While investment money keeps pouring into companies that focus on climate solutions, funding often takes months or longer to make it from the seed stage to commercialization. This is a problem, considering the urgency of reversing changes to the climate to minimize its impact. The newly launched Shared Future Fund (SFF) aims to address that problem by hurrying up the process of getting money to climate-focused startups.
The SFF bills itself as an “unconventional” venture fund designed to provide rapid seed funding and other resources to early-stage entrepreneurs committed to solving the global climate crisis.
The fund plans to finance up to 100 climate-focused startups this year, each getting $100,000 within 10 days of being selected.
“We’re giving them enough to get them off the ground and get started,” Craig Shapiro, one of the SFF’s co-founders, said in an interview with Forbes.
Shapiro is a veteran venture capitalist who founded Collaborative Fund, a New York-based seed and early-stage venture capital fund that finances tech startups. He has been joined on the SFF by a coalition of leading businesses, foundations, and advocacy organizations.
Shapiro got the initial idea for the Shared Future Fund following the wildfires that raged in California two years ago. He was also inspired by his work with Collaborative, which manages more than $500 million in assets across five funds. Collaborative has invested in climate tech startups such as Dandelion, a geothermal heating company, and Modern Meadow, which makes bio-fabricated alternatives to leather.
But the biggest inspiration came from a grant-making fund created by multiple philanthropists during the early days of the COVID-19 pandemic. The fund, called Fast Grants, was launched to speed up the work of scientists focused on finding solutions to the pandemic. It awarded grants of $10,000 to $500,000 to applicants. The application took only half an hour to complete, and the team handing out the grants often made decisions within 48 hours.
“I thought, ‘What a great initiative,’” Shapiro told Forbes. “And it was clear to me that there’s a similar urgency around climate change. The first dollars are so hard. You have to convince somebody to take a bet on you.”
Rather than provide grants, the SFF founders went the investment route, creating a platform based on the Fast Grants model. The fund was opened up to applicants in March. Its $100,000 investments are made on an uncapped Simple Agreement for Future Equity basis, which is a type of investment contract between a startup and an investor that gives the investor the right to receive equity in the company upon certain triggering events.
As of late May, the Shared Future Fund had already invested in 20 companies, with a target of investing in 80 more by the end of 2022. The fund’s primary focus is on three areas: sustainable materials, sustainable food and agriculture production, and technology that leads to decarbonization.
The SFF’s partners include Sweetgreen, Goldhirsh Foundation, and Banff Advisors, all of which bring different areas of expertise to the fund. For example, Banff Advisors, a talent advisory firm, can help startups find team members to hire. The Shared Future Fund will also share a portion of its profits with the nonprofit World Central Kitchen to support its $1 billion Climate Disaster Fund.