In September, Fifth Wall added Peter Gajdoš to co-head its Climate Technology Investment team with Greg Smithies. Gajdoš has a long history in climate investment. He began investing in wind assets in 2005 with JPMorgan. Gajdoš then led the VC and growth fund in Richard Branson’s Virgin Green Fund and later joined Presidio Partners, where he focused on climate and biotech. Before Fifth Wall, he headed venture capital and IPM Group.
Gajdoš and Smithies will lead the Climate Tech Fund, targeting $500 million, the goal of which is to close the climate tech funding gap in real estate and reduce its carbon footprint. Currently, the real estate industry is responsible for 40 percent of all greenhouse gas emissions globally, Gajdoš said.
The fund itself has raised more than $140 million to date from such LPs as Equity Residential, Hudson Pacific Properties, Invitation Homes, Ivanhoé Cambridge and Kimco Realty Corporation.
Venture Capital Journal spoke to Gajdoš about his new role and why he thinks today is the best time to invest in climate tech.
What attracted you to Fifth Wall?
I really bought into their vision. I believe that this is the next frontier for me personally and for the sector. We need to focus the conversation [on climate] because none of these things has been done. Fifth Wall’s corporate partnership model is unparalleled in the real estate venture capital space. This is the largest gathering of real estate players focused on decarbonization. The truth of it is, this is a truly fantastic group, and we believe more are coming that will provide us a unique advantage on several levels.
What are your investment interests?
We want to look at the technologies that address every aspect of the carbon problem across all stages of the built environment, ecosystems and critical infrastructure. We’re looking at the materials stage, which includes raw materials, manufacturing, facilities, and transportation. Then there’s the construction stage, such as the logistics supply chain, construction technologies and installation. The third is operation and the last is the end-of-life stage, so this is construction, demolition and recycling processing.
My expertise lies more in energy; those will be batteries, renewable energy and even material sciences. Greg [Smithies] comes at it from the industrial sector expertise and transportation. So, I think our investment interests nicely overlap.
You’ve been investing in clean energy and solar for a while. What do you think has changed in the past couple of years?
The number one thing that’s changed is general technology progression. Technology has had time to mature. Second, pricing has been phenomenal and has come down more than 90 percent in solar and wind. And, of course, there are positive tailwinds, such as the [Biden administration’s] infrastructure bill. But none of this would happen if the population didn’t take things seriously.
If you look at the mandates in public equities, you can see that ESG investing has exploded in size. Today, the regulatory framework is there and consumers caring about the environment has improved significantly. We are looking at the best environment for climate tech investment I have ever seen, and I hope it gets even better.
What does this mean for the larger start-up space in climate tech?
It does several things. For one, the quality of start-ups becomes better. There are more things that hadn’t had the chance to mature and develop before. Capital on the venture and growth side are able to invest into things and then find financing rounds from other co-investors. And third is that even on the LP side, we can raise funds that are multiple times bigger than you would be able to raise in the early 2000s. Those factors alone make the environment much healthier.
Do you think this interest in investing in clean energy or clean tech will continue to grow?
I do believe we are at a groundswell that is long-term sustainable. If you look at the scale of the problem, with the amount that needs to be decarbonized in real estate alone, you cannot solve the problem in just two years. I’m not even talking about the new buildings being added every year; you can absolutely expect that that contributes a large percentage to the carbon impact problem. So this is a problem that will potentially last decades.
Now, are the valuations sustainable? Just like in any sector, there is exuberance. But we’ve seen it in biotech and we’ve seen it in software; that exuberance will breed amazing companies who will be the next leaders in this space.