Another ClimateTech Podcast
Another ClimateTech Podcast is a weekly interview series that explores the fight against climate change through the lens of entrepreneurship, investment, academia, activism, and art. Join Ryan Grant Little, a seasoned climatetech founder, advisor, and investor, as he interviews the climate warriors trying to save us from ourselves.
#Climate #Climatetech #Cleantech #Sustainability #Environment
Another ClimateTech Podcast
Hardware is hard but we wrote the playbook with Andreas Schwarzenbrunner of Speedinvest
Andreas Schwarzenbrunner always thought he's get into politics. But, as a partner leading the climate tech and industrial tech practices at Speedinvest, he's arguably playing an even bigger role in Europe's future this way.
In this episode we talked about:
🌍 Why hardware is hard but absolutely critical in climatetech
🔬 How crucial de-risking with corporate customers is for startups
💡 The role of policy in driving climatetech investment
🏭 The challenges of scaling up production and fundraising for founders
📘 The creation of "Building and Scaling Climate Hardware," a playbook for the climate tech sector
Check out "Building and Scaling Climate Hardware: A Playbook" here.
#climatetech #venturecapital #VC #deeptech
Welcome to another Climate Tech Podcast interviews with the people trying to save us from ourselves. Andreas Schwarzenb runner heads up the climate tech and industrial tech practices at SpeedInvest, one of Europe's leading venture capitalists. Together with Planet A Ventures and Norsken VC, they've released a very handy guidebook for hardware investing, which is what I reached them in Paris to talk about today. I'm Ryan Grant Little. Thanks for being here, andreas. Welcome to the podcast. Hey, ryan, thanks for having me Pleasure. So you lead the climate tech and industrial tech investment practices at Speed Invest, which, for those of us in Europe know it's one of Europe's elite VCs. Talk a bit about Speedinvest and what your day-to-day there looks like.
Andreas Schwarzenbrunner:Yeah, happy to. So in a nutshell, we are an early stage technology investor. So we invest in pre-seed and seed companies, usually everything from 100,000 euros up to 3 million in the first round. We also really like to be involved very early on. We can also be in the idea stage first product, first customers and then work very closely with our companies over the first three, four, five years. I would say that's a bit our sweet spot and really try to help in this first three, four, five years to basically accelerate the company, de-risk the company, raise a proper Series A round, a Series B round. Then we're usually not in the driver's seat anymore, so if everything goes right. So everything around our support around company building is focused on this three, four, five years. So we work on the board with them, we help them on hiring people. We have our own background team that helps on business development with our corporate partners as well. So there's a lot of things that we do in this first three, four, five years and then we can also follow on in our winners up to 20 million. So I think there's, but now we also have some firepower to invest in our companies Within technology. We have six focus areas that we do. It's healthcare marketplaces, consumer software as a service, deep tech, industrial and climate tech and fintech, and I'm leading the climate and industrial tech investments. So that is everything that is in energy mobility, agriculture, food construction, real estate manufacturing, circular economy, so all the big emitters, and also there we focus on pre-seed and seed investments. The firm is actually by now what is it? 2024, so 13 years old.
Andreas Schwarzenbrunner:We started in 2011. Actually, in Vienna all places it's not usually a startup hub Started especially in Austria and a bit of Eastern Europe. We did investments in Slovenia, hungary and also Bulgaria, croatia. That was actually the beginning, because there was not a lot of competition there. There were no VCs really in Austria and CE. That's why we started to do a lot of investments there, and then we moved more and more, with success and a bit also with maturity. We moved more into more established markets, opened up our first office in Germany, in Munich, in 2015. And then Berlin, london and Paris followed over the years and by now we invest all across Europe and also in emerging markets, and so that's a bit the evolution of Speed Investor, to say.
Ryan Grant Little:And what's your background? What got you into investing?
Andreas Schwarzenbrunner:That happened pretty randomly actually. So I have actually a background in economics and always wanted to work in politics, which I also did. So I always wanted to work either for the European Central Bank or for the European Commission. It was actually my dream. I worked then in politics, first in the Austrian Parliament and also then, shortly, for a member of the European Parliament. What I realized in my time in politics is basically that I was always giving it twice, producing a lot of paper, actually not really making decisions. It was very slow moving, it was very bureaucratic and my idea of maybe I do then a PhD at the side and then I go into ECB. I realized like it's probably not a work environment where I'm going to be happy and it's not going to be something that I love doing, and that's why I was always looking for opportunities and really thought like, okay, what can I do if, let's say, this dream of working in politics is actually not really a fit, which was, for me, a bit disappointing because I was always very engaged in politics since I was 15.
Andreas Schwarzenbrunner:And all my friends from university days actually moved into tech, because it was the first big wave of startups in berlin. It was the whole era still of rocket internet and first startups really popped up. People either joined the startup or maybe were early employees, co-founded a startup or worked for big tech like meta or alphabet, and their world always sounded way more exciting than my world because they had office parties and a young crowd, very international, very fast-paced, you are like 24 and you can just do stuff and so on, and that was everything. That politics is not really or public service is not really. And then I actually met a friend for lunch and he just let me do speed invest, and so he was also in the tech ecosystem, he knew speed invest a bit and he said hey, there's this small Austrian fund. They are going to expand because they want to raise a second fund. The first one was 10 million, was quite small, was only alpha owners, and they want to raise a second fund and they want to build up a team. Maybe it was only our founders and they want to raise a second fund and they want to build up a team. Maybe that's interesting for you because it's a good combination of, let's say, more macro view and also this startup tech world.
Andreas Schwarzenbrunner:And then, through a common connection, I reached out and also to one of the co-founders and then I had my interviews my first interviews and with Oliver also. Then I was CEO and founder and actually I think I was lucky in two sides. So first of all, I think I had no real competition, so no one really knew about Speed Invest and what we're doing, and VC was also not that hot back then yet, so that really helped, so it was not there. And the second was I had a really fun conversation with Oliver and we really vibed and so he gave me a shot and I was hired as the first analyst that didn't really exist before at Speedinvest Wow, okay.
Ryan Grant Little:And never left landed on your feet there. One of the things I wanted to talk to you about, and the reason we're talking today, is that you've just, together with Planet A Ventures and Norriskin VC, launched and I'll quote the title here Building and Scaling Climate Hardware a playbook, and I think this is something that's really important for the sector and for investors, who maybe are more used to investing in software and SaaS and this type of thing, and, as we're collectively trying to wrap our heads around kind of the challenges of hardware investing and this is the culmination of interviews with 118 investors and 142 founders, as well as nine years of market intelligence covering 3,600 funding announcements, and, I should say, all with a focus on Europe. How did this come together? What was the impetus for this, whose idea was it and why do we need it?
Andreas Schwarzenbrunner:So, how it started was actually that there is a real influx of capital in the climatic space over the last few years. Right, there's climate tech funds popping up left, right and center and there is more generalistic funds that move more and more into climate. Like, we are also one of those, right, because we also do other things. And what I realized is always that when you talk to them bilaterally, they're always like yeah, but we actually prefer software. Right, and there's a reason for that, because it because, of course, it's easier to scale and multiples are higher and so on, and we can come to that later. But I also realized, and we realized at Speedinvest, that in order to really change the way we do things, the way we produce things, the way we get around and really help this transition to a zero-carbon economy, you need to touch physical stuff right At one point in time. You need to touch physical stuff right At one point in time. You need to touch physical stuff, otherwise it's impossible. And this is where it kind of stopped a bit.
Andreas Schwarzenbrunner:Right, a lot of investors don't really want to do that. Founders are also a bit afraid of doing that. Things are not really scaling. There's a lot of research, but there's not that much capital into it and there's this gap between you're coming out of research and you're getting a lot of grants until you're really mature and you can raise a lot of money, like, for example, climeworks does.
Andreas Schwarzenbrunner:There's a certain scale where it works again, but there's this gap in between and we thought we really need to do something in order also to get more investors feeling comfortable with investing in hardware and also helping founders especially to understand what are the things they need to look out for in order to be attractive for investors and how can they de-risk their model and how can they go about it. And our goal really is to get more capital into, let's say, these earlier phases of scaling hardware and enabled climate technologies and also, for us, something that we needed to learn. We did a few investments, for example, one in direct air-capturing technology, one in sustainable packaging, a few others. It comes with very different challenges than a classic software business and that was a bit our goal. We really want to help the market to be more educated about it.
Ryan Grant Little:The first sentence of the handbook is hardware is hard and I think that encapsulates a lot and is well put and I've got some ideas about why that's the case, but maybe talk about why that is. You just alluded to that a little bit, but talk about why that is. You just alluded to that a little bit, but talk about why that is and especially maybe for investors who have been focused on software for the past 25 years, and why it's different.
Andreas Schwarzenbrunner:Yeah, it's, by the way, one of the first sentences I learned at Speedinvest when I joined. We looked at a company I can't remember why it was, but one of our founders told me yeah, but remember, like hardware is hard, so it's been in the ecosystem for quite a while. Why is that? I think first of all, we built up, I think, an ecosystem of entrepreneurs and operators over the last 15 years in Europe, which is, I think, that it has been massive change in the European startup ecosystem in the last 15 years and it really matured and you see now more civil founders, you see very seasoned operators etc. But almost all of them were in software right or digital services and or consumer and marketplaces and they didn't really have the skills. They don't really have the skills to scale hardware and very capex, intense business models, which is quite interesting because, on the other hand, we have a really strong industrial core, especially in the German speaking region, so there are companies who know how to produce stuff and do things and do these at an excellent level. Right, and I think it's.
Andreas Schwarzenbrunner:We need to combine these two worlds a bit more together, like this entrepreneurial mindset, with the traditional industrial core who knows how to produce stuff and do this at scale. It's quite straightforward, I think. It takes a lot of money, it takes more time, there's a lot of risk along this path that it doesn't work out or things go wrong, etc. And usually when you exit a company or when you IPO it and you look at companies also that I don't know produce energy storage or hydrogen, etc. They're publicly listed. Multiples for such a company are also way lower than they are for a software company is that multiples for such a company are also way lower than they are for a software company and that means that the outcome for an investor is potentially lower, with more risk and more capital investment, which is usually an equation that doesn't really make sense for an investor.
Andreas Schwarzenbrunner:If you think about it and I think this is also, or is, the main reason why a lot of investors shy away from it the main reason why a lot of investors shy away from it and this is also exactly what happened in, let's say, cleantech 1.0 in the first wave 15 years ago, or actually 20 years ago when it started. I wasn't really involved, but from all the stories that I heard is exactly what happened. A lot of investors burned a lot of money because it took a long time to scale those companies. It was very capital intense and the outcomes were mediocre, and then performance was mediocre and then a lot of investors came to the conclusion climate tech is actually not really an interesting investment area, which, by the way, I think is the reason why it's called climate tech, because it used to be called clean tech. But clean tech is such a negative connotationation. No one wants to talk about clean tech, so everyone calls it climate tech. I think actually we're all talking about the same thing.
Ryan Grant Little:I mean, there are some differences, but yeah yeah, I was a founder in 1.0 and dealing with that funding environment. I founded a biogas company in 2006, which we sold in 2010. And it was hell, the funding environment there. We had funders who didn't really kind of understand this. We were trying to stack the capital in very novel ways and it was very capital intensive. We were building.
Andreas Schwarzenbrunner:our first plant was $30 million and there was just no blueprint for kind of how to do this so and the great financial crisis right then hit. Probably that was not helpful.
Ryan Grant Little:Yeah and we were the last investment of an investor that in 2008, had a commitment pulled pretty majorly, and so it went from the mantra of let's plan for success and I would ask should we really be spending this amount, amount of money on our team? When we're pre-revenue, ryan, you have to plan for success. And then the next day it became why are we spending so much money? So I mean it was a different environment. I mean 2008 was. I mean it's in the past now and so we kind of forget sometimes. But it was a bloodbath out there, right. I mean it's like really just, it was insane.
Andreas Schwarzenbrunner:It's funny that you say that, because I had a conversation with one of my founders and basically we had this board meeting and he said like, yeah, now all of you told me for years like we need to grow, grow, grow, and now all of a sudden everyone is like why are you not profitable?
Ryan Grant Little:Yeah, it's whatever the flavor is and it's a lot about the capital availability, interest rates and these types of things and we have short memories for this kind of stuff. But I'm interested to talk a little bit more about this. So this term pops up a lot 1.0 versus. I guess now we're in kind of climate tech or clean tech 2.0. And there was a number that 90% of investments in 1.0 didn't return their initial capital in that phase, which is probably why some investors are still gun-shy about investing in this space. I'm wondering what's different now in 2.0. That means we're not going to replicate those failures or mediocrity.
Andreas Schwarzenbrunner:Before I start with that, I think that there's also a slight misconception because if you remember, for example, kleiner Perkins was one of the first large investors in, let's say, cleantech 1.0. And they were really at the forefront of this and for years people said like the returns are shitty and it didn't really work out. It was basically one of the picture-perfect examples of this CleanTech 1.0 bubble. But if you look at the Kleiner Perkins numbers of that portfolio now, actually a lot of those companies matured and grew really really well and are now public listed companies. It just took way longer, but the performance now, if you look at it over the last 20 years, it's actually not that bad. So they didn't lose money, so they actually returned money and it was not that bad, which I think is interesting. It also shows that it just really takes time. I think.
Andreas Schwarzenbrunner:What has changed? I think a few things. First of all, prices have come down massively. If you look at I don't know battery storage, if you look at solar, if you look at soon, probably hydrogen. So I think, a lot of fundamental technologies that are needed for the energy and climate transition. As prices have come down massively, technology has improved also massively. So there's a lot of things that we can do now, let's say, also with the help of AI and other things, but the software side and the technology has improved a lot of things feasible now that have not been feasible. Third, I think that there is regulatory pressure to do stuff. So even in the US, if you look at the IRA, but also especially in Europe. So there is this clear will to transform to a zero carbon economy and, yes, it will probably take longer than the targets are, but there is the clear will. And this is that there's momentum and there's regulatory pressure.
Andreas Schwarzenbrunner:The fourth, I think, is also consumer behavior has changed massively. I was traveling through Switzerland by train two weeks ago, from France to Switzerland, and I was looking out of the window and it was incredible Like every house had a solar panel on the roof, like really literally every house had a solar panel on the roof, like really literally every house. And of course, this is also due to government subsidies and so on. But you see that people are changing and also this whole like people don't want EVs. I think it's bullshit.
Andreas Schwarzenbrunner:I think that once you have driven an EV, people realize it's actually quite nice. And the same is true for other areas where we see like people consume I don know less need and so on. So I think that the consumer behavior has also changed. And the fifth point that I would mention is the amount of capital that is now going into the ecosystem is just so immense compared to like literally every day you see a big asset manager announcing investments in, I don't know, infrastructure, infrastructure, renewable infrastructure, in cleantech, et cetera. So there are a lot of, I think, driving forces where I think this time it has very, very different momentum. But I also think that there will be companies that will face the same destiny as companies in the cleantech component.
Ryan Grant Little:Yeah, going back to 2006,. I mean a lot of that. 1.0 was on the heels of Al Gore's documentary An Inconvenient Truth. You know that was a watershed moment, but it's probably not enough to sustain a whole industry and there wasn't really the kind of regulatory framework or, you know, public desire for this stuff that's needed and that I think we have now, where it feels like climate change is a bit more of a pressing issue these days. And indeed you mentioned Kleiner Perkins. That was the only Silicon Valley company or investor that was interested in our space at that time.
Ryan Grant Little:I remember being there on Sand Hill Road and meeting with them. They're very curious and I think at the time they called it resilience that they were investing in. So that was the topic that they put all their clean tech stuff into and indeed they've done pretty well and, as you say, it's just taken a bit longer. Do you have any kind of numbers when you're looking at this space these days and going forward? You mentioned there's lots of capital being poured into this space. Can you kind of fill that picture out a little bit?
Andreas Schwarzenbrunner:That's a good question. I don't know by heart, but what we see in Europe is that the proportion of investments in climate I mean obviously also through the Ukraine war there is just a real momentum for energy investments in Europe, and also the amount of capital has increased and also new funds that popped up over the last three, four years. So what we see in our data, in deal flow, but also on our portfolio side financing rounds, et cetera, but also on our portfolio side financing rounds, et cetera we actually see that climate tech is most resilient in terms of there are still rounds happening at high valuations, there's lots of momentum, there's lots of investors' interest. So for us it's actually quite interesting to see, because we have so many different teams right, so we have a very broad view, I think, of the market is to see that there's still a lot of momentum, although the rest of the VC market is probably not in the best spot at the moment.
Ryan Grant Little:And so energy, I think, is still the number one absorption of capital in this space. What are some of the other verticals within Climatech that you're looking at at Speed Invest and maybe, if you can talk about some of the deals that you've done or types of deals you're looking at?
Andreas Schwarzenbrunner:Yeah, and maybe if you can talk about some of the deals that you've done or types of deals you're looking at, yeah, so for us that's basically how we clustered it, our sectors that are also the big polluters. So for us, it's, on the one hand, mobility, transport, logistics, which is a big driver. The second is agriculture, food. The third is manufacturing and circular economy. So it's about how can we decrease energy consumption in production, how can we production make more efficient, but also how can we reuse and recycle materials in a value chain. And then we have the whole energy topic, which is, of course, the whole transition to renewables, but also all the topics attached to that, like from quit to balancing, to storage, to whatever, to new forms like hydrogen. So there's a lot of topics around energy transition. And the fifth one for us is construction, real estate. 40% of energy consumption in Europe is heating and cooling buildings. How can we make buildings more efficient? How can we also improve materials? How can we improve how to build buildings, how to be more efficient about materials? I think this is an important area also for us, where we, for example, recently did an investment in a company that helps institutional investors to transform their buildings from brown to green assets. So at the moment there's a big, big, big pressure for institutional investors to renovate buildings, and so it's a big driver and a big goal of the European Union. So, for example, what they do is they make an assessment of the building to tell you what the decarbonization path looks like. So if you want to get to energy efficiency, this is what it looks like, this is what it would cost, this is what subsidies would be. Then they take care of the whole process, including the construction, and then basically it's a one-stop shop that helps institutional investors to transform their portfolio from farm to green building, so to say. And that's an area where we've seen a lot of stuff, from like heat pumps to solar, but also like ESG management for buildings, energy management software for buildings. That's an area where we've seen a lot of things. That is quite interesting for us Also, for example, another example in our construction angle is we have been invested in a company called ShipFlix that does the procurement of bulk materials and construction materials to construction site.
Andreas Schwarzenbrunner:But what the big driver in construction is actually the disposal and recycling of materials, and this is what they are now doing. So they basically take materials from a construction, at demolition, and then also recycle that materials, and a lot of the materials can be recycled and be resold. And how can you really create a loop where materials actually get reused, get recycled and reused? The same is, for example, to what we look at in a circular economy, a company called Resurcify. They really created an operating system for corporates to manage all their waste streams, not only have an overview of all your waste streams and not only be compliant with the regulatory environment, but also then, for example, what they do with Johnson Johnson as a customer is they manage the whole loop. So they take care that the plastic waste from hospitals goes back to a recycler, that goes to a factory of Johnson Johnson, that goes back to the hospital. So basically, they manage the whole loop so that the plastic in that process of materials in healthcare products gets reused and recycled. And so they really built this operating system for a circular economy, which is, for example, one example. So there's many.
Andreas Schwarzenbrunner:We're investing on 30 companies for everything from sustainable packaging to solar, but also energy procurement is another one. For example, recently announced fundraising one with Trava. They help SMEs to procure energy cheaper, procure also cleaner energy and manage their energy consumption smarter. So there's a broad area of topics in those five core articles.
Andreas Schwarzenbrunner:I would say Usually, as I said, come in early and then have the capacity to follow on. But yeah, I think it's for me and for us it's a super exciting space. There's so much that's happening and it's also really exciting to invest in stuff that is actually really meaningful and this has really an impact. But first time for time, for example, 1.5, our company that does sustainable packaging. We work with big brands on also products that you know in the supermarket, right, and the first time they sent me the samples of these products actually via mail to my home and I looked at it was like it's so cool, right, when you see this like company, from an idea stage to you have this product in your hand and that's actually like 100% sustainable packaging, which is really cool and which is, by the way, another thing why hardware investments are cool Because you get to touch them.
Andreas Schwarzenbrunner:You can go there you can see, you can feel it, you can see it. I think it's a cool experience. It's also when we looked at the facilities on the recycling of construction material. It's cool. For me it was cool. You know, if you come from the software world it's also a really nice experience to see how, let's say, real things are done.
Ryan Grant Little:Yeah, I remember putting on my construction hat and walking for the first time you know walking through the plant that I built, and that's different time. You know walking through the plant that I built, and that's different than you know. It must be a cool feeling, it is. Yeah, I mean, it's something a bit more tangible than logging into a Chrome browser.
Ryan Grant Little:Yeah exactly so if your first love is politics, a lot of this stuff has a policy angle and the EU is probably, you know, as far as global jurisdictions go, one of the leaders in at least kind of trying to think about this stuff. To what extent do you get involved now with policy, or you know, or how closely do you watch how policy is being created when you're looking at investments?
Andreas Schwarzenbrunner:It's, by the way, my two worlds let's say that this policy and politics world and VC basically interfered the most was really on the climate tech side. Right, because I realized, like especially on the climate tech side, that so many of our investments are driven by policy and also so much of this market is driven by politics and policy. And then I think that is also for me quite cool, where it's the first time where I really think that my connections from back then, or what I learned back then, is actually somehow useful to also startups. And then I realized that a lot of startups especially really have no idea how policies are being done or how politics work. It's really incredible when you sometimes, when you talk to them, like how far they're off of like really of like public service. But I think so how we get engaged is, I would say, more so.
Andreas Schwarzenbrunner:For example, I've been in a dinner with the european commissioner that is also in charge of the esc program program and we're part of like a deep tech initiative there and how we really can scale up deep tech in Europe from like really, let's say, a seed stage to solving this capital crunch for real innovation. So there are a few things where we get engaged. It's the same also with different ministries in the core countries, where we are active and really try to be more involved in the debate, mostly around, I think really, how can we solve this capital crunch for innovation and for technology and scaling technologies in Europe, because I think that's where, of course, we have the most expertise. And there are a lot of other things you can tackle as well, from education and system to other areas, but there are a few areas that are important for us when we really try to be engaged in the debate and really try to help, because I think it's important that people are available, so to say, because policy always looks also for counterparts. They want to hear what the real world problems are and they want to hear what. And then you need to be engaged in that debate, although sometimes it's, of course, a bit frustrating because it sounds often like a never-ending story. You always tell the same things and then you come back next year and it's the same things again. But I think it's also part of the game and you need to keep on pushing, and for us, it's actually something where we also internally discuss that, even want to do more, want to be more engaged right on a european level, because we think that at the moment there is that europe has so much potential.
Andreas Schwarzenbrunner:Actually, we have strong, a strong education system. We have strong talent. Any us investor also will tell you the same. We have really cool companies that produce really cool stuff. But but what we're really bad at is scaling this up, capitalizing those companies properly. Also bring academic research to commercialization and build businesses out of it.
Andreas Schwarzenbrunner:But the funny thing is that the capital is there. I mean there's so much capital in Europe in the wrong channels, right, I mean countries like Germany, france, italy still sit on so much capital. Because Europe in the wrong channels right, I mean countries like Germany, france, italy still sit on so much capital, because I mean we used to be the richest countries in the world, right. So there's still so much capital. It's just not really invested in high growth assets and in technology.
Andreas Schwarzenbrunner:And I think if we can change this, there's that really, you can really unlock a new era of I always call it European dynamism, because there's this American dynamism from basics and see, and I said, yeah, we also need European dynamism because and I think that's doable and that's why, for example, in France, I really like that. There's at least people try to do stuff, which also, for me, shows and I think should be a good role model for people how fast it can change. Because when I started in venture, no one cared about France. France was a very closed ecosystem, french investors for French companies and everyone out of France was told don't go to France if you're not French. And now Paris is the hottest shit in the European South and US investors are flying in to invest in Paris-based companies. So you can change stuff if you want to. It's doable, and I think we need the mindset to say okay, let's change stuff in order that Europe is thriving again.
Ryan Grant Little:So for European investors who are listening and there are a bunch of them and who are nervous about getting into hardware investing as someone who's crossed the Rubicon on this, what is your advice for them? What's the best way for them to get started?
Andreas Schwarzenbrunner:Yeah, I think just get started is the first advice, probably, but for us the most important is definitely the team here. So you need to have someone where we believe they can scale that, so they know how to play that game. So that means in different mix of financing, so from grants to project financing, to that, et cetera. So how do we approach this different kind of financing? How do we structure the financing mix? Are they aware of this, et cetera? So how do we approach these different kinds of financing? How do we structure the financing mix? Are they aware of this, et cetera? So I think if you have someone who has no idea about that, you need to allocate them. Of course you can support, but it's a very crucial part of scaling.
Andreas Schwarzenbrunner:The second is really like production experience Depends a bit, of course, what you're doing. But if you really want to build, let's say, a test factory and then you build another factory, for example, we invest in a company called Xilic. They do lithium-ion battery recycling. They tested this on a lab scale. They tested this on a small pilot production, so that's how you usually go about. And now rolling this out to the first big production. They raised the 50 million round now to really scale this, this out, to their first big production. They waste the 50 million around now to really scale this. And what for us was super important is, of course, that you have people on the team and it does not necessarily need to be the founder team, but people on the team who come from manufacturing, who know how to set up such a factory, who know how to scale that, because you can do a lot of mistakes, it can take a lot of time, it can cost a lot of money if you don't do it right. So I think this production experience is crucial.
Andreas Schwarzenbrunner:The third is, for us, always like trying to de-risk it with corporate customers. So, basically, either it's an off-take agreement, so they know. So, for example, in the case of Silic, we know that if they produce the lithium out of their recycling factory at that certain quality grade, then we know that there is a German OEM who will buy that. So of course, they didn't buy anything yet because there's nothing coming out yet. But we know if they achieve that, there's a customer. And I think for a lot of we had the same from a sustainable packaging company with a big FMCG brand. So they said if you can fulfill that certain criteria and produce at that quality. We take X and we pay Y and that at least gives you that sort of say, that the comfort that if it works there's a market for it. And I think those would be for us the three main areas that we look at.
Ryan Grant Little:And then the fourth one would be to read this handbook, which I definitely recommend. A great piece of work. I really enjoyed reading it.
Andreas Schwarzenbrunner:It took a lot of time actually, and also a big kudos to the whole team here involved, because there were many people involved and especially also from North Carolina Band A and Sophia from our team, and she was great in doing that.
Ryan Grant Little:And any big surprises or aha moments in all of those interviews with founders and investors.
Andreas Schwarzenbrunner:I wouldn't say surprises, but a big confirmation that if you look at what the founders say, the biggest challenges are. There was a very clearly over 70% people said fundraising and also people said how to scale up production, and the outcome of our interviews and so on really was showing or confirming our view a bit on the market and that's also interesting. But it also, on the one hand, makes it easier because it also shows clearly what are the things to work on. If you now have the data really that those are the bottlenecks and those are the problems.
Ryan Grant Little:So it's called Building and Scaling Climate Hardware, a playbook, and I'll, of course, link it in the show notes. Andreas, thank you so much for being here.
Andreas Schwarzenbrunner:Thank you for having me, Ron.
Ryan Grant Little:It was a great chat. Thanks for listening to another Climate Tech Podcast. It would mean a lot if you would subscribe, rate and share this podcast. Get in touch anytime with tips and guest recommendations at hello at climatetechpodcom. Find me, ryan Grant Little, on LinkedIn. I'll be back with another episode next week. Bye for now.
