to remake electricity grids, mobility infrastructure, and various sectors like transport and agriculture in a short period of time. Although there are challenges to be addressed, much of what is required is already known. The deployment of solar, wind, and the storage, and electrification of mobility, households, and buildings must occur at a speed and scale never seen before. To accomplish this, there needs to be a diversity of businesses involved, not just unicorn tech companies, but a range of zebra companies that can grow and achieve success. Danny emphasizes that the market is worth $100 trillion, and the transition to a clean energy economy requires millions of companies, not just 100,000. Many of these businesses will be small and will operate on a local level, such as in Africa, where the deployment of solar wind and storage will be done by microenterprises. It is important to support these small businesses and their success stories, as they are the ones who will play a crucial role in putting in the heat pumps and electrifying everything to achieve the transition. To support these entrepreneurs, there is a need for creativity and the creation of ecosystems that can operate at the required speed and scale.
What makes Third Derivative different & important
Elaine explains that D3’s value proposition is filling a market failure gap. D3 was born at a time when there was little momentum behind climate tech, but the seminal COP15 in Paris changed that and made it clear that the transition to a climate-benign global economy was a multi-million or trillion-dollar opportunity. However, the climate tech innovation ecosystem faced supply-side problems, such as technical risks, high capital intensity, and long development and commercialization time horizons, which discouraged many investors. Additionally, many impactful startups needed a more collaborative and ecosystem-based approach. D3 was formed to address these challenges by bringing together investors, corporates, mentors, and market experts to create a new system that could support startups in scaling their technologies. This approach has led to D3’s success, with over 125 startups, 20 VCs and CVCs, and corporates, 600 experts, and almost $600 million in follow-on funding since the program’s launch in less than two years.
The climate justice lens that informs Nexus’ & Third Derivative’s work
Danny acknowledges that there is tension between being informed by a justice lens and other goals. He believes that it is crucial to address this tension openly so that Nexus can be anti-racist and allies in ways that the energy industry has not historically been. He explains that the transformation of the economy, driven by energy systems, presents an opportunity to rebuild something beautiful, that is distributed and powered by the sun, without the negative impacts of fossil fuels. However, this requires critical minerals, such as lithium, which historically have been extracted at the expense of indigenous communities. Danny is concerned about how to include these communities and create value for them in the process. For example, Nexus has been working with the Torres Martinez Desert Cahuilla Indians tribe in California to engage the community in the production of lithium from geothermal power without a carbon footprint. However, there are still challenges in achieving equity in the opportunities created by this new industry. Nexus is committed to equity in its solicitations and support for startups, but Danny acknowledges that there is still much to learn and improve upon.
Elaine states that D3 recognizes the climate tech impact and financial opportunities emerging from underrepresented and underserved regions and entrepreneurs. However, she also acknowledges the challenges that these entrepreneurs face in gaining access to funding and support due to the lack of awareness and connection with investors outside of specific innovation hubs. Elaine emphasizes the need for more platforms that can bridge the gap between these communities and traditional pools of capital and support. Additionally, she believes that having a diverse staff with members representing underrepresented groups can help make better decisions and create more efficient networks. D3, along with other organizations like New Energy Nexus and RMI, strive to identify areas of the world with innovative solutions and provide them with maximum impact.
How listeners can get involved with New Energy Nexus & Third Derivative
Both New Energy Nexus and RMI are nonprofit organizations. Danny explains that there are various ways to engage with their work, including donating or joining their online community through the New Energy Nexus website. The community includes around 5,000 people, including entrepreneurs and mentors, who are active and self-organized. Danny recommends that those interested in being more active in the energy transition should check out their Slack community and newsletter, and connect with the people pioneering changes and startups supported by New Energy Nexus worldwide.
Elaine says that those who are interested in getting involved with D3’s work can visit their website to explore free resources, such as insights and ecosystem spotlights, and learn more about how to get involved. Investors, corporate partners, and individuals working at companies can find financial opportunities and a sense of responsibility in this work, and D3 aims to demystify the technologies involved and provide access to deal flow and information to make more informed decisions. Those with relevant skills can become mentors to startups, and startups themselves can apply to the program, which offers access to funding and runs for 18 months with no competition. D3 welcomes everyone and turns away no one, and there may be additional ways to get involved beyond those mentioned on their website.
Resources Mentioned
Connect with Danny Kennedy & Elaine Hsieh
Connect with Jason Rissman
Subscribe to Invested In Climate
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