Greentown Labs, with locations in Massachusetts and Houston, has a new source of donations from an investor who previously put money into the incubator’s startups.
The climate technology incubator said this week that New York-based Prithvi Ventures and its managing partner, Kunal Sethi, would make quarterly donations to Greentown out of proceeds from its Fund 1 and Fund 2 in perpetuity. The donations will be used as either locations needs, Aisling Carson, Greentown’s vice president of partnerships, told the Houston Business Journal.
Prithvi has previously invested in Greentown member companies, including Houston-based materials startup Mars Materials.
Sethi said the investment has a personal meaning to him. After going into remission from cancer last year, he went through a “forced reset” and began looking for ways to support climate investment with "no strings attached." He would like to see other venture capital firms do the same.
“This is not a [return on investment]-driven initiative; this is not a tax initiative,” Sethi told the HBJ. “I’m a micro VC, but if I can do it, a lot of other VCs, [limited partners and general partners] can do it without over-analyzing it. If you made money off an ecosystem, you’re not above the ecosystem, you’re still part of that ecosystem.”
Sethi, who had previously worked in clean energy banking in New York, looked to Greentown Labs as the most established climate tech incubation opportunity. Greentown was founded in Massachusetts in 2011 and opened its Houston location in 2021 in a former Fiesta building at 4200 San Jacinto St., on land owned by Rice University as part of an innovation district in Midtown Houston.
Carson said the incubator would look at replicating this model of partnership, though it may be on a case-by-case basis.
“We really try to help connect investors to the Greentown startups. And we don't charge anything for that,” Carson said. “So, we already have a great network of all the investors that we can start to talk to about this, and I think it's just about identifying those that think it’s interesting and would be willing to explore doing something similar.”
Greentown Labs' deal with Prithvi Ventures will add to the incubator’s contributions and donations, which are its main source of income as a nonprofit. Greentown completed its conversion to a nonprofit in 2023, according to Carson. For the 2022 fiscal year, Greentown reported $7.6 million in contributions on its Form 990 tax form, an increase from 2021, but only $13,000 in other income.
The incubator cut 30% of its staff in April, which included eliminating six jobs in Houston, and CEO Kevin Knobloch is leaving in July after less than a year on the job. The Houston Chronicle reported that the incubator’s board had raised concerns over some of its partnerships with major oil and gas industry giants like Spring-based Exxon Mobil Corp. (NYSE: XOM) and Saudi Aramco, though a Greentown spokesperson told the HBJ those concerns were not related to Knobloch’s departure.
While Exxon Mobil’s partnership deal fell through, Greentown Houston counts Shell PLC (NYSE: SHEL) and Chevron Corp. (NYSE: CVX), which both have major offices in Houston, among its founding partners. Microsoft Corp. (Nasdaq: MSFT), which has an energy transition-focused technology center in Houston and is investing in energy-demanding data centers, is also a founding partner for the nonprofit’s Bayou City location.
Sethi said that while those concerns needed to be expressed, ultimately there is a need to coexist to a degree with oil and gas companies in the climate tech investment space.
“I think at some point the climate ecosystem has to grow up, has to mature, and be like ‘I would like you to do this, I would not like you to do that’ and see how the other party responds,” Sethi said. “People say maybe you should go by intent and not by actions, but I don’t know how you measure intent. Actions speak louder than works, and if someone is taking initiative, maybe give them a chance."
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