Nili Gilbert, CFA, CAIA

Sharing views of my Partner. "Within the climate change investment ecosystem, much of the capital has gone to two ends of the spectrum: venture capital and infrastructure. Those investments are obviously impactful, but more of a developmental, long-term approach to solving climate change. We try to focus on where we can make an impact today. That means looking for companies already reducing emissions or saving energy." Read more from Stuart Barkoff, co-founder and managing partner GEF Capital Partners https://lnkd.in/dX2CMs35

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REDD up by 27% YOY, for 1Q2024. If you read about Carbon crisis, prices crashing, double check the source. Likely the author has an agenda that opposes Voluntary Carbon Markets(VCM) and/or anything that smells of capitalism.

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🌍💡 Embracing Interoperability: The Evolution of Carbon Markets 💡🌍 The landscape of carbon markets is rapidly evolving, with a significant shift towards fungibility and interoperability. What does this mean? We (at the SoHo Global Climate Fund) spoke with leading climate fund manager, Charles Bedford of Carbon Growth Partners, to shed light on this important trend in the carbon markets. It's about creating seamless connections between compliance and voluntary markets, allowing for the exchange and recognition of carbon credits across borders and sectors. This trend marks a pivotal moment in our collective efforts towards combating climate change. By enabling carbon credits to be fungible and interoperable, we're fostering a more efficient and scalable approach to carbon pricing and emissions reduction strategies. Companies and organizations now have greater flexibility to participate in markets that align with their goals. #CarbonMarkets #ClimateAction #Fungibility #Interoperability #Sustainability #Innovation #GlobalImpact

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Divestment requirements have a very real cost. This reduces the ability of endowments and foundations to support their mission driven enterprises. As the list of divestment demands grow, at what point do the consequences outweigh the perceived benefits? Hiding at the end of this article is the below quote: Golden admitted the divestment had undermined Princo’s returns, saying the endowment “would have been better off” otherwise. But he pointed to a bigger concern: the pressure to “keep adding things to divest from”. “Fossil fuels are necessarily part of getting to where the overall economy needs to be [and] it would be impossible for the world to not use fossil fuels tomorrow,” he said. “Divestment is a pretty weak tool to change the economy.” https://lnkd.in/g3SeC8rg #energy #investing #vc

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Reflecting on the enriching discussions at the recent PEWIN - Private Equity Women Investor Network CIO Roundtable in Boston. It was a joy to hear from panelists Letitia Johnson (Amherst College), Deb Shufrin (Colby College), Abigail Wattley (Williams College), and moderator Sarah Samuels, CFA, CAIA (NEPC, LLC). Some of my key takeaways: From the CIO perspective, alignment with the board is paramount. Portfolios experience ebbs and flows, emphasizing the necessity of a board committed to long-term strategies. Data underscores the repercussions of misalignment—allocators often undermine value by prematurely exiting positions for liquidity needs or reacting impulsively to market fluctuations. Across the board, CIOs prioritize firms that can articulate their competitive edge, foster sustainable organizations with top-tier talent, culture, and succession planning, and demonstrate agility in evolving markets. A robust LP base providing long-term support and institutional guidance is also crucial. Success isn't about funding billionaires—it's about supporting determined individuals committed to sustained success. Privates demand more than short-term commitment—they require a relentless desire to succeed over time. For a deeper dive into the role of CIO, I highly recommend The Counting House by Gary Sernovitz. #CIOInsights #PEWINRoundtable #InvestmentStrategies

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Our last Climate Report is out! Thank you Georgina Fleming for a great summary. It is our greatest joy at Systemiq Capital to help our amazing founders to scale their businesses, generating returns for our investors and getting us to net zero faster. #climatetech #impactreport

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It's Earth Month 🌎 and Clear Current Capital's portfolio company, Nosh.bio stands out for truly embodying the ethos of "Think Different." Founders Tim Fronzek and Felipe Lino prioritize core values such as trust, respect, pro-activity, customer-centricity, and positive thinking in shaping their company culture 💫. With a diverse team spanning nine nationalities and four continents, they understand the unifying power of food 🌱. Through scalable and sustainable technology, Nosh aims to provide clean, healthy, and affordable food. They are not only thinking but building, nourishing, and solving problems differently, particularly concerning the longevity and strength of our food system. Be inspired to Think Different. 🍎 Challenge: Many food products are not tasty, affordable, or sustainable. CLEAR + BOLD SOLUTION: Nosh.bio creates ingredients from fungi for cleaner labels, improved taste, and texture in meat and fish analogues, as well as convenience foods, dairy, confectionery, and bakery items while adding nutritional value. Their nutritional and highly functional proteins are naturally produced, low processed, allergen-free, non-GMO, not novel foods, and at cost parity. Nosh's proprietary fermentation process is scalable and sustainable. #innovation #food #foodtech #sustainability #climatesolutions #EarthMonth

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Massachusetts in 2024 is home to the most climate tech startups per capita in the country. They thrive at institutions like MIT and Greentown Labs, turning big ideas into tangible solutions. But we struggle to keep them here. States from coast to coast are wooing away entrepreneurs and employers. These places facilitate demonstration programs, connect companies to trained workers, and provide access to real estate for manufacturing. The Mass Leads Act rebalances these incentives, directing capital investments and tax benefits that keep these innovators in Boston for the long term and encourages others to join them. #climatetech #climateVC #venturecapital

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“About every ten years we face some financial crisis or reckoning, during which around 20% of the GPs fail to re-raise another fund” per Bain & Co’s private equity practice. Investors are growing restless, and the increasing pressure to return their capital is creating a critical juncture for many general partners. Distributions, the return of capital to investors, are at their lowest in over a decade. Early data for 2024 suggests a bleak outlook, with the year on track to be the second-worst for exit value since 2016. Private equity's business model depends on a continuous cycle: raising money to make acquisitions, exiting via sales or initial public offerings, and then returning capital to investors. When one part of this cycle stalls, it risks disrupting the entire system. This situation is putting a strain on pension funds, endowments, and other investors, known as limited partners. Cash-strapped, these investors are hesitant to commit to future funds without seeing current returns. And at the SuperReturn conference more general partners attended than limited partners! #privateequity #privatecapital #privatemarkets #pe #vc #growthequity #institutionalinvestor #liquidity #sponsor #limitedpartner #generalpartner #superreturn #distribution #m&a #realization

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That feeling when you watch the macro forces that undergird your Industrial Transformation & Supply Chain Technology investment thesis at ⁦‪REFASHIOND Ventures: The Industrial Transformation Fund unfolding every single day: Escalating Geopolitical Tensions; The Climate Crisis & Severe Weather; Consumer Behavior & Demographics. At most venture capital firms, Industrial Transformation & Supply Chain Technology is a tiny, emerging “area of interest” . . . At REFASHIOND Ventures, it’s our entire world. Join us. #IndustrialTransformation #SupplyChain #Innovation #Technology #Startups #VentureCapital

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Key takeaways from 20VC pod with Mark Suster: 1. The current market conditions are vastly different from the overvaluations seen in 2021, with a correction that is expected to take several more years. 2. Venture capitalists need to be disciplined about entry prices and valuations, as irrational pricing can lead to poor returns. Founders Fund's strategy of investing in the top companies regardless of price may not be replicable for all investors. 3. Reserves and follow-on funding are crucial, as they allow VCs to support promising companies that may take longer to gain traction. However, VCs should be cautious about over-investing in "rocket ship" companies without sufficient traction. 4. Investing in hard tech and infrastructure sectors like space can be promising, but VCs need specialized expertise in these areas to be successful, as they are fundamentally different from software investments. https://lnkd.in/gzzNgK27

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Really like the Audere Capital team’s methodology and framework for thinking about over-the-horizon innovation technology, and the strong signals of future winners. • Wave 1: Extract (efficiency at lower cost/higher speeds) • Wave 2: Expand (into new high margin markets & products initially deemed impossible) • Wave 3: Entrench (standardize, institutionalize and become the default platform and system for its space) Boom! #vc #startups #investing #investorplaybook

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Bloomberg and Alastair Marsh put out a terrific piece today comparing investment flows to AI vs. the capital urgently needed to fund decarbonization. Bloomberg's news team and BloombergNEF are leaders reporting on and analyzing climate. Thanks for the great insights -- and including Investcorp in the story.

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Cost leaders—companies that have taken the lead in reducing costs—have greater appeal to investors. Unlike the period from 2020 to 2021, when green-business funding flourished, investors may now restrict their interest to companies that have a clear plan for reducing costs. #climatetech #costmanagement #venturecapital

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Very similar and a complement to Independent Sponsor led transactions targeting $15 million to $100 million plus EV, search fund deals target acquiring companies for around $15 million EV, priced at approximately seven (7x) times EBITDA or less. Over the years, companies tracked by Stanford have shown annualized equity returns exceeding 30%! The target universe for search funds and Independent Sponsors is substantial, with nearly 200,000 businesses valued between $10 million and $100 million, according to NAICS Association data. Search funds often seek out companies with retiring family founders looking for liquidity. Middle and lower-middle market financial sponsors generally avoid targeting companies worth $15 million due to high overhead costs and the need to deploy significant amounts of capital. However, for individual entrepreneurs, these micro-sized deals are not only accessible but also offer attractive bargains. This has led to the emergence of specialized search PE funds alongside Independent Sponsor transactions. Great article by the FT. #privatecapital #privatemarkets #privateequity #buyouts #growthequity #independentsponsor #searchfund #middlemarket #smallbuyout #sme #institutionalinvestor #alpha #moic #irr #privatecredit #privatedebt #familybusiness #founderowned #fT

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Here’s a question investors are often asked: When evaluating early stage companies, how much time do you spend on due diligence around future exits? It’s not surprising we hear this question a lot. Also not surprising: it’s got a wide range of answers depending on the firm. Some don’t spend much time here at all. Others make it a point to put meaningful time in as part of their process. Our current thinking: take the time to do the work on public market comps. At Alpaca VC, we spend significant time understanding how public market investors will  realistically value a business based on margin profile, product, business model & TAM. In short, we want to know: how will this company be valued at scale when we get taken out? Yes, we can acknowledge that the journey toward exit is a windy road and that there may be pivots along the way, but there are still public market companies that have a business model similar to the early stage company you're evaluating. And you can always look at gross profit multiples if you think the margin profile will change over time. So we still do the work on the comps. Quantitative metrics we look at when making the comparison to public market comps include EBITDA multiple, revenue multiple, Gross Profit multiple or all of the above. As part of this process, it’s also important to factor in the public market company’s year-over-year revenue growth as this will also significantly impact the multiple it trades at. Simple example: if you have two public market companies with similar business models and similar margin profiles, but one's growing 100% year over year, and one's growing 50% year over year, then obviously the DCF (discounted cash flow) analysis is going to spit out a very different valuation for the one that's growing faster. Why this matters: When you take all of that information into account as you evaluate an early stage business, you can begin to create a realistic picture of how this company will be valued in the public markets at exit - or how an acquirer will value the company for an acquisition. Strategic acquirers may, of course, pay a premium, but we won’t underwrite for that. This allows us, for example, to form conviction around valuation based on revenue and gross profit predictions. If we think they can do $100M of revenue five years from now, we use this diligence process to form a thesis about whether the characteristics above (product, margin, business model, etc.) will cause the company to be valued at $200M vs. $500M vs. $1B at exit. Curious how other early stage investors think about underwriting an exit and how much time they’re spending on public market comps even though these companies are in their infancy.

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Venture capital and private equity can appear opaque. In our fall course (https://lnkd.in/e6wzFs6J), Archie L. Jones, Jr., CPA, NACD.DC and I again will attempt to de-mystify them. To that end, Christina Wallace and I have written a new Technical Note: "Venture Capital and Private Equity Funds: A Primer" (https://lnkd.in/edTPwGbe). It covers the "when, who, and how" details of how funds work: - "When": fund length, extensions, and when investors can no longer initiate new investments. - "Who": who is in the General Partner entity, the importance of the firm's Management Company (the owners of the firm), how fees and carried interest flows work, and the Limited Partners' Advisory Committee. - "How": key person clauses, invested capital vs, committed capital, what happens when an investor defaults on its commitment, how multiples are calculated (MOIC vs. TVPI), the difference between realized and unrealized gains/losses, how fund distributions work, and the difference between distributed and residual value. We look forward to seeing Harvard Business School's Class of 2025 in September! #hbsvcpe #harvardbusinessschool

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Like other venture building groups, at 9point8 Collective we have our own methods of evaluating and screening for great leaders. Empathy is pretty high on the list, but maybe not for the reasons you might think. - Successful companies deliver for their customers. As a leader, it is hard to understand your customers -- who will almost certainly have an entirely different reality and worldview than you -- without empathy. When was the last time you saw a product launch and thought "wow I don't really get it but I can see how THEY would love it." It happens a lot. - Successful companies have loyal and capable employees. What drives a capable employee to eschew potentially more lucrative offers elsewhere? For most, it starts with being heard, appreciated, and valued. Again, empathy goes a long way here. - Empathy breeds humility. If someone fundamentally does not appreciate the perspective of others, how likely are they to truly test their own assumptions and seek out new perspectives? Hubris creates blind spots and blind spots create inefficiencies, then limitations, then weaknesses. Empathy is not the end all be all, but it's a simple and effective mechanism to learn, course-correct, and build momentum. #venturebuilding

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