Today, Propeller pushed an update to our website, revealing for the first time the portfolio we’ve been busy building. It’s an exciting day for us becausewhat makes our work so satisfying is backing founders and the important work they’re doing.
You’ll notice that ournew portfolio page profiles each startup we’ve backed (we’re leaving a couple in stealth for now). Of course, these investments are just outputs in a process that involves meeting with hundreds of passionate founders every year and investing in the most promising of them. We feel good about where we’ve landed, but our work is only starting.
We formed Propeller in early 2022 and began gathering capital commitments from investors who saw promise in our vision to create a leading venture fund investing in the ocean-climate nexus. We were pleased to see strong deal flow, but to take it up a level we created and ran our first Ocean MBA (more on this later) at MIT. We followed with our first investments in the fall of ’22 and formally announced Propeller in October of ’22. We continued raising the fund and took in our last commitments in fall of ’23. Propeller Fund I, a $117MM fund includes commitments from a number of high net worth individuals, family offices, and strategic and institutional capital. We’re lucky and delighted to have their backing.
So, how do we invest? Let’s begin with our thesis. Propeller is a climate fund focused on the ocean. To us, the ocean is a climate superhero capable of reigning in and maybe even reversing some of the effects of anthropogenic climate change. The ocean already absorbs ~93% of anthropogenic warming, captures about a third of our GHG emissions annually, and stores about 60 times more carbon than the atmosphere.
But we believe (and science supports) that the ocean can and will do more. We also believe the unexplored ocean is the source of new biological, chemical, and material discovery that holds promise for consumer and industrial innovation and that can help humanity achieve its net zero goals. And lastly, coastal areas support 40% of the world’s population and a massive amount of the global economy. Maritime shipping transports over 80% of all freight. Around 1 billion people rely on the ocean as its primary source of protein. Trillions of dollars worth of real estate is built on our coasts. These industries - shipping, ports, infrastructure, fisheries, and energy – are all being transformed by the forces of climate change requiring transformative strategies centered on mitigation of climate emissions or adaptation against the forces unleashed by climate change.
Our investment thesis is organized into three investment themes: Carbon, Organics, and Industrials. We find these are a good way (for now) to capture the broad set of companies and founders we encounter as we look to invest into our thesis. As you know (and many of you have heard us say) the ocean is really wide, and really deep. So simplifying into just three sectors for investment almost doesn’t do it justice, and these categories may change or expand over time. For now however, we find it’s an elegant way to categorize our work.
Our fund size is geared to invest in and support founders primarily at the pre-seed, seed, and Series A stage. So far, we’ve found some interesting (to us, at least) trends in our investing.
mCDR is the ocean’s superpower: Consistent with one of our core theses, we have invested in several startups that are innovating in a variety of aspects of marine Carbon Dioxide Removal. It is early yet, but we think that the ocean will be where we will safely and permanently capture and store a lot of the world’s emissions and we’re lucky to be working with some tremendous founders who are committing themselves to this big vision.
Academics and scientists wear founder capes: There’s a belief that academics don’t always make great founders. Not in our portfolio. Academics and scientists are starting companies and we are excited by those who are willing to leave their tenured positions to go build a company. When we hear this, our ears perk up.
Customers in view: The companies in our portfolio are serving real customers and specific markets. This is a hallmark of Cleantech 2.0 and we see it showing up in our deal flow. The result is that several of our portfolio co’s have early revenue, or are already in active pilots.
This is exciting momentum, but we’re not getting ahead of ourselves. We realize we are still new, our portfolio is still young, and there are many more founders out there that we’ve yet to meet. Meanwhile, the climate crisis is accelerating, technology is evolving and changing just as quickly, and industries are figuring out how to adapt. There will be more to share as we grow our portfolio.