Third Derivative Six Month Update

It has been six months since I began as Cofounder and CEO of Third Derivative. Below is a very long assessment of how things are going but the TLDR is that I am really thriving in this role, loving my team, and feeling really good about this decision!

What is Third Derivative?
A joint venture of the Rocky Mountain Institute and New Energy Nexus, we describe ourselves as a fully integrated ROCKET SHIP of climatetech innovation, bringing together startups, investors, corporates, and policy makers to commercialize, deploy, and scale solutions to the most pressing climate problems. https://third-derivative.org/

Why Third Derivative?
It will take $2-3 TRILLION per year and bringing 2-3 new Gigaton-scale technologies to market per year to meet climate goals and we’re . . . not on track – not even close.
We’re falling behind because commercializing, deploying, and scaling climatetech is hard. Climatetech startups often have greater capital needs and longer paths to market, making it harder for them to compete with software ventures for funding.

Commercializing climate tech often necessitates navigating complex, slow-moving corporate customers, where it might take a year just to figure out whom to talk to. All of this is set against a regulatory and policy landscape that favors incumbents, not disruptors.

We often think of startups as facing a valley of death on their path to scale, but climatetech startups face FOUR valleys of death and, each time they successfully navigate one, they have to start all over educating an entirely new set of stakeholders. At best this slows the rate of climatetech innovation; at worst, promising climatetech dies on the vine (I have experienced both outcomes in my previous ventures!).

The Third Derivative Solution
We are attempting to fix this broken system at unprecedented scale and speed. Third Derivative brings together the key stakeholders – startups, investors, corporates, and policy makers – to get everyone rowing in the same direction. We scour the globe for the most impactful climatetech startups that match the technology needs of our corporates and the investment theses of our investors.

Each startup receives $100,000 funding from at least one of our investor partners and, as they go through our accelerator program, the investors are working right alongside them to help them succeed (while also gaining unprecedented diligence for potential follow-on investment). At the same time, our team is facilitating dealmaking between the startup and our corporate partners – helping the corporate “speak startup” and vice versa. Meanwhile RMI is providing its unparalleled market insights and policy access to give every participant in our ecosystem an advantage.

By filling these key gaps, we’re hoping to bridge the climatetech valleys of death, not only increasing the RATE of success, but – almost as importantly – also increasing the SPEED of success. In so doing, we aim to derisk the entire climatetech innovation category, unlocking trillions of dollars of investment that is currently sitting on the sidelines.
Some more on our r’aison d’etre:
https://rmi.org/innovating-to-solve-two-crises-at-once/
https://rmi.org/rmi-launches-new-climate-tech-accelerator/

What Have We Accomplished?
In these six months, we have:

• Built a small team of former climatetech entrepreneurs, VCs, business execs, and policy wonks – most of whom have never met each other in real life #thankscovid!
• Designed a global, virtual program
• Secured corporate partners spanning the sectors that need to come together to meet climate goals: tech (Microsoft, AT&T, Google), finance (Wells Fargo), energy (Shell, Berkshire Hathaway Energy), and transportation (FedEx) – still working to bring some heavy industry and auto/battery OEMs on board (close on several)
• Secured 10 VC Investor partners capable of follow-on investing $2 Billion across four continents
• Raised a $3 Million sidecar fund for individuals to invest across our entire portfolio
• Received 630 startup applications from 61 countries – with 2/3 of the founders identifying as women, people of color, or veterans! – during a brief, six-week window

We are now expanding our team and working with our corporate and investor partners to select the 50 best fit startups to join our inaugural cohort, which we will announce Dec. 1. I’m running the venture like a startup: we are moving with deliberate urgency and are learning quickly. There is a LOT still to be done but I am incredibly proud of what this smart, scrappy team has accomplished in such a short time – and under challenging circumstances! 

What’s Next For Third Derivative?
After our public launch Dec. 1, we will likely begin prototyping several complementary initiatives:

• expand our partner network; we are having to say “No” to some really promising startups that don’t happen to align with our small current group of corporate and investor partners.
• launch our own VC fund for follow-on investments in our startups.
• build a search fund and/or venture studio that connects talented entrepreneurs with world-changing innovators and stakes the commercialization of their climatetech.
• initiate prizes and other open innovation contests to create new markets – RMI has had great success with this model in the Global Cooling Prize so we might imagine similar initiatives, e.g. a Global Hydrogen Prize, where the economics, policies, and incumbents don’t currently support disruptive innovation.

How’s Your Personal Life?
What personal life?? Not really. 🙂 We moved in June to Boulder and, even though we’re still working from home, it feels good to have the move behind us. There is still a lot of work to do on our house (and office!) before we feel truly settled but we are loving Boulder so far. Katie is enjoying her new postdoc and our 2yo is thriving under the care of his grandparents, who are here helping us out. We mostly keep to ourselves due to COVID and haven’t met many neighbors yet – but Boulder has so much natural beauty to explore that, even keeping to ourselves, we’re quite happy.

I’m the President of the Association of Rice Alumni this year, which is a challenging time due to COVID and questions about race, equity, and justice at a university that was founded by a slaveholder. We have a talented, diverse alumni Board, though, and an incredibly capable staff, so we are working through it all – one Zoom at a time!

This is the longest stretch I have gone without setting foot on IMD’s campus since I interviewed there 13 years ago. Consequently I feel a bit isolated and disconnected from my network there. The lack of business travel due to COVID has been great but I really am missing travel for pleasure- hopefully that will be practical again in 2021.

If You Made It This Far . . . 
THANK YOU for supporting me during this new chapter! It hasn’t been easy per se but it is a grand adventure and I am loving it. How are YOU doing? Please shoot me a note and catch me up as I am missing connecting with you all in this time of distancing.