January 23, 2021
Image: Protocol and Denis Sazhin/The Noun Project
Hello and welcome to Pipeline. This week: how to build a venture firm on top of a community, investing earlier and diversity goals for selecting LPs.
Jason Jacobs isn't just another VC who blogs. He built his venture firm MCJ Collective on top of an already-thriving content operation and community focused on climate tech.
Unlike with other firms, the content and community aren't an add-on or something just to help with bringing in deals (more on content marketing below). His firm is a "three-legged stool" of content, community and a rolling fund, done through AngelList. Each feeds off each other. And unlike with other firms, the content and community are not there to fuel the fund — they're their own thing. He started off meeting industry people, then started a monthly email update (which became a Substack newsletter), then came a podcast, then angel deals, then a fund.
Jacobs eventually set up a rolling fund through AngelList that invests $100,000 to $250,000 in about six to eight pre-seed, seed or series A deals per quarter. The first quarterly fund was $1.4 million, and the second one is about $1.6 million. Many LPs are from the community.
It helps that people are intensely interested in climate change technology and often willing to help because they care about the cause.
This new model could work in other verticals, said Hunter Walk, partner at Homebrew, who is a personal investor in MCJ. "Normally you raise the fund and then sprint to build a community — or at least I think that's the 'big fund' playbook," he said. "Now with some of these new rolling funds, or new firms, they started with a community — of common interest, around content or an influencer personality, and then the venture fund is one of the 'products' they build on top."
But building this kind of community is "a lot of work," said Jacobs, who now has one other full-time person in addition to himself and a full-time intern. "We're quite intentional with it." They do a monthly or quarterly town hall for people to connect, ice breakers or speed networking. He also introduces new members each week in his newsletter and includes job openings for people to help people who are hiring.
For Raj Hazra, who is senior vice president of corporate strategy and communications at Micron, there has never been a more thrilling time than this golden age of data. In this interview, Hazra describes how "we are now at the doorstep of taking things that we thought were science fiction and making them real, and it's only going to be exponentially faster going forward". Read more from Micron's Raj Hazra.
Here are a few more interesting thoughts from Jason Jacobs on climate tech and climate tech investing:
What do you expect from the Biden administration on climate technology?
We're hopeful and optimistic this will create a bunch of tailwinds and air cover and supportive policy and just more visibility and awareness. And bring us back as a global collaborator in the Paris Climate Accord. That said, when it comes to investing I would call that gravy. You don't rely on future policy you don't control. Many companies would benefit from more favorable climate policy.
Were people scared off by what happened with "clean tech" in the 2000s?
There's some lingering PTSD from what happened in 2004 to 2007 when a lot of money got set on fire and there was investing in high-profile disasters.
What's different this time?
Whether or not this time will go well, there's no disputing this is a very different shot on goal. One it's just a very different time as many VCs will tell you sometimes it's not the ideas that were flawed — it just wasn't time yet. Sometimes you catch the wave, sometimes you don't.
What about the types of companies this time?
There's much broader climate tech now. And from what I'm able to piece together, hubris comes from the Valley devaluing expertise. They bet big out of the gates without doing small tests and iterating. And it seems equity capital tried to do too much. Infrastructure would have been better if there was project finance or some other sort of capital.
What areas do you focus on, investing-wise?
We're generalists within climate. We look at a wide range of sectors. Anything from consumer to carbon accounting to climate risk to mobility to food and agriculture to battery tech to decarbonizing cement to nuclear. We look at stuff that has venture-scale ambition. Typically we like to invest with institutional investors who can do in-house due diligence when we don't have expertise ourselves. Our goal is to expand that in-house over time.
For Raj Hazra, who is senior vice president of corporate strategy and communications at Micron, there has never been a more thrilling time than this golden age of data. In this interview, Hazra describes how "we are now at the doorstep of taking things that we thought were science fiction and making them real, and it's only going to be exponentially faster going forward".Read more from Micron's Raj Hazra.