1 00:00:00,120 --> 00:00:02,840 Speaker 1: Hi everyone, I'm just gonna get right to it. There's 2 00:00:02,880 --> 00:00:05,160 Speaker 1: a lot of money going into the energy transition right now. 3 00:00:05,280 --> 00:00:07,320 Speaker 1: I'll give a couple of examples. There appears to be 4 00:00:07,320 --> 00:00:10,000 Speaker 1: a sort of renaissance in climate tech venture capital this year, 5 00:00:10,000 --> 00:00:13,680 Speaker 1: with according to Pitchbook, nearly fifteen billion investment in h one, 6 00:00:15,240 --> 00:00:17,960 Speaker 1: nearly matching the previous full year record. And I just 7 00:00:17,960 --> 00:00:20,920 Speaker 1: saw being a publisher report on EV related spacks raising 8 00:00:20,920 --> 00:00:22,599 Speaker 1: ten point two billion in the past two months in 9 00:00:22,600 --> 00:00:25,439 Speaker 1: the public markets. But today we're gonna talk about even 10 00:00:25,520 --> 00:00:29,600 Speaker 1: bigger stuff. Asset managers raising huge funds to invest in 11 00:00:29,640 --> 00:00:33,519 Speaker 1: the energy transition, so things like wind and solar projects, 12 00:00:33,600 --> 00:00:37,920 Speaker 1: other renewables like geothermal, EV charging networks, batteries, anything and 13 00:00:37,960 --> 00:00:40,800 Speaker 1: everything zero carbon, as well as investments in the company's 14 00:00:40,840 --> 00:00:43,720 Speaker 1: doing these projects and supplying the kit. Okay, So just 15 00:00:43,720 --> 00:00:46,000 Speaker 1: to name a few of these funds we're recording on 16 00:00:46,000 --> 00:00:50,080 Speaker 1: on July Yesterday, on the twenty eight, Brookfield announced a 17 00:00:50,080 --> 00:00:52,600 Speaker 1: seven billion dollar fund that's on its way to twelve 18 00:00:52,600 --> 00:00:57,720 Speaker 1: point five billion target TPG. The day before announced a 19 00:00:57,760 --> 00:00:59,760 Speaker 1: five point four billion dollar fund on its way to 20 00:01:00,040 --> 00:01:02,560 Speaker 1: seven billion target, and back in April we saw eight 21 00:01:02,600 --> 00:01:06,600 Speaker 1: point four billion from Copenhagen Infrastructure Partners and four point 22 00:01:06,680 --> 00:01:09,800 Speaker 1: eight billion from black Rock. Okay, so, in his latest 23 00:01:09,800 --> 00:01:13,399 Speaker 1: piece for Bloomberg Opinion, Nat Bullard, chief content officer and 24 00:01:13,720 --> 00:01:16,880 Speaker 1: friend of Switched On, talked about this frenzy and fundraising. 25 00:01:17,160 --> 00:01:18,720 Speaker 1: We've gotten that on the show to tell us about 26 00:01:18,720 --> 00:01:20,560 Speaker 1: it and to give us a few frameworks for how 27 00:01:20,600 --> 00:01:23,320 Speaker 1: to think about it. Along with this weekly column, Bloomberg 28 00:01:23,400 --> 00:01:26,240 Speaker 1: users can catch Nat every Wednesday at eleven am Eastern 29 00:01:26,640 --> 00:01:29,160 Speaker 1: where he hosts Asked BANF, a weekly show where he 30 00:01:29,200 --> 00:01:31,120 Speaker 1: gets into it with a BENF analyst on their recent 31 00:01:31,160 --> 00:01:34,280 Speaker 1: work and users can ask questions live. The next ask 32 00:01:34,319 --> 00:01:36,560 Speaker 1: BNF is on August four, where he'll talk with BENIF 33 00:01:36,560 --> 00:01:39,920 Speaker 1: analysts Vicky Cumming and Maya Godamer about the asset owner's 34 00:01:40,000 --> 00:01:43,320 Speaker 1: path to net zero emissions. Register on NF dot com 35 00:01:43,400 --> 00:01:45,279 Speaker 1: or s M and R go on the Bloomberg terminal. 36 00:01:45,640 --> 00:01:48,600 Speaker 1: As always, does not provide investment or strategy device and 37 00:01:48,640 --> 00:01:50,000 Speaker 1: you can hear the full dist claimer at the end 38 00:01:50,040 --> 00:01:52,400 Speaker 1: of the show. Him Mark Taylor, and you're listening to 39 00:01:52,400 --> 00:02:02,320 Speaker 1: switched on the BENF podcast. Now, Welcome Mark, Thanks for 40 00:02:02,320 --> 00:02:04,160 Speaker 1: having me. It's nice to be back. It's always great 41 00:02:04,160 --> 00:02:07,840 Speaker 1: having you on the show. Thanks for coming to Thank you. Okay, 42 00:02:07,880 --> 00:02:10,639 Speaker 1: So we kind of decided to do this one really quick. 43 00:02:10,680 --> 00:02:13,079 Speaker 1: We just started talking about it this morning because there's 44 00:02:13,120 --> 00:02:16,480 Speaker 1: so much going on in this corner of the market. 45 00:02:16,560 --> 00:02:18,000 Speaker 1: Can you get put it in your ownwards kind of 46 00:02:18,040 --> 00:02:20,600 Speaker 1: what's going on in the market and kind of describe 47 00:02:20,600 --> 00:02:22,800 Speaker 1: why you decided to write about it this week. So 48 00:02:23,240 --> 00:02:27,040 Speaker 1: we're recording on Thursday of the twenty nine of July. 49 00:02:27,120 --> 00:02:32,400 Speaker 1: And on Tuesday July, we got noticed that two big 50 00:02:32,440 --> 00:02:38,680 Speaker 1: alternative asset managers, TPG and Brookfield, have closed between them 51 00:02:38,760 --> 00:02:42,360 Speaker 1: just under twelve and a half billion dollars worth of 52 00:02:43,160 --> 00:02:48,400 Speaker 1: climate or climate transition funds, so big private equity funds 53 00:02:48,440 --> 00:02:52,160 Speaker 1: designed to be deployed broadly around the theme of climate. 54 00:02:52,840 --> 00:02:56,760 Speaker 1: Now for reference, those are very very big funds, even 55 00:02:56,800 --> 00:02:59,960 Speaker 1: within the normal realm of like an energy or infrastructure fund. 56 00:03:00,760 --> 00:03:03,360 Speaker 1: They're not even the only multibillion dollar funds that have 57 00:03:03,400 --> 00:03:06,160 Speaker 1: been closed this month. I think I looked back and 58 00:03:06,160 --> 00:03:09,080 Speaker 1: found three or four others, and I found a number 59 00:03:09,080 --> 00:03:12,200 Speaker 1: that are announced intentions to be that size. Those funds 60 00:03:12,200 --> 00:03:15,720 Speaker 1: themselves aren't even fully closed. There at five point four 61 00:03:16,080 --> 00:03:20,160 Speaker 1: and seven billion dollar funds respectively. That could go up 62 00:03:20,200 --> 00:03:23,760 Speaker 1: to seven and twelve and a half billion, So we're 63 00:03:23,760 --> 00:03:27,000 Speaker 1: talking about potentially just under twenty billion dollars of funds 64 00:03:27,000 --> 00:03:31,280 Speaker 1: that have come in. And it's just an extraordinary moment, 65 00:03:31,480 --> 00:03:35,600 Speaker 1: certainly in general, but also I think given the history 66 00:03:36,680 --> 00:03:39,880 Speaker 1: rather fraught history in the last decade of fundraising either 67 00:03:39,920 --> 00:03:44,280 Speaker 1: at the early stage or later stages for anything climate related, 68 00:03:44,640 --> 00:03:46,640 Speaker 1: it just sort of caught our eyes, shall we say, 69 00:03:46,720 --> 00:03:49,000 Speaker 1: not just mine, but pretty much everybody we work with, 70 00:03:49,120 --> 00:03:51,960 Speaker 1: everybody in my guard of professional network. So I figured 71 00:03:52,360 --> 00:03:54,320 Speaker 1: let's put a little more sunlite on this and talk 72 00:03:54,360 --> 00:03:56,960 Speaker 1: about it a bit more. It was so, you know, 73 00:03:57,280 --> 00:03:59,480 Speaker 1: I don't want these ord shocking, but yeah, you know, 74 00:03:59,520 --> 00:04:01,720 Speaker 1: Cutter I such this week that it kind of caught 75 00:04:01,960 --> 00:04:05,480 Speaker 1: caught us off guard. We even stopped tracking these types 76 00:04:05,520 --> 00:04:08,160 Speaker 1: of fundraises a few years ago because nothing was going 77 00:04:08,200 --> 00:04:10,520 Speaker 1: on like it, which just wasn't really happening. We had 78 00:04:10,560 --> 00:04:14,680 Speaker 1: to go through that sad process of what we call deprecation. Yeah, 79 00:04:15,120 --> 00:04:17,760 Speaker 1: taking a taking a product that was that was sort 80 00:04:17,760 --> 00:04:21,960 Speaker 1: of a fallow field within within the larger pasture of 81 00:04:22,000 --> 00:04:25,320 Speaker 1: things that we cover in research, and say this is 82 00:04:25,320 --> 00:04:27,200 Speaker 1: probably something that we don't need to vote a lot 83 00:04:27,240 --> 00:04:28,599 Speaker 1: of time too, because there's just not a lot of 84 00:04:28,600 --> 00:04:31,479 Speaker 1: activity and a lot of inbound interest. And here we 85 00:04:31,520 --> 00:04:34,560 Speaker 1: are and what's the reverse in a direction I don't know, 86 00:04:35,080 --> 00:04:37,160 Speaker 1: right and and now and now we have something. Though. 87 00:04:37,200 --> 00:04:38,920 Speaker 1: There's one thing to say about that, which is that 88 00:04:39,560 --> 00:04:41,960 Speaker 1: this also shows that it was no longer probably running 89 00:04:41,960 --> 00:04:46,520 Speaker 1: through such specialized specialty financial channels too. It was no 90 00:04:46,680 --> 00:04:52,720 Speaker 1: longer potential limited partners coming through a specialty funnel, if 91 00:04:52,760 --> 00:04:57,000 Speaker 1: you will, to then go back out into a specialty market. 92 00:04:57,480 --> 00:05:00,880 Speaker 1: What it was instead is the world's collective pool of 93 00:05:00,960 --> 00:05:04,880 Speaker 1: limited partners going to a pretty well established funnel of 94 00:05:04,880 --> 00:05:09,520 Speaker 1: the world's biggest alternative asset investors. And that's that. In 95 00:05:09,600 --> 00:05:12,400 Speaker 1: many ways, it follows a pattern that we don't really 96 00:05:12,400 --> 00:05:15,400 Speaker 1: need to track because it is already very well tracked 97 00:05:15,400 --> 00:05:18,880 Speaker 1: in general within the world of finance and capital raising. 98 00:05:19,600 --> 00:05:21,960 Speaker 1: It says that this happens to be taking place not 99 00:05:22,080 --> 00:05:24,800 Speaker 1: for a real estate fund, not for an infrastructure fund 100 00:05:24,800 --> 00:05:29,400 Speaker 1: in general, but for specific climate transition. Let me give 101 00:05:29,400 --> 00:05:32,600 Speaker 1: you one more g whiz thought on that is, ten 102 00:05:32,680 --> 00:05:35,279 Speaker 1: years ago, when we were tracking this more closely and 103 00:05:35,279 --> 00:05:37,000 Speaker 1: all this stuff, I talked to a friend of mine 104 00:05:37,040 --> 00:05:39,080 Speaker 1: who worked at a private equity right and I was like, hey, 105 00:05:39,279 --> 00:05:42,000 Speaker 1: you guys should look at renewables. It's getting getting pretty cool. 106 00:05:42,040 --> 00:05:44,400 Speaker 1: And the answer, you know, I talked to him multiple 107 00:05:44,440 --> 00:05:47,400 Speaker 1: times about this, and it was always it's not big enough. 108 00:05:47,600 --> 00:05:49,919 Speaker 1: You know, the funds that would be raised that we 109 00:05:49,920 --> 00:05:52,360 Speaker 1: would do, they don't match them the numbers that we 110 00:05:52,480 --> 00:05:55,560 Speaker 1: are typically used to looking at. Well, this this p shop. 111 00:05:55,680 --> 00:05:58,240 Speaker 1: They are on the list that you mentioned of a 112 00:05:58,279 --> 00:06:00,520 Speaker 1: funds that have announced, you know, and don't even think 113 00:06:00,520 --> 00:06:03,400 Speaker 1: they're gonna be you know, in the top ten of size. 114 00:06:03,480 --> 00:06:07,159 Speaker 1: You know. So like things have changed, Things have certainly changed, 115 00:06:07,200 --> 00:06:09,520 Speaker 1: and we can actually track that change. Weirdly, out about 116 00:06:09,560 --> 00:06:15,960 Speaker 1: the same time that you had prospective fundraisers sort of 117 00:06:16,000 --> 00:06:19,800 Speaker 1: saying that nothing was big enough for us to invest in, 118 00:06:20,400 --> 00:06:22,960 Speaker 1: we saw the assets being created that later on they 119 00:06:22,960 --> 00:06:24,880 Speaker 1: could invest it. In fact, right about the same time 120 00:06:24,920 --> 00:06:28,280 Speaker 1: as when we saw the first multibillion dollar club deals 121 00:06:28,320 --> 00:06:30,839 Speaker 1: for offshore wind in Europe, which actually were a way 122 00:06:30,960 --> 00:06:34,320 Speaker 1: of kind of of kind of kickstarting things into a 123 00:06:34,400 --> 00:06:36,960 Speaker 1: scale of capital that finally mattered. I remember the first 124 00:06:36,960 --> 00:06:38,880 Speaker 1: time I ever talked to sovereign funds, and this was 125 00:06:38,920 --> 00:06:42,280 Speaker 1: even earlier than even earlier than the time that you're describing, 126 00:06:42,320 --> 00:06:47,599 Speaker 1: so let's say two thousand nine. Their problem was being like, yeah, actually, 127 00:06:47,640 --> 00:06:50,240 Speaker 1: you know, the returns profiles are okay for what we like. 128 00:06:51,040 --> 00:06:55,120 Speaker 1: The speed which we can move is also doable, all 129 00:06:55,160 --> 00:06:57,440 Speaker 1: that kind of stuff. Is there anything ten times bigger? 130 00:06:58,120 --> 00:07:00,839 Speaker 1: Like our ticket sizes ten times bigger, because that's the 131 00:07:00,839 --> 00:07:03,200 Speaker 1: weight that we move in, Like our due diligence process 132 00:07:04,040 --> 00:07:08,640 Speaker 1: and our timelines don't really reward doing things this small, 133 00:07:08,720 --> 00:07:10,480 Speaker 1: Like we're going to do the same amount of diligence 134 00:07:10,520 --> 00:07:12,360 Speaker 1: if we're acting in a half a billion dollar genre 135 00:07:12,400 --> 00:07:14,920 Speaker 1: in a fifty million dollar job. So, speaking of deploying 136 00:07:14,960 --> 00:07:18,000 Speaker 1: that capital, right, so we've talked a bit about how 137 00:07:18,080 --> 00:07:20,320 Speaker 1: much it is or how much is going into this stuff, 138 00:07:20,360 --> 00:07:25,400 Speaker 1: but like they're all being described as transition funds. Basically, now, 139 00:07:25,560 --> 00:07:28,480 Speaker 1: what are they going to be spending that money on? Well, 140 00:07:28,480 --> 00:07:30,360 Speaker 1: it's a little bit unclear. I have to say that 141 00:07:30,640 --> 00:07:35,120 Speaker 1: given the general trajectory for a fund that size, it 142 00:07:35,200 --> 00:07:39,360 Speaker 1: almost certainly be tilted towards asset investment, like it has 143 00:07:39,400 --> 00:07:43,040 Speaker 1: to probably flow into assets and infrastructure at that size. 144 00:07:43,080 --> 00:07:46,360 Speaker 1: You do see some general purpose venture funds that are 145 00:07:46,400 --> 00:07:49,240 Speaker 1: in the multiple billions, but they would be probably doing 146 00:07:49,320 --> 00:07:52,680 Speaker 1: later stage software investment. That might still happen, you know, 147 00:07:52,760 --> 00:07:56,080 Speaker 1: fifty million dollar ticket sizes per institution in the fund 148 00:07:56,160 --> 00:07:59,360 Speaker 1: raise at a time, but they're probably you know, they're 149 00:07:59,360 --> 00:08:03,120 Speaker 1: probably not going into like angel round funding, friends and 150 00:08:03,160 --> 00:08:05,600 Speaker 1: family rounds for things that have spun out of universities. 151 00:08:05,600 --> 00:08:08,160 Speaker 1: They're almost certainly going to be going at that price 152 00:08:08,160 --> 00:08:10,440 Speaker 1: for assets. But the caveat to that is that some 153 00:08:10,480 --> 00:08:12,400 Speaker 1: of the funds have said that they are interested in 154 00:08:12,480 --> 00:08:15,360 Speaker 1: looking relatively early on, like it is sort of an 155 00:08:15,400 --> 00:08:19,680 Speaker 1: early stage growth, So providing the first walk around money 156 00:08:19,760 --> 00:08:22,280 Speaker 1: for a big developer could be one. We definitely saw 157 00:08:22,320 --> 00:08:25,200 Speaker 1: that happen back in the day. The question and we 158 00:08:25,240 --> 00:08:26,920 Speaker 1: can talk about this a little bit later. It's interesting 159 00:08:27,000 --> 00:08:29,040 Speaker 1: is what does that What does that imply for pricing 160 00:08:29,280 --> 00:08:31,840 Speaker 1: of assets and pricing of companies when you have all 161 00:08:31,880 --> 00:08:37,079 Speaker 1: that that capital chasing in something that's inherently smaller perhaps 162 00:08:37,160 --> 00:08:39,920 Speaker 1: than the pool of available capital within a fund, just 163 00:08:39,920 --> 00:08:42,520 Speaker 1: to be clear, for assets, you mean like projects like 164 00:08:42,559 --> 00:08:46,200 Speaker 1: physical stuff things, Yes, you may not be buying them 165 00:08:46,200 --> 00:08:48,320 Speaker 1: at these stage you're commissioning yet, but you're buying into 166 00:08:48,360 --> 00:08:50,840 Speaker 1: a pool of physical assets as opposed to an acquisition 167 00:08:50,840 --> 00:08:54,360 Speaker 1: that is primarily concerned with intellectual property broadly speaking, right, 168 00:08:54,640 --> 00:08:58,120 Speaker 1: it's it's going towards property, plan and equipment if you want, 169 00:08:58,240 --> 00:09:01,080 Speaker 1: rather than intellectual property. Right. Okay. One thing that I 170 00:09:01,080 --> 00:09:03,400 Speaker 1: thought was really interesting looking at some of these announcements 171 00:09:03,559 --> 00:09:06,040 Speaker 1: was I think it was the Blackrock announcement where they 172 00:09:06,040 --> 00:09:10,040 Speaker 1: said that, you know, traditionally our previous two funds in 173 00:09:10,040 --> 00:09:13,880 Speaker 1: this space have been solely on operational assets, but now 174 00:09:14,040 --> 00:09:18,439 Speaker 1: we're going into construction assets and even just announced stuff 175 00:09:18,480 --> 00:09:22,320 Speaker 1: announced projects, so they're going, you know, further further a field. 176 00:09:22,360 --> 00:09:24,240 Speaker 1: I guess you could say. I thought that was pretty 177 00:09:24,480 --> 00:09:26,720 Speaker 1: telling of where things are going. It's a sign I 178 00:09:26,720 --> 00:09:30,719 Speaker 1: think of a sort of collective mass de risking, if 179 00:09:30,760 --> 00:09:33,600 Speaker 1: you will. If an asset manager at that size is 180 00:09:33,640 --> 00:09:37,360 Speaker 1: willing to start to go earlier and earlier in the 181 00:09:37,400 --> 00:09:41,960 Speaker 1: development stage, that implies greater confidence written large across the 182 00:09:42,000 --> 00:09:44,840 Speaker 1: sector and perhaps in the particular operators as well that 183 00:09:44,920 --> 00:09:47,480 Speaker 1: they are investing in. So there's another sign of sence 184 00:09:47,480 --> 00:09:51,000 Speaker 1: if if you're dealing with developers whom you've seen proved 185 00:09:51,080 --> 00:09:55,959 Speaker 1: success in the past, go from dirt you know, from 186 00:09:55,960 --> 00:10:00,280 Speaker 1: basically being a dirt farmer and dealing with permission and 187 00:10:00,440 --> 00:10:03,960 Speaker 1: rights of way all the way towards commissioned assets, and 188 00:10:04,000 --> 00:10:06,640 Speaker 1: you realize that you can invest on long that continuum 189 00:10:06,640 --> 00:10:09,720 Speaker 1: if you will on an asset basis, then then maybe 190 00:10:09,760 --> 00:10:11,360 Speaker 1: you are willing to do that. Also, they may find 191 00:10:11,360 --> 00:10:14,880 Speaker 1: that pricing is more advantageous. Certainly, your spreads are going 192 00:10:14,880 --> 00:10:18,280 Speaker 1: to compress the closer you get towards construction because the 193 00:10:18,400 --> 00:10:20,440 Speaker 1: risks are in turn lower. And I mean this is 194 00:10:20,679 --> 00:10:25,160 Speaker 1: this is kind of pretty familiar credit stuff. Maybe the 195 00:10:25,200 --> 00:10:29,240 Speaker 1: cases that you're finding risk reward tolerance that is shifting 196 00:10:29,280 --> 00:10:32,240 Speaker 1: towards the early stage because you want more reward and 197 00:10:32,240 --> 00:10:34,280 Speaker 1: you're either more willing to take on the risk or 198 00:10:34,360 --> 00:10:37,400 Speaker 1: you think that the risk itself is perhaps miss priced, right, 199 00:10:37,480 --> 00:10:40,560 Speaker 1: so you're you're willing to go earlier, earlier into development 200 00:10:40,559 --> 00:10:42,200 Speaker 1: stage because you see that that's where the value can 201 00:10:42,240 --> 00:10:46,440 Speaker 1: be captured. You know, all these funds are raised from investors, 202 00:10:46,559 --> 00:10:50,320 Speaker 1: who are the parties involved putting money into these funds. 203 00:10:50,320 --> 00:10:54,040 Speaker 1: So the archetypal participants in any kind of infrastructural fundraising 204 00:10:54,040 --> 00:10:57,920 Speaker 1: like this, and generally most of the institutions funding What 205 00:10:58,040 --> 00:11:01,959 Speaker 1: happened this week are what we brought to be called institutions, 206 00:11:02,000 --> 00:11:05,679 Speaker 1: and institutions in this case are endowments from a university, 207 00:11:05,800 --> 00:11:11,200 Speaker 1: they are sovereign funds, they are pensions, retirement funds, things 208 00:11:11,200 --> 00:11:13,280 Speaker 1: of that sort, and they're basically you're saying, well, we 209 00:11:13,280 --> 00:11:16,160 Speaker 1: have two billion dollars of us as under management. That's 210 00:11:16,160 --> 00:11:17,800 Speaker 1: the vote, you know, two tents of a percent of 211 00:11:17,840 --> 00:11:20,920 Speaker 1: it to this fund this year, and maybe one percent 212 00:11:20,960 --> 00:11:23,280 Speaker 1: of it overall in any given year to this kind 213 00:11:23,320 --> 00:11:26,560 Speaker 1: of asset class. So that's pretty typical on the Ontario 214 00:11:26,640 --> 00:11:31,960 Speaker 1: Teacher Teachers Pension Plan or the similar institutions in the 215 00:11:31,960 --> 00:11:34,559 Speaker 1: state of California might be doing something like that. What's 216 00:11:34,880 --> 00:11:38,599 Speaker 1: intriguing this time around is that you find other institutions 217 00:11:38,600 --> 00:11:41,360 Speaker 1: that don't really we don't qualify as an institutional investor, 218 00:11:41,480 --> 00:11:46,119 Speaker 1: and that would be things such as a Nike, Honeywell 219 00:11:46,880 --> 00:11:51,040 Speaker 1: a corporation acting as unlimited partner, which is intriguing that 220 00:11:51,080 --> 00:11:53,760 Speaker 1: doesn't often happen. You see companies of all sorts these 221 00:11:53,840 --> 00:11:57,200 Speaker 1: days setting up their own venture wings, so they are 222 00:11:57,720 --> 00:12:01,240 Speaker 1: sometimes they'll set up a completely separates wherein they have 223 00:12:01,920 --> 00:12:05,120 Speaker 1: hived off and ring fence. They general partner that interacts 224 00:12:05,200 --> 00:12:07,640 Speaker 1: with the rest of the company as a limited partner 225 00:12:07,640 --> 00:12:11,600 Speaker 1: to the general partner, or they might be unlimited partner 226 00:12:11,600 --> 00:12:14,679 Speaker 1: and somebody else's fund is a broader blanket or broader 227 00:12:14,760 --> 00:12:18,240 Speaker 1: umbrella of of corporate venture capital. This is something very different. 228 00:12:18,240 --> 00:12:22,760 Speaker 1: This is like corporate limited partnership in mostly assets based businesses. 229 00:12:22,840 --> 00:12:25,840 Speaker 1: And I think we need to watch very closely to 230 00:12:25,960 --> 00:12:29,199 Speaker 1: see what the intentionality is there over time. Part of it. 231 00:12:29,200 --> 00:12:30,800 Speaker 1: I mean it could be purely financial. I mean it 232 00:12:30,840 --> 00:12:33,360 Speaker 1: could be that the that the companies that are that 233 00:12:33,400 --> 00:12:37,520 Speaker 1: are raising the funds are simply giving an expectation of 234 00:12:37,520 --> 00:12:40,120 Speaker 1: returns that looks very very favorable and very very healthy. 235 00:12:40,240 --> 00:12:44,720 Speaker 1: And as a treasurer, chief investment officer, chief financial officer 236 00:12:44,760 --> 00:12:48,880 Speaker 1: of any big company, it simply pencils out ideally that's 237 00:12:48,880 --> 00:12:51,360 Speaker 1: the case. Anyways, there's some component of that. You're not 238 00:12:51,400 --> 00:12:54,280 Speaker 1: taking a flyer on it completely. But the rest is like, 239 00:12:54,760 --> 00:12:57,080 Speaker 1: what's the additional gain is it? You know? Is it 240 00:12:57,120 --> 00:12:59,640 Speaker 1: within the broader mandate of e s G of OF 241 00:12:59,679 --> 00:13:03,200 Speaker 1: and its stitution. Is it part of its sustainability strategy? 242 00:13:03,360 --> 00:13:08,160 Speaker 1: Is it part of its talent identification? It's thinking about 243 00:13:08,160 --> 00:13:10,199 Speaker 1: its own investing. I mean that that has often been 244 00:13:10,240 --> 00:13:14,720 Speaker 1: I think one of the complex dual mandates or triple 245 00:13:14,800 --> 00:13:20,120 Speaker 1: mandates within venture capital that companies want to make money, 246 00:13:20,160 --> 00:13:25,520 Speaker 1: identify deals, and identify partners at the same time, all 247 00:13:25,600 --> 00:13:29,560 Speaker 1: equally well, which is I think difficult. One of them 248 00:13:29,600 --> 00:13:31,840 Speaker 1: I feel like has to be sublimated to the others, 249 00:13:32,200 --> 00:13:35,600 Speaker 1: or one rather has to be the first among the equals, 250 00:13:35,640 --> 00:13:38,559 Speaker 1: the chief the chief goal, which personally I would always 251 00:13:38,559 --> 00:13:41,920 Speaker 1: say should probably given the nature of investing as unimited partner, 252 00:13:42,000 --> 00:13:46,640 Speaker 1: be money. But that's not necessarily the way that every 253 00:13:46,679 --> 00:13:48,920 Speaker 1: everybody sees it. In fact, most of the times that 254 00:13:48,960 --> 00:13:51,120 Speaker 1: I hear a corporate fund being described it, it's more 255 00:13:51,160 --> 00:13:53,520 Speaker 1: along the lines of we're we're looking to achieve all 256 00:13:53,559 --> 00:13:56,400 Speaker 1: of these goals at once. So in this case it's 257 00:13:56,400 --> 00:13:59,480 Speaker 1: it's even it's even more derivative, I think, because you know, 258 00:13:59,520 --> 00:14:02,160 Speaker 1: by by being a limited partner in a mostly asset 259 00:14:02,200 --> 00:14:05,960 Speaker 1: and infrastructure bigated fund, you're not sort of getting a 260 00:14:06,000 --> 00:14:10,199 Speaker 1: preview necessarily on a new technology or new market structure 261 00:14:10,280 --> 00:14:12,600 Speaker 1: things like that, I think you would on suppliers, right, 262 00:14:12,760 --> 00:14:15,720 Speaker 1: potentially suppliers and potential developers. Because some of these funds 263 00:14:15,720 --> 00:14:18,000 Speaker 1: were saying, you know, hey, we're gonna be using this 264 00:14:18,080 --> 00:14:22,320 Speaker 1: money for projects like assets and what they were calling 265 00:14:22,320 --> 00:14:25,240 Speaker 1: it growth equity, right, so identifying the what would you 266 00:14:25,280 --> 00:14:28,120 Speaker 1: call walking around money for for a developer. And so 267 00:14:28,160 --> 00:14:29,840 Speaker 1: if I'm like a big corporate, you know, I need 268 00:14:29,880 --> 00:14:32,160 Speaker 1: a developer and to to acquire later, maybe this is 269 00:14:32,160 --> 00:14:34,760 Speaker 1: a good chance to get them up to speed potentially. 270 00:14:34,800 --> 00:14:36,560 Speaker 1: So and so I actually I would actually like to 271 00:14:36,640 --> 00:14:39,280 Speaker 1: see how this plays out and how it's proven out. 272 00:14:39,360 --> 00:14:43,160 Speaker 1: I'm not to say do things one how the corporations 273 00:14:43,640 --> 00:14:49,960 Speaker 1: themselves describe the the initiative here like the prime mover 274 00:14:50,080 --> 00:14:52,440 Speaker 1: of their decision making, and to what they actually do 275 00:14:52,560 --> 00:14:55,040 Speaker 1: over time, and that may be that may be a 276 00:14:55,080 --> 00:14:57,440 Speaker 1: bit of a bit of a data challenge over time, 277 00:14:57,560 --> 00:15:00,440 Speaker 1: because we don't necessarily see any of these things, right, 278 00:15:00,520 --> 00:15:04,440 Speaker 1: they're unlimited partners within a general partnership structure that is 279 00:15:04,480 --> 00:15:07,640 Speaker 1: itself a private entity. And then we may not find 280 00:15:07,640 --> 00:15:09,560 Speaker 1: out a lot, but I think we should. We should 281 00:15:09,600 --> 00:15:12,320 Speaker 1: interrogate this as much as possible because it's actually it's 282 00:15:12,360 --> 00:15:15,040 Speaker 1: fascinating to see, and I think it's very important to 283 00:15:15,040 --> 00:15:19,240 Speaker 1: determine where future pools of capital might go, how how 284 00:15:19,280 --> 00:15:24,440 Speaker 1: how companies themselves might disrupt this this otherwise quite traditional 285 00:15:24,440 --> 00:15:26,720 Speaker 1: flow of capital through the funnel, if you will. But 286 00:15:26,800 --> 00:15:29,360 Speaker 1: let's step back a little bit. Why now, So what 287 00:15:29,520 --> 00:15:32,600 Speaker 1: is going on right now? What is the world telling 288 00:15:32,680 --> 00:15:34,920 Speaker 1: us to say that these funds should be raised at 289 00:15:34,920 --> 00:15:39,680 Speaker 1: this moment? One element is probably policy signal, right, betting 290 00:15:39,680 --> 00:15:42,920 Speaker 1: along the vector that eventually every major jurisdiction in the 291 00:15:42,960 --> 00:15:46,040 Speaker 1: world will have some sort of net zero target. And 292 00:15:46,080 --> 00:15:48,480 Speaker 1: that's when I say major jurisdiction, I think about that 293 00:15:49,440 --> 00:15:53,600 Speaker 1: on the kind of molecul or carbon dioxide basis. Okay, 294 00:15:53,640 --> 00:15:56,400 Speaker 1: every major emitter, if you will, we will have a 295 00:15:56,840 --> 00:16:03,480 Speaker 1: will have some mandate to insofar as possible, decarbonized as 296 00:16:03,560 --> 00:16:07,240 Speaker 1: much as possible. I think that's one. Two. I feel 297 00:16:07,240 --> 00:16:12,360 Speaker 1: like there's there's probably a general awareness in a very 298 00:16:12,400 --> 00:16:17,200 Speaker 1: good way of the competitive or out competing economics these days, 299 00:16:17,200 --> 00:16:20,760 Speaker 1: of doing cleaner types of investment on the assets side, 300 00:16:20,760 --> 00:16:23,120 Speaker 1: and maybe even further upstream of that, you know, investing 301 00:16:23,120 --> 00:16:26,080 Speaker 1: in technology companies, that there's potential there. So you're saying, 302 00:16:26,280 --> 00:16:29,600 Speaker 1: just the economics just makes sense, and that's being recognized. Yes, 303 00:16:29,720 --> 00:16:32,160 Speaker 1: that's being that's being recognized, it's being and it's also 304 00:16:32,200 --> 00:16:34,120 Speaker 1: been priced. And I think on the flip side of 305 00:16:34,160 --> 00:16:37,600 Speaker 1: that is that the the tail risk slash stranded asset 306 00:16:37,720 --> 00:16:41,800 Speaker 1: risks associated with other types of investing may become more apparent, right, 307 00:16:42,480 --> 00:16:45,760 Speaker 1: so that risk premium is probably going up for some 308 00:16:45,840 --> 00:16:49,160 Speaker 1: other types of investing on the other side of the 309 00:16:49,200 --> 00:16:51,240 Speaker 1: carbon ledger, if you will. Now, that doesn't mean that 310 00:16:51,280 --> 00:16:53,960 Speaker 1: those investments don't happen. They just maybe become more specialized. 311 00:16:54,480 --> 00:16:57,920 Speaker 1: They become the domain of more specialized not so much 312 00:16:57,920 --> 00:17:00,600 Speaker 1: general funds. We go back to me ten a lot, 313 00:17:00,640 --> 00:17:03,680 Speaker 1: I guess, but we kept seeing the boutique banks doing 314 00:17:03,680 --> 00:17:07,280 Speaker 1: these types of deals, right, and maybe maybe we're not 315 00:17:07,320 --> 00:17:09,560 Speaker 1: talking banks, but maybe it flips, right, so maybe it's 316 00:17:09,600 --> 00:17:13,360 Speaker 1: now the boutiques doing the coal plant. Yes, I would say, 317 00:17:13,400 --> 00:17:17,239 Speaker 1: like and actually that is absolutely the case already. If 318 00:17:17,280 --> 00:17:18,440 Speaker 1: you want to do it, call if you want to 319 00:17:18,440 --> 00:17:20,280 Speaker 1: do a coal plant investment in Europe and North America, 320 00:17:20,280 --> 00:17:23,639 Speaker 1: you are almost certainly doing it with at the highest level, 321 00:17:24,280 --> 00:17:27,640 Speaker 1: maybe a special situations group within within an established bank, 322 00:17:27,720 --> 00:17:31,359 Speaker 1: though honestly I doubt it. It's much more likely that 323 00:17:31,400 --> 00:17:34,560 Speaker 1: you're dealing with a specialty private equity fund then looks 324 00:17:34,560 --> 00:17:37,119 Speaker 1: at that type of asset, that type of market, and 325 00:17:37,160 --> 00:17:41,399 Speaker 1: also looks at specific instruments within that there might be like, great, 326 00:17:41,800 --> 00:17:45,080 Speaker 1: we'll take you to our energy Distressed Debt fund, you know, 327 00:17:45,160 --> 00:17:47,800 Speaker 1: as opposed as opposed to our seven and a half 328 00:17:47,880 --> 00:17:52,200 Speaker 1: billion dollar soft clothes or seven billion dollars soft clothes 329 00:17:52,240 --> 00:17:56,440 Speaker 1: on our climate transition fund. I think there's just a zeitgeist, 330 00:17:56,520 --> 00:17:59,480 Speaker 1: the element not to sound too hand wavy about it, 331 00:17:59,520 --> 00:18:02,280 Speaker 1: but there is is, you know, a sense that there 332 00:18:02,400 --> 00:18:07,719 Speaker 1: is a more categorical imperative to decarbonize in more places 333 00:18:07,760 --> 00:18:10,520 Speaker 1: and in more ways. And I think a sense too 334 00:18:10,840 --> 00:18:14,200 Speaker 1: that I'm interested to see how this reflects within climate 335 00:18:14,200 --> 00:18:17,080 Speaker 1: transition over time, that it is about more than the 336 00:18:17,119 --> 00:18:19,800 Speaker 1: electron that it that it, that it starts to go 337 00:18:19,880 --> 00:18:23,520 Speaker 1: into things that are about chemistry and not just about 338 00:18:23,600 --> 00:18:26,200 Speaker 1: physics so to speak, you know, that start to get 339 00:18:26,200 --> 00:18:30,560 Speaker 1: into the difficulty decarbonized spaces that we know very well 340 00:18:30,600 --> 00:18:33,800 Speaker 1: we'll take tens of trillions of dollars, but also maybe 341 00:18:33,800 --> 00:18:36,320 Speaker 1: the sorts of tens of trillions of dollars that online 342 00:18:36,400 --> 00:18:39,520 Speaker 1: with the sorts of things that people already invest tens 343 00:18:39,520 --> 00:18:44,480 Speaker 1: of trillions of dollars in two pipelines, plants for transforming molecules, 344 00:18:45,080 --> 00:18:48,880 Speaker 1: supply networks, things of that sort that better online with 345 00:18:49,200 --> 00:18:52,840 Speaker 1: the expectation of investing, you know, a billion dollars at 346 00:18:52,840 --> 00:18:55,359 Speaker 1: a time. Do you think this is the start or 347 00:18:55,400 --> 00:18:58,520 Speaker 1: do you think this is like, you know, a culmination 348 00:18:58,760 --> 00:19:01,240 Speaker 1: or something like that, Like, what's would we expect going forward? 349 00:19:01,680 --> 00:19:05,040 Speaker 1: It's a it's a good question, Um. I I expected 350 00:19:05,119 --> 00:19:07,440 Speaker 1: to be sort of still within a continuum. I don't 351 00:19:07,480 --> 00:19:09,440 Speaker 1: know when we'll see a high water mark on it. 352 00:19:09,680 --> 00:19:11,600 Speaker 1: We will probably look at and be like, Okay, that's 353 00:19:11,640 --> 00:19:14,840 Speaker 1: it this, you know, this seventeen billion dollar fund that 354 00:19:14,960 --> 00:19:20,159 Speaker 1: was closed in six weeks specifically around I don't know. 355 00:19:20,640 --> 00:19:24,760 Speaker 1: Green hydrogen production in one in one market is probably 356 00:19:24,800 --> 00:19:26,520 Speaker 1: the kind of thing of it that seems kind of 357 00:19:26,560 --> 00:19:29,480 Speaker 1: high water market to me. But I don't know that 358 00:19:29,520 --> 00:19:34,320 Speaker 1: we're anywhere close to that yet, So I would still 359 00:19:34,359 --> 00:19:36,400 Speaker 1: say that it's a continue There's still an awful lot 360 00:19:36,400 --> 00:19:40,399 Speaker 1: of institutional money waiting to go. And this is a 361 00:19:40,480 --> 00:19:42,959 Speaker 1: neutral statement, but there there does tend to be a 362 00:19:42,960 --> 00:19:46,720 Speaker 1: lot of trend following and going along. Like these institutions 363 00:19:46,720 --> 00:19:48,400 Speaker 1: I would say that are doing these fund raises are 364 00:19:48,400 --> 00:19:54,320 Speaker 1: really really apex institutions within alternative with an alternative investment, 365 00:19:55,000 --> 00:20:00,360 Speaker 1: and I think that implies if they're so oversubscribed. If 366 00:20:00,359 --> 00:20:03,200 Speaker 1: they have so much interest from so many different parties, 367 00:20:03,840 --> 00:20:08,240 Speaker 1: it implies a much greater total addressable market to shake 368 00:20:08,280 --> 00:20:11,720 Speaker 1: out over time and perhaps come down a little bit 369 00:20:11,800 --> 00:20:15,119 Speaker 1: in fun size, specialize on a little bit more. I 370 00:20:15,119 --> 00:20:18,000 Speaker 1: think this would be entirely healthy if that was the case, right, 371 00:20:18,040 --> 00:20:19,919 Speaker 1: I mean I I think it's possible we get some 372 00:20:20,040 --> 00:20:23,960 Speaker 1: larger funds beyond this point. It's also possible we get 373 00:20:24,000 --> 00:20:28,680 Speaker 1: we get a thousand flowers blooming of more specialized funds 374 00:20:29,480 --> 00:20:34,080 Speaker 1: with similar enthusiasm. So like the whoever Canadian wind fund, 375 00:20:34,680 --> 00:20:36,920 Speaker 1: Yeah I'm or yeah, I'm raising the mid market green 376 00:20:37,000 --> 00:20:41,560 Speaker 1: hydrogen fund for the Benelux. That actually doesn't sound should 377 00:20:41,640 --> 00:20:45,240 Speaker 1: not sound rather too specific in that sense, given the 378 00:20:45,280 --> 00:20:48,040 Speaker 1: scale of what might be happening right where things come 379 00:20:48,080 --> 00:20:49,840 Speaker 1: in with a much when things come in with a 380 00:20:49,880 --> 00:20:54,960 Speaker 1: tight targeting based on appetite, thun limited partners, specific expertise 381 00:20:54,960 --> 00:20:57,600 Speaker 1: and technology, all that kind of stuff I feel in 382 00:20:57,640 --> 00:20:59,280 Speaker 1: tells me if I can give my my my slight 383 00:20:59,320 --> 00:21:01,760 Speaker 1: take for a second, the NEO, the new energy outlook 384 00:21:01,800 --> 00:21:03,960 Speaker 1: that just came out last week from benf Right, we 385 00:21:04,080 --> 00:21:08,720 Speaker 1: put investment in there required to achieve net zero or 386 00:21:08,760 --> 00:21:13,760 Speaker 1: between our different scenarios out one seventy three trillion in 387 00:21:13,800 --> 00:21:16,520 Speaker 1: the next thirty years. And so I've penciled that out 388 00:21:16,880 --> 00:21:20,959 Speaker 1: and we put capacity you know, for wind and solar 389 00:21:21,040 --> 00:21:23,800 Speaker 1: only like like not even talking about hydrogen and things 390 00:21:23,800 --> 00:21:27,240 Speaker 1: like that, but wind and solar only at eight now 391 00:21:27,600 --> 00:21:32,560 Speaker 1: of capacity and what in right, And so if you 392 00:21:32,600 --> 00:21:35,560 Speaker 1: just use average project sizes, that gives you three hundred 393 00:21:35,600 --> 00:21:38,359 Speaker 1: and sixty six thousand new projects that have to be 394 00:21:38,359 --> 00:21:42,120 Speaker 1: built the next thirty years. And so to me, yeah, 395 00:21:42,160 --> 00:21:44,840 Speaker 1: this might be a culmination or a high water mark 396 00:21:44,920 --> 00:21:48,040 Speaker 1: for this type of fund, but there's still a drop 397 00:21:48,040 --> 00:21:51,440 Speaker 1: in the bucket in comparison to what kind of could 398 00:21:51,440 --> 00:21:54,680 Speaker 1: be expected to be built in time. The headroom within 399 00:21:54,760 --> 00:21:58,080 Speaker 1: the markets in order to reach a net zero energy 400 00:21:58,119 --> 00:22:02,919 Speaker 1: system is so huge that there's no chance on a 401 00:22:03,000 --> 00:22:06,560 Speaker 1: pure capital basis of anybody crowding anybody else out. Exactly. 402 00:22:06,560 --> 00:22:08,359 Speaker 1: That's that's the point of trying to make yeah, exactly 403 00:22:08,560 --> 00:22:11,920 Speaker 1: totally yeah, Like like none of these funds are saying like, well, 404 00:22:11,920 --> 00:22:14,639 Speaker 1: that said, I've stitched up the opportunity and the resident 405 00:22:14,680 --> 00:22:17,160 Speaker 1: can go get stuffed. Like that's not that's not possible. 406 00:22:17,880 --> 00:22:20,040 Speaker 1: There's a different there's a different thing to be said 407 00:22:20,040 --> 00:22:23,040 Speaker 1: about what it means for valuations, what it means for 408 00:22:23,119 --> 00:22:26,600 Speaker 1: sort of distribution of distribution of interest in investment types. 409 00:22:26,640 --> 00:22:29,280 Speaker 1: But that's you know, that's that's perhaps a different conversation 410 00:22:29,520 --> 00:22:31,240 Speaker 1: before we go to break though. Let's do one one 411 00:22:31,320 --> 00:22:33,920 Speaker 1: last one on that, like if everybody wins, who loses? 412 00:22:34,000 --> 00:22:35,920 Speaker 1: Like if if it seems like there's room for everyone, 413 00:22:36,240 --> 00:22:38,320 Speaker 1: you know, who are the winners and losers here? I 414 00:22:38,320 --> 00:22:40,760 Speaker 1: don't necessarily think of it in winners and looses losers, 415 00:22:40,800 --> 00:22:42,600 Speaker 1: but I can think of it in terms of vector 416 00:22:42,680 --> 00:22:46,919 Speaker 1: and that is that you may have a very stiff 417 00:22:47,000 --> 00:22:52,080 Speaker 1: competition that pushes valuations up for certain asset types that 418 00:22:52,119 --> 00:22:54,800 Speaker 1: could make it that can make it challenging, especially the 419 00:22:54,840 --> 00:22:58,720 Speaker 1: early stage like wind lease offshore wind leases in the US, right, 420 00:22:58,800 --> 00:23:01,639 Speaker 1: and I'm but also also on the company level, like 421 00:23:01,680 --> 00:23:03,840 Speaker 1: if you know where in these where in these institutions 422 00:23:03,880 --> 00:23:05,800 Speaker 1: are going to participate in say a Series B or 423 00:23:05,880 --> 00:23:08,679 Speaker 1: C round, which I think some of them probably will. 424 00:23:09,320 --> 00:23:11,840 Speaker 1: They're going to be competing with each other and with 425 00:23:11,920 --> 00:23:15,680 Speaker 1: general venture funds along the way that have in many 426 00:23:15,680 --> 00:23:19,560 Speaker 1: cases a history of bidding extremely aggressively and being very 427 00:23:19,640 --> 00:23:24,240 Speaker 1: very founder friendly. So soft Bank of course, is well 428 00:23:24,280 --> 00:23:26,479 Speaker 1: known for this sort of behavior, so are so as 429 00:23:26,520 --> 00:23:31,160 Speaker 1: Tiger Global Um and when you could have a sort 430 00:23:31,160 --> 00:23:34,760 Speaker 1: of miniaturized version of that within the funds that we've 431 00:23:34,760 --> 00:23:38,120 Speaker 1: described right now, and you could also have external non 432 00:23:38,160 --> 00:23:41,760 Speaker 1: specialty funds at the Series B and C level doing 433 00:23:41,800 --> 00:23:45,480 Speaker 1: that same competition, and it could be a pretty aggressive 434 00:23:45,480 --> 00:23:49,080 Speaker 1: bidding up, could be very founder friendly. It could be 435 00:23:49,720 --> 00:23:55,359 Speaker 1: challenging for some of the long term really expert investors 436 00:23:55,560 --> 00:23:59,760 Speaker 1: in early stage climate tech investing, of which there are 437 00:23:59,800 --> 00:24:02,040 Speaker 1: now a number. There are plenty of veterans that that 438 00:24:02,040 --> 00:24:04,040 Speaker 1: that are around and are raising new funds, and it 439 00:24:04,080 --> 00:24:07,080 Speaker 1: could make it very challenging in that. In that element, 440 00:24:07,119 --> 00:24:12,040 Speaker 1: I feel like I find it unlikely that a very 441 00:24:12,119 --> 00:24:15,160 Speaker 1: large alternative investment manager is going to be doing seed 442 00:24:15,240 --> 00:24:18,600 Speaker 1: round funding. It's just simply not worth the trouble and 443 00:24:18,640 --> 00:24:20,920 Speaker 1: it's not you're not really set up to diligence things 444 00:24:20,960 --> 00:24:24,199 Speaker 1: like that. But you might find it competing in a 445 00:24:24,280 --> 00:24:27,399 Speaker 1: B round or a CE round against you know, a 446 00:24:27,520 --> 00:24:30,840 Speaker 1: fund that has been raised specifically for climate tech two 447 00:24:30,920 --> 00:24:34,960 Speaker 1: or three years ago and is doing its own follow 448 00:24:35,000 --> 00:24:37,120 Speaker 1: on investing with things that it is sort of carefully 449 00:24:37,200 --> 00:24:40,040 Speaker 1: nurtured from seed on up, so that will be that 450 00:24:40,080 --> 00:24:43,199 Speaker 1: will be interesting to see. There is also the worry, 451 00:24:43,280 --> 00:24:46,280 Speaker 1: as always, I think that there are certain asset classes 452 00:24:46,280 --> 00:24:49,080 Speaker 1: that still proved to be too challenging to invest in 453 00:24:50,200 --> 00:24:53,040 Speaker 1: for any number of reasons, Like would any of this 454 00:24:53,160 --> 00:24:58,080 Speaker 1: funding end up devoted to newer nuclear power technologies? I 455 00:24:58,119 --> 00:25:01,520 Speaker 1: don't know, Like tickets size wise, they should be perfectly suited, 456 00:25:01,560 --> 00:25:04,640 Speaker 1: but are they within the risk profile direct air capture 457 00:25:04,880 --> 00:25:09,040 Speaker 1: or something like that exactly? Um So I think there's 458 00:25:09,040 --> 00:25:10,720 Speaker 1: always that, And then there's always things that might have 459 00:25:10,760 --> 00:25:13,920 Speaker 1: a sort of regulatory brittleness to them. Be very binary 460 00:25:14,000 --> 00:25:16,640 Speaker 1: if you will, which is I would enough to invest 461 00:25:16,680 --> 00:25:19,359 Speaker 1: in that hydrogen network, but only if you know, only 462 00:25:19,400 --> 00:25:21,960 Speaker 1: if something is backstopping it, and what is that thing. 463 00:25:22,359 --> 00:25:25,119 Speaker 1: You don't need to back stop doing rooftop PV almost 464 00:25:25,160 --> 00:25:27,240 Speaker 1: anywhere right now, but you do probably need to do 465 00:25:27,280 --> 00:25:30,800 Speaker 1: it to build a green hydrogen network Without that, and 466 00:25:30,800 --> 00:25:33,439 Speaker 1: without that happening, it may be very difficult. This This 467 00:25:33,520 --> 00:25:37,160 Speaker 1: is a It could be a virtuous cycle. The back 468 00:25:37,160 --> 00:25:39,679 Speaker 1: stopping institution, whatever that might be, is willing to do 469 00:25:39,760 --> 00:25:42,359 Speaker 1: it and therefore capital flows, or it could be a 470 00:25:42,440 --> 00:25:45,399 Speaker 1: vicious cycle in which is neither one, neither one commits 471 00:25:45,400 --> 00:25:48,040 Speaker 1: because neither one is committed. Thanks. Now, when we come back, 472 00:25:48,080 --> 00:25:51,159 Speaker 1: we're gonna get a little bit more into NAT's recent 473 00:25:51,200 --> 00:25:58,240 Speaker 1: piece talking about networks in all of this, stay with us. 474 00:25:58,280 --> 00:26:01,640 Speaker 1: So this week we had CEO of A Yes Undressed, 475 00:26:01,640 --> 00:26:03,760 Speaker 1: Glue Sky on the show. He talked about how he 476 00:26:03,800 --> 00:26:06,760 Speaker 1: got his start in telecoms in the nineties and how 477 00:26:07,359 --> 00:26:09,960 Speaker 1: the changes he's seeing in the power sector now remind 478 00:26:10,040 --> 00:26:12,680 Speaker 1: him a ton of telecoms. Then, So that reminded me 479 00:26:13,480 --> 00:26:16,920 Speaker 1: of your piece today. How you saying these changes related 480 00:26:16,920 --> 00:26:19,119 Speaker 1: a lot to networks. Can you kind of describe the 481 00:26:19,440 --> 00:26:22,720 Speaker 1: concept you're setting out there. I'm often looking to analogize 482 00:26:22,920 --> 00:26:26,119 Speaker 1: what's happening in our sector to other sectors, and I 483 00:26:26,240 --> 00:26:29,280 Speaker 1: think that there's something both both very beguiling but also 484 00:26:29,359 --> 00:26:33,040 Speaker 1: potentially a bit dangerous and saying everything is networked now. 485 00:26:33,560 --> 00:26:36,320 Speaker 1: So I've I've been hesitating for a very long time 486 00:26:36,400 --> 00:26:39,000 Speaker 1: to kind of work that angle, if for no other 487 00:26:39,080 --> 00:26:42,680 Speaker 1: reason than duh, like they have network in their name, 488 00:26:42,920 --> 00:26:46,119 Speaker 1: like electricity network, a vehicle charging network. It runs the 489 00:26:46,240 --> 00:26:49,480 Speaker 1: risk of being not terribly insightful. But I was doing 490 00:26:49,520 --> 00:26:52,600 Speaker 1: a little bit of reading and I came across one 491 00:26:52,640 --> 00:26:56,560 Speaker 1: of Chris Dixon's essays. Chris Dixon is now at Andries 492 00:26:56,600 --> 00:27:00,400 Speaker 1: and Horowitz, and he has this brief but really fantastic 493 00:27:00,520 --> 00:27:02,520 Speaker 1: essay called Come for the Tools, Stay for the Network, 494 00:27:03,400 --> 00:27:06,000 Speaker 1: and he talks about how, in the case if his 495 00:27:06,080 --> 00:27:09,480 Speaker 1: example was Instagram, something that began as a pure tool 496 00:27:09,800 --> 00:27:15,480 Speaker 1: add a filter to your photo, became something that could 497 00:27:15,560 --> 00:27:19,119 Speaker 1: create a network. It attracted people for its utility. It 498 00:27:19,240 --> 00:27:23,439 Speaker 1: becomes sticky because it has an expanded utility, and then 499 00:27:23,480 --> 00:27:26,920 Speaker 1: it becomes insentially embedded because other people are using it 500 00:27:27,000 --> 00:27:30,280 Speaker 1: and you can share within it, and you create value 501 00:27:30,359 --> 00:27:33,040 Speaker 1: for users, you create value for investors instead of doing it. 502 00:27:33,119 --> 00:27:37,879 Speaker 1: So I thought, this is actually an interesting, potentially fruitful 503 00:27:38,200 --> 00:27:41,440 Speaker 1: hook to use from looking at what might be coming 504 00:27:41,560 --> 00:27:46,680 Speaker 1: next in the broad bucket of climate tech investment. Is 505 00:27:46,720 --> 00:27:49,600 Speaker 1: it it's too easy to just say everything is a network. 506 00:27:49,680 --> 00:27:51,000 Speaker 1: We have to we have to sort of think about 507 00:27:51,040 --> 00:27:54,600 Speaker 1: how they start. And so I took that logict from 508 00:27:54,720 --> 00:27:57,119 Speaker 1: from Dixon's essay and I wanted to look at it 509 00:27:57,840 --> 00:27:59,800 Speaker 1: across the world of coming TECK. I probably could have 510 00:28:00,160 --> 00:28:02,440 Speaker 1: dozens of examples, and in fact I put out an open, 511 00:28:02,560 --> 00:28:05,280 Speaker 1: open outcry in the bottom of my column. Send me 512 00:28:05,400 --> 00:28:07,840 Speaker 1: a note with things that you can think of as 513 00:28:07,840 --> 00:28:11,159 Speaker 1: an example of tool becoming network. So send them to 514 00:28:11,280 --> 00:28:13,080 Speaker 1: me if you have them, and I will happily read them. 515 00:28:14,000 --> 00:28:15,720 Speaker 1: And I came up with three. I came up with three, 516 00:28:15,800 --> 00:28:19,320 Speaker 1: which was the first one was looking at energy storage. 517 00:28:19,440 --> 00:28:22,680 Speaker 1: So a battery is a tool. Battery my phone is 518 00:28:22,680 --> 00:28:26,800 Speaker 1: a tool. I use that to charge up my thing. Right, 519 00:28:26,880 --> 00:28:29,320 Speaker 1: it provides power. I charge it up. It provides power. 520 00:28:29,680 --> 00:28:31,720 Speaker 1: That's a tool. If you have a hundred thousand of 521 00:28:31,760 --> 00:28:34,639 Speaker 1: them connected together, being at the home scale and a 522 00:28:34,680 --> 00:28:37,080 Speaker 1: grid scale or whatever, that's a network. They begin to 523 00:28:37,119 --> 00:28:41,240 Speaker 1: interact with each other. There's there's differential values distributed over 524 00:28:41,320 --> 00:28:45,480 Speaker 1: time and space that therefore of now people to arbitrage, 525 00:28:45,600 --> 00:28:48,960 Speaker 1: to trade, to transact. So that's a perfect example. I 526 00:28:49,000 --> 00:28:52,200 Speaker 1: think of wearing like a tool that I have becomes 527 00:28:52,600 --> 00:28:55,920 Speaker 1: a network. We all have them and we put them together, 528 00:28:55,960 --> 00:28:57,960 Speaker 1: and it's not just that they're connected, it's that there's 529 00:28:58,000 --> 00:29:02,040 Speaker 1: greater value to be derived too. I think that that's 530 00:29:02,040 --> 00:29:04,600 Speaker 1: actually the most important part. That's that's the part that 531 00:29:04,640 --> 00:29:06,280 Speaker 1: I want to make sure it is always emphasized. When 532 00:29:06,280 --> 00:29:08,480 Speaker 1: everybody says, well, like this reminds me of telecoms, or 533 00:29:08,560 --> 00:29:11,520 Speaker 1: there's a network that's being created, is it needs to 534 00:29:11,560 --> 00:29:13,960 Speaker 1: be also a creation of value, not just of connection. 535 00:29:14,440 --> 00:29:17,160 Speaker 1: It reminds me of one of those fascinating essays I've 536 00:29:17,160 --> 00:29:20,240 Speaker 1: ever read. Actually, Lewis Thomas wrote an essay a long 537 00:29:20,320 --> 00:29:24,280 Speaker 1: time ago. He was a biologist physician about ants and 538 00:29:25,000 --> 00:29:28,840 Speaker 1: how an individual ant is a neuron but simple oversimplifying 539 00:29:29,200 --> 00:29:33,560 Speaker 1: many ants, becomes a brain that can build structures, can 540 00:29:33,640 --> 00:29:36,520 Speaker 1: transport goods, can do all kinds different things. They become 541 00:29:36,560 --> 00:29:40,040 Speaker 1: a network and isolated on its own. That aunt is 542 00:29:40,880 --> 00:29:45,200 Speaker 1: it's it's strong, but not particularlyly capable, he said. Aimless. 543 00:29:45,680 --> 00:29:48,320 Speaker 1: Aimless is a very nice way of saying it, right, Um, 544 00:29:48,560 --> 00:29:51,040 Speaker 1: not not directed. I mean in the case of ants, 545 00:29:51,640 --> 00:29:55,000 Speaker 1: they require a pheromonic connection. Like, they don't actually do 546 00:29:55,080 --> 00:29:57,920 Speaker 1: anything without a connection to each other. They don't they 547 00:29:57,960 --> 00:30:01,440 Speaker 1: don't act as, they don't really act um even if 548 00:30:01,480 --> 00:30:04,520 Speaker 1: they are out, even if they are out foraging scouting, 549 00:30:05,440 --> 00:30:08,200 Speaker 1: they're only doing so in connection to a larger group 550 00:30:08,280 --> 00:30:12,760 Speaker 1: of entities that's connected behind them. Okay, So from entomology 551 00:30:13,360 --> 00:30:16,840 Speaker 1: to to what I will broadly call climate intelligence. That's 552 00:30:16,880 --> 00:30:24,680 Speaker 1: everything from measuring deforestation and afforestation two emissions two um 553 00:30:25,440 --> 00:30:29,840 Speaker 1: carbon footprinting different objects to what I use as my 554 00:30:29,920 --> 00:30:34,560 Speaker 1: more specific example, carbon accounting and accounting up for and 555 00:30:34,680 --> 00:30:37,600 Speaker 1: around climate risk. And I said that these things. The 556 00:30:37,640 --> 00:30:40,600 Speaker 1: reason I think about these in particulars as being networked 557 00:30:40,600 --> 00:30:43,520 Speaker 1: in value is that if we can, if we continue 558 00:30:43,560 --> 00:30:47,320 Speaker 1: to accumulate individual tools, we will have dozens of standards 559 00:30:47,400 --> 00:30:49,520 Speaker 1: for doing these things, which means we don't have standards 560 00:30:50,280 --> 00:30:52,200 Speaker 1: right We have two ways of doing accounting in this 561 00:30:52,400 --> 00:30:55,920 Speaker 1: in the world right now, very roughly speaking, gap and 562 00:30:56,440 --> 00:31:00,640 Speaker 1: non gap accounting, so we we sort of probably want 563 00:31:00,720 --> 00:31:05,000 Speaker 1: to there will be a taxis towards having only a 564 00:31:05,120 --> 00:31:06,960 Speaker 1: few standards for all of these things of her time. 565 00:31:07,040 --> 00:31:09,240 Speaker 1: And in so doing, two things are working at the 566 00:31:09,280 --> 00:31:12,560 Speaker 1: same time. First is that they are attracting. As they 567 00:31:12,560 --> 00:31:15,200 Speaker 1: become more powerful, they attract more people to them, more 568 00:31:15,320 --> 00:31:17,720 Speaker 1: entities to them, which makes them more powerful. And they 569 00:31:17,800 --> 00:31:20,440 Speaker 1: consolidate around a shared set of standards that makes them 570 00:31:20,760 --> 00:31:23,480 Speaker 1: lower in cost and more useful and attracts and turn 571 00:31:23,880 --> 00:31:27,200 Speaker 1: more things, more things, more entities towards using them. So 572 00:31:27,520 --> 00:31:29,680 Speaker 1: I was thinking about it that this is a place 573 00:31:29,760 --> 00:31:35,120 Speaker 1: where the tool measuring your emissions gains intense value from 574 00:31:35,160 --> 00:31:37,440 Speaker 1: becoming part of a network when everybody's doing it the 575 00:31:37,480 --> 00:31:39,600 Speaker 1: same way, there's a huge amount of shared learning and 576 00:31:39,680 --> 00:31:42,640 Speaker 1: a great deal of shared expertise. And this was actually 577 00:31:42,680 --> 00:31:46,200 Speaker 1: something one investor wanted to emphasize to me in writing today, 578 00:31:46,280 --> 00:31:49,200 Speaker 1: to say that you know that the fourth fourth tool 579 00:31:49,240 --> 00:31:51,640 Speaker 1: that becomes a network is people ourselves. You know that 580 00:31:51,800 --> 00:31:54,640 Speaker 1: we that we individually are a tool for climate tech 581 00:31:54,760 --> 00:32:00,160 Speaker 1: and collectively we are an instrument for a network work 582 00:32:00,280 --> 00:32:04,080 Speaker 1: for changing the climate. So that I think it's actually 583 00:32:04,160 --> 00:32:06,160 Speaker 1: very well spotted to go along with that same with 584 00:32:06,240 --> 00:32:08,560 Speaker 1: that same notion, and then the third one I said 585 00:32:08,680 --> 00:32:13,440 Speaker 1: was seven renewable power that we could probably expand that 586 00:32:15,280 --> 00:32:18,080 Speaker 1: zero carbon power sort of broaden the brush a little bit. 587 00:32:18,280 --> 00:32:20,280 Speaker 1: And the reason I said that is, like, Okay, the 588 00:32:20,440 --> 00:32:25,040 Speaker 1: the classic instrument for reducing my my emissions as a corporation, 589 00:32:25,120 --> 00:32:28,120 Speaker 1: my electricity emissions at least is I sign a power 590 00:32:28,160 --> 00:32:30,680 Speaker 1: purchase agreement with a wind or a solar farm that 591 00:32:30,800 --> 00:32:35,360 Speaker 1: has reduced my emissions commensurate to x percent of demand 592 00:32:35,440 --> 00:32:38,680 Speaker 1: for something. Usually I'm offsetting the emissions from the data 593 00:32:38,720 --> 00:32:41,719 Speaker 1: center by acquiring wind. That's great, but we've seen Google 594 00:32:41,760 --> 00:32:43,920 Speaker 1: and we've seen some other institutions as well go about 595 00:32:43,960 --> 00:32:45,880 Speaker 1: the process of essuch as saying I actually wanted to 596 00:32:45,920 --> 00:32:49,480 Speaker 1: meet all of my demand seven by doing that, and 597 00:32:49,600 --> 00:32:54,600 Speaker 1: that necessarily requires looking generally beyond one particular region for 598 00:32:54,680 --> 00:32:59,800 Speaker 1: sourcing electricity, one particular technology, one particular market approach. All 599 00:32:59,800 --> 00:33:04,720 Speaker 1: that's sort of thing, and it again necessitates interconnection and 600 00:33:04,840 --> 00:33:07,920 Speaker 1: requires it in the process. So you know, I closed 601 00:33:07,960 --> 00:33:10,800 Speaker 1: it off by saying a wind power purchase agreement is 602 00:33:10,840 --> 00:33:15,120 Speaker 1: a tool and zero carbon powers and network. So that's 603 00:33:15,240 --> 00:33:17,800 Speaker 1: that's the case again, like where they they have an 604 00:33:17,840 --> 00:33:20,280 Speaker 1: a creative value of things coming towards them and coming 605 00:33:20,320 --> 00:33:25,360 Speaker 1: into them. That creates value for everybody involved as well, 606 00:33:25,600 --> 00:33:28,600 Speaker 1: and then ideally has virtuous cycles. I suppose within it 607 00:33:29,080 --> 00:33:31,840 Speaker 1: things that get cheaper and better, shared learnings, shared expertise, 608 00:33:31,880 --> 00:33:34,560 Speaker 1: shared knowledge, and so as more of these funds that 609 00:33:34,640 --> 00:33:37,200 Speaker 1: we you know, open the show with, get raised and 610 00:33:37,320 --> 00:33:42,200 Speaker 1: get deployed, we'll have more of these networks seven zero 611 00:33:42,280 --> 00:33:45,960 Speaker 1: carbon power ideally, yes, And what I would hope is 612 00:33:46,040 --> 00:33:48,600 Speaker 1: that those those funds, when they're deploint capital, are asking 613 00:33:48,720 --> 00:33:53,080 Speaker 1: questions about where what additional value beyond the internal rate 614 00:33:53,120 --> 00:33:58,000 Speaker 1: of return they're going to generate over time and where 615 00:33:58,120 --> 00:34:00,479 Speaker 1: that might where that might have knocked on for other 616 00:34:00,520 --> 00:34:03,080 Speaker 1: stuff within their portfolio, and where it might might be 617 00:34:03,240 --> 00:34:08,279 Speaker 1: creating durable competitive advantages over time for the companies that 618 00:34:08,320 --> 00:34:10,800 Speaker 1: are making those decisions, not just for the assets, but 619 00:34:10,920 --> 00:34:14,200 Speaker 1: for the companies that are making those decisions as well. Nah. 620 00:34:14,560 --> 00:34:17,400 Speaker 1: Always a pleasure having you on. Thanks, Mark, It's a treat. 621 00:34:17,600 --> 00:34:19,840 Speaker 1: Let's let's do it more often. Definitely, Well, you're probably 622 00:34:19,840 --> 00:34:22,520 Speaker 1: saying me by this point, but no, any any any time. 623 00:34:22,560 --> 00:34:25,799 Speaker 1: I'm happy to I'm happy to hop on and thank 624 00:34:25,840 --> 00:34:28,920 Speaker 1: you for reading. Thanks for grabbing me on short notice. 625 00:34:29,160 --> 00:34:31,040 Speaker 1: I like doing stuff like this. It's a it's good 626 00:34:31,080 --> 00:34:33,160 Speaker 1: for everybody, and just for everybody. Where can they find 627 00:34:33,200 --> 00:34:36,200 Speaker 1: you on Twitter? Nat, It's pretty easy and a T 628 00:34:36,360 --> 00:34:38,240 Speaker 1: b U M L A r D. In the spirit 629 00:34:38,320 --> 00:34:42,520 Speaker 1: of deprecation, I have long since deprecated my very industry 630 00:34:42,600 --> 00:34:49,080 Speaker 1: specific in joke of a Twitter handle, unlike somebody I know, well, 631 00:34:49,280 --> 00:34:52,759 Speaker 1: I was in a new gold rush. I'm embarrassed. I 632 00:34:52,840 --> 00:34:54,719 Speaker 1: was embarrassed about the New gold Rush for a long 633 00:34:54,800 --> 00:34:58,960 Speaker 1: time because I put it up there, like because you know, 634 00:34:59,080 --> 00:35:01,600 Speaker 1: I thought, like God, this is happening, renewables is happening. 635 00:35:01,640 --> 00:35:04,279 Speaker 1: But guess what like now it actually kind of makes sense. 636 00:35:04,320 --> 00:35:07,320 Speaker 1: I don't know, you weren't wrong, Mark, just there you 637 00:35:07,440 --> 00:35:11,359 Speaker 1: go on that note. Thanks a lot that Thanks Mark, 638 00:35:11,440 --> 00:35:20,560 Speaker 1: take care of This week's show was produced by Ava 639 00:35:20,560 --> 00:35:23,719 Speaker 1: Gonzalez SLA and edited by Rex Warner of Grace Took Media. 640 00:35:23,880 --> 00:35:26,440 Speaker 1: Bloomberg an EAP is a service provided by Bloomberg Finance 641 00:35:26,560 --> 00:35:29,400 Speaker 1: LP and its affiliates. This recording does not constitute, nor 642 00:35:29,480 --> 00:35:33,000 Speaker 1: should it be construed, as investment advice, investment recommendations, or 643 00:35:33,040 --> 00:35:36,480 Speaker 1: a recommendation as to an investment or other strategy. Bloombergunia 644 00:35:36,640 --> 00:35:39,279 Speaker 1: should not be considered as information sufficient upon which to 645 00:35:39,360 --> 00:35:42,960 Speaker 1: base an investment decision. Neither Bloomberg Finance LP nor any 646 00:35:43,040 --> 00:35:46,000 Speaker 1: of its affiliates makes any representation or warranty as to 647 00:35:46,040 --> 00:35:49,360 Speaker 1: the accuracy or completeness of the information contained in this recording, 648 00:35:49,440 --> 00:35:51,759 Speaker 1: and any liability as a result of this recording is 649 00:35:51,800 --> 00:35:52,720 Speaker 1: expressly disclosed