Issue #5. Launchpad: the Energy-Focused Unicorn Factory

Exploring the mind and insights of a ClimateTech venture builder. Siobhan Clarke, an Operating Partner at Launchpad, told us all about spotting and growing future Tech leaders in the energy sector.

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Apr 15, 2021

Buenas!

A couple of weeks ago we had the chance to discuss with Siobhan Clarke one of the leading VCs in the ClimateTech space and an Operating Partner at Launchpad. Working semi-independently from BP (Launchpad’s investor), this “Scale-up Factory” has the vision to generate sustainable change by building and scaling a progressive portfolio of digitally-led businesses which re-imagine energy.

We had a wide-ranging conversation on finding and building the next Tech unicorns, the traits of successful investors; we geeked out into how geophysics (and as geophysicists ourselves we definitely enjoyed the insights) is an essential component on how Stryde (a portfolio company) and their nodes could further unlock the potential and applications of/in geothermal, CCUS, civil engineering, archeology, among other industries. Finally, we touched on how important diversity is, both from the founders and investor perspective. Launchpad is not only chasing but creating the next unicorns, so watch this space.

(This interview has been edited for clarity and length purposes).

Or if you prefer you can also listen to the full episode:

Explorationists (Es): Hi Siobhan, such a pleasure to have you with us. Let’s start with a brief intro, could you walk us through your experience and then describe how you came along to join the team at Launchpad?

Siobhan Clarke (SC): I always say my background is in the commercial end of tech. I've worked in startups and in large tech companies around the world but also on the investment side. My heart Is really about finding certainty in complexity and finding and unlocking potential through this idea of a value exchange between a number of parties.

With a short round trip, I was born in Northern Ireland. That is important for the rebellious nature. I did university in Manchester, in the UK. And then went from consultancy to MBA, to Cisco in London, in Singapore and in San Francisco, set up my own business to work with startups and moved back to London in 2017 to join Episode One to focus on investing at the seed level in software companies in the UK. Approximately 18 months ago, BP came along, tapped me on the shoulder and thought, “Hey, how would you like to come over and take some of that interest in investing and make an impact at a global scale and by building this progressive portfolio of digital companies that will shape and change our climate future?”

Explorationists (Es): Fascinating. Great summary: international and a very diverse career so far. I'm interested because you mentioned that you were involved as an investor at seed stage, but Launchpad works a bit differently. It's focused on developing and scaling businesses that are already reaching maturity. They have revenue streams, etc. Can you describe how Launchpad fits into the wider ecosystem?

(SC): Yeah, absolutely. David and you're right. It is very, very different between the seed level investment, where in some ways you're trying to figure out how to get to your first 10 customers and what are you learning from all of that?

And how does that help me to scale? So that's like the zero to one kind of game. We talk about Launchpad as a scale-up engine, it's a scale-up factory. So we go from one to a hundred levels. And when you're going to one to the hundred level, what you're doing is adding layers of people. You're adding layers of complexity in terms of the customer base, and you're always keeping an eye from a technology or a product point of view: where is the future about what you want to head to? whilst delivering and building value for today. Layered across all of that, you still have to deliver financial returns.

So our focus as Launchpad, we have five companies in the portfolio today. Our aim is to get to a portfolio of somewhere between 10 and 15 companies with a billion dollars worth of potential in the next two years, we have, as I said, five now, very much in the industrial analytics space and some in the intelligent commodities.

And our plan is to add another three this year. If there's any kind of listeners that are thinking about it, where does Launchpad fit into this picture? In some ways we talk about that as a comparison, to early stage, Series A or small and mid-cap PE where they're on the right journey and the timing is right for scaling.

Explorationists (Es): Can you explain how your portfolio companies fit into the wider Launchpad / BP in terms of accelerating the decarbonization and getting to net zero? I'm a geophysicist myself and I'm quite interested in one of the companies in your portfolio which is Stryde. Can you help us understand how Stryde fits into that picture?

(SC): Stryde is really a company that enables us to understand what is happening under the earth surface. And it does that in a way that is non-intrusive to the environment in which it is, and does that in a really efficient way. So I think if you look on their Stryde website, you see where their nodes are, and I'll come back to describe what their node is and where their nodes are used to help understand what is happening for example in archaeology sites, in opportunities for geothermal, CCUS, as well as some of the traditional kind of exploration and seismic surveying. The node that Stryde has developed, maybe the size of a pen, slightly bigger.

It's a bit like the thick kind of pen that you would use to write on a white board. You put those down and it helps to be able to understand what's happening under that surface in order to be able to make decisions or for companies to make decisions.

Stryde is part of this understanding to get to net zero. In some ways we have to actually understand what is happening in our world and understand that in a way that enables us to make the right decisions. Stryde fits into this area for our investment thesis around industrial analytics for energy system optimization. It helps us to understand what is happening in particular spaces in order to optimize either on existing energy systems or to explore opportunities for new ones in terms of leveraging the existing resources, like geothermal in a way that is non-intrusive and positive for the environment.

Explorationists (Es): Interesting. So what's the main difference then if you compare that to legacy technologies, let’s say geophones and vibrators, etcetera, is it cost efficiency? is it faster? Is it less intrusive? What are the benefits?

(SC): They're obviously less intrusive, because that is a smaller node compared to previous ones. And then the second there is cost efficiency, which is important for customers, particularly over the next couple of years. The third component is actually about people's health and safety. So to understand what's happening in complex areas where you might advise where you might have a lot of forestry and where you might have a lot of brush, how do you do that in a way that is safe to the people that are putting out those nodes, but still kind of collecting the information.

Explorationists (Es): switching gears, let's talk about those five companies, and you have, Onyx, Finite Carbon, Fotech Solutions and others, what are the commonalities among their teams? about the growth opportunity that you see in all of these companies maturing to a unicorn level? As an investor, what are you looking for?

(SC): When I described some of the investing that we're doing is like an early Series A, or mid to low cap companies. We're looking in some ways similar to a lot of other investors. You're looking at what is the size of the particular market that the company is kind of entering into? What is the product or the technology and are they solving a problem within that market for their customer base? So you've got, is it a big enough market? Is the product solving it for what it needs?

But you're also looking at the team. Does this team have the passion, the understanding, and that has the grit and resilience to build and scale? to take on that scaling journey and support the delivery of their product to the customers? And all of that has to add up to financially good sense and a really good return. So it's similar to a lot of other investors.

It's interesting that you kind of pull on this point around, the teams themselves and the people. And it's very typical in a scale-up journey to have the semblance of a core team, but to enable them to build out a leadership team, to build a sustainable scaling culture and perhaps to add other people into what might've been the finding team that brings with it, some interesting scaling challenges, but that's where you're looking for in the people.

Are they the people that others are going to want to follow because of their passion, because of their beliefs and because they're open to a large ambition?

Explorationists (Es): Fascinating. So how does it work? I understand that there are entrepreneurs seeing residents, are all these five companies close together? What sort of contact, how often they are working with you? I understand that you obviously help them to reach that next level. But what sort of, help you're giving them in practical terms?

(SC): It always comes down to that, what are you really doing? (laughter)

We spent a lot of time thinking about this when we set up Launchpad. We, as an investor, are approximately 40 people. And that might sound a lot for an investment landscape, but there's actually only a very small origination team that is looking at deal flow and bringing in the companies.

The biggest proportion of the team, 80% of the team is actually focused on helping the portfolio and the companies go through their scaling journey. We set up Launchpad to have this, a small origination team and a small portfolio team. The rest of it is set up around practices.

We have the growth practice, there's people, technology, operations, and finance. And for each one of those, they are a team of talent that we've hired from companies that have scaled and operated at large scale. And the reason why we deliberately designed that and created those into practices is that we wanted to be able to have the people who know what it feels like. Not just the practical frameworks for scaling, but they know what it feels like to go through that crazy journey. In that way they can then relate to the companies in the portfolio on a different level.

This gives an ability for these practices to be resources that the companies in the portfolio can draw on. Now as we add more companies to the portfolio, we don't intend to grow the Launchpad core team very big, because we see that as the companies grow, they've come more and more independent on their own.

They will build up their teams. They're on a different side of that scaling journey. Then the practices can then bring that experience to whoever the next portfolio company is. And that creates the circular learning and this embedding, now of people, emotions, and that talent into a circular, hopefully, positive loop.

Explorationists (Es): Yes, I'm a big fan of virtuous cycles. Basically you're giving them (the portfolio companies) the tools, the methodologies and the internal talent to help them mature. That's great. Which leads me to the next question:

In terms of the traits, skills, the mindsets, mental models, everything, from an investor perspective, what do you think makes an investor really strong and at the top of their game? What are you seeing with your colleagues? What is inspiring and what sort of things you learn from them.

Siobhan's response on the Traits of the Investors (Audio)

(SC): I think fundamentally to be a good investor, you need to be a people person. You need to understand people at their core and then help them to be even better versions of themselves. I think you have to be driven by this coach versus player mindset: you're the coach as an investor. Your predominant role is, as a coach, to support the teams and the CEO's and the boards to be better than what they were yesterday. I think the second condition as an investor is that you have to have these two elements together. One is curiosity and the second one is hunger and they are interrelated.

You need to be curious about the world, to always be asking the question, why that's happening in that market, what are the dynamics, what product would solve it? And the hunger is the desire to change that. It’s like “why don't we solve for that? Why don't we do X, Y, Z.

Good investors are chasing down their curiosity, but they're also chasing down the support of people and helping them to unlock themselves. That hunger translates into ambition and the curiosity translates into seeing the world in a different way.

Explorationists (Es): I love those two: curiosity, and hunger.

Obviously there are different paths to become an investor. In terms of curiosity, do you think that multi-generalists have a bigger edge than those specialized in one single field? What do you think are the main advantages of each?

Listen to Siobhan's Diversity response (Audio)

(SC): I think that there's been a whole change in how people are considering what it means to be a good investor and where the talent is coming in from it? I've seen this with the women in VC. What started out not even two years ago as a small WhatsApp group is now two and a half thousand women investors connected together in one Slack. That is phenomenal. I think there's also been this acceptance that investing or a recognition more publicly that investing is so much more about people. It is about the experience and sharing that experience with someone, so that they can be standing on the shoulders of giants.

I think this recognition that if you've been in an operating position somewhere, that allows a different point of view as an investor, and we know it's about a diversity of teams within the investor. That will translate, in my opinion, different and better opportunities for the future.

In terms of the investing landscape, there is a bit of a recognition that we (as an industry) had to change, that we've become much more open to diversity, to inclusion. That will bring a different future; For now, there is only a small slither of people that can actually get into the investor piece. But I think that's going to grow in terms of the individuals that are coming into that and we're just going to see a broader base for it.

Explorationists (Es): I totally agree. Obviously, we were recording this from the UK we’ve also seen it in other areas like the US where there's this big push, to bring together other views and under-tapped talent. Obviously you mentioned women, but also different backgrounds from under-served or not-seen types of people that can actually become great investors and the same applies for founders as well. I think that there is a big movement that I just believe will make better, stronger teams, companies and definitely investment firms as well.

That's an interesting movement, and it's very exciting. Let’s wrap up, with an optimistic view of what's happening in the net zero environment and how you guys are helping.

(SC): I think the one thing that's really exciting and I've been having this conversation, David, I'm sure you have it as well , are we going through another Green tech bubble?

I think what's really interesting and why I'm optimistic about Launchpad and the aspect of this kind of landscape that we're in, is that there is a real power of both between Launchpad's scaling capability and the access to someone like BP and that support because for companies that are scaling within and are trying to make a difference within net zero, they need to access really big distribution channels to unlock their advantage to really deliver their product or value at scale. And that's what makes me really excited about the combination between BP and Launchpad and what we're doing. I think we're entering into it, whether it's a green bubble or not, I think we're entering into a landscape where things are going to change. And there's a real acceleration towards doing something different. That'd be good for us. Right?

Explorationists (Es): Absolutely and I totally agree. I think that the main difference from 10 years ago is that now society (at large) really gets it, investors get it. We just moved towards: “Hey, this needs to happen and needs to happen at scale and right now.

Siobhan, It's been really lovely to chat with you and probably we will have to get you in the pod again soon.

If you liked this interview why don’t you subscribe?

Our recommended reading for this week:

If you are on the entrepreneurial path, we definitely encourage you to have a look at Siobhan’s book: The Founder Handboo. She and Andrius Sutas share words of wisdom on the do’s and don’ts on building and scaling your startup. You can get it here: https://thefounderhandbook.org/
Also follow Siobhan in Twitter @sioclark
Amazing combination between technology, science and climate solutions. Saildrones offers a global fleet of wind and solar-powered ocean drones monitoring the planet in real time. These incredible 7 m and 22 m unmanned vehicles are able to measure multibeam bathymetry, ocean currents, CO2, salinity, water and air temperature, wind speed and direction, etc. Since the vehicles don’t need to go back to port for maintenance, they can be on mission for up to 12 months. Saildrones even offer a weather forecast (with an app) with all the data they are collecting. Great work!

If you want to send us an idea or a tip, a #ClimateTech company that we should have a look at, or if you have any questions, please reach us at: davidcongeof@gmail.com or arraiz.p.daniel@gmail.com.