The NatureBacked Podcast

Jumping on Climate Change Opportunities with Icebreaker.VC's Aleksi Partanen

February 21, 2022 Tarmo Season 1 Episode 1
The NatureBacked Podcast
Jumping on Climate Change Opportunities with Icebreaker.VC's Aleksi Partanen
Show Notes Transcript

We spoke with Aleksi Partanen from Icebreaker.vc about the opportunities created by climate change, the urgency of the current situation, and (of course) about breaking the ice.
A few key takeaways from Aleksi Partanen:
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"People are becoming more aware of the issue we're facing that this planet will not be able to, to hold us all, or at least not stand everything we do or would like to do. And that, on the other hand, brings a massive amount of opportunities."
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"Let's look at Nasdaq IPOs. How many are actually impact-driven? I can't come up with one."
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"This planet is running out of time. The faster we try to help as many people as possible, the higher the likelihood that some of these will turn into actual change."

Tarmo Virki  
Welcome to NatureBacked podcast of Single.Earth. In this series we are talking with the investors about their plans, what future holdsi are investments in greentech sector. My name is Tarmo Virki. And in this episode one, we are talking with Aleksi Partanen from Icebreaker.vc. We see how the Icebreaker is investing in early-stage companies, how they are seeing the green investment scene developing, and what's out there in the future. Enjoy the show. 

Aleksi, tell us a few words about Icebreaker.vc - what is Icebreaker doing beyond, in addition to, breaking the ice, of course.

Aleksi Partanen  
In addition to breaking the ice, we're a venture capital fund and investor active in Finland, Sweden, and Estonia as the main markets. We're a team of 15, spread between Helsinki, Stockholm, and Tallinn, investing in the earliest possible stage of typically software-driven companies in one of its definitions.

Tarmo Virki  
How it was born. Why Icebreaker?

Aleksi Partanen  
Icebreaker is a great name that I could tell long stories about. But then again, it can also be that it all started with a joke in the kitchen, as the best ones, just stay. So maybe, at some point, we will pay a design agency or whatnot to come up with the storyline. I guess the meaning behind one could actually say there really is that at the earliest stage of these companies, they do need to break the ice, right? I mean, they might be yet not moving forward at all. Or they might be, for example, going out and solving a problem that has not yet been solved. Or they might be looking ahead of them like this, deep, frozen ocean, right? That no vessel can go through. And then they need to make it happen. Does it sound familiar enough to your own ventures?

Tarmo Virki  
Absolutely. That sounds very familiar to different journeys or adventures I've been part of. Tell us a few words about how Icebreaker sees green tech, climate tech. You guys invested in Single.Earth, but is there any other kind of green tech investments in your portfolio?

Aleksi Partanen  
We actually have multiple. Looking at our investment funds, we are running from two funds. The first fund was born in 2017. And it was a 20 million euro fund. So it was fairly rapidly invested. The second fund was born when Helsinki went into lockdown end of March 2020. And it was already a significantly larger fund. So 100 million fund. In the investments we've made, especially from the second fund, we actually have multiple teams that are wrestling with this same insanely large challenge that we have on this planet from different angles.
Looking at the investments we've made, most of them are still under the radar. So the teams choose not to become publicly known yet, or at least that they are funded in any way. I would say that almost a quarter of cases that we look at seriously have something to do with different angles of this issue.

Tarmo Virki  
What's the what's the reason? I think this one quarter sounds more than probably for the typical VC fund. Maybe these days it's slightly more common than it used to be, but still, why the interest in this field?

Aleksi Partanen  
You know, always trying to keep things as simple as possible. I feel like in the money market, which venture funds are operating in at the end of the day, money is a pretty fast learner. It typically even runs faster than the rest of the market. So I guess one of the main reasons is that we are becoming, like we globally, people are becoming more aware of the issue we're facing that this planet will not be able to, to hold us all, or at least not stand everything we do or would like to do. And that, on the other hand, brings a massive amount of opportunities. I was just yesterday talking about one single company, Tesla. They were at one point, they were valued at a trillion dollars. What's the value based on? Is it based on the amount of cars sold? Probably not.

Tarmo Virki  
How many millions?

Aleksi Partanen  
It's based on the market believing that the future will desire the innovations that the company is bringing to us all. And I guess like, to be frank, I feel the interest from venture funds is driven by two different tracks. One is like pure personal interest. For example, I can tell you that I became much more interested in this whole domain when we got our son, so it became a lot more important to think about others than yourself. And then and then the other track is the opportunities that we're seeing like that are at the end of the day wrote it due to financial returns, which, at the end of the day is what we're supposed to return to our investors. I don't want to say that we would, for example, be driven purely by our personal interest in saving the world. It will be, in my opinion, naive and misleading. And I guess like the latest researches and study papers, you can read from different universities and whatnot, actually do conclude that without having an element of a kind that would be rooted into the common economics logic it might not be as fast at least the change.

Tarmo Virki  
Exactly. So and that's what we are kind of rooting for with Single.Earth that though there should be some kind of change in the whole economic system. When you think of nature backed financial system - does this sound crazy to you?

Aleksi Partanen  
I remember very, very vividly the day I came to Tallinn from Helsinki. It's like a two-hour ferry trip, and I was about to meet the first time face to face these two individuals, Merit and Andrus. If I don't remember wrong, in Lift99, we met them at some meeting room there. And already during that first meeting, I realized that, okay, here I'm dealing with some pretty special way driven individuals. I've kind of felt it with these guys. I can let go as well. And I feel it. I'm not a musician, but I would say like a jam session, jamming session of a kind, and I guess that session just keeps on rolling. And now there's like, I don't know, 60 or something of you. So it's already a big band. In the process of creating something new, you have to let go. And if that's a definition of crazy, I would say yes. But at the same time, I feel it's necessary. Without it no rational individual would conclude, at least in this space, conclude that that okay; we should get on this. We should do it. Crazy in a good way. And in a necessary way, I would say,

Tarmo Virki  
Development and progress have always needed a bit of element of craziness. Otherwise, there is no development, right? 

Aleksi Partanen  
correct

Tarmo Virki  
I'm hearing from different directions that the I don't know, the climate tech is, is a big deal in the investment world. And I think somebody recently quoted somewhere saying that there is actually more money than startups for reasonable climate tech projects. Do you see something similar?

Aleksi Partanen  
I was just yesterday talking to a colleague at a much later stage fund. I often have those discussions with different stage investors because they have a different view, right? Different maturity levels of teams, companies, and so on. And we had a pretty good discussion about like, Okay, let's look at Nasdaq IPOs. How many are actually impact-driven? I don't, I mean, can't come up with one. So how many software companies are trying to help a sales guy do his job better? Or helping, I don't know, teams to share information faster? Or, I don't know, the stockbroker platform for common people? I don't know. 
Given that's the case, there are not yet many, and given that, we all understand that we all share the same understanding that this planet is dying if we continue on this track. It becomes impossible to live in. And yet, we haven't found another place to go to, right. 
So anyway, so what I was about to say is that given that this is becoming an insanely large problem, it is it is pretty natural for it to be seen as a huge opportunity. We need to remember I was this morning discussing with another person about the whole Coronavirus situation. Depending on the market, obviously, and depending on geolocation and whatnot. But last time I checked, economies are better than ever.

Tarmo Virki  
Markets have been up and down, but I think the economy's general up.

Aleksi Partanen  
In general, they're up: draw a line from the beginning of 2020 to the beginning of 2022. It's a fairly upright arrow while we have had the biggest suffering since Second World War. Crisis brings insane opportunities. It is. Because it's always been like that, right? What makes the opportunities in this particular category that, for example, Single.Earth is working so intriguing is that it's all positive. We're not trying to mine the world or Earth more, or something like that, trying to use technologies to find that last hidden drop of oil somewhere. Instead, we are on the mission to save it, conserve it, have the species around us, have those forests, have those wetlands, and so on. So, I mean, that adds a huge drive to it, I would say because it has more than just financial interest as an opportunity. But it actually includes this continuity and conserving our planet and whatnot, saving it for our children and grandchildren.

Tarmo Virki  
Exactly. I mean, as you were referring to it, the natural passion level for improving the sales software system processes is something which, for me personally, would be difficult to figure out waking up every morning and being passionate about. I know there are people who are passionate about

Aleksi Partanen  
There are people; some people even enjoy pain. 
The level of excitement to it, because it's actually built into us, as humans, as a species, like any other is drive to survive. We're driven to exist. We're not like collectively saying, hey, let's all just die. Quite the contrary.

Tarmo Virki  
However, it must be really different for an investor who typically thinks that I have to get the returns for my investment and the fund, and there is an opportunity to shave something to get a few percentages more. And then there are projects, which on the other hand, try to save the world. The listed companies typically trade on their quarterly numbers: how many people they can cut to lower the cost level and how they can put the profit per share up. And then on the other side, there are companies like Single.Earth who kind of working on a small mission of trying to save the world. So they sound like totally different worlds?

Aleksi Partanen
Well, yes, and no. If you think of, if you would, for example, envision that, okay, what if, what if Single.Earth becomes the future federal reserve of natural, natural resources natural world, right? You could compare it to an enormously large bank. So we're just having different types of assets. We're trading with a different type of thing than cash money.

Tarmo Virki
I kind of like the Federal Reserve comparison or central bank comparison.

Aleksi Partanen  
And then you could ask yourself: well, what if someone would pitch you that, hey, I'm gonna build a new central bank. It's going to hold as its assets the entire world's natural resources? Then you bump into a crazy opportunistic, always optimistic venture fund manager, and you're like, yes. Let's do it.

Tarmo Virki  
Life happens.

Aleksi Partanen  
I feel like, again and again, ideas are cheap, right? I mean, they're easy to come up with, and anyone can. Anyone can come up with any ideas, right? And have any missions like ethical missions, value-driven missions, whatever. But a totally different thing is to do something and get something done.
If you're asking from an investor's perspective, what makes something very interesting is that - I'm not hyper interested, wouldn't be a bunch of people with, like, a very golden value set, right. But I get super excited about people who can get other people excited and then, as a group, can get shit done. Right. So that's when the value starts to, actually, get created and not just talked about.

Tarmo Virki  
Exactly. Of course, in the startup world, we have a lot of examples where value is created through talking about it. And some of whose cases don't end up very well, but that's totally different talk. Wanted to maybe slowly start to wrap up ... when you look into 2022, what are your big goals this year? What do you what how do you want to change the world in the near term?

Aleksi Partanen  
I want to invest in as many teams as possible who are driven by as ambitious or even more ambitious missions than what, for example, Single.Earth is pursuing. I feel like the biggest gift we can give, not only investors but everyone, is just to support those who will help us become better. And we, as investors, we're doing our small part by giving access to capital, but obviously giving access to expertise and support and what have you, right. And I would like to be able to help as many teams, as many small starts of teams as well this year. I a running, we are running out, we are running out of time, we know that, right? I mean, this planet is running out of time. So the faster we try to help as many people as possible, the higher the likelihood that some of these will turn into actual change.

Tarmo Virki  
If there is listening, you know, small entrepreneurs thinking about their crazy ideas to change the world or big entrepreneurs who want to change the world. What's the stage to contact you guys?

Aleksi Partanen  
The moment you get the crazy idea?

Tarmo Virki  
Not before?

Aleksi Partanen  
Even before, there is no such thing as too early for us. Like we don't need to see a business plan. We don't need to see a presentation. We don't need to have any of that. We are very driven by people; we are very, very open. And if we are not the right people to help you move forward. We probably know who can. So lowest possible threshold. We're super keen on getting to know everyone who wants to get something done.

Tarmo Virki  
That's a very good starting point. And ending for this recording. 
Thank you for listening. We will be back next week. Turn on to NatureBacked podcast.

Transcribed by https://otter.ai