14 Jul Enduring Planet
Enduring Planet
Interview with Erin Davis; COO and Co-Founder of Enduring Planet
Jen: How was Enduring Planet Created?
Erin: There are not enough financing options for climate startups that are non-dilutive and help them keep more of their company as they grow. Dimitry Gershenson, co-founder and CEO (ex-Facebook, 10+ years of climate and investing exp) and Erin Davis, co-founder and COO (co-founder of SIMA Funds, $190M+ debt vehicle for cleantech in emerging markets) started Enduring Planet to provide more equitable capital to the market and address climate change. We use fintech to increase the speed at which we can underwrite and get money into the hands of those who are doing this important work.
Jen: How are your investment funds catalytic in a way that is different from other funds?
Erin: Climate Entrepreneurs are working tirelessly to address climate change, but access to capital remains limited and existing financing options are largely high-cost, dilutive, and often exclusionary due to inherent bias in the venture capital community. Enduring Planet’s first fund, the Enduring Climate Fund 1, seeks to plug this gap by providing revenue-based financing (RBF) and Climate Grant Advances that are entrepreneur-friendly and non-dilutive. The Fund combines traditional underwriting techniques with a data-driven and automation-supported approach to rapidly assess eligibility for funding, reduce the duration and complexity of due diligence (thus lowering transaction costs), manage collection risk, monitor and report on loans, and predict portfolio performance. Beyond the venture-backable community of startups, there’s a massive universe of small business entrepreneurs filling gaps to enable deployment of clean technology at scale. These include HVAC technicians focused on energy efficient technologies, residential solar sales and servicing companies, and small businesses built around charging and servicing micro-mobility solutions. The start-ups we invest in have a transformational role to play in the decarbonization of our economy. Our Climate Grant Advance investees are developing novel solutions to challenges spanning transportation, the built environment, carbon tracking, and everything in between. All of our investees innovate around adaptation/resilience, enabling often marginalized populations, communities, and businesses to adjust to the change that will inevitably occur.
Jen: How do you describe the kind of non-financial returns the fund offers?
Erin: We monitor and report on progress towards specific SDGs (e.g. CO2 emissions avoided), growth in employment of our investees and the demographics of their employees.
Investee Company – New Sun Road, installing microgrid in Guatemala
Jen: Can you describe how you use integrated capital to do your work?
Erin: Today, the Enduring Climate Fund 1 offers two debt products for climate startups and SMBs: 1) Climate Grant Advances against state/fed grant funding (bridging timing delays) and 2) Revenue-Based Financing. Both products are flexible based on grant revenue or monthly revenue streams and help entrepreneurs keep more of their company. Outside of capital, we have a large network of VC/investors and are constantly making introductions for our pipeline and portfolio companies.
Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?
Erin: Potential borrowers are screened prior to funding using our Climate and Diversity, Equity and Inclusion Investment Policies. Our target market must be working in the New Climate Economy across mitigation (i.e. reducing emissions), removal (i.e. pulling carbon out of the atmosphere), or adaptation/resilience around the world. While not exclusive, we prioritize investing in diversely led teams, management, and companies operating in underserved communities. We require all companies to report on two metrics tied to the Sustainable Development Goals as well as the demographics of their team.
Jen: Can you share with us an example of an investment?
Erin: Many of our investments are described here https://enduringplanet.com/resources/case-studies. A specific investment we recently made was a Climate Grant Advance to Dollaride (https://enduringplanet.com/resources/case-studies/dollaride): Dollaride is a mobility platform that helps shuttle-van fleet owners grow their businesses and transition to clean energy. Dollaride currently brings value to 15,000+ commuters in NYC (and growing).
Today, Dollaride offers a suite of digital tools that these small businesses use to operate fixed-routes, manage vehicle fleets, process payments, and report on performance.
The product platform will soon provide fleet owners with access to financing, EVs and charging stations so that they can deliver clean transportation in their cities. They anticipate converting small fleets to electrical vehicles will achieve the most impact over time.
We invested $500K 12-month Climate Grant Advance into Dollaride to enable them to start their $10M grant project with NYSERDA 3-4 months before the first payment arrives without raising more dilutive venture capital.
Jen: What do you tell people who think your fund is risky?
Erin: We approach risk management in many ways including maintaining a strict credit box, thoughtful portfolio construction, and using a capital stack which protects investors with first loss capital.
We also believe its riskier not to invest in climate. We believe there is a systemic problem with the options entrepreneurs have to finance their companies where they are largely dependent on extractive, dilutive capital. On top of that, financing for climate solutions in general is nowhere near sufficient to meet the global climate targets. The Climate Policy Initiative estimated that an average $632B were invested per year in 2019/2020. However, flows must increase to $4.35T by 2030 to enable the world to maintain warming below 1.5degC or a 7X increase.
Investment Thesis/What is your rationale for your approach to investing?
We provide fast, flexible, founder-friendly financing to climate startups and SMBs.
Geography: United States
Year Founded: 2021
# of Investments: 22
# of Investors: 16 (noteholders)
Funds Raised: $5,310,000 for Fund 1
What’s on Erin’s Mind?
Book: Crying in H Mart by Michelle Zauner, a memoir about growing up Korean American and losing her mom. It’s poignant and sad and captivating.
Song: Gloria by Laura Branigan – a good ‘sing at the top of your lungs in the car’ kind of song
Podcast: Tig & Cheryl – True Story, a totally irrelevant podcast supposedly about documentaries, but they never actually talk about them in any detail. I am always LOLing.