Sector Spotlight is a periodic series highlighting each of the individual impact areas we invest in.
This month we sat down with Impact Engine Vice President Chris Wu to learn about his speciality, environmental sustainability investing.
Why are you personally drawn to environmental sustainability investments?
Prior to Impact Engine, I spent the majority of my career focused at this intersection between the natural and the built environment. I studied civil & environmental engineering in college. My first job coming out of school was as a structural engineer designing buildings in New York City. I was really fortunate, my first project would end up becoming the first LEED Platinum skyscraper in the world, the Bank of America Tower at One Bryant Park. That experience went a long way towards seeding my interest in all things sustainability.
What’s an example of a recent E.S. investment we’ve made here at Impact Engine?
I’m really excited about our recent investment in a company called Circuit, which is an on-demand microtransit solution provider that uses fleets of electric vehicles specializing in pooled rides to fulfill the first/last-mile gap that's experienced by municipalities around the world.
Circuit’s last mile solution has demonstrated that it can serve as a connector to public transit systems or mass transit hubs, and has effectively addressed transit deserts in places like West Dallas. The company has strong business traction with a diverse set of customers including cities, municipal partners, private inter-city rail companies, and real estate property owners. Circuit has delivered over 5 million rides to date, and in 2021 alone they served over 650,000 riders, reduced congestion by over 1,000,000 vehicle miles traveled, and prevented 535 tons of CO2 emissions. They are able to deliver all this to cities at a much lower cost than current options. Fixed route bus systems with low ridership can cost a city over $35 per ride, whereas Circuit successfully serves Pompano Beach, FL at just $2.28 per ride.
When you’re evaluating a potential investment in this space, what are some special aspects you consider? Things you like to see in a company?
In general, I’m typically looking for a strong mission-driven team with a compelling and differentiated product that is addressing a large social or environmental challenge, which also represents an attractive market opportunity. I really like to see a founder who is steeped firsthand in the problem they’re trying to solve, and I look for companies where the impact is baked into the core DNA of the business so that the impact scales in lock-step as their revenue grows
In the sustainability space, I think it’s particularly important to have a team who can demonstrate that they are strong at customer acquisition because they may be selling to governments, utilities, or large enterprise clients where the sales process can be very long and challenging. Another special aspect to consider is the changing regulatory landscape, and how new legislation can help open up or accelerate new markets for sustainability companies.
Are there particular challenges to investing in the environmental sustainability sector?
Climate change touches every aspect of our economy, as a result sustainability is a very broad space that can cover everything from food & ag, transportation, and energy, to the built environment and the industrial sector. So it’s important to stay up to speed on a wide range of topics, but that’s also part of what makes investing in environmental sustainability so fun!
Looking forward, what’s got you excited in the environmental sustainability space? Big opportunities on the horizon?
It’s a really exciting time to be investing in the environmental sustainability space. There’s a confluence of different factors all converging to drive strong tailwinds, including the passage of the Inflation Reduction Act, the SEC’s proposal to require publicly traded companies to disclose climate-related financial risks, seeing that 80%+ of global GDP is now covered by net zero commitments and 20% of the world’s largest companies have adopted net zero targets, as well as consumers shifting their sentiment towards more sustainable purchasing behavior. I’ve also seen an influx of new talent entering the space, I’ve met a lot of first-time entrepreneurs who come from traditional engineering and science backgrounds and are applying their expertise to help develop novel, highly scalable solutions to some of the biggest environmental challenges we face. Taken all together, it’s a great time to be building a climate tech startup, and I look forward to supporting them.
I also think the environmental sustainability space has a big opportunity in terms of driving more equity and inclusion. Disadvantaged communities and people of color are often on the frontlines of climate change, and are disproportionately impacted by its negative effects related to health, quality of life, and economic outcomes. Climate justice is becoming more top of mind for folks in the space, as demonstrated with initiatives like Justice40 as well as the work of organizations like the Greenlining Institute and Browning the Green Space, and I look forward to seeing more progress on this topic moving forward.
Browse our environmental investment portfolio.