Episode 202: Gabriel Kra, Prelude Ventures
Today's guest is Gabriel Kra, Managing Director and Co-founder at Prelude Ventures.
Prelude Ventures is a venture capital firm partnering with entrepreneurs to address climate change. The firm has invested in over 60 companies across advanced energy, food and agriculture, transportation and logistics, advanced materials and manufacturing, and advanced computing. Prelude has a long-term commitment to the sector, accept informed risks, and couples a fundamental emphasis on venture-level returns with an understanding of deep-tech and hardware development timelines. Prelude manages capital exclusively for Simons family philanthropic entities and is a founding member of the Breakthrough Energy Coalition.
Gabriel co-founded Prelude Ventures in 2013, after almost 25 years as an investor, entrepreneur, scientist, activist, and ski-bum. Before launching Prelude Ventures, Gabriel spent four years as an investment banker with Deutsche Bank in its solar and semiconductor groups. He also was an early employee at venture-backed telecommunications and semiconductor start-ups, where he was instrumental in raising money, launching products, developing technology, and getting acquired. Gabriel's early experience working a summer at Yellowstone National Park and for Greenpeace sparked his lifelong commitment to fighting climate change.
In this episode, Gabriel walks me through Prelude Ventures' founding, Gabriel's career path leading to climate investing, and why a generalist mindset to climate investing is important. We also discuss Prelude's single LP model, why venture investing translates well to helping solve climate change, and the role fossil fuels play in the clean future. Gabriel is a great guest, and this is a fantastic episode.
Enjoy the show!
You can find me on twitter @jjacobs22 or @mcjpod and email at info@mcjcollective.com, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded March 10th, 2022
In Today's episode, we cover:
An overview of Prelude Ventures & Gabriel's role at the firm
How Gabriel saw himself as a capitalist who stumbled upon clean energy and how his career unfolded before he co-founded Prelude
Cleantech 1.0 and why 2009 was a tumultuous time for climate investing from Gabriel's perspective
A discussion on generalist v. sector-specific investing mindset
Determining Prelude's impact threshold when making investments in the early days
How stage factors into Prelude's investing strategy and what financial risks the fund is willing to take on when investing in climatetech
Where Prelude stands in the climate investing landscape and what sets the firm apart from others
Balancing blind optimism and the expertise of long-time entrepreneurs in cleantech 2.0
The role of fossil fuels in the future and why Gabriel steers clear of the energy source
The differences between Prelude's single LP model and a transitional structure with institutional LPs
How to ensure an equity and just clean transition
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Jason Jacobs: Hey everyone, Jason, here. I am the My Climate Journey show host. Before we get going, I wanted to take a minute and tell you about the My Climate Journey or MCJ as we call it, membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education, but they were longing for a peer group as well. So we set up a Slack community for those people. That's now mushroomed into more than 1,300 members. There is an application to become a member. It's not an exclusive thing. There's four criteria we screen for. Determination to tackled a problem of climate change, ambition to work on the most impactful solution areas, optimism that we can make a dent. And we're not wasting our time for trying and a collaborative spirit. Beyond that, the more diversity, the better.
There's a bunch of great things that have come out of that community, a number of founding teams that have met in there, a number of nonprofits that have been established, a bunch of hiring, that's been done, a bunch of companies that have raised capital in there. A bunch of funds that have gotten limited partners or investors for their funds in there, as well as a bunch of events and programming by members and for members and some open source projects that are getting actively worked on that hatched in there as well. At any rate, if you wanna learn more, you can go to myclimatejourney.co the website, and click to become a member tab at the top. Enjoy the show.
Hello everyone. This is Jason Jacobs, and welcome to My Climate Journey. The show follows my journey to interview a wide range of guests, to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help.
Today's guest is Gabriel Kra, co-founder and managing partner of Prelude Ventures. Prelude Ventures is of venture capital firm partnering with entrepreneurs to address climate change. Since 2013, they've backed over 40 companies across a wide range of sectors like advanced energy, food and ag, transportation and logistics, advanced materials and manufacturing. And more. I was excited for this one because Gabriel and Prelude have been doing this for quite a while since 2013. And they're also climate motivated. I mean, that's their sole focus, their single LP firm, a very wealthy and very philanthropic family in the climate cause. And they also have been around now through multiple cycles, which means that they know where all the bodies are buried.
So I was excited for Gabriel to come on and talk, not only about his journey into doing this work and the work of the firm, but also how the work of the firm has changed from when they first started doing this work in 2013 to today. This is one you definitely don't wanna miss. And I'm pleased to bring you Gabriel Kra. Gabriel, welcome to the show.
Gabriel Kra: Hey there, Jason, how are you?
Jason Jacobs: I'm well, so it's been about three and a half years that I've been focused on climate. And I, I met you and the Prelude team very early in that journey. And at that time you never would've come on a podcast like this.
Gabriel Kra: I'll tell you on a secret at that time, I was jealous of all the people you'd been having on the podcast. I, I was just dying for an invite man, dying for an invite.
Jason Jacobs: Yeah. Well, I have a lot of questions for you. I'm really grateful that you made the time to come on the show. You're such an important perspective for people like me that are relative newcomers to the space to, to understand since you've been at it for so long and doing so at, at such a strategic, well placed level.
Gabriel Kra: Well, thanks for saying that and I'll return it right to you. I am so excited and so grateful for what you bring to the, to the climate and climate tech landscape. I mean, I think MCJ and the community, the, you know, the Slack community, the things that I see and participate in, have just brought so much more talent and so many more people and so much more excitement and enthusiasm into what we're doing. That I, I think it's advanced the whole community and effort I'm grateful for what you're doing. Glad to be here.
Jason Jacobs: Thanks for saying that. Well, for starters, we, we like to just start with an overview of, of where people sit. So talk a bit about Prelude and what you do.
Gabriel Kra: Happy to. And, uh, if I get just, if I get too long winded interrupt, if I'm not being clear, I'll go back to sort of a, a little bit of a, an origin story of Prelude. We have, uh, specific LPs who are really climate committed. Our founding LPs, our co-founders of the firm, Nat Simons and Laura Baxter-Simons are massive climate philanthropists, as well as entities affiliated with them are our LPs. And I literally went out to lunch with Nat, like sometime in 2008 or 2009. I'd known him a little bit personally, a little bit professionally, done a few things with him. And we started talking and he sort of said, "Look, we are an investment family."
We've stood up a bunch of hedge funds and a bunch of investment vehicles. I am, we are now being incredibly active philanthropically in climate, although they were still very quiet about it back then, we should think about what's an investment strategy that we could have in, in climate and climate tech. And that was like 2009.
Jason Jacobs: And Gabriel, what were you doing at the time?
Gabriel Kra: At the time I was working at Deutsche Bank, I was in solar and semiconductor banking in the corporate finance group. So I had a great bird's eye view of what was sort of Cleantech 1.0, we covered and were active with a bunch of companies there. Before I did that, I was a tech entrepreneur. I was at a couple of hard tech startups, one in the semiconductor space, one in the optical telecommunication space, bringing really hard novel materials to market. And I was in the product management roles there. So I had, you know, I was able to bring to that moment, a technical background, hard-tech entrepreneurship with bumps and scars and bruises, uh, and some successes as well.
Uh, and then also just financial background, you know, that I'd have gotten working three years at Deutsche Bank. So that gave me kind of just a, I think an interesting and broad based background to bring to this effort. But, you know, once we got going in 2009 or in 2010, there weren't a lot of people, Cleantech 1.0 was crashing around us as we sort of started thinking about this platform. And there were not a lot of people who were getting active in climate tech, wasn't even a word clean tech back then, but we said, "We're gonna figure this out and we're gonna build a platform here." So it took us a little bit, but by 2013, we'd established Prelude Ventures.
Jason Jacobs: So one question before we get too far down that path. So prior to, to joining up with, with Nat and Laura, would you describe yourself as a capitalist that happened to work in clean energy or, or a climate warrior that was using capitalism as a, as, as your mechanism for impact? Like, how did you think about yourself and the decisions that you'd made up to that point?
Gabriel Kra: It seems like everybody who is involved in climate and climate tech has an aha kind of moment, right? So I'm gonna tell you my aha moment. And it goes way, way back. I grew up on Long Island and I went to school in New York City. I was not the most outdoorsy person. I was, I always skied. So I'm, I'm still an avid skier to this day. You wanna distract me, start talking to me about skiing. I'll drop whatever I'm doing and talk to you about that. But my junior year of college, after my junior year, I was driving cross country with a friend. The goal was to get to California where my sister was in school at Stanford. She was getting her PhD. And my grand plan for my summer, between junior and senior year was to sleep on our couch and get a job somewhere out in Palo Alto, you know, California, the golden land and just see a new place. That was my goal.
But along the way, we stopped in Yellowstone Park. We got into the park at like two in the morning, I was in a beat up old high Honda Accord. So we took the cooler out of the back of the Accord, 'cause we, you know, had food and whatever, 'cause you know, we were cheap. We didn't have much money. We stuck it on the roof of the Honda Accord, and rolled back our seats so that we could go to sleep 'cause we didn't know where to sleep and we didn't have a tent or anything like that. So we got woken up like 5:00 or 6:00 in the morning by the ranger tapping on the window with the kids, with the New York plays and said, "Son, this is Bear Country. You can't put your cooler on your roof 'cause you're just gonna provide a snack for the bears."
So now it's like 6:00 in the morning and we're in Yellowstone Park. And like that was the most beautiful freaking place I'd ever seen or been. And me and my friend, we spent two days touring around the park, seeing all the sites, old faithful, the Grand Canyon of the Yellowstone, the geysers, the mud pots, everything. And somewhere along those two days we stopped in and we got joked for the summer and I was a waiter in uh, Grant Village in Yellowstone Park. The summer in 1989 after the, uh, fires were the summer of 88 and every weekend I went on a big back country hike and I bought a tent, and I bought a sleeping bag, and I bought hiking boots and I became like a super avid hiker, tracker outdoorsy kind of guy. When I graduated from college the next year, I didn't get a job on Wall Street or in tech or in anything.
I went to ski bumped. I moved to Breckenridge Colorado. I got a dog and moved to Breckenridge, Colorado with my two best friends and, and lived there for a while. And then after I did that, I moved to Washington D.C. with my girlfriend at the time and I got a job working Green Peas. So waking up in Yellowstone, that's my aha moment. And I've been a climate activist ever since I was, you know, I was arrested at the Washington Monument in a civil disobedient direct action in uh, 1992, protesting Bush number ones, lack of action at the Rio Earth Summit.
So I go way back when? After a few years working for Green Peace, I figured I needed to learn a little bit more. I went back to school and got a master's degree in atmosphere chemistry because I wanted to learn more about the science and like early to mid '90s, it was obvious this isn't news. We shouldn't be waking up in 2022 saying, "Why didn't somebody tell us about this years ago?" The certainty has been decreasing. The margin for error has been decreasing. We've known about this since the '70s earlier. But the models have been there since the '70s.
Jason Jacobs: So coming back around to 2009. When you sat down with Nat at the time and he said, "Look, we got deep pocket and we're philanthropic and, and climates on our mind." Like what, what was the pitch at that time, uh, about what you would do together?
Gabriel Kra: There wasn't a pitch. There was a, a brainstorming, you know, I said, "I would like to come help you figure that out. I will do that with you." And it was incredibly collaborative and, and it took us a while. So now, you know, I'd worked a bunch of startups. We liked that approach. We thought it was an interesting place and we thought it was a place where we could put meaningful dollars to work and have a big impact. And it took us a few years to get to where we were, but we established what we now call a climate tech venture fund by 2010 or 11, we were investing, we did it out of a, a bunch of different kind vehicles. But by 2013 we'd established Prelude Ventures on a dedicated fund with LPs to do it. Fast forward, you know, well, we don't need to fast forward, you know, back then we weren't the best at what we were doing. We were pretty much the only ones at what we were doing.
Jason Jacobs: Those are the same, right? If you were the only then you were the best by default.
Gabriel Kra: Yeah. [laughs] There were a few other people doing it, but there were not a lot of people out there, right? Like if I walked into a room, I had to explain what we were doing. When I said we're investing in the low carbon economy. We're investing only in cleantech. You know, that's our mission. We wake up every day thinking about it. We wake up every day wanting to have a huge impact. And the tool that we have is venture capital and or that the tool that we're implementing in the struggle is venture capital. And our core belief is that everywhere you look, nothing in our economy for 200 years or 300 years, since the industrial revolution began was, was created with the cost of CO2 and CO2 equivalence in mind. We're polluting the atmosphere and there's a cost to that.
We've recognized it with sulfur dioxide in the atmosphere, we've recognized it with contaminants in our rivers and streams. There's a cost to doing this and nothing was built with that cost in mind. So there's tremendous opportunities everywhere you look, and that's where we wanna invest. But now we wanna build big companies. Like if you're focused on a company that has an impact, when it's successful, then you can make the financial success of that company, your impact measurement.
Jason Jacobs: In 2009, when you were just getting going, what was the landscape in relation to the, the Kleiner Green Growth and Thedras, and, and that whole wave. So had that already happened and crashed and burned, or just from a timing standpoint, where were you relative to that? And how much did that factor into your thinking at the time?
Gabriel Kra: Got it's hard to remember all the details. I've don't think Green Growth had been established, I think, but maybe they had, or maybe they were sort of coming together right around that time. 2009 was the center of the financial crisis. And so the spit hadn't hit the fan yet with all of the ARA money that had come in. And I think that was the vehicle that put the money into cylinder so that all hadn't happened yet. So yeah, 2009 with ARA and the money that started still was still going into the Cleantech 1.0, companies was still, uh, somewhat optimistic time period, even though the financial crisis was immense.
And then by like 2010 or 11, things were really starting to go south. I think I remember it was, it must have been in 2011 where we invested in some solar companies and then it must have been April of 11 where the polysilicon spot market prices crashed. I don't know if people remember that moment, but that was a signal that things were about to shift dramatic and Cleantech 1.0 or had shifted already. And you you'd missed it if you hadn't seen it.
And so from 2011 to say, 2012 or 13 companies were really having trouble fundraising that continued through, I don't know, 2016 or 17. There was this five-ish year period where getting any funding into companies was just a real hard slog for everybody. So that time period was the heart of the, kind of the dark quiet years for cleantech and climate tech. 2011 to 2013 or 2015. You know, Solyndra is a, the poster child for the, the loan program. And certainly that was a financial failure, but that loan program, even in those days, it was in the black, right? So it, there was, that was a bad loan. A lot of things that that loan program did were dramatically successful, they helped Tesla get to its first manufacturing stuff.
And, you know, Elon Musk on the stage at the, uh, RPE conference announced that he was gonna pay back all those loans early, right? Like that was, there were some dramatic successes out of it. I think we shouldn't just remember Solyndra and a failure there. That program did a lot of good and, you know, fast to now Jigar Shah, taking it to brand new heights and new places that are really exciting.
Jason Jacobs: Now, you, you mentioned low carbon economy. One of the challenges about climate investing is that the low car-, essentially the economy needs to move to low carbon economy, which means that climate isn't a sector it's, it's every sector. So when you were just getting going, how did you think about generalists versus specialists from a sector standpoint, from a stage standpoint, from a check size standpoint, were these initially financial investments or was it more about learning? Like how did you start?
Gabriel Kra: How did we start? It's a fun question and long pause because I'm trying to really recall how we started. The first thing I did is I set up an investment kind of committee with both people inside and outside, who I convinced to help us out so that it wasn't just me running around, chasing down good ideas or bad ideas and, you know, putting money to work without a team, I believe strongly in the powers of teams and the are groups of people to come to better decisions maybe than an individual will on, on his or her own. I still remember the first deal we did. And with your permission, I won't even name it. But one of my advisors, one of the people on that investment advisor committee, where I was really passionate about putting it forward said, "Yeah, well, you know, buddy's first investment is a disaster. So you might as well do this one."
He didn't like it. It didn't go well, the company didn't succeed. Uh, we've learned a lot from that. But even from that moment, everything was economic. We were always a financial investor. We always viewed ourselves as investing in a, with a theme. You're right. It's not a sector. There's a lot of sectors that you can invest in. But we were investing in a theme with a mission that was guiding what was inside or outside of that theme. But we were financial investors. The only metrics that we put on the fund is the return. Uh, you know, the venture level return of the fund.
I am very proud to say that we invested, you know, Prelude one or Prelude was an evergreen fund. We're launching now investing out of a new fund with our same exact LPs. That's gonna be a, a different fund structure, but Prelude one the evergreen, that thing is gonna return. It's gonna be a top decile, uh, kind of level return, maybe top quartile, depending, 'cause it's been a crazy bunch of time for venture capital asset class in general, but investing in only companies that are low carbon companies, climate tech companies. I mean incredibly proud of what we did and we made mistakes. We had successes, but we were always looking within that north star, is this climate positive? Does this get CO2 and CO2 equivalence out of the atmosphere? Once it passed through that gate, now we're talking purely a financial exercise.
Jason Jacobs: So when you assemble that initial committee, how much of that committee was helping you on the financial side to make sound investments versus on the impact side to assess whether it's actually gonna have the stated impact on the problem.
Gabriel Kra: In those earliest days, that was all just like an investment committee. That was that they were, they were the investment committee, is this, you know, I, we did a bunch, I would do a bunch of work and present it on the impact side. And so, you know, that was definitely paid a lot of attention to, and they would read my memos and we'd discuss that. But they were giving me feedback on, on the finance side, there's a guy who's a really good experienced value VC, another guy who's a multi times successful tech entrepreneur. They advised us. And then I would work through the deals with them and with, uh, our LPs, because at that point we didn't even have the fund structure established, but they were financial. They were looking at it from an investment perspective and advising us on that.
Jason Jacobs: And so ho-, how did you know at that time, if something cleared the impact threshold?
Gabriel Kra: You know, sometimes it's really easy to do that. And especially in the early days, we weren't pushing corner cases, I'd say on that, we would look at a solar generation technology company and it was pretty easy to do that. There was another company that we did, you know, that was, uh, reducing costs in solar. Um, and, and if, you know, reducing costs makes something more accessible. There is like a building technologies company where you could document how much less waste was generated on a construction site. Very easy, very quantifiable measurements. Early on in Prelude, uh, we did something that was then called [inaudible 00:20:36] now called Trove, right? Uh, about the circular economy.
And I don't remember when that was, say 2014 or 15. I'm not sure when we did the, uh, participated in the first round into that company. For us, we're like, this is a corner case, you know, reusing stuff instead of buying it new, like that's a corner case of what we are gonna do. Well, now it seems blindingly obvious that the circular economy is low carbon, right? Like if you look at the metrics on how much stuff we throw away every year, especially clothing, everything, the embedded energy in manufacturing is immense. But back when we did that deal, we were like, "Ah, is this really clean tech? Is this really decarbonizing?" And we did a bunch of work and we convinced ourselves that it was, but at that point we thought, "Oh, this is kind of an edge case." Now it like squarely in the middle of a great way to build a company that has a big impact and also makes money.
Jason Jacobs: Did you have rules Gabriel coming in about what you wouldn't do?
Gabriel Kra: Yeah, yeah, we did. We didn't have them when we started, but we talked about it a lot and a couple of things. I think we were really smart on, you know, back in 2010, natural gas, kind of the na-, the shell gas boom, was just getting going. And everybody was saying like freaking terrible, clever marketing, gas is a bridge to a clean energy transition, which I think is total BS, right? Like, like just to be clear. And we spent a bunch of time. I saw this company that was a really cool and interesting company doing profits for natural gas fracking. And so we had a debate. Would we do profits for natural gas fracking? And we decided, no, we don't want to do that. That's not clean tech. We also saw companies back then that were cleaning up coal plant emissions.
I'm not gonna separate that from a similar conversation we had years later on point source carbon capture, but this was just like a technology that you could, could put in a flu stack that would make the cold burn cleaner. And therefore you hypothetically get more energy out of it. And we're like, "You know what? We're not gonna, you know..." We thought about it. We looked at it. It was the first time we're not gonna do anything with fossils. We are like, you might be able to make it argument that cleaning up coal in India and China and even in the U.S. back then is a better, it has a huge impact. You might make that argument. We're not gonna do anything with fossil fuels.
And now that sounds again, blazingly obvious in 2010, there was still some genuine public and academic discourse on that. So that was one hardened task rule we never, never wanted to cross a line over. Aside from that, we made a commitment to sort of probe and look and be open-minded about opportunities. And I think that has served us well.
Jason Jacobs: And you talked about won’t dos on an impact side. I have the same question more on the financial side. So how do you feel, or how did you feel 'cause we're still in the early days here year, but in terms of our discussion focus, about science risk or capital intensity or reliance on future policy.
Gabriel Kra: All right. So three totally different buckets and everything I'm about to say, I've probably made a mistake on each of these metrics. Sometimes it's hard to separate science risk from engineering risk. If you know what I mean by that. And you think that you're tackling engineering risk, which is something that you can accept, but maybe you're, there's something about the science that isn't known or proven. In those scenarios, this is a debate, an ongoing debate right now is that's a risk, a science risk we're willing to take, right? You don't know if you can improve this thing on this metric, which is crucial for the economic success of this company. And I can think of examples in our portfolio right now, where we've done it, even though we see that risk and where we've chosen not to do it, where we see that risk. But what you're gonna get is a really repeated, boring answer from me.
You have to invest in the team, in the entrepreneurs. You have to believe that they can solve the problems because whatever you think at the series seed or series A of a hard tech company, is going to be the path to productization of the technology that you're looking at at that moment, whatever you really think about that is wrong. And it's the entrepreneurs and the team they assemble in the company who are gonna solve those problems. That very earliest company I've referenced, or one of the earliest companies I referenced is called PLANT PV. It was these two guys out of Stanford, Craig Peters and Brian Hart. And they wanted to build stacked PV silicon cells. They wanted to add a layer on top of your crystal and silicon cell to enhance the efficiency. And I didn't know if that idea was good or bad, but I knew that they were crazy smart, crazy dedicated entrepreneurs.
The idea totally didn't work out. The economics, you know, were crushed by just the decline in this cost of crystal and silicon cells that we all know about. And then they pivoted to inventing a paste. That removed silver content, uh, from the manufacturing process of manufacturing, crystal and silicon cells. And we sold that company profitably for them and for us as an investor, it wasn't a huge exit, but everybody made money that had nothing to do with the thing that we did a seed investment on back in like 2011 or 2012. But what I did the diligence on was those entrepreneurs. So that's how I think you need to address science and tech and engineering, but at the end of the day, better do your diligence on your team to address that problem. You asked what? about future regulatory...
Jason Jacobs: Capital intensity. Yeah. And specifically, like, let's say there's a little bit of equity in that a lot, a project finance, for example.
Gabriel Kra: Yeah. Well look, uh, we've done it. We're not shying away from capital intensity. There's two types of capital intensity. The one you just described and also just like some things are gonna take a lot of capital to scale the company. It's hard to remember, like right now, a great team with a big product, you know, going after a big outcome can raise a lot of money at an equity level to do what they want to do. We have a couple in our portfolio, Form Energy in ultra long duration storage, Electric Hydrogen, who's doing green energy electrolyzers. And I don't wanna come on here and tap my portfolio. But those are just the one, you know, couple that come to the top of mind, like they're raising a lot of money at the company level to solve really hard problems. That wasn't possible back in 2010 or 12 or 13. We were investors in a couple of battery companies back then and they managed to do it, but it, the capital wasn't as available and you had to be much more cautious and, and some companies failed for lack of capital. A lot of them did. And so that's a shift
Nevertheless, we were willing to take on that kind of capital intensity back then, but how we worked with the entrepreneurs to build the companies differed. Back then it was like, what incremental proof point are we getting to that's gonna enable us to raise that next increment of capital to continue the business development effort. How can we stretch this capital? Absolutely as far as possible, let's stretch the dollars, not minimize the time. That's kind of a trade off you might think of in a, in a big picture. Now, with a really good team, you can do other math. You still have to really be careful with your dollars, but you can say, "What can we prove that enables us to unlock these bigger pools of capital from these other investors who are in our ecosystem?" And you actually still need to be cautious and careful stewards of your capital, but you can think a little bit differently about company formation.
My advice, whenever somebody asks me, "Should we be taking this much money at that price?" [laughs] My answer is just like, yes. Right? 'Cause like eventually good times stop. Eventually markets dry up a little bit. And if you're, you know, my advice to my entrepreneurs and to other entrepreneurs is like, don't be pennywise and pound foolish, you know, arbitrarily without talking to any specific incidents. If you can raise $50 million, uh, at that valuation, why not raise 60 or 75? If the markets will give it to you, don't be so shy of that dilution, give yourself the resources you need to build a really big successful company. So capital intensity on that metric, we were always willing to accept it and willing to write checks into those companies. And we have some track record in the, you know, say 2012 to 15 or 17 timeframe where we were amongst the only one or two or three backers of companies that couldn't raise outside capital in those times.
I think the right now we're in a much better capital raising environment, but yes, it's the short answer. Capital intensity on the project side is a different beast. There's also much more money there available. And I go back and forth on company and entrepreneur specific. And we can spend some time there if you like, but I go back and forth on how to structure the cap tables of companies that are really project development oriented with a kernel of, you know, equity needed versus companies that really need to do a lot with their equity. You know, meaning build a really hard to build product that takes a lot of money to do the first iteration of it. That's a different economic decision versus a company that doesn't have that much to do on the company side, but then needs to figure out financing on the, on the project side. They're two different beasts.
Jason Jacobs: Well, I have different questions that would take us in very different directions. One is, would you invest in domains where you don't have experience or expertise?
Gabriel Kra: Yes. Even in my partnership, people have different attitudes towards it. And again, it, it comes back to the entrepreneurs and the entrepreneurial focus.
Jason Jacobs: Well, you say that, but I guess one question for you is how to stage factor into that equation. It sounds like people above all else, but, but is that, is that relevant at a certain stage? But there's more, you know, but domain expertise was required at X stage and beyond, or are, are there at least guidelines if not rules?
Gabriel Kra: There's guidelines. Well, look, we wanna be a series seed and series A investor. You know, like those things mean different thing. So I'll even be specific. We wanna invest, you know, seed stage investing nowadays feels like companies are calling $5 million rounds and above still their seed round. So we wanna participate in those and we'll write a three, you know, if you're doing a five, four, $5 million seed round, we'll write you three, 4 million check. We can do that. And we will do that. And frankly, for a fund that says a, you know, 750 million fund running a three to $5 million check, you can take some real chances there. So, you know, if I meet the entrepreneurs and they tell me a compelling story and I do some real diligence on it, I can get there pretty quickly on that. You know, these days Series A companies are raising 20 million bucks.
So, you know, for your fund math, you wanna write a 10 or $15 million check into that company. But you gotta do a little more work on that. And probably you've got to be a little more knowledgeable about the industry or have to take the time to learn it. But again, it depends on the entrepreneur, you know him well, I'm good friends with Matt Rogers of Nest Fame. And when I got the chance to invest in his latest venture, I just ran as far as fast as I could and put, you know, put as much money as I could into it. Right? Everybody wants to invest in that team.
And I didn't know a ton about the industry. I learned a lot and I had a lot of value to add as an investor to them, I believe. And you know, you could ask them that would be a better metric of that. But that's a, a much easier equation, great entrepreneurs going after really big, hard problems. It's easier. So there's guidelines, there's rules, but I think the best investments are made by a combination of technical work, diligence, understanding the market, but then your heart, you know, you've gotta believe in and trust the team. That's gonna build that company.
Jason Jacobs: Switching gears a bit Gabriel, you mentioned that when you were getting going, you weren't the best, but you were the only, and increasingly you are far from the only, you've, know well, as I do, there's a new fund that's being announced almost every week. There's a, there's a lot of shifting energy and attention. So the generalist firms are looking to do more in this area. There's dedicated climate funds that are getting set up at, at every stage. So I have two questions there. One is, how do you feel about that in terms that capital inflow, in terms of our ability to address the problem and then separately, more selfishly, how do you feel about that from a Prelude standpoint in terms of what that means for, for you and your firm.
Gabriel Kra: Both good questions and not so different answers, but I'll get into, I'll get into some things that may be, you know, ruffle a few feathers, at least on this one. Generally speaking though, it's great. We need so much money to solve this problem. And it's not just venture dollars, right? We need venture dollars, we need project dollars, we need construction, finance, we need infrastructure dollars. And it's not even a venture problem. We're going after a segment of the solutions, but you know, know we need to be building as much solar wind. I think we need to be building nuclear and I'm talking vision, not fusion. I think we need to be building all sorts of infrastructure enhancing-
Jason Jacobs: Because you think fusion will never get there Gabriel, or do you, or because you think it would actually be detrimental if it did get there.
Gabriel Kra: No, I'd love to see fusion get there. I believe it probably will get there. Even the most optimistic looks of fusion are like, "We're not gonna be deploying this," right? It's not a carbon impact in the here and now, right? Like we need to be building this stuff today, tomorrow throughout the 2020s into the 2030s. And I think the fusion will provide cheap or at least base load energy. But it's not gonna be doing it at scale until 2040 or 2050. And that's just too late. I think all that money coming into the sector is great. You know, and the fact that we now compete for deals where we didn't have to be like, "Uh, just, you know, grow up, you know," of course you have to compete for deals. That's good for the entrepreneurs. It's good for the ecosystem and it's good for us, right?
Like would I rather be in this environment than the environment we were in from 2013 to 2015 or 16 every day of the week, 24/7. Because the companies that I wanna participate in and invest in and the entrepreneurs I wanna support, they're gonna be more successful because of this ecosystem. So glory, hallelujah. I mean like iniversably. I have a lot of fears and concerns. I think there's a lot of investing going on that is not based on the economic value that the company is creating over a reasonable timeframe. I think there's a lot of money that's coming into the sector that is not bothering to do the work to under, to know and understand how the companies are built and how companies are built and scale. And I think that is going of fight a bunch of people and investors and companies in the behind, over the coming years.
And so I worry about that. We have constant conversations around valuation. We've seen this in other sectors before, we've seen it in cleantech before. I think we're seeing it in the public markets already. And in my experience, and you know, I've been watching this for 20 plus years. I'm not the most seasoned veteran in the room, but I've been watching startups and valuations for a good while now, you know, what goes up does come down. And so the, the public markets trickle down to the private markets and valuations and availability of capital get affected.
So I, I have a lot of, I have a lot of concerns there, but that's layered on top of incredible enthusiasm and, and gratitude that so many more people and investors and entrepreneurs are coming into the sector. And at some point I'd love to talk about that because I think the biggest change I could rattle off a bunch of changes from 2010 to 2020 or 2012 to 22, 2022. But the biggest change that I see and the most exciting thing, the most positive, the most climate positive thing, as well as outcome positive thing, is the people working in the sector today versus 10 years ago.
Jason Jacobs: The people meaning the, uh, which aspect is, is it the volume of people or what do you mean?
Gabriel Kra: The volume of people, the commitment of people, the folks who are tech, you know, traditional tech entrepreneurs, like we were talking about earlier, who are coming into the sector, students at, you know, the top tier universities who are now deciding what their feet, where they're gonna of work or what kind of companies they're going to sound are incredibly exciting. I spent time at Berkeley at Cal and at Stanford, you know, have, since we started Prelude and even before. In 2010 and 2012, if you went down to a cleantech event at one of those campuses, yeah, the room would be with 20 or 30 students, or maybe a few more, but everybody wanted to start the Web2 companies, Facebook and Twitter. And that generation, you know, Salesforce was already established, but taking off. In 2010, everybody wanted to start the next Facebook or Twitter or something akin to that.
And I looked at that and I said, "God, we got this huge problem. Why aren't you starting companies in our sector?" We don't have that problem anymore. And that's really exciting. I went down to Stanford. Uh, I don't know if you've had, uh, Dave Danielson on podcast. He's the former under secretary of energy for EERE, he's now at breakthrough energy ventures, an amazing guy. He teaches a class at Stanford with a few other people that is where the students go and do, uh, projects, you know, that are about a startup, you know, and then they do a bunch of work on the startup and then they present it and I got to go and be the judge there. And I've done that a few times. I think I did it once earlier for that class. And I've done it at a similar class at Berkeley, at Cal and a caliber of the students and the caliber of the ideas, the sort of innovative, thoughtful things they were bringing to the table was exciting.
And these are students who weren't just taking this as a class. These are students who want to make this their career. And I spoke to another person who's a friend of mine, Alicia, who teaches us a class in law and climate and finance. And, and she teaches it in the law school, I think. And it's about finance and climate and asked her, "How many of your students end up getting a job in a climate related field?" And she's like, "Over 50% of the students who come through my class and are getting climate related jobs." So that's the indication that I'm talking about. That influx of talent into our sector. It's not that the people working here 10 years ago, weren't talented. It's that there's so many more of them. And so many more people are realizing that this is something to focus their career on.
Jason Jacobs: Aha, and I had Jagger back on the show recently. And one of the things he was talking about was just how the incentives of venture as an asset class really aren't aligned with, uh, scaling meaningful, climate innovation, and that we need to stop thinking about things with fun life cycles and exits and things like that. And think more about, you know, how to build infrastructure that last for decades or centuries or, or things like that. Do you worry about that? That, that venture, although, I mean, you mentioned it's a subset, so there's some acknowledgement that it's not gonna save the world on its own kind of thing, but, but is, I mean, is it is venture by definition greenwashing?
Gabriel Kra: No, no, maybe you're, you know, you're, you're teasing me or provoking me, but I don't think-
Jason Jacobs: Yeah, I do. But so obviously I don't think it, but, but I'm still asking the question.
Gabriel Kra: I Know, I know, I get you. I know I get you, but, uh, I'm kind of smiling and grinning here, but I absolutely don't agree with the statement that venture is not suitable for solving climate related problems. I also Wouldn't agree if anybody made it hit with a statement saying venture can solve all of the climate problem. Venture is really good at some certain specific things. When you have a core technology or business innovation that you can invent something, be it, you know, invent and patent invent and trade secret, or just invent a, a kind of think through a new way of doing something, that you can have a proprietary moat around, right? That other people can't immediately copy and blow you out of the water with more money. And then once you've created that, once you've invented that, uh, and you've built that moat, you can take in a bunch of money and scale that thing really rapidly. That's what venture's good at.
if you have something that's just like project development, it oriented from day zero. Maybe you shouldn't be talking, trying to raise money from venture capitalists. Because what I wanna do is I wanna put in my $10 million into your company, and I wanna see that thing go to $200 million, which means you gotta 50, 30X, the value of your company over time. And you only do that by creating some something new and disrupting something, which is great. And a bunch of that stuff will help us solve climate. Think about what Tesla did. Tesla didn't become the most valuable car company in the world. It's more valuable than like the next eight or 10 or something like that. They proved to the world that you could make an electric vehicle that people wanted to drive because it was more fun, more attractive, more sexy.
They made a sector viable. And now that sector's gonna take over all of, uh, passenger vehicle transportation in some recognizable timeframe, we have work to do to accelerate that we need government policy. We need money, we need regulation, but like the speed isn't inevitable. But the transition is. That was a venture, a huge smashing venture success. Think about what the folks at Sunrun did, right? They came up with like business model innovation, and we're really good at it. And they did it better than SolarCity and Vivint did right? But they figured out how to economically, attractively put solar and now batteries on people's rooms and then their homes and make money doing it and build a big company to having a big impact on they're creating a big company that's venture.
You know, I can rattle off more examples where venture is massively successful and going to be massively successful with big companies that have big impacts. But it alone won't solve the climate. And what Jagger's saying about infrastructure and decarbonizing infrastructure and making it last for a long time, because that's actually fundamentally decarbonizing. Then, if you don't have to rebuild all that embedded energy, doesn't get used. That's not a venture problem. That's a different problem. And we need different pools of capital to solve it. And we need to solve those too. It's yes. And not know the other.
Jason Jacobs: So bringing that back around then to venture, at least at the earlier stages, given that it sounds like at, at least from, from your view, it is so people focused. Is it the same sport as a more generalist tech fund in terms of what Prelude does and, and that, like, if I'm a generalist tech fund that decides I'm climate motivated and either wants to bring in a climate partner or shift my focus to do more investing in this area, or maybe even be, be dedicated, like, am I equipped or do I need to bring different competencies than, than exist in my firm already?
Gabriel Kra: I think you're equipped generally, probably maybe a 10 year fund. Isn't the perfect vehicle, but the dirty secret is there's 10 year funds with two year extensions that get another three year extensions. You know, I think there's a lot of things that have lasted 15 years in venture. So I don't think that's a fundamental barrier. I think the core competency of building companies, you know, helping entrepreneurs build companies is what a good venture capitalist has and brings to the table.
I think a good VC firm, that's a generalist firm has that there already. And I think though, there are some things, you know, you better think through and learn, you know, hard tech companies, you know, companies that are building physical systems, companies that are working on biology, you know, like companies that are working on electrochemistry and batteries, you know, those scale and grow differently. Uh, and I think that was a lot of the mistakes of Cleantech 1.0 where people expected them to scale similarly to a SaaS company. So they have some learning to do, but yeah, they can come in and, and probably do pretty well. The pattern recognition is valid, but getting the pattern recognition and learning the new industries, learning the new technologies, it does take time.
Jason Jacobs: And I, I've heard some people say that if you have expertise, let's say in ad tech that instead of shifting and trying to build a climate company, you should just make as much money as you can and give it all to climate causes. If, if that's the cause that you care about the most, do you think that's good? Does that resonate with you? Or what would you tell if that person heard that aspiring founder coming from say ad tech, as an example, asking that question?
Gabriel Kra: I would say, come talk to me, 'cause I can slide you into a whole bunch of companies where your skills will be really valuable and really needed and where you could help build a big company. If you wanna be a founder, you know, like if you're wanting to launch your own thing, then there's things to be done there as well. Climate tech is so broad. There's so many opportunities that to build a successful company that actually helps to decarbonize some massive segment of industry that I think you can find a great place to, to park those talents and build something meaningful.
Jason Jacobs: Another question that's been on my mind. I wanna be careful with how I phrase this. In some ways it takes blind optimism to, uh, head down the entrepreneurial path. And so people that have been too close to a problem for too long and seen it not work are sometimes that times that's valuable institutional knowledge and it's productive. And sometimes it is PTSD that can be inhibiting because it's this cynicism that even if it's justified, pretty much guarantees failure before you even get out of the gates. Right? And so given that the new blood from Silicon Valley, I would say a lot of it as you were talking about, one of your fears is that it's a is blind optimism and it's reckless and it's too cowboy and not doing the work. How do you balance that as it relates to how much DNA, you know, experienced domain DNA versus new DNA? Yeah.
Gabriel Kra: There's a bunch of stuff that I think I'm gonna miss when the successful company comes around because I'm looking through yesterday's classes. What are some, some examples of sectors where I'm really nervous that I have just that wrong filter on. There is so much both embedded energy in buildings and actual used energy and operating buildings. And I've seen so many companies struggle and die that hill. Somebody's gonna crack that nut and build a big impactful company. There are probably a bunch of big impactful companies and I'm afraid I'm gonna miss it for exactly the reason you just outlined. We institutionally had some success in early biofuel companies. We were investors in sulfurzyme that eventually went BK, but you know, if you were a venture investor in there, you, you had the opportunity to make money. We're currently investors in Zymergen, which is, has having its own public company struggles.
I think there's huge, huge successes still to be won using bio, to make materials in some sense or another or fuels or chemicals. Uh, and I'm worried that again, I'm gonna struggle to see it having, you know, been through a bunch of cycles with a bunch of companies there. We look at waste waste to X, you know, like waste to anything. And we've seen a bunch of failures there. We actually had the opportunity to invest in something that we took recently, but I had to really into my partners why this one was different because we've all seen so many failures there. So it's a really good, good question. And I think that's another reason to welcome not only the new blood institutionally like new firms, but also new people at your firm and younger voices and less jaded voices. I'll even refer it's a specific company that had this exact same conversation internally.
We were talking in an early board meeting about at Electric Hydrogen, which is making an electrolyzer to make green hydrogen. And we were talking like, God, there's a lot of industry vets who have been around Penn and electrolyzers and fuel cells, you know, where we could pull from, but they know all the old ways of doing things. And they know all the ways that haven't really produced the economic breakthrough that we need. And we had a lot of conversations of what's the right ratio of no old industry vets to green technical, younger generation people, to people pulling in from totally different sectors to help build that team.
And I think if you look at how some of the other big successful clean tech companies have been built, it's been by carefully managing a seasoned, experienced engineer, scientist, biz dev person, but putting also combining them with people looking with, with clean eyes, new eyes, it's, it's a, you gotta constantly reinvent and rethink.
Jason Jacobs: Gabriel, I wanna go back to something you mentioned before, which is that you won't do anything with fossil fuels. I wanna just push on that a bit. Are you talking about fossil fuels or fossil fuel companies?
Gabriel Kra: The former, the former, I think look we're co investors for the bunch of the venture firms on a number of companies. I think it's, you know, from a, some sort of philosophical perspective, people think of it as a bitter pill to swallow that, you know, the big oil giants are gonna make money cleaning up the mess that they made you like, that's somebody, you know, that's a definite perspective that's out there and I can and empathize with that feeling I can say, "Okay, I get that." On the other hand, we don't have the time to waste and we need money and expertise from all sorts of industries and sources. And so we go into that conversation pretty pragmatically.
But, uh, what I'm, what I was talking about is we don't want to invest in something that's gonna make oil or, or coal or natural and gas you cheaper or last longer. And we have, we've had a couple of opportunities recently where we've had to stare down this decision or that decision by a company could do that. And are we comfortable with that? Yes or no. Or is there a different way to attack that problem. And, you know, think about things within our portfolio. 'Cause it's a different thing. Once you're an, an investor and you're a director and you have a fiduciary responsibility to the company and to all the stakeholders there, it's a different thing at that moment, even than when you're making an investment decision.
Jason Jacobs: I'll just bring up one example, just a pressure test, but like plugging methane leaks in, in pipelines, for example, uh, is that something that you would stay away from due to principle?
Gabriel Kra: Is, is that got, it's, it's a hard question. So I'm gonna start somewhere that's a little bit easier, but still hard. You can use methane, forget burning it. You can use methane as a feed stock to do all sorts of really interesting things. And some of them are climate positive. However, you can, even if you invent the most remarkable and best process for how you, what you do with the methane, if you're up stream leakage, isn't taking care of and accounted for? Then that's probably a climate negative solution and you I'm talking well to where, you know, well to use, right?
So even if you have the best thing to do with methane, whatever that is, you know, methane paralysis to make hydrogen the, you know, the methane plant, you know, that the DOE funded to do carbon black and hydrogen, you know, if your upstream emissions aren't accounted for and properly accounted for, then that might not be the best climate thing, or that might be a climate negative thing.
And so we have looked at, and we are not yet comfortable, uh, investing in those sorts of companies. Now what you said, would you invest in something to plug methane emissions? That gets even tougher and tougher. We probably wouldn't do it. We could probably justify not doing it over economics. You know, like, is this gonna be a big business? But what's the point of doing that is the point to change the whole methane, you know, natural gas delivery system so that it is all leak proof. And therefore you can green that and then you can capture everything and you can stop burning methane.
I would find that a very dubious climate proposition, uh, you, somebody could convince me otherwise I would really be a skeptic if you were to tell me that we can actually make methane from wheel to point of use, let alone, whatever that point of use is green, not leak. I think that's a really, really hard engineering problem, uh, and system problem and human nature problem. And I'm not convinced that you can do it and I'd rather spend my climate dollars and my dollars elsewhere.
Jason Jacobs: I wanna switch of gears a bit. And this is another one. I, I don't know quite how to ask succinctly, but I mean, you mentioned that you're essentially single single LP. I mean, there might be different entities, but at the end of the day, it's family wealth and that there's a profit motive from that family wealth, but that the family was very philanthropic and that it seems like maybe profit and correct me if I'm wrong is not the primary motive for the, the capital.
So there might be profit expectations, but it's coming at it from a missionary standpoint. The reason I, I bring that up is that if you take a typical institution, you can look at say a pension fund as an example. And, uh, you know, I, I've never raised an institutional funds. So I mean, caveat, caveat, right. But, but you, but like if they're strictly return focused, you can call it mercenary. Right? But then they'll remind you that it's not actually mercenary because these are, you know, these are like people's pensions and retirees and things like that, that they need to protect and maximize because these people need to live.
So by being returned focused and mercenary, it's actually being missionary in a way, but this case is different. And, and so I guess what I'm asking, and that was a long-winded way to ask it is what is the difference in terms of you and your team and your ongoing operations, having this single LP that you have versus if you had a more traditional structure with lots of institutional LPs?
Gabriel Kra: When I, uh, started before we created Prelude, when I started working at what eventually became Prelude, there were a couple of investments, kind of side pocket investments that I was kind of handed the mandate for. And one of them we wanted to sell and get the, the family out of. And I got a close friend, bit of a mentor to come in and help me with that process. You know, who ran a little boutique bank. He came and we sat down and I explained where I was and what I was doing. And he met some of the principals and he looked at me, you know, like a week two later and he smiled and he said, "Gabriel, don't fuck this up. This is the most amazing opportunity you'll ever get." So I recognize I don't have all your answers. I recognize that we are incredibly lucky.
We are incredibly fortunate at Prelude. We have like what you said, mission driven, limited partners and capital. And we work within this amazing structure, this amazing family office structure, where we get to wake up every day and think about helping solve climate, right? That's what we get to do. What a privilege, what a joy, what an honor, and I'm not being flipped. And we get to do it in a way that we have actually all one way or another dedicated our careers to venture investing, building companies. So for us and our fund, we are a returns driven fund. And our limited partnership agreements, documents, we don't talk about the climate side of stuff. It's all about the fund and returning it and thresholds and you know, economics and legal points of how you call, invest, return, distribute capital. So like for me, there's no contradiction there.
There's just an amazing structure. And I'll bet that if you look and talk to many of the climate, other, the other climate venture firms around, they have their version of that, our structure is unique, but that aspect of it I'll bet is not unique. I've said this to friends and I don't quite know how to say it. So excuse me, if it comes out wrong, just like you said, you didn't know how to ask it. I think if you're like an engineer in the early stages of your career, and you're going to work in an oil and gas extraction industry, you're kind of kidding yourself if you're saying that that's just a morally or neutral thing.
Like there's something not right about that. Now I get people need jobs and I get people have to do it. So maybe it's not the college engineer who just needs, you know, somebody coming out or the oil rig worker, I'm not talking about him or her, but like at some point, if your job is just pumping out and you're a senior exec and you've got money and you're secure, and your job is just pumping out the next barrel of oil, there's something there for me that I find difficult.
And so to that LP, who says, "We're just doing this for the grandmas and the grandpas and the retirees, you know, it's their pension funds." Yes you are. But there's a lot of study that says you don't need to be invested in these industries to this amount to guarantee that return. Jeremy Grantham, you know, the Granton Foundation published work, you know, sort of on a decade by decade. Like you couldn't find a period of time where some meaningful impact returns, uh, if you just took energy, the energy sector out of a basket of investments, I don't have that at my fingertips, but it's really powerful.
So in this day and age, like to say my investment decisions as a limited partner in funds is ethically climate neutral thing. And it's for the betterment of, you know, widows and orphans and, you know, like that old phrase about, you know, those kind of stocks, I don't buy it.
Jason Jacobs: Well, there's a co-, couple other areas I wanna dig into. And, uh, I know we're running up on, on time here, but one is just related to what we were just talking about. There's these words that get thrown around catalytic capital, additionality, concessionary capital. I mean, if I'm hearing right, it sounds like, it sounds like you don't really fit into any of those boxes, but how do those words resonate with you? Are there any of those that are, that are kind of, I don't know, maybe I'll just stop there, like just like speak to those words and, and whether you identify with, with any of them.
Gabriel Kra: Look, I guess we do think about additionality, but the way we think about it is the but for test meaning, but for my dollars, will this thing exist or not exist? That's a sort of an additional additionality test. We don't do that.
Jason Jacobs: Well, you can't, if you're fighting for deals with, Andreessen and Sequoia. [laughing]
Gabriel Kra: No, you cannot. Exactly, exactly. Right. And that's the new environment. But what we do is we say, "Is this gonna have, when it scales a meaningful impact on CO2 or equivalence in the atmosphere," and we don't have a numerical gigaton metric, but we do dive into that really carefully and thoughtfully. Concessionary capital, no, we need our return. Like that's why we're investing these dollars. These dollars were entrusted to us to return, uh, a venture level return. You know, we need to take that money and return like three times that amount after we return the capital to our LPs to be really successful at what we do. And that's what we're aiming at. So we're not conceding any return there. I think concessionary capital has a place. And, you know, in my personal activities, I might be a source of concessionary at capital at a, a very low scale.
And, you know, in another world I could have a lot of fun working in field, but that's just not what we do. Uh, and then catalytic capital, same thing. Like, that's not what we're doing, but you can recognize that if we invest this and I can think of a bunch of firms who do it and do it really well, that will spur other groups to come on in. That's a really important segment of the capital stack and, and hard to decarbonize markets. I'm on the board of Activate, which is the nonprofit that works with Cyclotron Road and a couple of other programs. You know, that's some version of catalytic and concessionary capital in some sense. I'm on the investment advisory committee for a Prime Coalition, same thing. And I love those things. I love those efforts and they're part of the ecosystem and I'm grateful that they're there, but that's not Prelude.
Jason Jacobs: The last topic area and thi-, this one's also a sensitive one, but I think it's an important area to delve into, especially as a couple of white guys sitting here and that's that some people say that we aren't gonna be able to decarbonize effectively without also ensuring a just transition and that you cannot decouple diversity, equity, inclusion, and justice from carbon. How do you react to that statement?
Gabriel Kra: In broad strokes, I think it's pretty true. I think did I just equivocate in broad strokes? I think it's true. You look at who is impacted by pollution, who is impacted by extreme weather, who will be impacted by where you site factories. Like I guess that's part of pollution. It's communities of color. It's economically disadvantaged communities. It's the broader, more diverse communities who aren't represented in the power structures and economic, controlling economic institutions, uh, globally. And when you look at the effects of climate change, there's gonna be a big north south imbalance. There's gonna be a big developed world versus a developing world imbalance.
And then also where you looked at where it came from, it's the same thing, but in the other direction, right? Like I don't know when the crossover comes, but the biggest emitter historically was the United States and Western Europe's a huge emitter. And China is now big emitter and the countries that are gonna suffer the most, you know, beyond just the, you know, within our own borders, our countries and populations that didn't have a hand in creating the crisis. So I think the first question, how do I react to that statement? Yeah, I it's true. And you can't, you can't separate those two things.
Jason Jacobs: How does that manifest as it relates to looking inwards at say your team composition or the composition of your portfolio and how much of a filter is that, or should it be when making investment decisions?
Gabriel Kra: It is a filter? It's something we look at and think about, especially as we now have the opportunity to expand our team in the, in the coming year or two. And it's, so it's something we take really seriously looking inside at our team. And then the other thing is when you expand your portfolio, yeah. We also have to be thinking about it there it's something we wanna get better at. I don't think we're great at it right now, both as an industry, but Prelude specifically. And it's something that we wanna work at and get better on.
I don't think it's in any way in contradiction to the economic motivation that we were talking about earlier. In fact, I think it can be an enhancement to it. If you think about it and implement it properly. And I'd say we're still working on how to be better at it. The last few years were some real reckoning I think for a lot of people in terms of thinking racial injustice, you know, like the George Floyd murder happening in the middle of the COVID pandemic sparked a lot of people to get really introspective and thoughtful about stuff. And we're not at the end of our journey, uh, internally or as a broader industry. I mean, Prelude as a broader industry.
Jason Jacobs: My last question is, is just taking a step out side of Prelude and just looking at the ecosystem overall, if you want more small, high growth, early stage innovation to happen, be successful and have the biggest impact on climate that it can, where are the gaps? Where are the bottlenecks? Where are the opportunities? What are the things that would help you and I and anyone that's focused in this area do so faster, more effectively and more profitably, and with a bigger impact on the problem.
Gabriel Kra: Climate technology, venture capital is doing a good bit and it's doing its part and it could use more money and maybe some better regulations and some more governmental support, you know, around the edges or better policy and things like that. The DOE and ARPE and lots of public private partnerships and philanthropic dollars are working on that, not enough. But this problem is bigger than that. We need national action. And by action here, I'm talking about government policy, local state policy, federal state, local policy, and regulations.
We need national, we need international action. We need things like a price on carbon. We need regulations that make a clear lasting, endurable, understandable roadmap for how we, uh, as a national and international community are going to account for the damage we're doing when we put CO2 and CO2 equivalence into our atmosphere. When I say we need to account for the carbon, yes, I'd love to see a price on carbon. I would love to see that, but that's not the only tool. And that's not the only mechanism. I'm not a policy guy. I don't have the nuts and bolts at my fingers of specific policy recommendations to make here. If I step back and say, "What do we need to solve this problem?" It's concerted international and national effort, um, that we don't yet have in place.
Jason Jacobs: Uh, last two questions, Gabriel. One is just, who do you wanna hear from? How can we be helpful to you?
Gabriel Kra: You know what I really wanna do? I'll tell you what I wanna figure out how to work with more younger, newer entrance into this field. I wanna support people coming into the field and I wanna support young entrepreneurs and people from diverse backgrounds, you know, wanna hear from people who, who want that support and wanna tap into some of the experience that I've had over the last 15 ish years in this sector doing what, what I'm doing. The only thing I can't promise in return is that I'll respond to your email in the next day or two, 'cause God, that, that inbox is a demon.
Jason Jacobs: Uh, last question is just, is there anything I didn't ask that I should have, or do you have any parting words?
Gabriel Kra: Uh, you didn't ask me about skiing, which would've taken us a whole nother hour and a half. No, Jason, my last parting words are thank you for the energy and the new institution that you've created, uh, and CJ, both on your podcast, the Slack channel that I go to every other day and wish I had more time to just talk to and read and communicate with the people there and for the investing and networking and connecting, I think is what you talk about. And it's one of the biggest advantages. So that's what I'd like to end with. Thanks a lot for having me and thanks for doing what you're doing.
Jason Jacobs: Thanks, Gabriel. This was awesome.
Gabriel Kra: Yeah. Likewise, I'll talk to you soon, Jason.
Jason Jacobs: Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co, note that is .co not .com. Someday we'll get to .com, but right now, .co. You can also find me on Twitter @jjacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say of that. Thank you.
