About episode
Climate tech is a $90 trillion opportunity and synthetic biology is projected to be a $30 trillion opportunity. Both sectors are expected to grow by 100x in the next decade, and we know that more than 60% of the dirty inputs to the global economy can be replaced by inputs made by biology which are more efficient, cleaner and cost effective. So we invest in the intersection of these two markets, both of which are at inflection points.
When it comes to a rapidly decarbonizing world, there’s many things we take for granted that we shouldn’t. For example, it’s easy to assume that coffee and chocolate should always come from beans that grow on trees. Maybe that’s the case. Or maybe we’ll rely on new tech that’s enabling us to create synthetic alternatives that are actually better for the planet. Welcome to the world of synthetic biology. I’ve been fascinated by the possibility of dramatically reducing emissions across many different sectors through biology. So I sat down with Michael Luciani and Jenny Kan, who are investing in synthetic bio as they build a new fund called Exponential Impact. I learned a ton in this conversation and hope you do too.
In Today’s Episode, we cover:
- [3:21] What led Jenny and Michael to climate investing
- [9:32] What is syndicate investing and how it works
- [12:36] What is a rolling fund and what type of investors are a good fit
- [15:15] The investment thesis behind Exponential Impact
- [16:56] The market case for climate tech and biotech investing
- [19:47] How synthetic bio is creating an opportunity for addressing climate change
- [21:34] Examples of investment opportunities available
- [27:27] How do synthetically made products compare
- [29:06] The economical and ethical critiques of the synthetic bio space
- [32:22] Exponential Impact’s advantages as a firm
- [33:49] Exponential Impact’s ideal investor and minimum investment
- [35:31] Principles for supporting climate tech startups
- [37:30] Community and attitude considerations for climate impact
What led Jenny and Michael to climate investing
Jenny started her career as a scientist, earning her PhD in chemistry at the University of Cambridge. Captivated by the idea of how we could potentially teach and engineer biology to solve human problems like making medicines and solving climate change, she made her way to Caltech and worked with Francis Arnold, the first American woman to win a Nobel Prize in chemistry. At Caltech, Jenny had a front row seat to see the potential of how biology can come up with ideas that are beyond human imagination and how biology has this incredible ability to self replicate and self optimize to overcome adversity. During the pandemic, Jenny started a tech company to help medical and care facilities hire healthcare professionals, which allowed her to really understand the possibility of generating profitability and impact both as flywheels to change the world while generating generational wealth.
Michael’s journey started in politics. He worked on Hillary Clinton’s campaign in 2016 with the intention to work for her administration, if she had one. When she didn’t, he connected with a friend who had been a part of various Y Combinator startups and they brainstormed around Michael’s experiences working on the campaign to build technology that they thought would help campaigns to succeed. This was his entrance into the world of entrepreneurship as a vehicle for impact. After selling the company, Michael started to explore climate tech, realizing that he could be of service to entrepreneurs coming out of academia, who are hard scientists, and who he could work with as a mentor and advisor to help them to grow their companies. At Climate Capital, he not only started advising and mentoring, but also investing and leading syndicates into really fantastic companies run by extraordinary entrepreneurs working to solve the climate crisis. Through his own research, Michael developed a thesis that synthetic biology and biotech seemed to be the area of scientific innovation most likely to yield the types of results at scale that we need for bringing the entirety of our society and economic system into a carbon neutral and sustainable footing.
The investment thesis behind Exponential Impact
Jenny explains that going for measuring impact means being one of the first investors to invest in deep tech companies solving climate change. Through their experience running syndicates, Jenny and Michael learned that a lot of investors in deep tech companies, especially at the early stage, are not technical. And a lot of these technical companies don’t have the commercial traction to get investors excited enough to help them get the first check so that the company can continue to grow and move on to getting investments from more established institutional investors. Michael and Jenny have the unique capability of being both technical and business savvy because they’re both founders with a deep understanding of the tech space that they invest in, especially in biotech and synthetic biology. Now, they’re supporting scientists and engineers to build up their companies by helping them figure out what’s the best go to market strategy, how to bring down the unit economics of a technology, and how to think about scaling.
A helpful way to think about Exponential Impacts’ thesis is climate tech being a $80 trillion market opportunity. Most inputs into the world economy are dirty today, but the hope and expectation is that the world economy will continue to grow while the percentage of inputs that are fueled by fossil fuels and other greenhouse gas emitting processes shrink, hopefully to zero. There is a giant market opportunity that climate tech investors are now pursuing theses around. Exponential Impact sees that the biotech economy is expected to potentially grow to $30 trillion market share over the next 20 years and the overlap shouldn’t be ignored.
How synthetic bio is creating an opportunity for addressing climate change
Synthetic biology is the design and engineering of biological entities, ranging from DNA and proteins to organisms like bacteria, plants, and animals. With or without us knowing, humans have been modifying biology for a long time. Synthetic biology enables us to engineer and design biology in a more intentional way, at the level of DNA. This has become possible because now we understand the structure of DNA and we can write and read DNA through DNA synthesis and sequencing. The consequence and impact of that is massive: one of the most impactful applications of synthetic biology is how it can completely change how we make things for human society. For example, instead of using fossil fuels for feedstocks and processes that are dirty and polluting, we can use renewable feedstocks that are processed without energy intensive processes.
Resources & People Mentioned
Connect with Michael Luciani and Jenny Kan
Connect With Jason Rissman
Subscribe to Invested In Climate
