Curbing climate change and limiting global warming to 1.5 degrees Celsius, the level climate researchers say is needed, will cost about $5 trillion annually. So says Dimitry Gershenson, CEO and co-founder of lender Enduring Planet.
“There is nowhere near enough money invested in climate,” he said, noting that right now the totals are around $650 billion annually.
Gershenson and business partner Erin Davis co-founded Enduring Planet to be part of the solution.
Enduring Planet is building a platform where climate entrepreneurs of any stripe can access non-dilutive capital in order to grow their businesses and create a new climate economy. The company was started in 2021 and its first product launched earlier this year: a revenue based financing instrument.
Early stage entrepreneurs working in areas of emissions mitigation, carbon removal or improving resilience are eligible for funding. Products could be software, hardware, subscription services or consumer goods. Minimum financials are $25,000 in monthly revenue and 35% gross margin.
There are no liens or collateral and no personal guarantees. The capital is secured against revenue, said Gershenson. Enduring Planet will invest up to $500,000 in exchange for 1%- 10% of top line revenue for two years. It has announced two loans so far.
“I’ve been working on climate and impact investing for more than a decade,” said Gershenson. His last role was at Meta leading that company’s Energy Access program, which was a lot of deploying clean energy funding to lenders in emerging markets in order to unlock more financing.
“I saw the powerful role capital plays in driving change,” he said.
First revenue based financing, next more options
However, he also knows that for early stage startups the funding avenues available can be limited to small grants, venture capital or nothing. Gershenson and Davis want to create more avenues.
Right now, the Portland company only offers revenue-based financing options, but over time the team plans to add different instruments.
“So, a founder or CEO or CFO, whether it’s a small business in energy efficiency retrofitting, a consultant, a solar lead generator, Saas company or hardware, if you are working to transform to a new climate economy, we want to have an offering for you that allows you to support growth,” said Gershenson.
Enduring Planet is a benefit corporation. It has raised $3.1 million of a targeted $5.5 million for its pilot debt facility that it uses to make its loans.
“Right now there is an incredible amount of capital that wants to participate (in climate investing) but needs fixed income opportunities,” said Gershenson, meaning it’s capital that can’t participate in venture. “If you don’t present that (option) the money won’t participate. If there is money interested and there is demand then why can’t we serve the demand with the money that is interested?”
Who has been funded so far
Enduring Planet has backed two California-based companies: New Sun Road, which developed a platform for remote microgrid monitoring at $250,000; and Aquaoso, which provides location-based information data, maps and analytics to agricultural lenders at $200,000.
Gershenson expects the company will make about 20 investments from this pilot debt facility. Once the company’s methods are proved in this pilot, he anticipates raising much larger facilities.
The company’s funding criteria also has diversity, equity and inclusion requirements. Funded companies need to have a diverse board and C-suite, inclusive HR policies, a diverse employee base or serve marginalized communities.
“Every sector of our economy needs a face-lift; as we undergo this climate transition, we believe it should be done equitably and inclusively," said Davis, whose background is in impact investing, in a written statement. “We estimate there are thousands of climate entrepreneurs who lack the right types of capital to scale. We're changing this in a way that's inclusive and gets money into the hands of underrepresented founders, managers, and companies serving underserved communities."
Enduring Planet, which has a team of 10, has raised venture capital for its own operations. Gershenson declined to say how much has been raised but noted between the debt facility and the company, it has raised a total of $5 million.
Its venture investors include Climate Capital, Portland Seed Fund, Keiki Capital, KD Venture Partners, Common Sense Fund, Susquehanna Foundation, a large strategic corporate investor in the clean energy space, and a number of angel investors.
