Reflections on Climate Angels Course

Matt Blythe

I came into the Climate Angels course as a moderately successful ex-founder with experience of starting and growing a software company in the energy infrastructure space.

However, I knew that I wanted to leave software behind and angel invest in businesses building physical assets to decarbonise heavy industrial processes.

Some of the questions I wanted to work through on the course were things like: 

> What should I spend time on to improve my chances of finding great early stage start-ups that fit my investment thesis around industrial decarbonization? 

> How do I get into these start-ups’ rounds as an angel when I haven’t built and scaled a hardware or deeptech start-up myself? 

>And what did the first investments and relationships with those founders look like for more experienced climate angels than me? 

Here are some of my reflections on what I learnt on the Climate Angels course about those questions and how I’ve applied them so far.

Sourcing great start-ups

So the course itself has a strong practical element, it’s not just theory. You get put into small groups with coursemates and a mentor to flesh out your initial investment thesis and then you do weekly calls to collaborate on researching investment areas and sharing any deals you find.

I like this approach a lot because if you’re new to angel investing in climate tech, it’s hard to know where to begin and how to unearth great start-ups. Instead of watching what everyone else is doing on LinkedIn and following hype, just pick a specific sector, industry or area that fits within your overall investment thesis and start reading everything you can about it. 

The immediate benefit of this is that it gives you something specific and achievable to work on. In the longer term though, it’s useful because when you’re starting out as a climate angel, it’s difficult to distinguish which technologies and ideas are truly novel if you don’t really understand the space that a company is operating in and who else is working on similar things.

Doing your own research also helps you to generate ideas about where and how to find promising early stage start-ups. For example, I began teaching myself about the industrial process heating sector and saw that an existing unicorn within the space had made a number of recent acquisitions of smaller start-ups. When I looked up the founders of these start-ups, I noticed that some of them were now quietly building their next start-ups in stealth. 

One of the course speakers (Leo Banchik from Voyager Ventures) mentioned that in his early days of angel investing he would do things like sending cold LinkedIn messages to founders working in stealth on areas that he was interested in. Having done some research about industrial process heating, I felt confident enough to cold email some of the founders that I identified working in stealth on their next start-ups and all of them responded.

I think the other big benefit of spending time on research is that you’ll find that other climate angels and VCs will start to seek out your opinion if they know that you’ve built up more knowledge than them about a particular industry, sector or area. This means deals that you don’t even know about will begin coming your way, though it’s important to say that you have to actively and regularly communicate what you’re researching on for this to work. There are of course many other ways to source great start-ups but I’ve found this one works well for me.  

Getting into deals 

Once you’ve found a promising early stage start-up, you’ve still got to spend time talking to the founders to learn about their business, diligence it and then convince them to let you participate in their round once you have conviction in what they’re building. And this is especially hard if you’re an individual angel fighting for allocation in a round alongside VCs. 

There is a big element in the course on strategies to do this well. One of the key points is that you need to first figure out what your two or three biggest strengths or ‘superpowers’ are that you can communicate to start-up founders that you meet. For example, I have experience in doing relatively high value B2B sales, energy and infrastructure sector contacts, and I have been a founder myself so I have some insights into building and growing a start-up. 

After you’ve decided what these are, I have found the best way to build a relationship with interesting founders you don’t know is to try to help them before you ask for anything in return. Ideally, this will involve drawing on one of your strengths but it could also be as simple as introducing them to someone talented in your network that might be able to help them or offering to review their pitch deck, website, marketing or something they else want help with. 

So far I have done different things to get into deals that I was excited about. In one case, I started by just cold messaging a founder with some observations I had about a potential use case for their technology. This morphed into a call to learn more about their business, then requests to give feedback on their pitch deck for their upcoming fundraise, followed by requests for introductions to relevant VCs, which gave me a platform to get to know the founder better and observe their progress too. 

In another case, I was able to offer introductions for discovery calls with potential customers in the energy sector as well as some mentoring and guidance on B2B sales approaches and tactics to position myself to join the start-up’s round. You might think that all VCs investing in start-ups will offer something similar to their founders but in fact, that’s not always the case and many will have no experience themselves of doing things like sales in a start-up. 

The value of spending time researching a sector that you are talking to founders operating in is also apparent when you want to get into deals. It helps you to ask better and more probing questions when you do engage with founders and this means that they don’t have to spend time explaining the basics of their world to you and your feedback is also more likely to be useful to them. 

Making your first investments 

When you do pull the trigger on your first few investments as a climate angel, you may well be thinking I don’t know if these companies will turn into unicorns or have I really done enough due diligence and spent enough time researching other start-ups working on similar solutions. 

Another course speaker (Sophie Purdom from Planeteer Capital) talked a bit about this and made a nice point that the initial angel investments that most people do, including successful angels like herself that go on to start a VC, are not necessarily their greatest successes and that’s absolutely fine, don’t overthink it. A disappointing investment does not have to define you as an investor and you learn more each time you invest which helps you to improve too. 

Sophie also talked about how the nature of your relationships with founders that you invest in will vary a lot from case to case. In some cases, you might Whatsapp regularly about everyday business details, while in others you will have more formal scheduled check-ins or even little interaction after investing depending on what the founders want. The main thing is to be receptive to their needs and priorities because you’re going to be in it together for the long haul and these will change over time, so your relationship with them will naturally change too. 

I’ve tried to apply her insights in my own interactions with climate tech founders that I have angel invested in by avoiding the temptation to bombard them with my own ideas and advice. Instead I just ask them upfront after investing how often they would like to interact and what, if any, areas they want input on or what’s bothering them most at any particular point in time. My relationships with some of the founders I have invested in are much closer than with others and knowing that is entirely typical has helped me get much more comfortable with this. 

Overall, if you’re looking to start angel investing in climate tech start-ups, then the Climate Angels course will help you take practical steps to get going, expose you to some very high-quality investors already in the space and rapidly expand your network of relevant contacts that you can collaborate with. And if you found any of these reflections useful or simply want to chat about industrial decarbonization, then feel free to connect with me on LinkedIn here.