Better together like tacos and tequila
Last month we shared that our portfolio companies mitigated one million tonnes of CO2e! This is a big milestone, but it’s also a small fraction of the 50 billion tonnes of CO2e our society is producing annually. We … both the global ‘we’ and the Active Impact portfolio of companies … need to grow our emissions mitigation number aggressively to address our changing climate and keep global warming below 2.0 degrees.
During our diligence process, we scrutinize the strength of the link between emissions reduction and revenue growth. If the link’s not clear, we don’t invest. Enterprise revenue growth is a key area of support we provide our management teams post-investment, which in turn increases impact. We provide everything from one-on-one advice to founders who are navigating their first enterprise sales conversion to actively placing key talent in revenue generation roles. In February we placed Mike Watson as CRO of Flair, who previously built a $100M smart lighting and electrical products business—very analogous to the work he’ll be doing at Flair.
This graph is pulled from a recent investor report to illustrate the revenue/impact link in action. The company name is redacted for confidentiality.
In venture capital, doubling revenues year-over-year in early days is a strong representation of demand, and tripling year-over-year is seen as a benchmark for exceptional growth. Exponential revenue growth demonstrates real customer demand and shows that a given company has the operational skill to execute on that demand. While Fund II is early in its performance and emissions mitigation journey, the 2023 numbers are in and they are strong. 37% of our Fund II companies grew revenues at least 3x over last year and almost 70% of our companies are at least doubling YoY. This certainly gives us confidence that our companies that come to market will find receptive audiences for financing and significantly increase share prices. It also makes us particularly excited for our impact numbers as those revenue growth numbers translate to real emissions reduction.
