Hi everyone. My guest at The Curious Learners is Amos Wittenberg. He is the co-founder of Dovetail. Amos and his co-founder Phillip Marks are building the climate risk modelling toolkit for investors. Dovetail helps to identify and quantify risks and opportunities in the era of climate transition.
What Dovetail is building is critical for institutional investors' workflows, investment strategies and decision making. And it goes beyond climate-tech investors of course. Take Oil and Gas as an example. Investors need to take into account the exposure of Oil and Gas companies to stranded assets, to climate-related taxes and levies, as well as the knock on effect of transitions in other industries (e.g., EVs reducing demand for lubricants)—and hence the potential for higher costs and lower revenues for the industry.
Amos and I had a great discussion. Here are some highlights from the episode. There is much more in the episode including how Dovetail collects inputs, the approach to integration with investors' workflow, Amos's background in journalism in financial crime and his experience at Palantir and how both led him to found Dovetail.
How do you think about the risk framework in the era of climate transition?
Climate transition is an undisputed megatrend. Over the next 30 years it will drive billions of dollars to change hands in practically every industry, regardless of how effectively we transition. All investors need to incorporate that risk in their strategy and decision making.
What does Dovetail do against that risk framework?
Dovetail provides a modelling toolkit for investors and lenders to understand both the risks and the opportunities of the transition at equity level.
What is the horizon for Dovetail's modelling approach?
It depends on the industry, however we typically model on a three to five year horizon.
What are the key building blocks of the product?
Primarily there are two sides to it: one is the systemic risks, which apply to each company relatively equally in a particular sector and geography, and the other is idiosyncratic risks, which define how each company is set up against such risks.
What is the output? Is it a scoring system?
We stay away from generalist scoring systems. Instead, our product gives investors both a high-level view of how their particular investments and overall portfolio would perform as well as tangible detailed projections (e.g., adjustments to revenue growth assumptions over the next 5 years).
How does the current pace of net-zero transition drive your projections?
The viability and economic feasibility of net-zero transition have improved. In addition, momentum is gathering in the capital stack and among regulators, driving disclosure and transition aligned investment.
What are you most #curious about and what are you doing to #learn more about it?
Green hydrogen! I went back and forth between being interested in it and sceptical. But I have gained a better understanding and am now exploring specific companies and applications developed with green hydrogen.
Please enjoy my conversation with Amos Wittenberg.