Venture Capital Driving Impact: A Conversation with Alexandra Clunies-Ross

In this episode, we chat with Alexandra Clunies-Ross, Partner at Katapult VC, about how venture capital can actually drive real, measurable impact. Alexandra explains how investors choose and support startups tackling climate change and social challenges, and what makes an “impact business” stand out. She also shares insights for students interested in sustainable business, startups, or careers at the intersection of entrepreneurship and climate solutions. If you're curious about how money can fuel change, you’ll want to tune in.

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Transcript

Intro 00:03

Welcome to SolPods Studio. We're not your average social network. We're a community of professionals, enthusiasts, and students taking sustainability to the next level. Join us on our journey and get inspired by Earth Heroes just like you. 

Amy 00:18

Hi, welcome back to another episode of SolPods Studio. I'm Amy Farrell, and I'm joining from the Bay Area of California. Today, I'm delighted to have Ali Clunies-Ross join us all the way from Sydney, Australia.  Ali is a portfolio manager with Artesian, an investment management firm that invests in debt and venture capital across Asia Pacific. Ali is specifically focused on the firm's clean energy and clean tech venture capital funds, and she's also the lead portfolio manager of their Female Leaders Fund. This is a fund that invests in high-growth, women-led startups. I'm really excited to get Ali's insights on the region and also learn more about the companies that she meets every day that are tackling global challenges such as scalable access to renewable energy, textile waste, healthcare, food insecurity, and equality, among others. Thanks so much for joining us today, Ali.

Ali 01:21

Thank you so much for having me.

Amy 01:24

So Ali, how did you get into venture capital and what is it that attracted you to working with founders?

Ali 01:31

I guess I started off looking at the technology sector when I was finishing my undergrad. I did a course called Regulation and Law, which is a big stretch to tech and VC. Then I wrote a research paper on how regulation impacts innovation within a country and focused on the Australian legal system. Australia is often referred to as a nanny state - we have a lot of pretty strong laws and regulation, and it was talking about how that impacts technology and commercialization within Australia.

And so from there, I started looking at tech investments. I'd done a business degree, and when I was starting my master's, I started as an intern at Artesian and was doing international environmental law as part of my master's, one of the subjects I was doing there.  So, I started to kind of unravel into this tech, climate, environmental piece. And I guess, technology is one of the levers.  Obviously regulation is one that is being pulled, but technology and new innovations is a massive lever that we need to pull to get to our net zero transition.  And you know, countries across the world have net zero targets, and technology is one of the ways that we can solve these big problems of climate change, renewable energy.  How to take a volatile energy sources, which is the sun, it's not reliable because at night, obviously we don't have it. So, how can we store that energy.  How do we supply food to a growing population.  What will food look like.  What will our food sources look like.  So technology is solving all of these problems, and working with some of the smartest people on Earth who are PhDs or have done deep research or spent their whole lives researching these issues was really exciting and a total privilege for me to be able to access this exciting space. That's how I got into it and why I love what I do.

Amy 04:14

It sounds amazing. Working with founders.  As you said, you're working with scientists and individuals who believe so passionately in what they're doing that they'll set out and start a business. You must see and meet so many interesting people from so many different countries. Is there a way to categorize some of the founders? Are there serial entrepreneurs that you come across or those who come out of an academic setting? How would you group the founders that you're meeting?

Ali 04:51

So I would say that It differs on the agnostic tech side compared to the clean tech, agriculture tech, some of the deeper tech stuff that we do.   Often with the deeper tech investments we're making, they are engineers, or PhDs, or researchers who might have partnered with a business co-founder, which makes a really good team. Because there's one person who understands the deep tech and the other person who understands how to commercialize that technology.

We're starting to see serial entrepreneurs pop up more and more in Australia across both the agnostic tech, so more software side, where you've got founders that are spinning out of groups like Canva where we've had some really great success in Australia.  And we're starting to see that in climate as well. I had a founder pitch to me last week who.  He was going through his CV and where his experience was from.  He'd actually had worked previously at one of our startups. Funnily, I was introduced to him completely different way.  But he'd also worked at one of our start ups that is not at its series C level.  So we are starting to see technologists spin out of groups who might be first-time entrepreneurs but they have that technology and startup background.  As well as the serial entrepreneurs who are starting multiple businesses over and over.  And first time founders as well.   There are still a lot of first-time founders as well. So it's a real mix, but particularly on the deep tech side we see a lot of PhDs who might be spinning out their research projects or spinning out IP from a university. We work with a lot of universities across Australia to ensure that we can access that IP and new technology.

It's not one-size fits all.  Every problem requires a different type of founder, a different background, a different domain expertise. It's great that we get access and are meeting lots of new people. That helps us help the founders as well, because we can take lots of different ideas.  Lots of different business models across the portfolio and help them scale their business.

Amy 07:27

Definitely. I mean, I think you've invested in over 600 companies globally, right? So you have that expertise. What if you could look at some of the differences you see between female founders, let's say, now that you have the Female Leaders Fund? Maybe you can introduce the new fund.  And also the technology, or those that are coming more from a climate tech perspective.  Are there any generalizations you might point out with female founders that surprised you or caught your attention?

Ali 08:03

Yeah. To give a little bit of background on the Female Leaders Fund, we launched this almost two years ago. Differently to some of our other sector-focused funds like our agricultural fund, energy fund, and med tech fund, the Female Leaders Fund is an agnostic technology fund. We can invest in any sort of technology, but the core piece of the mandate is looking at the ownership structure of the business and leadership structure of the business and ensuring there's equal weighting across men and women. It doesn't mean that we can't invest in a male and female co-founded business, we can, but we want to make sure that equity stake is equal.

I think. You know, we've made a couple of investments now in that fund, a mix of direct-to-consumer businesses.  So some of hypotheses when we started, obviously women, particularly across Asia I think control around 80% of household spending.  So women are solving problems that they've faced. That might be medical, financial, educational, or a direct-to-consumer business where they haven't been able to access something. 

And we definitely have direct to consumer businesses in the portfolio.  There was a huge amount of medical tech companies. A lot of doctors and researchers who were solving medical problems for women like childbirth, endometriosis, general health issues for the heart, etc. So we have seen a really broad range of technologies across that business.

Yeah, it's been really exciting.  I guess, the genesis of that fund, as I am sure a lot of people know, is that less than 3% of global venture funding goes to female-only led businesses.  95% of decision makers in venture firms are men. We really wanted to open up - we have a predominantly female investment team - so we wanted to make sure that we were putting the right investors in front of problems that might resonate with us. That might not necessarily be the case.  But there have been cases where I've said "Oh my god, I would definitely use that" or "I do use that"  or "I know that brand."  Or I have specifically sought out brands that I know or new things that I have seen or my friends are talking about.  And reached out to those founders. That might not have been something that my male counterpart would have done.  Without making generalizations, I don't necessarily like to make generalizations.  But, our goal with this fund is to show that investing in diversity creates outperformance.

Amy 11:16

Thank you so much for what you're doing. Hopefully that 3% can change with your fund and others who follow you. You talked a little bit about how you're finding the companies, but I'm sure you have a lot of inbound inquiries. How many companies do you meet with on an annual basis, and how do you sort through that and identify what makes the most sense for your investment thesis?

Ali 11:45

It's around a thousand investments, give or take, in a year that we're reviewing. High volume. We're looking at the Asia-Pac region, so it's a pretty big geographical spread. We have a deal flow team who manages that who are reviewing all of the decks and all of the inbound, which might be warm or cold.  So we have a lot of people who come through our network and get warm introductions, as well as through our website.  There are a lot of screens that we put on those. We are a B Corp, so we are an impact and sustainable investor. While we still have the same financial returns as a traditional VC fund, we have that extra layer of sustainability that we're putting on. At minimum, we have negative screens on things we're not investing in - weapons, tobacco, all the bad things. But we also have positive screens, looking at, is a renewable energy technology?  Is this helping health tech. Is this, what is the net benefit to society as well. 

Then, because we've got a lot of funds, we're obviously looking at the mandates of each fund.  We know what stage might fit what mandate each individual fund has, what targets on an impact level they have. So, all of those elements come through as well.    And then finally, another very important bucket is: is this a venture business? Can this scale? How can.  Will this business succeed? Do we think that this is the right team to help it succeed? If all those things are looking good, we'll take a first time meeting, because you can't get the return and you can't get the impact if the business isn't able to scale and have a large footprint.  There are a lot of different filters that we're putting on things, and we have a team that is doing that on a daily basis. It then moves through the process - you meet lots of different people along the way depending on what the business is and what they're doing.

Amy 14:20

I'm sure that's one of your strengths, because you have to meet so many different people who are operating so many different types of businesses. If you're listening to pitches all day long and trying to identify those that meet all of your different criteria, that takes a certain skill. I can see in your personality that you're probably very excited to hear about what's coming, what people have identified as a problem or challenge that they want to fix, right?

Ali 14:50

For sure. I mean, founders are the most exciting people. For somebody to quit their job, and stop their steady income and salary, and go "I'm going to tackle this big huge problem and I'm starting from nothing to grow it into something major" - it's super impressive.  It's super exciting. The founders that we're working with are deep experts in their area. You're always learning something new from them. I'm always the dumbest in the room.

Amy 15:32  

No, I wouldn't say that.

Ali 15:34

I have a different skill set. I'm going like you guys are, wow, this research you've done is so impressive.  You can't help but feel hopeful for the future as well. I know there's so much going on in the world, beyond environmental things - wars, negativity around the environment, people saying we're not going to hit 1.5 degrees increase. You know, how are we going to do this.  Countries aren't hitting their targets, etc. But then when you're sitting all day long meeting people who are battery material scientists.  Or have deep expertise in carbon capture or soil carbon sequestration, you can't help but think "Oh my god, there are so many people in the world doing so many amazing things. Surely if we all keep working together and keep building these companies, we'll have a good outcome for the world." It is a privileged job.

Amy 16:44

Actually, I wanted to touch a little bit on the types of investing in the climate fund. Some of the examples you mentioned sound a bit more capital intensive - they're not your typical SaaS. Maybe you can talk about some of the companies that you have and why in your investment thesis you believe that hardware might be a very important contributor. Sitting in Silicon Valley, I can tell you that there are certainly a lot of venture funds looking at software solutions. I'm sure we need a mix, but from your experience.  And in Asia Pacific in particular, are you seeing some really neat innovations on the hardware side?

Ali 17:32

Yeah, so I think.  We do hardware, deep tech, so it could also be a biology element, like in the natural capital space. There is a role for both to play.  But to transition and make that energy transition, we need new infrastructure projects, better battery systems, lower cost solar, and waste-to-energy solutions. Software can't solve everything and neither can hardware - hardware is great at doing the thing, but software can optimize that. There are a lot of layers working together. 

I think that there have been really exciting.  To give you an example, one of our companies is called Sicona. They are a battery material technology.  This company spun out of the University of Wollongong, which is a university just south of Sydney. They started as kind of a pre-seed deal.  They had founders, two founders, and IP and had to go from there. They followed a similar path to a lot of deep tech companies where they do lab testing, get the lab results, validate that it works, then go to the next stage which is a pilot plant. So showing that they can do it at a larger volume, maybe in the kilograms. Then they might provide those to customers, then go to a commercial plant, then have large off-take agreements, and go from there, maybe building more and more.  It's not developing software.  And you can't distribute deep tech on the internet. You have to understand import and export taxation across different countries, the regulation within those different countries, how you're going to logistically transport it from here to there. It's very complicated, and it is more complex in some ways, but it's a necessary part for what we think the impact that our companies can create, which is reducing greenhouse gas emissions and creating that energy transition.

Amy 20:08

That's really helpful. Do you mind talking a little bit about the natural capital solutions you mentioned coming out of Asia? I think you're seeing more on the biology side, is that right?

Ali 20:21

We see America, I mean Australia and the US, obviously the US is a humongous market, and a lot of companies from Australia often go to the US.  That's there kind of natural next market. In Asia, they are markets themselves. If you look at Indonesia, it's a huge market, I think around 270 million people. I probably got that wrong, give or take.  But a massive market.  They have, for example, 35-40 million people working in agriculture. To put that in perspective with the US, it's around 3.5-4 million people who are employed in farms, fisheries, sort of that like-for-like.  So there's a huge number of people in Indonesia working on rural local farms. Indonesia's, it's around $16 billion a year industry. In the states, it's 3.7 trillion.  Already you can see different problems that would emerge in those two markets. The US is talking about larger scale precision agricultural technologies. On the natural capital side, we have a company called Loam that recently raised $100 million in Australia, the largest agricultural deal. They are doing soil carbon sequestration. They're focused on the US and Australian markets.

With Indonesia in agriculture, they have labor challenges, it's more around marketplaces and cooperative access for collective purchasing. It's a different problem set, so there are different types of technologies that emerge from those markets, despite them having huge populations. They're very different. So, I don't know if that answers the question.  In a round-about way.

Amy 22:43

It definitely does answer the question, and we've heard so much more about nature-based solutions. What you touched on, those certainly are examples around carbon sequestration, for example with the company that's operating in the US. How do you see your role at Artesian in bringing small businesses or startup businesses to larger markets? When you explained the differences between the US and Australian markets versus the markets in Southeast Asia. Are you helping the portfolio companies as they grow? Maybe you can also touch on where you come in - I think it's Seed to Series C sometimes, is that right?

Ali 23:33

We come in usually seed, pre-Series A, Series A is our initial check, and we're following on into up to Series B, Series C in our companies. We have an office in New York, so we have a team in New York who are helping our companies on the ground, helping make connections. It's a great launchpad for a lot of our companies to go and work in those offices.

At a certain point, we always try to ensure that our companies have a follow-on investor.  So it might be at Series A, Series B, Series C, in the market in which they are trying to launch. We think that's important because then they have the on-the-ground connections.

One of our companies, 5B, which is a rapid solar deployment company. They have investment from BP Ventures and AES, and those two groups, obviously, are global but headquartered in the UK and the US. They can help more broadly on the ground there and help that company grow into those markets.

We have a lot of network. A lot of a VC's job is helping your startup get access to customers, investment advice, talent, all of those different things, helping them think about their operations, but also making sure that we can network them into the right people so that they have the right support at the right time in their journey.

Amy 25:24

To scale of course, but as a sustainable investor and a B Corp, impact is also important to you. You mentioned earlier that's one of the criteria you look at. How do you help founders and early businesses think about sustainability and integrate it? They're trying to run their business, obviously they're solving world challenges, but how can they incorporate sustainability and how do you help them with that?

Ali 25:54

Straight away when we invest, our reporting includes a whole lot of things about sustainable practices - you know questions hiring processes, questions on carbon abatement, carbon footprint. Some of them may be relevant to some companies, maybe not so much to others. It's start to get the companies.  Even if they can't answer all the questions, and they often can't at the Seed level.  It could be 10 people in the company. They are not tracking their carbon footprint yet.  There is a bit of realism on what stage they're at. We think that starting to get them into those practices and asking them those questions allows them to put the foundations in for when they are a big company, that they've been doing it from the start. It's similar to what we think about with the Female Leaders Fund. There's a top-down approach where there are a lot of superannuation or pension funds saying if they're going to invest in your company, you have to have certain board targets for women. Same thing with NASDAQ and different stock exchanges around the world putting in diversity targets. That's for large organizations that are already listed, that are already big. That's important.

But then from the bottom-up approach, by creating every new company that's emerging, the future Amazons and future Apples of the world, ensuring that they're thinking about sustainable practices and thinking diversity from when they're basically at their genesis, they'll grow into those companies. Over time we'll continue to have more sustainable businesses, better governance, etc. That's our thought process with it.

Obviously later stage companies, it's more hands-on. We help them with their impact reports.  We help them with policies they might want to put in. But it ranges depending on the stage of the business and when we're getting in.

Amy 28:16

I would think the work that you're doing with the Female Leaders Fund and the framework that you develop for that probably contributes to helping your other portfolio companies think about diversity. So you're building an in-house capability that then you can share with companies that are in some of your other funds.

Ali 28:38

Exactly.

Amy 28:39

Having that in-house expertise probably contributes across the board.

Ali 28:43

Same thing with climate. Obviously, the energy companies, the renewable energy companies, are the best at understanding their impact, and where they're getting their materials, and they're thinking about carbon footprint all the time. We can take that and it crosses over to maybe a company that hasn't started thinking about that yet. So, having that cross-pollination is really helpful.

Amy 29:11

Definitely. I want to dig a little bit into your background, because working in VC is so exciting and so many people want to work in venture. Based on your own experience - you said you had kind of a legal background in many ways, international business - what sort of advice would you give to someone who wanted to go into venture on the investing side? And on the other hand, what sort of advice would you give to someone who wants to do a startup?

Ali 29:43

I think on the venture side, there are so many ways in. My background is quite generic in terms of business, finance, legal. I understand the numbers side of things and I've learned the technology side. But conversely, you could have come from the technology side and have a deep understanding of material science. You're going to have a different skill set than me, but the two of us working together will benefit a company. I don't think there's necessarily a one-size-fits-all for VC.

I think you can go down multiple paths.  And I think people should follow what they're interested in, because that's where you'll thrive. If you're choosing a degree to get into VC, don't choose a degree because you think that that's what they'll like to see. Choose it because you're passionate about it. That might take you down a path in building your own startup or something that enables you to get into VC. 

You can come from so many different backgrounds. Yes, you might have a financial background, but a technical background is just as important. That might depend on the fund or the firm that you're looking to apply to. Obviously everybody is going to think they're going to have different things that are important. But I think having a technical engineering background can also be super helpful.

And then for somebody trying to start a startup - just go for it.!You're going to learn on the way. Get advice, try and network into people who you know can be good mentors or advisors or who can help network you down the road. Work out what you don't know. When you're starting a startup, there are so many things to the business and you can never know all the things. Work out where your gaps are and try and fill those with people in the network. People are always willing to help emerging founders. 

Reach out to people, ask for advice, have a coffee. But just start. What's the worst that happens? It doesn't work out and then you start another one. That's my advice.

Amy 32:22

That's excellent, especially after you've seen so many founders and what they go through. You're helping them along the way. I think for anyone who's interested in going into venture, having that mind who just loving to see all sorts of businesses, especially in the areas that you're focused on - climate, equality, healthcare, agriculture - the people who are involved in these are just so passionate and passionate about the planet.

I guess that leads me to our last question. We always talk about each skill that we have that can contribute to make the world a better place. But if you could take that one step further and think, if you had a sustainability superpower, something that would definitely make the world better, and you can use your imagination, what might that superpower be?

Ali 33:26

Apart from being like Einstein and being able to solve some of the global problems at the blink of an eye, I think - and maybe this is kind of an unusual one - being an ultra networker. Being able to call anyone in any big corporation in the world. Ironically, being a global networker ironically is potentially a sustainability superpower, because you can have a really big impact by connecting a whole lot of small companies to a whole lot of customers, big players. The more companies that you can scale, the more impact that you can have. 

If you can create five Teslas or five Apples, but if Apple was a renewable energy company, think about the impact that you can have on the world.

Amy 34:37

I love that, and it's right in line with what you do already. You are connecting people already, so you're just taking it to the next level.

Well, that's amazing. I love hearing about what you're doing, Ali. You've given me so many ideas for people who come to SolPods asking what they can do with their startup idea that is in the area of impact and sustainability, and also for those who are interested in VC. I really appreciate the time. Thank you for connecting with us today, or I guess it's evening for you - I'm not sure.

Ali 35:13

Midday, lunchtime.

Amy 35:15

Ok, lunchtime, thank you so much. We look forward to staying in touch and finding out how all of your portfolio companies do that are out changing the world and making it a better place.

Ali 35:26

Thanks so much, Amy, thanks for having me.

Amy 35:29

Thank you.

Outro 35: 32

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