Although social impact investing in sustainability has been around for over a decade, funds solely focused on it are still an anomaly.
In early 2022, Bay Bridge Ventures was founded upon the idea that taking care of the planet means taking care of every business and every being. The venture capital firm saw an opportunity to “do well by doing good” by investing in scalable, profitable, and impactful technology companies and innovative entrepreneurs.
Taking Nature’s Lead
Before Kim Kolt joined Bay Bridge Ventures as a General Partner, she was with Goldman Sachs in its Technology Investment Banking Group (TMT) in San Francisco and Los Angeles.
Following Goldman Sachs, Kolt founded an investment company, For Good Ventures, which prioritized investments in computing-based solutions coupled with necessary supporting systems (such as financial and insurance products) to unlock the next generation of technologies, including cleantech and closed-loop systems.
I have been deeply passionate about nature since childhood. Sustainability arose out of my original interests in marine biology and oceanography, which stemmed from growing up in Hawaii.
Kolt’s goal with For Good Ventures was to use technology for the benefit of the planet and humanity.
“I have been deeply passionate about nature since childhood,” said Kolt. “Sustainability arose out of my original interests in marine biology and oceanography, which stemmed from growing up in Hawaii. Since as long as I can remember, I’ve felt a sense of reverence for all life and the systems in nature that support it. Hawaiians have a close connection with and appreciation for the environment.”
How Business Impacts Societal Change
Businesses must make money to survive, but they can be equally-driven by the mission to make the world a better place. Nonprofits, on the other hand, can run into difficulties when attempting to scale solutions due to their financial and governance structure. Businesses by their very nature thrive on scale, so a mission-based business is looking for that sweet spot where the prosperity of the business relies on the prosperity of the planet and humanity.
Kolt sought out nature’s regenerative and self-sustaining systems as inspiration for her investment firm’s operations.
“If solutions could work as businesses and become self-sustaining entities that attract talent and create value, they have a chance of tackling issues more quickly than their nonprofit counterparts,” said Kolt. “I could put back the economic proceeds into the same pool of capital to support the next generation of solutions and create a regenerative business model.”
Bringing more inclusivity into sustainability gives us a much better chance of comprehensively solving the most pressing climate problems because we have a diversity of perspectives and more information to drive more creative and effective solutions.
The Intersection of Inclusivity and Sustainability
Scientific research has proven that underserved communities are disproportionately exposed to the toxicities and downstream effects of traditional energy and wasteful systems. Sustainable systems created from renewable resources provide communities with cleaner water and air, less waste, more healthy and readily available food, milder temperatures, and improved health outcomes. The wins compound and perpetuate one another.
“Bringing more inclusivity into sustainability gives us a much better chance of comprehensively solving the most pressing climate problems because we have a diversity of perspectives and more information to drive more creative and effective solutions,” said Kolt. “[At Bay Bridge] we want to see a proactive approach from our portfolio companies incorporating diversity from leadership down. At our own firm, we have the same philosophy about diversity and inclusion.”
Two Guiding Principles for Sustainable Investments
Although Bay Bridge’s ESG+ Methodology in the evaluation and valuation of its investments is proprietary, Kolt shared with us their two main guiding principles:
Meet ideas where they are. It’s unfair and short-sighted to compare one company’s beginning to another company’s middle. The framework at Bay Bridge is highly configurable and flexible, and based upon the stage of the company.
Investments are partners. In all their dealings, Bay Bridge sees the companies and people in whom they invest as partners. Many times, VCs can be overbearing and portfolio companies can feel constantly judged and braced for ridicule. Bay Bridge’s methodology seeks to meet the needs of the individual portfolio companies depending on their maturity and then evolve alongside the companies as they grow rather than just having their methodology act as a screening tool.
“Our process is uniquely architected to help companies stay true to their own values and to fulfill their own vision for the company,” said Kolt. “This inspired stewardship is what many CEOs are looking for but is sorely lacking today in the market.”
What’s Changed Since Cleantech 1.0
What is retrospectively known as Cleantech 1.0 lasted from around 2006 to 2011. Investors attempted to apply their time-tested investment playbook to climate change mitigation solutions and a burgeoning consumer interest in sustainable products. They failed to understand the underlying science of clean technology, nor did they anticipate the capital intensity and the necessity of long-term investment. They also failed to recognize that the overall supply chain wasn’t robust enough at the time. Consequently, many ventures collapsed and investors saw cleantech as a disappointing fad.
Fast-forward to today, many foundational technologies that were needed a decade ago are available, and new applications of these technologies are flourishing. This maturity makes today’s cleantech investments much more sustainable than ever before. Bay Bridge is distinguished for its broad technical expertise coupled with deep investment experience, and that has allowed them to be part of today’s cleantech renaissance as their core investment focus.
“AI control algorithms, energy storage, robotics and automation, 5G communication, advanced computation, and next generation sensor technology are all coming down in cost while increasing in performance,” said Kolt. “This is creating massive opportunities to disrupt old industries or create entirely new ones.”
The Future of Sustainable Investing
The million-dollar question that every investor wants to answer is, “What’s next?” When Kolt looks out across the sustainability landscape, she sees five large opportunities:
Climate change mitigation and resilience
Health innovation, access, accuracy, and affordability
Equitable financial stability
Quality of and equal access to education
Solutions that live at the intersection of all of the above
Three Key Pieces of Advice
After investing in and working alongside new ventures, Kolt offers three key pieces of advice for all companies that want to incorporate sustainability into their operations, metrics, and reporting:
- Make sure the scope of work for incorporating sustainable metrics is viable for the stage of the company. For very early stage companies, planning the KPIs and metrics to track may be the only feasible option given limited resources and that’s okay. Every company must start somewhere.
- Keep reading, learning, and asking about new tools, policies, and systems for incorporating sustainability. The field is rapidly changing and evolving. Stay curious, alert, and aware of these changes.
- There is no one-size-fits-all way to be a sustainable company. There will inevitably be customization needed specific to a business, industry, geography, and size. It’s important to be aware of what other companies are doing. It’s also crucial for a company to be true to its own values.