The SAF Podcast with Jim Lockheed, JetBlue Ventures

The latest episode of The SAF Podcast is this week with, Jim Lockheed, Investment Principal, JetBlue Ventures. Jim gives us an insider's perspective on the intersection of aerospace, entrepreneurship, and venture capital. From his time in the Air Force to his stint at Boeing and his foray into the world of drones, Jim's unique journey is one you wouldn't want to miss. Plus, he shares his optimism about the future of drones and VTOLs, and reveals how JetBlue Ventures scouts for groundbreaking technologies and startups in the aviation sector.

Ever wondered about the hurdles and opportunities that come with investing in sustainable technologies? We delve deep into this topic, discussing the financing gap between early-stage and project financing, the critical role of techno-economic analysis, the importance of scalability and how critical the relationship with the airline JetBlue is in making investment decisions. We also shed light on the potential of sustainable aviation fuel (SAF) to revolutionize the aviation industry and offer practical advice to scientists and entrepreneurs seeking funding for their SAF processes. We also discuss there first SAF investment, The Air Company, and what makes them special.

How do we strike a balance between financial returns and sustainability impact? Jim Lockheed shares his views on this and explains how strategic funds and partnerships can help us achieve our decarbonisation goals.

Find out more about Jim and JetBlue Ventures here: https://www.jetblueventures.com/

You can listen to our recent episode with Daniel Bloch, IATA, here: https://www.buzzsprout.com/2202964/13989712

SAF Investor London

This conference serves as a nexus for innovators, customers, financiers, regulators, suppliers, and advisors, forging partnerships that will drive change. SAF Investor London 2024 isn't a conference for debating the merits of SAF; it's about convening the dealmakers who can effect real transformation.

Join over 200 leaders in the SAF Industry for two days of stimulating debates, discussions and plenty of networking.

You can find out more about SAF Investor and our conference in London here: https://www.safinvestor.com/

Host: Al Whyte, SAF Investor
Producer: Oscar Henderson, SAF Investor

Transcript

Speaker 1: 0:07

Now I just want to say we, rather than I, enjoy. Hi, welcome to the SAF podcast brought to you by SAF Investor. We're passionate about finding capital to funds the sustain about politics. Welcome to the SAF podcast from SAF Investor. As always, we're out there trying to find capital to help fund the sustainable aviation fuel revolution. This week we talk to Jim Lockheed of JetBlue Ventures. We hope you enjoy it. Hi, jim, how are you?

Speaker 2: 0:49

Hey, al, I'm doing great Thanks for having me.

Speaker 1: 0:52

So let's start with your background, and I don't think everyone knows this, but you're the great, great grandson of the founder of Lockheed Martin, aren't?

Speaker 2: 1:00

you, I am actually yeah, it's not something that I typically start with but, yeah, great grandson of Alan Lockheed, who founded that company actually in San Francisco in about 1913. But anyways, yeah to my background. So my background is true, isn't it, Jim it?

Speaker 1: 1:22

actually is, so you were always going to end up in aviation.

Speaker 2: 1:27

Maybe I was destined, maybe it's in my blood, my great-grandfather, grandfather, dad and brother of all the pilots as well.

Speaker 1: 1:37

That's just so cool. And the funny thing is you've never told me this and I've made that numerous times and you've kept a secret. We can still keep a secret if you want to.

Speaker 2: 1:47

No, I mean no, it's not a secret. It's just not something that I typically start my conversations with.

Speaker 1: 1:54

I would if it was me, I'd do 100% with it.

Speaker 2: 1:56

Anyway, sorry Jim, take us three years back, but it definitely is an inspiration for why I've been close to aviation and aerospace most of my life, yeah, and so my background is a mix of aerospace and entrepreneurship, basically.

Speaker 1: 2:14

And knowing that I wanted to do something in aerospace.

Speaker 2: 2:16

The first thing that I did was actually to join the Air Force, and I was an avionics guy basically working on computers for fighter jets. From there I went and worked for Boeing, where I was hired as a surveillance drone operator of all things which took me around the world places like Iraq and Afghanistan They've done military bases for six, seven months at a time and flew drones. Did that for about four and a half years, worked in operations management for a little while for Boeing as well. Left Boeing to get an MBA at the University of Oregon and I had always had this big interest in entrepreneurship and decided that this would be an all right time to try that out. I didn't necessarily have the time, but I felt it was kind of low risk at least, and because I'd been working in drones for the last five years and it was kind of a brand new cutting edge technology, I decided I'd actually start a company focused on exploring different use cases for drones. And so this is like 2012, when it was a new thing and it was things like roofing inspections, all kinds of aerial imagery, stuff with constructions, lots of real estate stuff. But, to make a long story short, I built this company on the side of my MBA program would go on to sell it a few years later to a competitor of mine doing about the same thing. It was never a high growth venture type business, but it was a good, profitable company, which is something to be said for Ended up actually buying and holding on to another business for a number of years that I eventually sold and eventually made my way into the venture capital world not by accident, but my interest in it kind of came from an accident and it was really myself thinking about trying to start another company and I wanted to learn about the venture capital financing process.

Speaker 2: 4:15

And I got introduced to a couple of investors. I was living in Portland, oregon, at the time and I remember just asking them about what I would need to do tenant, to prepare and what is the process. And then I kind of started asking them also about their day to day and just the job. And I just remember getting really fascinated with this role and your role is to explore new technologies and to try and help people build companies, and so that just started developing this huge draw for me and there's this big kind of vicarious entrepreneurship angle to it.

Speaker 2: 4:47

I think that was really appealing and so I actually decided I would move to the Bay Area and try and make my way into the industry, try to talk to whoever I could have coffee meetings, that sort of thing and then caught a little bit of a break, kind of hit it off, with a really senior investor, mostly talking about aerospace and space and all these different things that we both found really interesting. And one day I kind of just pitched him can I come scout and work for you and just learn the business? And was able to basically spend a significant amount of time with him and his team and kind of get my feet wet and just understand this industry and how people who are really experienced do it. And from there I saw this opportunity with JetBlue Ventures and commercial aviation travel. All the things I was very interested had a major appeal and so happily I joined about four and a half years ago.

Speaker 1: 5:47

Actually, I guess at the time, a lot of the things you saw with the early drone stage you've seen with things like VTOL. There's real parallels there aren't there.

Speaker 2: 6:00

Yeah, I think there are, and I think the main conclusion on that one is just that these things take a while, and sometimes they take longer than people think, and for good reason. We obviously need these types of technologies in these industries to be as safe as possible, and the FAA needs to do their jobs, continue maintaining a stellar and an incredible track record. But I'm very optimistic and hopeful about drones, vtols, everything that's going on around aviation right now.

Speaker 1: 6:33

And do you want to explain how JetBlue Ventures works?

Speaker 2: 6:39

Yeah, yeah, I'm happy to get out of the overview.

Speaker 2: 6:42

Well, first off, you know it was founded in 2016,. Really out of this idea that there should be some kind of effort that's really focused on new technologies and startups and things that might just be overlooked by a large corporation, a large airline, right. And so, you know, awesome woman, bonnie Simi, was kind of tasked with setting this up, and so she came out and I think she did you know, a great amount of research, talking to very successful CVCs, talking to other financial focused firms and kind of designing this style of a firm where we've got, you know, a full venture investing side, where most of the investors have more of a background in tech, more of a background in VC, and then we've got a full operation side, which is really our kind of liaisons between the investment team and the portfolio and the startup community in general, directly to the airline itself, and most of that team has a background with JetBlue or with the travel industry and so, anyway, so JetBlue Ventures was set up in Silicon Valley as a subsidiary, whereas, you know, jetblue's had courted in New York and we've been around, you know, doing a fair amount of investments. We've done over 50 investments.

Speaker 2: 8:04

Now, some of the more noteworthy ones you might be, you know, would be Flyer, would be Joby, would be Air Company, universal Hydrogen, you know Asaya, beacon, ai, abnos, the list goes on. But awesome organization and that's had, you know, an incredible run here.

Speaker 1: 8:27

That's the danger of when you start naming portfolio companies.

Speaker 2: 8:30

You really have to name all of them, I know, because we love them all. The same right.

Speaker 1: 8:36

It's really interesting, because Bonnie was amazing, wasn't she? She was a JetBlue pilot. She's now Joby, but she was a JetBlue pilot and also competed at Bob's Lane in the Winter Olympics.

Speaker 2: 8:48

Yeah, yeah, she's an amazing figure. She's very inspiring.

Speaker 1: 8:53

And it's interesting, isn't it? For people who don't understand Venture. You're not looking to invest in companies like the one you founded, are you? Or are you looking to put small bets in with huge returns?

Speaker 2: 9:06

Yeah, of course. Of course, you know we operate as an early stage venture capital firm and, yes, we're absolutely strategic. But we're still very concerned with finding, you know, venture scale, returns and the way that we invest is, you know, like just about any other financial VC out there. We're looking at basically, you know, can this company scale into a really large market opportunity? Do they have something that's differentiated? Do they have an awesome team? I'm sure we'll get kind of more into how we analyze companies later on, but I could also say that you know we're an early stage fund. What that means for us is we're about seed through Series B. Our check size is kind of in the 500K to a few million range. We also typically don't lead rounds. We're typically, you know, working with a lead investor and a syndicate of investors. We do pretty much always require a board observer role, and that's just because we want to be really, you know, a partner to any company that we're working with. We want to be building that relationship with Depp Lou and helping them out in any way that we can.

Speaker 2: 10:22

On a tactical level, too, you know where do we invest? Obviously, we invest across commercial aviation and travel, but we do kind of break that down. We have five themes that we like to talk about. One of those is basically everything customer experience. We call it seamless customer journeys, and this is really.

Speaker 2: 10:41

You know, where does your travel inspiration come from? Where are you booking it? What are you doing outside of your air travel? We've got a category around accommodations basically reimagining the accommodation experience, so this would be mostly around unique stay types that we can offer to jet blue passengers. We've also got one that's called Next Generation Aviation Operations and Enterprise Tech, and so this is, you know, enterprise Tech could be any of the regular business functions that the airline could use, and then, obviously, all of the you know niche airline stuff. So we could be talking about, you know, crew scheduling or maintenance or tech ops or weather or whatever it is. Another category is around basically loyalty, travel distribution and revenue management. So basically, you know, how do we find more customers, how do we give them a better experience so they'll return? And then, lastly but not leastly, our category is around sustainable travel, and that's the one that I think obviously brings us here today and the one that I probably spend the majority of my time thinking about working on.

Speaker 1: 11:50

What's really interesting about being a corporate venture capital firm is that you know, if I came to you with an idea and I haven't got one, relaxed if I came to an idea or when. I got a brilliant idea about scheduling. Or you know physically how to fuel aircraft or tug them around. You know optimizing that. You've got the thing where you can go straight to the airline, haven't you? And say guys, what do you think about this as an idea?

Speaker 2: 12:16

Absolutely. Yeah, no, it's. You know, it's a super power for us. I'd say, as an investor. Right, we can go, we can meet startups with all kinds of interesting ideas and we can kind of say, you know, yeah, maybe this sounds all right, but let's go talk to the, you know, the RICA in charge, and that's also where I kind of mentioned our operations team earlier. But this is where I'll ask my operations team you know who do we talk to about this thing or that thing? And the fact that you know our operations team has spent, you know, years at JetBlue, they know who to talk to and we don't have to figure that out. And it can also allow me to really focus on, you know, the startup community around investments and not have to try and wear all of that at once.

Speaker 1: 13:04

You were mentioning how, what you look for in investment generally, it doesn't really change much, does it?

Speaker 2: 13:13

You mean, if we're talking around sustainability or something like that, yeah, yeah, yeah, I would say it doesn't really change. First off, you know we're gonna look through just the basic, general kind of you know, vc or startup filter, right, and that's that's. You know that's products, that's. Is there differentiation in there? Is there any kind of sustainable advantage against competitors? Is there IP? We're gonna look at teams Are they uniquely qualified to do this? We have a history of success. And then we want a large market.

Speaker 2: 13:46

You know, I think there's kind of a cliche statement that you know, in venture, you know your, your market needs to be at least a billion, preferably a lot larger than that to even be considered right. But then, when we're talking sustainability sustainability, you know, often we're looking at technologies that you would consider more deep tech, right, that has a, you know, significant science or engineering challenge Attached to it, and so then I think you also have to kind of put on the, the deep tech filter and you really need to start looking at, you know, technology maturity. You need to start thinking about Technology readiness levels like where is this actually at and also who is telling you that it's that? You know it's. It's great that you can kind of get an assessment from the team, but it's, it's better when you can get, you know, a techno Economic analysis from a third party or something like that.

Speaker 2: 14:37

Then there's also the question of you know what else needs to be solved. You know, is the science done and it basically just needs to be scaled, or is there still, you know, a lot of technology risk that we're looking at? And then you know, probably the biggest one is sustainability, because we've got such huge challenges. Is, you know, does this scale? How does this scale? You know who's gonna finance it, where does this whole thing go? So we look at it like any other one, but then we also kind of, I think, put some extra filters on top of that.

Speaker 1: 15:07

And when you're looking at, when you're looking at staff investments you mentioned their company are you also taking the view that you know that may take longer? To you it may just be slower, but slower runway for that than say, you know an accommodation app.

Speaker 2: 15:28

Yeah, yeah, absolutely. I think on some of the deeper tech, you know, some of the sustainability stuff, we do have to think that the Length of time till an exit could be longer and the the length of time for technology development could be longer. But you know, I don't think we look at it any different than probably your average deep tech investor. Right, and you know, especially when you're looking at something like staff and you've got, you know, massive demand for it, as long as you can actually, you know, make the science and the cost work, you, you kind of have a just a confidence about, you know, the space. As long as it can work, the demand is already there, they're gonna have customers and so if they can achieve certain levels of production, you know there's often there's absolutely, you know, an expectation that they would IPO, that they would, you know, possibly be acquired, that an exit is very possible.

Speaker 1: 16:27

There's lots of staff producers we talk to. You would love you know, 20 million in BC. They're coming at the top of the company and use it to prove the technology and maybe get them close to showing commercial scale. But they're going to need billions to set up. You know that, hundreds of millions for their first plant. How confident you are you that they'll find that financing? Because that's not where you want to play, is it?

Speaker 2: 16:55

Yeah, it's, it's really not a place that we can play. Just how we're set up right we're again, we're an early-stage investor. We'll do our follow-ons and pro-ratas but at some point, you know, we may even have to step out of that if the deals get too big. This I think you're touching on, you know, kind of a known problem that a lot of people are talking about right now and it's kind of that Scaling gap in financing right.

Speaker 2: 17:16

There's a lot of early-stage financing, there's venture capital, there's kind of deep-tech financing and then there's a lot of later stage kind of project financing, guys, when something's really been tested out at a commercial level and you've kind of got your economies of scale.

Speaker 2: 17:30

Then there's there people happy and willing to do more projects and help set that up.

Speaker 2: 17:34

But there's kind of a space in the in between where it's, you know it's probably several hundred million dollars that need to be raised to really get, let's say that you know, first or second really large-scale plant to demonstrate. And you know I don't have the perfect answer there, but I do know that there's a lot of a lot of companies that are looking into it, a lot of investment firms that are trying to set up more of kind of like you know not not quite you know projects that are not really you know project financing level but growth stage to target this very specifically. And there's a lot of industry kind of you know coalition talks about how we can make this happen, and then I think there's also a lot of Potential for things you know, like the inflation reduction act and different, basically, loans from the government that goes specifically into trying to help these. You know whether the first of a kind or end of a kind plants that really need this financing once a certain amount of technology has been demonstrated.

Speaker 1: 18:32

See, you're gonna take us through some of your sustainability investments with talks about our company. I'd love to know more about that, but do you want?

Speaker 2: 18:40

to take us through some of the other ones.

Speaker 2: 18:42

Well, maybe, I mean, maybe it's a good place to just quickly start on their company too, just because you know they're there are primary SAF investments, and one that we still continue to be really proud of and love the work that they're doing. So, starting there, yeah, we, we, you know, in 2021, we kind of said, you know, we really want to make an investment, you know, directly in some kind of new SAF technology. And so what we kind of did was was went out to educate ourselves a little bit on the different technology pathways, different companies that different stages that we're raising, and we talked to a lot of different companies and talked to a lot of different investors and Was very, you know, happy to find air company actually towards that, you know what I would consider the end of our search. We talked to so many companies and then finally got introduced to air company actually through a friend and fellow investor named Robert Allen and evoke innovations and and so met them and the thing that really stood out to me first off was you know, this is a company that when we met them, they had, I think, 5,000 operational hours at that point with their first plant that was in Canada. They had produced, you know thousands of leaders and so where, whereas most other Companies were doing you know, very small lab scale quantities, these guys were actually, you know, creating product and refining their product. And you know that may be part of that is because they actually have a strategy that has, you know, some consumer products in the beginning, where they could Actually start selling products a lot sooner than than other companies could.

Speaker 2: 20:12

But it was great to see that. It was also great to see, I think, the founder duo there of Greg Constantine and staff she had, whereas you've got you know Greg, who's kind of more you know, visionary, he's got Partnership and strategy experience and I think can just do a great job of kind of steering a company and creating an awesome brand. And then you've got staff, who you know he's a chemistry PhD from Yale and he's he's got you know patents and he's got awards and he's he's just an incredible scientist. And you know these guys came together and Said you know, basically, how can we make you know fuels? How can we, how can we make an impact on the world? And their, their first idea was well, they could start in some high-margin consumer products, help them, you know, fund their own business while they're working towards the technology that would ultimately scale into, you know, large commodities and fuels markets.

Speaker 2: 21:06

And so, yeah, they, you know they made, they are making, you know, air company vodka, they make a perfume, they made hand sanitizers during the pandemic and and while that was, I think, maybe scarier or you know, there's questions you could say on focus or all these different things, I actually thought it was, it was genius and I thought it's a little bit of a safety net and it's also potentially you know it was a, it was a product line that you know we talked about. You know you could potentially at some point try and spin it off or sell it and maybe you fund your own. You know big series C or something, and then you continue on, like there's just so many things that I actually liked about it.

Speaker 1: 21:43

So Some VCs would have hated it, though, because during the pandemic, when the Vodkara has died, they went. We can make hand sanitizer, and some VCs would be. Why are you wasting our time on that? There's never going to be your big market, but you like the fact that they always want revenue from you.

Speaker 2: 22:02

Well, I also believed the discussions that we had with them that a lot of the technology is very similar and that it's building on it. Yes, there's some different setups and there's different tweaks, but a lot of the stuff that they're doing in the consumer products translates directly to stuff that they needed to do anyways to develop their fuels market. So it's basically them doing their testing and their design, while actually making some money and building a brand around it at the same time. The last thing that I'll say, which I think is important, is, you know, when I met them, I think there was some really knowledgeable groups involved, knowledgeable investors involved.

Speaker 2: 22:39

You know, carbon Direct stands out with, like you know, a large team of PhDs who focus on engineering and chemistry, who dig into this stuff significantly. And I'm you know, I'm not going to try and say that I'm a scientist or that I'm ever going to be an expert in any of these categories, so I can read and I can learn as much as I can, but at some point we really need to rely on expert analysis. And so that was really, you know, great to partner with some of their other investors Carbon Direct, toyota Ventures, for example and get comfortable. And then you know that's our main staff investment today and that's one that you know very proud of and really love those guys and the work they're doing.

Speaker 1: 23:17

Jim, do you want to mention some of the other sustainability investments you've made?

Speaker 2: 23:22

Yeah, more than happy to. So, yeah, 2021 was a, you know, a big kind of kickoff for our, I guess, renewed sustainability focus. Sustainability has been an important category for JetBlue for quite a long time, but really getting into, you know, trying to use technology and startups as a tool to help the airline meet its goals, has really kind of only started to crystallize, I'd say, around maybe 2020. So, yeah, air Company you know I've talked about Air Company, an incredible one, another one that you know very proud of and they're doing awesome work is a company called Universal Hydrogen Also invested them then the first time in 2021. And what they're focused on is basically, you know that, long term decarbonization of aviation and trying to use hydrogen as a fuel source to do that. They do work on powertrains for aviation and they actually just flew the largest aircraft ever flown on hydrogen fuel cells in March. However, their real, you know, focus as a company is to be a hydrogen distributor. Basically, they want to establish the actual supply chains that enable moving hydrogen around, and so that's different kinds of containment systems, that's different kind of filling stations and that's, you know, buying basically hydrogen wholesale from you know, green hydrogen production producers and moving it around to where it needs to be done. They're also kind of pioneering some hydrogen for ground support equipment to help decarbonize ground support operations, especially where the viability of putting in a new charging infrastructure isn't possible. Right now. A lot of airports don't have a ton of money and they, you know, some of these charging retrofit projects are, you know, in the hundreds of millions of dollars, and so this is a great solution there. So, yeah, very excited about universal hydrogen.

Speaker 2: 25:16

What I can also note that you know we're not here to be the you know, the the picker of one technology over another. Necessarily, we acknowledge that all of these are decarbonization pathways and our goal is to basically pick what we think are the best, most promising technologies in each category and to support them. I bring that up because, you know, sometimes the, the staff guys and the hydrogen guys kind of battle a little bit and I'm just not a part of that battle. I support them all. So that's a great one. The last thing I'd say about them is maybe to try and understand their business model. It's worth noting that they're kind of like trying to be a bit like cured coffee, like, you know, the cured coffee pod right. So they create the pod, you know, they create the technology and they license it out. That is the coffee machine, which is the drive train, and then they basically want to, you know, be distributing those coffee pods. So that's a great one.

Speaker 2: 26:05

Another one that's relevant to talk about would be a company called Avenos, which actually we learned from some of our friends over at Shell and Shell Ventures who had been working with them for quite a while, and these guys are commercializing some technology out of the Pacific Northwest North National Laboratory, and it's a direct air capture technology, but that it also combines atmospheric water extraction, and so they're calling it a hybrid deck system. So for every ton of CO2 that they produce, they believe that they can produce something like, you know, three or four tons of water as well, which is a really interesting output that you could think of having, you know, really interesting impacts around the world. And why this is also relevant to SAF is, you know, if we're talking about power to liquids in the e-fuel space, we're talking about having, basically, you know, co2 captured, either it's point source or it's directly out of the air, and it's definitely combined with hydrogen in the system. But these guys, you know, are building a, you know high energy efficiency system that we think we can get the cost of captures down to where you know. Someday it'd be pretty reasonable to be fed directly into sustainable aviation fuel production, like in our company, for example. So they're great.

Speaker 2: 27:25

And then we've got a number of other investments. Maybe touch on really quickly. Beacon AI is a pretty incredible system that they're building, basically an AI assistant concept that eventually becomes more like an AI co-pilot and it's basically, you know, it's taking, you know advancements in AI and advancements kind of around the self-driving car space and applying it to basically all aviation operations for an airline and basically benchmarking everything, looking at everything and saying you know, what could you do be better to be either safer or more fuel efficient? And when it comes to pilots themselves, the system is basically analyzing everything that's going on with the aircraft, all the configuration, all of your throttle and your altitude and everything else, and it's going to be suggesting things that you could do to be more fuel efficient and they think that there's a, you know a significant percentage gain that can be had there.

Speaker 2: 28:19

And then maybe the last one I'll touch on would be a company called i6 that actually, you know, interestingly, came to us from JetBlue's fuel team. This was, you know, this is one of the cases where the airline actually met this company and was evaluating them and they said, hey, you guys should talk to this company. They're, you know, they're early stage and think about raising some funding. And this company is a fuel management platform and basically helps, you know, reconcile fuel transfers between airlines, airports and fuel suppliers, gives you a complete digital, you know observability to what's going on. But it's also really interesting for sustainability because until systems like this are available and I think this is the leading one there just hasn't really been as accurate accounting on with fuel as you would need.

Speaker 2: 29:14

And so there's there's a lot of issues where they're, you know, the numbers don't match up and they don't know where this fuel was lost somehow. So there's, there's kind of like let's increase the accuracy of what's going on or at the fuel. There's also the situation where, in most cases, airlines are overfueled a certain amount, and I think the the average is around 300 pounds or so fuel. And you know, yes, the you know the airline doesn't go, or the aircraft doesn't go all the way to zero, right, so it's not on there the entire time, but what it does do is if you extrapolate that out and say every year the aircraft everywhere is flying with extra 300 pounds, there is some amount of extra fuel burn associated with carrying that extra weight and if you put that across all of the flights around the world, it ends up actually being a pretty significant impact. So those are that's a you know a handful of of our investments.

Speaker 1: 30:09

I think that's a secret. It's not just about decarbonizing. Aviation is going to take every. It's going to take direct air capture. It's going to take new air traffic control. That's going to take everything to get it down. And you mentioned earlier that you're not bothered about being the lead investor and you've also invested in the United Saf fund as well. So we have yeah, the United Ventures.

Speaker 2: 30:40

Yeah, yeah, exactly yeah, and that one was just. You know, SAF is really important to us. I think any. You know we look at decarbonizing aviation and we look at the different pathways that can help do that and everyone agrees that SAF is going to be a big part of that. It's not the only part of it and you know we still think that. You know new kinds of aircraft, fleet renewals, hardware and software upgrades, the aircraft, novel propulsion, you know batteries, hybrids, hydrogen, all these other these areas are important and they have their time in place. But you know, saf is a big one. So I think the the idea there was to support the industry, to kind of support the coalition that's that's forming, to try and encourage more SAF development. Yeah, that was something we were happy to get to become a part of.

Speaker 1: 31:27

In the future. Do you see your next SAF investments being through that fund or on your own? Or do you know it will depend on deal by deal.

Speaker 2: 31:40

Yeah, no. So we kind of treat that like an investment. You know it's a partnership. We expect to, you know, potentially find companies out of that and but we still have, you know, very much our own, you know, in the sustainability investment function. So we yes, that's, you know, could be potential deal flow, but it's more of an investment to us and we're still out there looking for our own investments whether or not United may be interested in them.

Speaker 1: 32:08

Okay. So one of the questions I've asked you loads of times before is if I came to you and said you've got one investment with their company, if I came to you saying I've got a different pathway, different, completely different, non-competitive, would you be interested?

Speaker 2: 32:25

Yeah, yeah. So that's a great question. Actually, normally we kind of stick to about one company per category, but because SAF is so important to the industry, so important to the airline, we've kind of talked about it and figured out that our path, for at least the moment, is that we would be interested in other SAF investments, ideally in different pathways. So we've got a company that's more in the e-fuels or power to liquids. We haven't really done anything in alcohol to jet, or we haven't really done anything quite yet in more fish or troph related technology sets. We're probably not as excited about the HEPA pathway at this moment, just because everyone kind of agrees that at some point the feed stocks really start becoming an issue. But yeah, we continue to evaluate one. Sorry, we continue to evaluate a lot of companies in this space. We are looking at one right now that we're decently far along with it I can't really share much about. But yeah, we will absolutely open to continue looking at other pathways.

Speaker 1: 33:29

Roughly how many opportunities do you look at for an investment generally?

Speaker 2: 33:37

You mean within a particular category or I'm thinking, once your coffee.

Speaker 1: 33:43

To closing ratio.

Speaker 2: 33:46

Oh yeah, I mean as a firm I know that we will definitely look at over a thousand companies a year I think we might have been significantly higher than that already this year and then we'll typically make around six new investments a year, something I'd say that's maybe a decent average for us. So I mean that kind of tells you right there we see a lot of companies and all the investors and that's kind of I think you know what the same for most venture capital firms. It's a very high bar to get across.

Speaker 1: 34:24

And the market. When you did their company, I think two years ago, didn't you invest in that, or roughly two years ago? Is it harder now to find VC generally than it was two years ago?

Speaker 2: 34:43

Yeah, I think that's kind of maybe a little bit of an obvious one. The answer is probably yes, there was a kind of a boom time around all industries, and sustainability also kind of had a boom time, and it's any. It continues on in climate tech and sustainability. But you are just seeing still a bit of uncertainty with everything going around around the world A lot of macro political issues that are, I think, impacting the funding market, and I think there's just a little bit of hesitancy. So you're seeing investment dollars and deal counts go down significantly across most stages right now. So, yeah, I think that does translate to a harder to raise environment, but good companies will continue to figure it out and continue to find a way.

Speaker 1: 35:36

Do you as a VC? You say you're not a scientist, but I'm sure you've analyzed this market. I know you've spent hundreds of hours looking at this market. Do you think that the industry projections to get to net zero by 2050, which rely hugely on staff, are going to be achieved?

Speaker 2: 36:02

Tough question. By 2050, you know, at least we've got a bit of time there it may be more possible. What I do think is that some of the shorter term targets you know percentages and stuff that we're trying to be accomplished by, let's say, 2030 and 2035. I'm not as quite confident about those, just because the magnitude of staff production required is just so huge, right, and it's going to take so much investment I think it was, you know, last year, I think in 2022, there's somewhere around 80 million gallons of staff produced. Roughly, the industry used, I think, 95 billion gallons of jet fuel. So like the gap is just absurd.

Speaker 2: 36:51

You know you've got the White House staff challenge, I think, targeting 2030 for 3 billion gallons of staff production. So I think in the shorter term goals, I think those are going to be really hard to hit. I hope we can hit them. But then in the longer term, you know, especially if some of these technologies, like what our company is working on, really gets proven out on large scales and the economies of scale kick in and they actually get cost competitive with jet air, at least within a subsidies distance, then I think yeah, there's going to be massive projects. So my answer, I think is you know, I'm not necessarily hugely bullish on hitting our early targets, but I am actually still bullish on individual companies who really put out a great product and really understand how to produce it, because I think they tap into just this insane massive demand.

Speaker 1: 37:49

And actually that's what you're trying to do, isn't it? Because you're trying to find you're not up to 2030, it's largely going to be heather and alcohol to jet, so what you're hoping to do is make your investments, the ones which make a difference in the 2030s and 2040s.

Speaker 2: 38:06

Yeah, absolutely. And I mean, you know even these companies, while they do have longer timelines to get to really massive volumes, they can also get to you know scales of, you know tens of millions, you know getting towards you know 100 million, you know within a reasonable amount of time. And so I kind of go back to an earlier comment I made that you know the possibility of a, an IPO for for some of these SAF technology companies, you know, I would say you know maybe, let's say they're doing 50 million gallons or something like that, right, that could potentially be enough to actually, you know IPO the company If you're, if you're doing over, let's say you know, 100 million in revenue. You know I think that's kind of the traditional average of where a company usually goes public around, right? So while while getting to, like you know, massive scale may take a long time, I do still think that there's possible, you know, exit opportunities for investors in the interim.

Speaker 1: 39:08

And also you've got so many readily identify identifyable trade buyers. If you can produce a process, you're something very attractive to an oil and gas major.

Speaker 2: 39:20

Absolutely, absolutely, and you're already, I think, seeing a lot of partnerships across that space and for us, you know, trying to find these deals that's actually been a great you know. Source for us is partnering with these energy companies who really, you know, want to be on the pulse of what's going on because it's, you know, it's going to be really important to their business model and if somebody can really prove out the technology, they want to be a partner or maybe an potential acquirer or something like that down the way. So, yeah, we work pretty closely with, you know, most of the oil and gas energy major Shell, chevron, saudi Ramco, pretty much everyone you can name. Bp.

Speaker 1: 39:59

So if I'm a scientist, you know I've got, you know I've got the PhD, I've got the a couple of patents, I've got a couple of new processes and, you know, and maybe I've got a commercial business partner who's great to talk with airlines and getting an off take agreement signed up. How do I find venture capital.

Speaker 2: 40:24

Yeah, I mean, I think your probably best step would be to start with, you know, firms that are, you know, focused on climate tech, that are focused on sustainability would be one step Right, and I think, you know, a quick Google search would give you a large list of companies who say that they're, you know they're interested in climate tech and sustainability. Another place to start would be absolutely, you know, talk to CVCs in the industries who would be impacted and who are looking for this kind of stuff. So, you know, talk to us, right, talk to talk to, you know, maybe some of the automotive CVCs as well, right, your, your Toyotas and your Porsches and whatnot, because everyone's interested in sustainable fuels and people out. You know firms have different stages, that they'll interact, but it's good, even if it's too early, it's good to make those relationships and to let people know what you're working on.

Speaker 1: 41:16

So I send an unsolicited email. I don't hear anything. When can I call?

Speaker 2: 41:25

My preference would be please don't call. You can send a few more emails, you know you'll get a response. The only reason you probably haven't gotten a response would be that we just receive a high volume and we don't have a huge amount of staff, right, and so it's just it's. You know, it's not personal, and you should receive a. You know, yeah, we'd love to talk, or maybe, hey, this is too early. You know, we want to be honest.

Speaker 2: 41:46

We can't necessarily talk to every single company and also just make sure that you're you're talking to the right companies, right, you need to talk to people that are in your niche. This is all stuff that you know, as an as a savvy entrepreneur, you should be, you know, able to Google and find out, you know, who's interested in the things that I'm making, and if you can, obviously, you know, trying to get some kind of introduction is helpful, but I also, you know, I don't, I don't love that idea that, oh, you know, you're not going to get taken seriously or funded if you don't have, you know, someone walk you into the front door of a VC firm. So don't, don't believe that. That's true. I've, you know, cold emailed people plenty of times and I've had, I've made a lot of great connections and a lot of great steps in my career from doing that very same thing.

Speaker 1: 42:34

And how professional does my pitch book have to be? Do I have to hire someone who's going to be a designer, or will you look past that?

Speaker 2: 42:45

You know it is pretty important actually, and I think it's just, it's a level of professionalism. It's also a level of problem solving right, and knowing what you can do and what you can't do. It's fine if you're not a, you know, a creative marketing designer type and you can't personally make, you know, this great pitch deck, but you should be creative and a good enough problem solver to either hire someone who can or to have someone on your team help you out with it and to be responsible for that final product. Right, you don't have to do it yourself, but you have to show the ability to actually get something you know high quality, done, at least to that degree. And yeah, I mean it might suck, you might have to spend a couple thousand dollars on it, you know, but it's, it is an important, I think, sign of professionalism that you can create something.

Speaker 2: 43:35

Also, something you know that's important is you know a lot of these concepts are really complex, right, they're really complex. And to raise fundraising, sometimes the biggest part is distilling a complex idea down into something very simple, like, if you can't explain your idea to someone and you know a few sentences and, very simply, if you have to go on a long educating explanation, then you probably need to rethink how you're communicating it and your narrative and the story, because it needs to be able to sink in quickly at least right. The technical details we can get into later, but you know the actual concept itself and the persuasiveness of it. You need to figure that out.

Speaker 1: 44:17

Which is actually going back to the air company, was part of their juniors. Because, absolutely you go. I've got a bottle of vodka I've made from the air. I can make anything from that. Yeah, I can make fuel that way. It's really clever.

Speaker 2: 44:31

I would completely agree.

Speaker 1: 44:34

Okay, jim, that's excellent, and I guess you've told us that. You know you see thousands of pictures. You know your odds are very slow. It's the same when you're raising funding as well, isn't it? You should? You shouldn't rely on, you know, one VC. You should be going out. As many as possible. Provide a few fit their criteria.

Speaker 2: 44:57

Absolutely. You know, unfortunately, as a founder, you have to be comfortable with a little bit of salesmanship and kind of what I mean by that is you may go, you may have to go talk to you know 100 or hundreds of VCs to get the funding, but you know you only need a couple yeses to make it happen. And I would, you know, point at, you know very famous examples in history. You know Airbnb, for example. I think the famous story is they pitched, you know, 100 investors didn't get any, or something like that, and you know it's happened over and over again, especially if something is kind of counterintuitive. But I think even your average you know. You know companies that don't have a really hard time fundraising. They probably still, you know, pitch many tens and you know probably up, you know, more than 50 investors, I would guess easily. And then you're probably your average. You know company is, yeah, easily pitching 100. I wouldn't be surprised.

Speaker 1: 45:55

And so you should, and it's not going to be quick.

Speaker 2: 45:59

You should, you know it's, it's no, and things are and things are slowing down right now, unfortunately.

Speaker 2: 46:04

You know, in the last couple of years sometimes we have these, these you know, exploding deadline rounds, or you know you got to be and it was kind of it's because the you know. I guess that you know the power dynamic has swung back a little bit on the pendulum right, there used to be so much money chasing, not as many deals, and now there's just less money and so there's just more deals and it takes longer and it doesn't. It doesn't have to be a rush and it doesn't have to be you got to let me know by Friday, sort of sort of thing anymore, and I think it's heading back towards more in the middle where it kind of should be right and neither side should have, you know, all the power. I don't think that's necessarily healthy and I think everyone should just be reasonable about. You know, investors shouldn't take too long, but but startups also can't say you know, you have to, you've got three days to decide. Like, let's just not reasonable.

Speaker 1: 46:58

It's an easy question in 10 years time or 15 years time, one of the ways you'll measure the success of your self investments is financially. But is there something bigger there? Are you also going to be looking? Are you hoping in 10, 15 years time to be going? You know, I can't believe that the companies with that have brought in so many million tons of zap.

Speaker 2: 47:23

Yeah, absolutely. I mean, that's kind of where our you know, our strategic connection and mandate come in here, right. So you know we are fully a strategic fund that does care very much about financial returns, right. And when we talk about sustainability, what we're basically doing is we're looking at, you know what are all those different levers that we can use, all those technology pathways to help decarbonize the airline. We want to make money doing it as an investor, but you know, we wouldn't exist here if it wasn't for trying to help the airline decarbonize as part of our investment focus. And so absolutely part of our impact is going to be, you know, offtake agreements and impact and partnerships and all these kinds of things, and so that's. You know, something that we're also, you know, judged on internally for our performance as a firm is you know how many POCs and partnerships and agreements are coming out of it. And so, yeah, we're actually going to be judged on our financial performance. But also, how much did we impact JetBlue, their 2040 goal, and how much did we impact the industry?

Speaker 1: 48:29

Jim, thanks so much for your time.

Speaker 2: 48:32

Yeah, thank you.