Tommy Leep, founding partner at Jetstream, shares insights on climate tech investing and nurturing startups for a sustainable future. He delves into climate tech trends, opportunities for startups, and challenges that early-stage investors face (such as greenwashing). Tommy also advises founders on articulating their vision, avoiding the "founders' curse of knowledge" and the importance of sales skills.
Tommy Leep, founding partner at Jetstream, shares insights on climate tech investing and nurturing startups for a sustainable future. He delves into climate tech trends, opportunities for startups, and challenges that early-stage investors face (such as greenwashing). Tommy also advises founders on articulating their vision, avoiding the "founders' curse of knowledge" and the importance of sales skills.
In this episode, you’ll learn:
[2:05] Startups attract people who love to be part of disruptive innovation.
[4:53] Finding purpose in setbacks: the story of how Jetstream started
[9:59] Trends and opportunities in climate tech investing.
[14:03] Building a startup in the climate tech space
[19:47] Founders’ curse of knowledge - what is it? How can founders avoid the curse of knowledge?
[25:21] There’s something special about a founder who can influence an investor to make subjective decisions.
About Tommy Leep
Tommy Leep is the founder of Jetstream. He is a seasoned entrepreneur, investor, and business advisor with experience in startup funding and growth. He held key roles at Floodgate and Rothenberg Ventures before delving into venture capitalism. With experience at Meraki, Inc., Intuit, and Yahoo! Music, he brings a diverse skill set. Tommy advises startups like Around, Payable, and Patreon, and formerly led Rothenberg Ventures' SF office. He's also advised Orchestra Inc. (now part of Dropbox).
About Jetstream
Jetstream is a venture capital firm investing in pre-seed climate, sustainability, and biodiversity startups. Companies in Jetstream’s startup portfolio include Verdi, Pachama, Windborne Systems, Glacier, Albebo, Lightship, Pathways, Cecil, Wildgrid among others.
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"I don't do that. I do kind of the opposite. I'm investing so early. It's one, two, maybe three founders that I'm looking more for personal alignment in the founders into improving life and prosperity on our planet within human life and non-human life, but also just in general, wanting to leave things and change industries in ways that are going to be healthier for our environment going forward. So for me, it comes down to what's the founder’s personal kind of vision and story in relating to climate change."
Gopi Rangan: You are listening to The Sure Shot Entrepreneur - a podcast for founders with ambitious ideas. Venture capital investors and other early believers tell you relatable, insightful, and authentic stories to help you realize your vision. Welcome to the Sure Shot Entrepreneur. I'm your host Gopi Rangan. My guest today is Tommy Leep. Tommy Leep is the founder of Jetstream.
Jetstream is a venture capital firm that mainly focuses on climate tech investing. Let's talk about what that means. What kind of founders does Tommy invest in? And he has this mission to invest in founders who advance life and prosperity on our planet. What kind of startups fit that theme? Why does he focus on that?
When does he get excited about some of these companies? What does this theme hold for us for the future? Let's talk about all of these things.
Tommy, welcome to The Sure Shot Entrepreneur.
Tommy Leap: Thanks for having me, Gopi.
Gopi Rangan: Let's start with you. Tell us about yourself. You're a Bay Area native, grew up in Silicon Valley.
You went to Stanford and you've lived here pretty much all your life. What got you into the world of venture capital? But perhaps even before that, tell us a little bit about your journey from college to where you are now. Yeah,
Tommy Leap: For sure. So yeah, as you mentioned, so I grew up in Menlo Park and I'm now in San Francisco.
So I haven't gone far, just happened to have shown up in Silicon Valley when things were getting pretty interesting here. After Stanford, I got interested in products and marketing, um, the tech industry. So I started my career at Intuit where I was in a rotation program and became a product manager.
And then I heard about a startup called Meraki - a wireless networking company, uh, based in San Francisco that sounded really innovative to me. So at Intuit, one of the founders, Scott Cook, would talk about disruptive innovation all the time. And this was kind of along the lines of what Clay Christensen wrote about.
And I thought that was really compelling. So when I heard about this startup Meraki, everything clicked for me. And I thought, you know, I think they're doing the disruptive innovation thing. So let me go check that out. And I realized that Intuit maybe would get there, but eventually, and I didn't want to waste any time.
So I went and joined this startup and I was at Meraki for a year. And every quarter, I just remember the CEO Sanjay would show slides about the company's progress and every quarter, just up into the right, up to the right, up to the right. And so it's very impressive. And, uh, yeah, so that was my first startup experience.
And I was like, wow, startups are really cool. Of course, this one just happened to be doing quite well. And while I was at Meraki, I met Mike Maples, the cofounding partner of Floodgate, which is a seed stage fund in Palo Alto. Some months later after we had a few conversations, he happened to be looking for their first associate.
So I joined Floodgate in 2011 as the first hire. I was there for a couple of years. It gave me just a really amazing and thorough understanding of how to do VC. So I was riding along with Mike Maples and his partner Ann Miura-Ko to board meetings and Monday meetings and just absorbing as much as I could about VC, which I had no experience in before.
And it was a fantastic on ramp to figuring it out. So that's what launched my interest in VC and, you know, subsequently an early career so far, uh, in venture capital.
Gopi Rangan: So you went from the building side of the world at Intuit and Meraki to the investing side of the world, and you got an insider view at Floodgate on how VC fund runs.
And when you say Monday meetings, these are these popular Monday morning partner meetings where a lot of the important decisions, especially investment decisions are made. And it's often a very Socratic debate about where's the world going? What's the role of the startup? Do we believe in the founders?
That's where the conviction is formed. Being a fly on the wall in these meetings is absolutely amazing. I'm glad that brought you into the world of venture capital. And then you now recently founded Jetstream. That's right. How is Jetstream different from other VC firms?
Tommy Leap: So Jetstream is a pre-seed climate tech fund focused mostly on software climate tech companies. So I started getting interested in climate tech in 2019. There's a bit of a fun story here that I could tell. I was at AngelList at the time. I was helping people start syndicates and venture funds.
So AngelList had rolled out this venture fund product, enabling anyone to start their own venture fund with AngelList software. And I thought that was a really cool trend because I had been doing syndicates and I figured there'd be a lot of smart people you know, founders or other investors who want to start their own funds.
So I was helping promote that. I heard about this startup called Mercury, the bank for startups and having worked for First Republic Bank for a little bit and seen Silicon Valley Bank software. When Mercury came along, I actually had a bit of an Intuit moment where I realized that Mercury was making it so easy to do banking, and in this case online, where, you know, Intuit originally did this with bookkeeping back on computer software.
And again, it was one of these disruptive innovation moments. I said, "I have to get involved with this company." And so I met the founder and asked to invest, but he had just taken funding from Andreessen Horowitz and said, "I don't need your money, but thank you. But you could join." So I then went through this process that took about maybe six weeks or two months where I applied to join Mercury.
I ended up getting the offer. I wanted to negotiate for a lot of equity. We got to the limit there. I asked what else we could do. The founder said, you could also invest. I did that. And I said, that sounds good. I joined and two weeks in the founder said, "Sorry, Tommy, it's not working out how I thought it would, unfortunately I got to let you go."
I like sharing this story because even though it didn't end up well for me at Mercury, I did then have this moment of "now what do I do with my life? It didn't work at this startup. So I've got to figure out what to do." And that was the moment kind of at a 9:30 AM on a Monday morning where I had this big question.
So I started reaching out to friends and mentors and one, uh, putting me down the path of climate change. So there's some silver lining there. And I would also add that, as I was walking out the door, turning in the laptop, I asked, "wait, are we still good for that SPV investment?" And he said, "Okay, yeah, we could do that."
So I actually did ultimately get what I came for, which was an investment in the company. I'm also in half been a customer. So I'm fully aligned with Mercury succeeding and appreciate what they do as well.
Gopi Rangan: What an amazing story. It's fascinating to hear this. What could have gone down a really wrong path, you've really turned it around and there's a beautiful outcome for everybody here.
Tommy Leap: Yeah, and I like sharing it because everyone has ups and downs in their careers and there are other times when I've had challenges going forward. And so, yeah, one door closing might be something else opening. And in this case, for me, it was the opportunity to learn about climate change.
At the time, having just been at AngelList, where we see all kinds of deals coming over the platform, there really wasn't anyone talking about climate change. None of the startups were focused on any climate change related problems. But in the public media, Greta was quite popular. The green new deal in some version was in Congress.
And I realized there's gotta be some people working on startups in this area. So I tried to meet everyone I could in Silicon Valley who was doing something at startups, kind of the cleantech 1.0 wave had crested and there were some new funds coming along. Lower Carbon had started, YCombinator had made a request for carbon removal startups at the time, Jason Jacobs had a great podcast called My Climate Journey.
And so I connected with these folks and ultimately ended up with a fund called Congruent Ventures, where I became a consultant effectively to learn as much as I could from Josh and Abe, who are fantastic climate tech investors. And then I switched all my personal investing to focus on climate change.
And that was 2019. And of course, early the next year, the pandemic hit and everyone scattered. But having built a bunch of those relationships and made some investments, I basically had, you know, what I now call my Fund Zero rolling through SPVs. And then in the fall of 2021, I was able to raise Jetstream Fund 1.
Gopi Rangan: So I see your focus on climate change at Jetstream a little bit contrarian. Let me give you some thoughts on, you know, how I view this. Silicon Valley venture capital is supposed to be at the forefront of where the world is going. And climate change is such an important topic for it's not something that we just figured out two years ago.
It's been around. The team has been around for years, perhaps decades. There were not that many startups in Silicon Valley in the past 20 years that focused on this topic. And there were not nearly any funds at all until five years ago that focused on climate change. So neither startups nor investors took this seriously, although the topic of climate change is important. And I would say most people in Silicon Valley they're not climate deniers. They actually believe that this is a problem that needs to be addressed. So there's this dichotomy. It's an important topic, but largely ignored.
And then you come in and you say that I'm going to start a fund focused on climate change. Has the world evolved to a point where there are now good opportunities in the startup world to invest with this theme. What's been the trend in the past few years?
Tommy Leap: Yeah, I think so. On one side, the, the problem has become clearer and more widely recognized.
And then on the solution side, there have been many more startups popping up to address some of the challenges. If you're watching the climate tech investment and startup space, you'll see that there are many climate focused investors popping up from early to kind of mid and late stage, and there are even a lot of generalist funds that have moved into doing climate tech investing.
Which is awesome to see as well. And then over the last few years, the amount of money going into climate tech has also ballooned, which is exciting. So I think there is a recognition that this is a problem space worth pursuing by the kind of community and industry. However, I think that there are some areas to watch out for.
There's clean tech 1. 0 had some winners and I'm not a complete expert on clean tech 1. 0 because I didn't invest through it, but some of the lessons that I've learned and taken from it is that there were some winners, but many investors got wiped out. In my lens, there's a risk that we enter the same kind of situation where there's a lot of deep infrastructure investing that doesn't exhibit venture style returns, but my insight from this actually comes from something I learned from Mike Maples at Floodgate, which is to invest along big technology shifts.
And I think we've seen some major ones that create an opportunity for founders to start climate tech companies that can achieve venture scale.
Gopi Rangan: So I see that this is becoming real. It's an important topic. Now there's more focus from the venture side of the world. Investors are actively looking at climate as a topic that either dedicated funds or even generalists have now adopted an active view in this topic.
Within this theme, are there certain ideas that are more exciting for you? I understand you mentioned you invest in software companies only. But within the theme of climate, what are some trends that you're excited about?
Tommy Leap: Yeah, so I think there are three big interesting technology trends. And I prefer to invest along technology waves because I think they create an opportunity to make significant shifts within industries.
And the three big waves that I like are the declining cost of sensors or the proliferation of sensors is kind of the inverse of that. The advent of AI improving software, and then the declining cost or proliferation of low cost robotics. So I think of the sensors, AI and robotics.
On the sensor side, now, more than ever before, we're able to create sensors that are very inexpensive and help us collect data about our planet at many different levels. So that can be from space with low cost satellites. It can be in the atmosphere with micro weather balloons. It can be on the ground, in soil, in buildings, in refrigeration.
There are many places now where we can collect data [00:13:00] inexpensively. And that provides us with just an abundance of data that we have to figure out what to do with. And so AI and that software layer can be very helpful in decoding and understanding all this data and giving us a direction to figure out where we want to make a change in the physical world or do something.
And then I like to also, though I don't invest as much in robotics, I think it's an important category because climate is a physical, real world problem and ultimately we have to do things in the physical world to be able to affect climate change and a lot of the robotics are increasingly low cost off the shelf.
Potentially like less and less custom robotic components are needed. And so much of it is actually software. So though I say with my fund, I invest in pre seed climate tech, mostly software, sometimes there's a little hardware hanging off of that.
Gopi Rangan: Can you give us some examples of startups that you've invested in these themes?
And I'm particularly interested in how is it to build a startup in this space compared to other sectors? What do you look for?
Tommy Leap: Yeah. So, you know, with climate, I would say climate is in a sense, more of a theme than a sector itself. So it can be a theme that crosses energy, transportation, mobility, food and agriculture, the built environment.
And then, you know, kind of long tail of other things like maybe fashion or other things that we buy and consume. So there are some major industries like energy is a massive industry. Transportation is huge. Food's huge. But then, climate can also be, "how do we also just learn about the planet? So maybe I can give some examples of sensor companies that I've invested in out of the fund and out of, you know, when I was doing syndicates kind of right before the fund.
So, one that comes to mind is called WindBorne Systems that makes a small sensor and a micro weather balloon. It's like a six foot tall weather balloon with a, somewhere in the, you know, maybe less than 10 pound little package on the bottom of that can pick up all sorts of information about the atmosphere - your classics like temperature, humidity, wind speed, etc. But all this data about what's going on with a constellation of these micro weather balloons, they can actually predict weather more accurately, and they can help us figure out the path of a hurricane more accurately than we're able to right now with older technology. So that can be really helpful either in forecasting, which it's often described as the adaptation side of climate change. So recognizing that weather is getting more extreme; how can we survive and adapt better? And WindBorne Systems is super helpful there because it's a big deal. You know, if a hurricane is going to hit one state or, or another, um, it's very expensive to have to plan for that and repair a bunch of damage.
Another interesting one that just had an announcement yesterday is called Glacier, which is a robotic recycling system that uses computer vision and robots to help sort and pick recycling.
And so Amazon is interested. Amazon Climate Pledge Fund invest in them because they're interested in understanding kind of the life cycle of a lot of their packaging. And Glacier works with these recycling facilities, which see a lot of challenges with labor. They have a super high turnover rate because it's actually one is a very demanding job to be on a on a line and removing items out of a waste conveyor belt.
But two, it's also quite dangerous. And so, it's a job that's better suited for robots anyway. So Glacier has this great system. They can also figure out what is going into our waste stream and they can help companies like Amazon and others either recover some of their materials or just get better data on what is kind of coming through the waste stream, which is helpful.
So those, I think, are two examples that are interesting on the sensors, AI, and robotics.
Gopi Rangan: Very interesting. I can see the need for predictive modelings that will help us get new data that will, you know, help imagine what might be coming soon and be prepared for those scenarios. I can see how valuable robotics and automation can be in this space, especially when, you know, cleaning waste and bringing more purity into the world.
There's a skeptical view on climate tech. There's a greenwashing part of it where everybody claims to be climate tech friendly and they get brownie points for ESG and things like that, but they really aren't making a difference. How do you tell the difference between good and bad? How do you walk away from some of these greenwashing stories and only focus on the good ones that actually align with your theme?
Tommy Leap: Yeah, it's a good question. So there are a number of funds that have emissions reduction targets. You know, they're saying we only invest in companies that reduce a gigaton of emissions equivalent of greenhouse gases once those startups are at scale. And they apply a very critical lens to the startups that they're investing in and kind of emissions reduction potential.
So I don't do that. I do kind of the opposite. I'm investing so early. It's one, two, maybe three founders that I'm looking more for personal alignment and the founders into improving life and prosperity on our planet within human life and non-human life, but also just in general, wanting to leave things and change industries in ways that are going to be healthier for our environment going forward.
So for me, it comes down to what's the founder's personal kind of vision and story in relating to climate change. And it's cool because smart founders have many options. You know, AI has a huge boom right now, and there will be many winners probably in the AI space where founders can make money. Founders can go into FinTech, they can go into gaming, they can go into many, many different types of categories, but climate tech attracts founders who are very aligned with the mission of improving the planet and prosperity for people on the planet. And so I'm looking for that primarily. And then I want to see that the solution that they're building, if successful, we'll have some kind of systems change impact and we'll be big enough that it can create some systems change impact.
So that whatever way we were solving a problem before with this new solution, it will and can reduce emissions or, reduce pollution or reduce waste, you know, generally in some way.
Gopi Rangan: How many companies have you invested in so far? And on average, how many investments do you make per year, per quarter?
Tommy Leap: I've done about 30 over the last four years in climate, and I'm doing right now, maybe kind of 8 to 12 a year, I write a $250k check, and I'm investing in startups that are typically in a single digit valuation.
Gopi Rangan: Okay, now let's take a moment so you can give some advice to founders. Let's imagine a founder is coming to meet you.
What's your advice to the founder so they can be better prepared for that meeting to be productive? What can they do so that they can be ready to answer questions that you might ask about beyond the basic stuff - you know, keep your slide deck ready and product market fit and market size and various other things. What are some specific like one or two things that would make it efficient for them and for you in that first meeting, second meeting?
Tommy Leap: One of the things I love helping founders that I invest in is get connected and pitch other VCs. So I'm often the first check in the company or very early. And so sometimes I'm helping them fill out the round and coach them into doing that, or when their seed round comes along, I'm I like to leverage my connections and make tons of intros and help them through that process as well.
So I really care about fundraising. It's a very important topic. And two things come to mind that I think are, I would like to see more of. So one is the founder has a curse of knowledge. Which means the founder is, is often so deep in their own industry and has so much information about their industry. It's really hard for them to level out and think in terms of someone who isn't as deep as they are. So even though climate tech investors, you know, might have a focus on energy and some of the industries that I mentioned before, and if you're an energy company and you roll in and start talking very detailed about your subsector, Unless you got really lucky and find that that one investor you're talking to is also deep in that area, the chances are the investor for the most part, they might have a prepared mind will not be as deep as you are.
And so the challenge for the founder is to think about how, how can I get in the mindset of the investor and what they might know, or especially what they might not know. And how can I provide a enough perspective on this industry and context so when I start talking eventually about what my solution is, they get that it would make sense.
And so the kind of important words for me, there are our context and perspective. A lot of founders will often start with, you know, we're doing this thing and this is what it does. And that, I think it puts an unrealistic burden on the investor to understand what that space is all about. What kind of impact that product can have, how big it could be, where I find it better to be, to set as much context as possible, especially if you're in a kind of a pitch meeting, as opposed to just sending something ahead online, but if you're actually able to have a conversation with the investor, then just provide a ton of context on what's going on in the industry. So that's my first one.
Gopi Rangan: And this happens quite often. And so many pick any industry, any domain, the founders spend, they're pretty much world's best expert on that topic. So they know way too much and it's really hard for them to synthesize all of that into two or three nuggets that are important for the listener.
And that's a skill. Any brilliant founder could use a little bit of coaching and preparing for those nuggets.
Tommy Leap: And it's so crucial because you're going to be conveying your idea to lots of people over the course of your startup. So it's important one to cultivate from very early on. All right. So that's one.
The other one is the big vision. I'll often meet founders who have the idea for, you know, we're starting with this one thing and you know, it's this little product that can do this. And most investors I would say would say, okay, that's great. So what if that's successful and where, how does this eventually change the industry?
Where can this go? How big can this be? What is possible? What do you want this to become? And your kind of biggest, fullest vision of the company. That's a really important moment, I think, for founders to be able to articulate a path, kind of like it can be a, you know, three act story or play of where this is going to end up, but I want to see that from the beginning.
And often sometimes founders are concerned about saying, "well, if I talk too much about the biggest vision, then that might distract from what we're able to do today, or, you know, this kind of niche that we're starting in, or it might just be confusing." But it's really important to me because investors want to see a huge opportunity and want to participate in the successful unfolding of that company.
And it's really helpful, I find, for founders to have that vision and work on it - on what possibly could happen - and articulate that very early.
Gopi Rangan: A beautifully articulated long term vision can really inspire people. It's great to hone in on that. Okay, now, tough question. Why do you say no? What is the most common reason for you to say no?
Tommy Leap: Most common is I don't fully get what the founder is talking about or believes in, or I'm just not there. I'm just, it's, I don't have enough context. I don't have enough background. I just don't see it. I just don't see it kind of playing out the same way.
But I think that that is a surmountable problem for founders who are really good at conveying a lot of this context that I talked about before. I think the ideal scenario for a founder is you meet a VC who has some background in what you're doing, or somehow you find out that they have some knowledge and, and previous experience about something that, you know, you're working on, but for the most part, they won't, and it often takes.
You know, dozens of meetings to find the right investors. And so I think part of the burden, unfortunately, is on the founder to be able to share that context. And so the main reason I say no is there's not enough context for me. I just don't fully get it.
I think the other kind of side one is I found probably more and more recently, how important being a good salesperson is among the founding team and it doesn't necessarily have to be the CEO, but you know, I think sales is something that's hard to hire in the early days. And the founder should expect to do founder led sales. And if it's not clear to me or if I don't really buy that, the founder or founders have that instinct or skill within that early team, that's hard for me too.
Gopi Rangan: Do you worry that if the founder is really good at sales, you might drink some of that Kool-Aid and you might lose objectivity while you're still making the decision? Yeah.
Tommy Leap: I think the goal is for founders to move objective decisions to subjective decisions. I would say all of my investment decisions are subjective, right? There are, you know, some combination of my background and things that I think are cool and people that I want to work with. So, it can be really helpful to be able to bend someone's mind to your will.
And, uh, if you've got that, then that's very powerful lever. And yeah, if you can do it for me, you can probably do it for a lot of other people too.
Gopi Rangan: I drink that Kool Aid and I get a high and I love it, but the next day in the morning I wake up and I wonder, okay, let me think about this more. And the reality sets in.
And even after that, if I'm still excited about it, I move forward. So it's a tough one. There's no easy framework or method to follow to maintain objectivity, but the pleasure of drinking that Kool Aid and getting the high [00:27:00] is part of the job. I really enjoy that. We're coming towards the end of our conversation, and I want to ask you about your community involvement.
Is there a nonprofit organization you are passionate about? Which one?
Tommy Leap: Yeah, great question. So, I don't have a nonprofit that I kind of personally contribute to. You know, as kind of a consummate cheerleader, I like to support the nonprofits that are important to my friends. So, if any of my friends comes and says, "Hey, you know, there's important cause to me.”
I'm always there. But on the community involvement side, I'd like to make a call out. I think community is extremely important. I think local community we're finding, especially coming out of COVID is hyper important. And I'm going to give a shout out to my wife who has organized some new parents in our community here in San Francisco.
And we do this thing that we borrowed from a friend of mine called 'parents quarterly'. And so once a quarter we get together and have dinner together without our kids. And so I would encourage anyone who is kind of local community oriented to spend time cultivating relationships with your neighbors and other people who are maybe in a similar life phase as you so that you can have meaningful connections and experiences together and grow old together.
And I'm, I've been a beneficiary of this kind of in multiple stages of my life, but I'm really grateful to have this kind of community of new parents, where I live here in San Francisco. So that's my plug for getting involved in local community.
Gopi Rangan: Thanks for the shout out to your wife, Tommy. Thank you very much for spending time with me today.
Thanks for sharing candid stories based on your personal experiences, anecdotes, and real life examples. It's very inspiring to hear that. And climate tech is such an important theme that we all should focus on. I expect that eventually every firm will begin to prioritize this. Thanks for being a beacon of hope and leading the world in that direction. I look forward to sharing your nuggets of wisdom with the world.
Thank you, Gopi.
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