Friday Letter: For climate tech, new Fifth Wall partner says ‘this time it will stick’

Fifth Wall Ventures partner Greg Smithies notes that climate tech may not be the most exciting sector, but it is growing in importance and acceptance, and is certain to be highlighted in the Biden administration.

Politics has been on my mind lately, for obvious reasons. And with the inauguration coming on Wednesday, one thing I’m keeping an eye on is how the Biden administration’s proposed clean energy revolution and other initiatives will take shape. What will get passed in the new Congress now that it is tilted to the Democrats and what can the venture community expect.

With that backdrop, here’s a spoiler alert: my colleagues at our affiliate publications and I taped a podcast this week that we plan to post soon after the inauguration.

With all that’s going on, I talked this week with Greg Smithies, who late last year joined Fifth Wall Ventures as a partner to co-lead the firm’s Climate Technology Investment team. The firm, which focuses on real estate and proptech, announced last year it is seeking to raise about $200 million for a fund to invest in climate tech, which Smithies is helping to fundraise.

That fund comes at a time when more interest is being paid to the sector. Take for example Union Square Ventures, the venture firm which backed Twitter, Etsy and Twilio. It has raised a new vehicle to invest in early-stage start-ups focused on carbon reduction, carbon removal and climate-change adaptation technologies.

Previously, Smithies was a partner at BMW i Ventures, where he created that firm’s sustainability investing practice, committing to such companies such as Prometheus Fuels and PureCycle.

Smithies acknowledges that climate tech may not sound like the sexiest of sectors. He described it as pragmatic and said at Fifth Wall he will look at improving building operations and efficiency to help cut down on carbon needs.

He noted there’s a lot of low-hanging fruit out there, with trillions of dollars’ worth of buildings that need to improve their energy efficiency. Fifth Wall invests primarily in the US, but also Europe.

VC Energy Climate
Greg Smithies, Fifth Wall Ventures

Smithies said there are three factors driving the current push of interest into climate tech, unlike the initial cleantech boom years ago.

For one, the incoming Biden administration and new Congress seem eager to take on climate change and many officials recognize that tech innovation will play a role. Also, building tenants are more receptive to reducing costs and conducting business more sustainably. And LPs, from pensions to family offices, are increasingly interested in an ESG focus. They see that backing funds that invest in cleaner projects is not only more ethical but a less risky financial proposition, too.

Smithies said he is confident the new administration will look to clean energy solutions to help create jobs and give a much-needed lift to the economy.

Just from retrofitting buildings and making them run more efficiently, Smithies said, “We can create a ton of new jobs.”

The economic incentives are there for green investing to catch on, Smithies said. “This time it will stick.”

Let me know what you think. I would like to hear from you about the new administration and whether you’re also seeing this trend in climate tech in venture take hold. You can drop me a line at agoldfisher@buyoutsinsider.com, and I’m happy to chat.