Episode 207: Johanna Wolfson, Azolla Ventures
Today's guest is Dr. Johanna Wolfson, General Partner at Azolla Ventures. Azolla Ventures, created by Prime Coalition, invests in early-stage technology companies with the potential for gigaton-scale climate impact.
This is a discussion that was actually done live at the MIT Energy Conference on April 1st, 2022. It was a great discussion, so we figured we'd publish it as a podcast so that all of you can benefit from this discussion as well.
We cover a lot in this episode, including Johanna's background and what led her to doing the work that she's doing today, Azolla's origin story, it's recent spin out from Prime Coalition, the criteria that they use for making investments, and some of the recent investments they've made. We also have a great discussion about the role of catalytic capital in general, how it's different from other types of capital in climate tech investing, and what it will take to help these technologies reach wide scale deployment and impact. We talk about some of the barriers, some changes that would help the clean energy transition happen faster, and how you and I can help.
Enjoy the show!
You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast), or @mcjcollective (company) and via email at info@mcjcollective.com, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded April 1, 2022.
In Today's episode, we cover:
An overview of Azolla Ventures and Prime Coalition
How Dr. Wolfson began working with startups during her time pursuing her PhD at MIT
How catalytic capital works
How Azolla looks at deploying capital that is concessionary on risk as opposed to on returns
How Azolla measures impact in their investment portfolio
How philanthropists could think about working with Azolla Ventures
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Jason Jacobs: Hey everyone, Jason, here. I am the My Climate Journey show host. Before we get going, I wanted to take a minute and tell you about the, My Climate Journey or MCJ as we call it, membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education, but they were longing for a peer group as well. So we set up a Slack community for those people that's now mushroomed into more than 1300 members. There is an application to become a member. It's not an exclusive thing, there's four criteria we screen for. Determination to tackle the problem of climate change, ambition to work on the most impactful solution areas, optimism that we can make a dent and we're not wasting our time for trying and a collaborative spirit. Beyond that, the more diversity, the better. There's a bunch of great things that have come out of that community, a number of founding teams that have met in there, a number of nonprofits that have been established, a bunch of hiring that's been done, a bunch of companies that have raised capital in there. A bunch of funds that have gotten limited partners or investors for their funds in there, as well as a bunch of events and programming by members and for members and some open source projects that are getting actively worked on that hatched in there as well.
At any rate, if you wanna learn more, you can go to myclimatejourney.co, the website and click the become a member tab at the top. Enjoy the show. Hello everyone. This is Jason Jacobs. And welcome to My Climate Journey. This show follows my journey to interview a wide range of guests, to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help.
Today's guest is Johanna Wolfson, General Partner at Azolla Ventures. Now this is a discussion that was actually done live at the MIT Energy Conference on April 1st. And it was on stage between Johanna and I, and it was a great discussion, so we figured we'd publish it as a podcast so that all of you can benefit from this discussion as well.
We cover a lot in this episode, including Johanna's background and what led her to doing the work that she's doing today. We talk about Azolla, it's origin story, it's recent spin out from Prime Coalition. We talk about the criteria that they use for making investments, some of the recent investments they've made, we talk about catalytic capital in general, what its role is and how it's different from other types of capital in climate tech investing. And we also have a great discussion about climate innovation in general, what it will take to help these technologies reach wide scale deployment and impact, what some of the barriers are, what some things we could change are to help things happen faster and how you and I can help. I really enjoyed this one and I hope you do as well.
Conference Moderator: Good afternoon, everyone. The next session is, uh, fireside chat in a special live recording of the, My Climate Journey Podcast. The podcast explores the problem of climate change and the best ways to address it by talking to our experts from a wide range of backgrounds and perspectives. I myself am a big fan of the show, so I'm really excited to introduce our speakers, Jason Jacobs, and Dr. Johanna Wolfson. Jason is a longtime entrepreneur, most recently as the founder and CEO of Runkeeper, one of the largest mobile fitness apps and communities, which was acquired by ASICS. He's now the creator of the, My Climate Journey platform, which consists of a podcast, a vibrant member community, and a venture fund focused on helping address the problem of climate change through content, community and capital.
Johanna, is a co-founder and General Partner at Azolla Ventures and a co-founder of the Prime Impact Fund. Johanna's career has focused on accelerating climate technologies from lab to market, spanning university and industry applied research, government and venture investing. Prior to her current roles, she obtained a PhD at MIT and has worked for organizations including the Department of Energy and Fraunhofer. Today, they will be talking about the world of climate tech investing and the commercialization of new technologies among many other topics. Please welcome on stage Jason and Johanna.
Jason Jacobs: Okay, well, hey everyone. I'm Jason, this is Johanna. And typically this is a podcast that I do from my living room with digital technology. This is the first time we've ever done a live episode in person. So we'll see how it goes, but thanks for being here, Dr. Johanna Wolfson.
Dr. Johanna Wolfson: Hello.
Jason Jacobs: Welcome to the show.
Dr. Johanna Wolfson: Thank you, great to be here.
Jason Jacobs: Great to have you. We've been trying to make this one happen for a while, but everyone's busy and, and of course, I've had a number of your colleagues on the show in the meantime so I feel like I've got a, a decent idea of whats up to with, with Prime and Azolla, but one of the things about the show is that it's not just about the organization, but it's as much about the people and their journeys as it is about the organization so there are gonna be no shortage of things to talk about today.
Dr. Johanna Wolfson: Awesome. And yeah, we have been trying to make it happen for some time. And so Jason, when you asked me to do it here today, as part of the MIT Energy Conference, I just felt like, "How can I not?" This event is part of my climate journey, so it just felt like a must do.
Jason Jacobs: Great. Well, for starters, for benefit of, of the audience, talk a little bit about Prime and Azolla and what you do as an organization.
Dr. Johanna Wolfson: Sure, great. So Azolla Ventures is a pretty new fund. We're a venture fund supporting very early stage climate technology companies. We're looking to support companies that are taking really big swings at the climate problem on an emissions reduction or removal basis. So we spun out of Prime Coalition pretty recently, and Prime Coalition as probably folks know, but just to recap is a nonprofit founded right around here and about 2015, where the big idea is we can use philanthropic what we now call catalytic capital to support early companies that are outside of the risk envelope for other sources of venture capital. We can do that because philanthropic or catalytic capital can be risk embracing. It is ultimately there for the impact, it is patient, is exactly the type of capital you would want supporting companies falling into a funding gap. My colleague, Sarah, who is one of your first episodes I believe, she kind of had this... Sarah Kearney had this idea and formed a nonprofit around that idea.
I came on board to build Prime Impact Fund a little over four years ago, where we were using our catalytic capital in the form of a fund. We went out and we raised it and deployed that capital into 16 companies that we were excited about that we thought were a great fit for this source of capital, big swings at climate, almost exclusively hard tech and have built a portfolio we're really proud of. Azolla Ventures uses really the same model in many ways. It's heart and soul is catalytic capital. It pairs that with non catalytic capital or more conventional dollars that aren't impact first necessarily, but are impact aligned. And that lets us both get companies started, which is what we've always been about at Prime. Get companies started with this unique catalytic capital, it also though lets us continue to grow with the companies term through growth rounds that come and that lets us be good long term partners to the company, be voices for impact on company boards and, and in partnership with companies long term.
Jason Jacobs: Uh-huh [affirmative]. Well, I have so much respect for what you do because as you know, we also have a fund, but in our case, um, we write a lot of little texts and we're not leading and we're not setting terms and we do that because we're looking across so many different domains that each domain requires its own sector expertise, and we're, we don't have mastery anywhere because we're climate focused, we're looking across sectors, which means we're relying on firms like you guys to lead and do that work so that we can draft behind the sector specific work in areas that we don't have the expertise nor the bandwidth to do.
You're writing much fewer checks and bigger checks and you're sticking your neck out before the market based capital.
Dr. Johanna Wolfson: Mm-hmm [affirmative].
Jason Jacobs: Is there... I can't even fathom and you're doing it across, across sectors as well. So I have a lot of questions there, but I wanna stop because before we get down that path, I wanna know how you got into the seat because I know you got your PhD and you spent some time in industry and you worked at the DOE and you've done a number of different things. I mean, did you grow up wanting to be a catalytic capital deployer in climate tech or how, how did this all happen?
Dr. Johanna Wolfson: Yeah, no, not in those words, that's for sure [laughs]. So yeah, I did my PhD training here at MIT. I was a physical chemist, deep in the labs of basements of Buildings 2 and 6. Like, you know, no one goes down there except the spectroscopist, the people with the lasers. And so, you know, I was down there doing like really fundamental science and inspired by it, but ultimately I realized, and this was during my PhD work at MIT than I realized, I am more excited about what comes after the lab part.
So, you know, MIT is this very entrepreneurial place, a lot of things happening, people starting companies. I thought, "Oh my gosh, this is where I wanna be. I wanna understand once something gets invented in the lab, what's next? How does that become a product? How does that become a company? How do you know when it should be a product or company?" Because, you know, I hated this feeling that is true in some academic circles where the ultimate goal is kind of the publication, and then you move on to the next thing. That, that really didn't sit well with me in terms of my purpose. And so I just, you know, at some point realized that, "I don't know in what form exactly, but I want to be totally focused on the commercialization process and I want to do that in climate and energy."
Like that's the biggest problem. I think I could train this question on and where I can bring my background as a scientist in materials and chemistry, which is pretty broadly applicable area to bear. We have a lot of energy and climate challenges that can be solved, not all, but that can be solved by kind of new materials and materials approaches. So that's what drew me to working on this, the climate and energy, energy sector. But I'm, I'm very interested in the concept of technology commercialization and the challenges and barriers very much more broadly as well, but I've, I've chosen to focus in climate.
And so I guess your question went beyond that, but so that's what kind of directed me on the commercialization trajectory. And then I, yeah, I just started doing different thing like working with startups straight outta graduate school, helping them develop their technologies, like helping them kind of harden and test their technologies to become products or to receive investments. I did that at an applied industry lab called Fraunhofer here in Boston. And that was an awesome job for a graduating PhD because it let me stay deep in the technical world working with startups and their products, but also gave me a lot of exposure to the commercial questions that startups have to start answering at those early stages when they're negotiating their first customer contracts or seeking first investment. At the Department of Energy I was able to extend that, think a little bit more broadly, look at the national labs, look at how do we spend technologies out of the national labs and other universities.
And to answer your question more directly, I, I wasn't, I did not have venture capital on my mind as a target job or anything. I probably wouldn't have been able to articulate really what that was, but over the course of working with many startups and seeing how the ecosystem, startup ecosystem support system does and doesn't work for companies, it became very clear that especially, you know, at this time in, you know, 2012 plus that there was just a dearth of funding for startup come companies, hard tech companies working in climate. And so that funding gap really stood out, not as the only problem. There are other challenges around talent, around you know, access to facilities, around engaging with the market and gaining traction and incumbent industries, but that funding gap is a really critical and early problem that can be unlocking for all the other ones.
And so I came, you know, I, I had known of Prime for some time, but became back in touch with the team around the time that my DOE tenure was ending and, and felt, you know, this, this model of using catalytic capital to fill that gap is really structurally the way you'd wanna do it. And so there aren't many people doing it. There aren't many people using in this type of capital support companies, but really it's sort of the, the right solution. It's the right color of capital to solve that problem and it's the right size of capital pool to solve that problem. That's what convinced me that this is worth working on and coming to Prime, building that in a fund form that could be replicable.
Jason Jacobs: Well, I still remember when Sarah Kearney came on the show and I think it was like episode four-
Dr. Johanna Wolfson: Mm-hmm [affirmative].
Jason Jacobs: ... or five, and we've done hundreds at this point, but she said that, "While it, it is catalytic capital, it's not concessionary capital, or it's not capital that is compromising on-
Dr. Johanna Wolfson: Right.
Jason Jacobs: ... financial returns." How's that possible? I mean, I, I wonder that because if you're using philanthropic capital then why shouldn't it be concessionary and how does that not get in the way of impact if it's not concessionary? And now I'll counter that and answer my own question before [laughs] I let you answer it. But by saying that I've, I've seen you back companies that are high impact companies that are now breaking out and raising lots of market based follow on capital and that where you're capital appears to have been smart financially, in addition to the smart, from an impact standpoint, but talk a little bit about how you think about that and what your assessment process is and how you balance impact and profit.
Dr. Johanna Wolfson: That's a lot. Okay.
Jason Jacobs: Yeah. In 30 seconds or less.
Dr. Johanna Wolfson: [laughing]... So catalytic capital can be concessionary. It is often and in fact, traditionally used that way, concessionary on return. The brilliance, I think of what Sarah instantiated at Prime is that it doesn't have to be and when you use it in the venture investing context specifically, that's not even how it's most useful. So if you think about just the continuum of risk uncertainty and return potential, venture capital, just kind of plain vanilla venture capital is way on the extreme side of that relative to other asset classes, right?
But if you think about, "Okay, what would it look like if we just..." So if venture capital sits here relative to other asset classes, the riskiest, "What happens if you just push that a little bit further? What's the next phase out? We don't have an asset class that does that at scale, but what would it look like?" It would look much more risky with potentially higher return. That doesn't happen. Those, those investments don't get made because they don't fit but... And I'm speaking in generalities, there are venture funds that do that, but in, in the main, those investments don't get made because they don't fit that risk return profile.
What catalytic capital lets you do is stretch further. And so capital can be concessionary on risk as opposed to on returns. And that's what we're doing here. Capital can also be concessionary on timeline, right? You might see just as good returns, they might take longer. So on an IRR basis, those returns might be slightly lower, but on a multiple basis, they're not. So I think what Sarah and others have mapped out is those different dimensions of concession. And we do love to talk about this because I think it's catalytic capital is so powerful and probably is only starting to be leveraged in these very powerful ways. And I think there's a lot to be explored there, but this idea of concession and on what dimension is a really rich one that, that I think can blow open, you know, how catalytic capital can make things happen in the world. And that was only the first half of your question. So let me know where, what I missed.
Jason Jacobs: I mean, if I can, if I can double click on what you just said, and gosh, I hate that expression. I dunno [laughing] why I just use it, but [laughing]-
Dr. Johanna Wolfson: [inaudible 00:16:25].
Jason Jacobs: ... in absence of a track record, right? And now you are starting to amass a-
Dr. Johanna Wolfson: Yeah.
Jason Jacobs: ... pretty meaningful track records. So, so this, you know, diffuses some of these objections, but I would imagine that the greedy capitalists out there when Prime was just starting out would say, "Well, is it really that the risk reward isn't aligned or are those just bad investments that shouldn't-
Dr. Johanna Wolfson: Sure.
Jason Jacobs: ... get done?" And so what are the types of risks that you believe fit into this bucket? And then what are the types of risks that are red flags to you that lead you to think, "This is just a bad investment that-
Dr. Johanna Wolfson: Great.
Jason Jacobs: ... that we can stay away from?"
Dr. Johanna Wolfson: Well, I would say what's really important to us and what's important in a conversation like this is fidelity to the purpose of catalytic capital. The point of catalytic capital is not to make money. That's not the point, but if catalytic capital can be leveraged early enough such that, you know, you take on risks, some of them fail, some of them prove to be spectacularly successful, great. Then it's more about the purpose for which it was used than what the outcome was. That's what defines it as catalytic.
Jason Jacobs: Just to cut you off, does that mean that it's more about if it works, how impactful that can be without factoring in potential viability?
Dr. Johanna Wolfson: Yeah, absolutely. Well, how impactful it can be without factoring in financial upside, yes. But we believe-
Jason Jacobs: Okay, so factor in viability, but not necessarily profitability.
Dr. Johanna Wolfson: Viability and often profitability, because how are you gonna reach Gigaton impact without using the markets and leveraging the markets and growing to be a commercially successful company? So almost always we think that these things go hand in hand, which is ultimately why, as you said, I think we're seeing some good results from our portfolio in terms of follow on investments, becoming very competitive, larger, and larger round companies deploying commercially, um, we are seeing that starting to come to fruition, but your point about how do you know the difference between just a bad investment that probably shouldn't receive anyone's capital catalytic or not versus just finding that earlier slice. We need to look for, we have a qualification process that looks for companies that will be attractive to other investors who are not us after de-risking certain elements of their business.
That is very often technical or engineering de-risking, but not always, sometimes it's de-risking of certain market assumptions or a business model. We try to identify kind of these discreet pieces that can be worked on over the course of a couple years. You know, the there's 18 months, this the seed precedes era of a company, and try to mature that into a company that looks more investible to a larger group of investors that may not include us.
Jason Jacobs: Now, if the goal and correct me if I'm wrong and assuming that this is the goal, but is to build a bridge and get this into the hands of market based capital that can take it from here, right? Well, market based capital might come in with a different agenda from an impact standpoint or no agenda from an impact standpoint. So two questions there. One, do you worry that they're gonna take it in a direction that is gonna follow profit at the expense of impact? And two, do you worry if you try to put constraints and make sure that doesn't happen, you significantly reduce the company's probability of making it?
Dr. Johanna Wolfson: I didn't even ask you to ask that question. That's such a good lead in to why we built Azolla.
Jason Jacobs: If you told me to ask any question-
Dr. Johanna Wolfson: [laughs].
Jason Jacobs: ... I wouldn't, I, I don't, I don't take... Give me the softballs.
Dr. Johanna Wolfson: [laughs].
Jason Jacobs: It's not how MCJ works.
Dr. Johanna Wolfson: [laughs]... I had a feeling. So, so this is why we built Azolla because with Prime Impact Fund, we could only get companies started. We were the catalyst, we were the match and that's great and a powerful thing. And we want more of that in the world, but then you start to worry about what happens after our involvement and at Prime and Azolla we have this concept called lockstep, uh, mission lockstep. So a company either is in lockstep, meaning the only thing they can do is reduce emissions. Doesn't matter, you know, what? There might be a matter of extent, but they can't really go off mission if they don't end up evading emissions, well, because, because they failed as a company. So maybe a good example of that is a long duration and storage company, right? That the technology will either work or it wouldn't, but it's only gonna do that thing.
It's gonna be enabling for larger scale, renewable penetration versus a not in lockstep company, which could potentially do many things with their technology. And we invest in both types of companies, by the way, because we're just looking for large scale emissions reduction, but it's important to acknowledge different paths that companies can take because it does inform how involved we might wanna be long term. And so with Azolla Ventures and the, the structure we've built, which pairs this catalytic capital with capital that can invest long beyond what we call our additionality threshold, when a company would not get funded but for our involvement.
With that structure, we're able to continue investing in companies long term. We almost always take a board seat early on in a company's life and this lets us retain that be part of the con, more importantly, be part of the conversation, be in it in the trenches with the founders of the company and the, the management team and be that voice for impact for, you know, many times it won't be needed, but there are times when there are forks in the road. And yeah, you can imagine a company, you know, needing to weigh a difficult decision, we wanna be part of that conversation. We're not majority investors, we're never gonna be the only voice in the room, but it matters a lot to be a primary voice in the room and one that's been there since the beginning and that's, that's something we can do with our new fund.
Jason Jacobs: Uh-huh [affirmative]. And from an entrepreneur standpoint, what are the trade offs when thinking about whether to take a catalytic investment versus say a grant?
Dr. Johanna Wolfson: Mm-hmm [affirmative], so the trade offs would be, you know, a catalytic investment is dilutive. So, so there's, there's an equity stake that's acquired as a result of the investment. A grant, that's not the case. However, just like any investment capital, what a company can do with it is usually way more flexible than what they can do with grant capital. Grant capital is usually pretty constrained. I mean, that's not so much the case if it's coming from a philanthropic source unconstrained, but government grants are usually pretty constrained. And that's for good reasons that, you know, government grant programs need to go by certain rules, but a company that's just trying to rapidly build their business influx of cash from venture capital can be, can be extremely helpful just to, to operate, to hire, to, you know, file, to build.
So we can do that in terms of our involvement then in exchange, you know, we hope, and we, we seek to build a reputation where we are honest to goodness, really good partners to companies. You know, most companies that I personally led the investment on I'm on the phone with once a week, at least, and, you know, kind of walking through whatever's going on, navigating a customer contract, you know, navigating an IP license from a university, talking about trade offs in team building decisions. This is not like a quarterly check-in kind of thing, this is, this is a constant partnership. And, you know, that's, that's something companies can get with us earlier on in the process of company building, then they might be able to with another investor base.
Jason Jacobs: And for an IP standpoint, it's is the pitch philanthropy with the promise of returns?
Dr. Johanna Wolfson: So the initial idea was yeah, philanthropy and these dollars could come back. And then as a philanthropist, you can grant them to another good cause. And how awesome is that instead of a negative 100% return, which is what you, what is guaranteed, if you just grant something out? You know, you have a potential to re-grant. What we learned, so that was kind of the original thesis behind Prime Impact Fund. What we learned is that those folks are coming to the table to be part of the fund as are many others. So we have, you know, on entrepreneurs and investors, you know, professional venture investors in our fund participating personally, who are just like, "This is awesome. This is an extension of the venture model that I wouldn't be able to do in my regular investing life, but I want exposure to this. Like this is sort of a different lever."
And so we have capital, even in Prime Impact Fund, that's not kind catalytic in nature. It's just conventional, you know, family office dollars. We also have foundations participate that some of them use their program or grant budgets would fall into that first category. Others are using their endowment dollars because there's been decision made at the foundation that, you know, some carve out needs to be set aside to mitigate climate change long term for proper management of that endowment and to manage climate risk. So it's been, I think the reasons for coming in have been much, much more varied than what we originally suspected.
Jason Jacobs: Uh-huh [affirmative], and when it comes to sectors, how do you go about assessing whether something is investible and also kind of a corollary, how do you evaluate impact?
Dr. Johanna Wolfson: Hmm. So this is where we are so fortunate to be partnered with Prime Coalition. Even though we spun out as Azolla Ventures, we're still totally tied in with Prime Coalition as a nonprofit. And I don't think what we're doing with Azolla would work without that tie in. And the, one of the ways that that tie in takes form is through the nonprofit actually building out an impact model for any investment we might be making. So we have growth from Prime Impact Fund on Azolla. We have a pretty high bar as some other funds do on Impact, which is we wanna see Gigaton scale impact potential by 2050, and Prime has done it.
Jason Jacobs: Gi-Gigatons of emissions removed or reduced?
Dr. Johanna Wolfson: Exactly. Yep, exactly. And Prime has developed tools for doing that has developed a methodology for doing that that now has had lots of eyes on it. Lots of feedback, it's continually improved, I mean, is now gathering... This is a little bit off path, but I wanna mention it is now gathering a lot of other industry stakeholders and investors around to develop common standards. So we feel very fortunate that Prime Coalition is kind of a fulcrum for this conversation of how to, how to rigorously and expand, but also expansively define impact potential. And so the bras tax of it are that any investment we're considering making the potential impact of that investment is actually evaluated at arms length by the nonprofit. And then we are, we, we of course do our, the first cut of that ourselves. We only wanna do big impact plays, but the formal evaluation happens at arms lengths.
That's all, "What's the biggest thing that could happen? If this company is massively successful, what's the potential?" Then our job as the investment team is to, is to suss out, "How likely is that potential. Do we see a real path toward it?" So evaluate the impact potential and then say, "Okay, what's the company's real path. Can we see that path? Can we help them get on that path to achieve what will look like Gigaton's scale impact potential?" And doing that early modeling of getting to that Gigaton scale actually gives you a roadmap for what companies will need to do over the course of the next 10 plus years. That's gonna change.
But for instance, if a company is gonna need to deploy, you know, X units of an air conditioner by 2030 to get to where they need to be in 2040, to get to where they need to be in 2050, that starts to inform our operational work with the company and, you know, annual company level goals to help make sure they're on that track toward impact. So it's, it's a system that is proving to be useful, not just for vetting and evaluating companies upfront, but also managing them toward impact for the long term, keeping ourselves grounded and communicating about how the company's doing against those long term goals.
Jason Jacobs: Uh-huh [affirmative], and when it comes to impact. I mean, selfishly, the question I'm about, about to ask is one that, that we wrestle with, but you, I mean, you mentioned Gigatons and carbon or GHGs as the metric that you used to assess impact. If you manage to many things and you manage to nothing-
Dr. Johanna Wolfson: Mm-hmm [affirmative].
Jason Jacobs: ... right? Like are you worried about the opposites that managed to one thing that there'll be unintended consequences, negative ones in some other areas that are important, whether it be diversity and inclusion or just transition or, or things like that? Especially given the systems nature of the climate problem, how do you think about that and why have you chosen GHGs as primary?
Dr. Johanna Wolfson: I'm so glad you asked that 'cause it's an area of active discussion internally too. So I think we've chosen GHGs as primary so far because it is a clear North Star and that is very helpful because as you said, "If you managed everything, you managed nothing." So it's very clarifying to have a high bar, a singular bar, and most companies that we look at don't meet it, don't even come close and if a company could meet it, it's worth looking at. So it's been again clarifying, helpful and I think differentiating for us, but you're absolutely right that it's not the only thing. And there could both be other impact goals that you want to highlight or elevate. And if you only focused on that, there could be negative consequences as well. So without going into full detail, I think where we are right now, we've, we've identified management tools, post investment that are helping us track think about potential, unintended consequences, manage against those, develop frameworks for companies to be thinking themselves about unintended consequences and how to avoid that.
One of the things I'm most excited to build over time is sort of a toolkit for helping companies think about responsible community engagement, right? As the companies in our portfolio, sort of graduate to deployment stage, we want them and we need them to be extremely thoughtful about that. That's just one example. So again, more, uh, more management tools for, "How do we avoid and be aware of and be asking each other about unintended negative consequences?" But I will say it's, you know, an area of active discuss in, in future funds, would we want to expand the scope of what is evaluated pre-investment in order to qualify a company in.
We have built into our diligence process recently conversations with a team about, "You know, what is your own DE and I plan for instance, for the company?" And it's not that they have to have that fully baked, but we really wanna understand where are they at, how much would we be able to potentially help them, is there openness to that? So there's a lot that we're doing kind of the, the, like the investment criteria are one thing and that may evolve in the future, but even putting those investment criteria aside, which I know is our most obviously public thing, there's a lot that we can do as partners to companies that is much more multidimensional than the emissions reduction target.
Jason Jacobs: Uh-huh [affirmative], and if I had to play psychologist for a moment, it, it seems like what I've been hearing from you is a common theme about taking impactful technologies from conception through helping them reach their full form to have an impact on the world as kind of your mantra for your career. And so sitting where you are, this catalog of capital is one impactful way to do that. But stepping outside of that for a moment, and just looking at the overall landscape, especially since we have a room full of people and a digital room full of listeners after the fact who might also share that passion, I think of a, kind of like an assembly line. So looking at that assembly line, what are some of the other stops that you know, where the arteries are clogged or things like that, and where do you think the biggest, yeah barriers and or opportunities are to unlock that-
Dr. Johanna Wolfson: Hmm.
Jason Jacobs: ... funnel so that more of this technology can reach its fullest form more quickly?
Dr. Johanna Wolfson: Mm-hmm [affirmative]. Well, there are two, there are many, but there are two that jump to mind for me that I think about a lot for different reasons and it's not surprising, it's kind of the input of our funnel and then the graduation point of our investment making. And so those are respectively the kind of even company formation kind of in the university environment or elsewhere, "Are we forming entrepreneurial minds, right? Are we forming... Are we helping empower people who could create solutions?" And I, when I say entrepreneurial, I just, I don't mean just in startup companies, but taking technology or, or non-solutions and actually being the power behind them that makes them into something.
You know, when we, when we, as investors look at a promising technology, we might get excited about it, but we don't get really, really excited unless we see someone behind it willing to power through and kind of be that shepherd. And I think that applies across the board programs like Activate are, you know, very much in this zone of building new, powering up entrepreneurial people and minds to go problem solve. And so that is huge. Like I just, I think we could not possibly have enough resources pointed at that problem. And that's both for founders and people, you know, who wanna jump on board, working with founders like you are gonna jump in.
Jason Jacobs: Well, I guess just a clarifying question, but I think what I'm hearing is that there's the technology aspect, but there's also the jockey, if you will. And so-
Dr. Johanna Wolfson: Yeah, the jockey.
Jason Jacobs: ... helping more technologists or PhDs make the transition to being jockeys that can see not just these technologies, but these companies through the long term?
Dr. Johanna Wolfson: Yeah. And I don't think it has to just be technologists or PhDs, right? I mean, it, that is often what [crosstalk 00:33:48].
Jason Jacobs: [laughs].
Dr. Johanna Wolfson: Totally. Yeah, absolutely. I mean, I, I, yes, there's so much power here and I think this plays into, you know, you asked about diversity equity and inclusion earlier. This plays here too 'cause I think back to my graduate school days, I never would've thought, "Oh, I could be a company founder," but of course I could have been. So many... I mean, anyone here can be. And I don't think we, I think there are so many ways that we could better equip people to feel that way. Not necessarily about being a founder of a climate technology startup company, but you have an idea, you can be the person to bring that into the world. There's endless potential there. So that's one big bucket. And then the other that I mentioned kind of on the graduation side of our investment activity is, you know, projects getting deployed.
So after a technology's developed, after a company is grown, which is our wheelhouse at Azolla Ventures and you know, our day to day work of being a good partner and venture investor to our companies is, you know, growth and deployment of projects. And that is, you know, starts to be in the realm of project finance. It starts to be in the realm of how do you get projects, you know, considered bankable, considered financable by conventional markets? And that's a different ball game than venture, but it's a really important one to ultimately scale just as we've seen solar and wind, you know, playbooks being written on how to deploy projects at massive scale and successfully so, what will that look like for the many, the many other tech technologies that are moving through the commercialization phase?
And so, you know, there are lots of good approaches undertaken there, but I don't think enough and not, probably not enough innovative thinking yet on how to do that. That is an area I was mentioning, uh, while we were chatting earlier, that is an area that Prime Coalition is starting to think about separately, "Oh, what could catalytic capital do to enable projects that might not otherwise get off the ground?" So that's an exciting future dimension of catalytic capital, I would say, or maybe present dimension, but that I don't, I just don't think that there's been as much creativity yet at that stage as there has been at the early company formation and venture investing stage.
Jason Jacobs: Uh-huh [affirmative], and two final questions. One is just speaking specifically about your work. If you could wave a magic wand and change one thing to help your capital be more catalytic that's outside the scope of your control, what would you change and how would you change it?
Dr. Johanna Wolfson: Ooh, what a good question. I think I would just put out a rallying cry to philanthropists everywhere who there have been many courageous and pioneering philanthropists who've come in early to help us do what we're doing, but we've barely scratched the surface and there's just so much more we could do. But what we're doing is new for philanthropy and for philanthropists generally. So I guess I would, you know, wave my magic wand and just encourage many, many more folks in the philanthropy sector to get to come on in and to, you know, explore what else their capital could be doing in this sector and other sectors than maybe what the traditional tools have allowed or suggested.
Jason Jacobs: And last question is just speaking to the audience and to listeners on the show, how can we be helpful to you and or who might you wanna hear from if anybody, whether it's hiring or-
Dr. Johanna Wolfson: oH.
Jason Jacobs: ... portfolio company needs or, or anything else?
Dr. Johanna Wolfson: Oh my gosh, how long do I have [laughing]?
Jason Jacobs: The last question, so its, so they bring the cane out and-
Dr. Johanna Wolfson: [laughs].
Jason Jacobs: ... and boot us off the stage.
Dr. Johanna Wolfson: Well, my mind goes to one of the things you mentioned, which is hiring. I mean, we're always, we happen to be hiring at Azolla, we're in a really exciting growth stage right now. But beyond that, the portfolio companies that we're privileged to support are all at exciting stages. They're around the country and building incredible solutions. So they're my top priority and you know who I have to put the plug in for, you know, if anyone's looking for, you know, amazing opportunities, those would be great places to look. And you know, I think I just really appreciate as we've built what we've built at Prime and now as Azolla the more people that learn about what we're doing, I've just been really gratified to see them out, talking about it in the world.
And that's probably one of the most impactful things is, you know, what we're doing is sometimes new to philanthropists, new to other investors, new to companies and we just love, we love when people call us up or send us an email and say, "Hey, you know, I wanna learn more about what you're doing," or, "How did you structure that fund?" Or, "You know, how can you help my foundation do something like this?" And that only, that really starts to happen, just the more people who understand a little bit about our model and are talking about it. So that's honestly what I appreciate most of all.
Jason Jacobs: Awesome. And anything I didn't ask that I should have or any parting words?
Dr. Johanna Wolfson: Thanks for having me.
Jason Jacobs: [laughs].
Dr. Johanna Wolfson: I really appreciate the ability to talk like this and yeah, wish we'd done it sooner.
Jason Jacobs: Well, once you hire more people, then we can do more MCJ episodes with Azolla-
Dr. Johanna Wolfson: Yeah.
Jason Jacobs: ... people, I'll just do the whole round Robin, but no, your work is super inspiring and I learn something every time I talk to you or, or anyone else on your team, so thanks for coming on the show and thanks to the audience as well for bearing with us for our first live in person episode.
Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note, that is .co not .com. Someday we'll get the .com, but right now, .co. You can also find me on Twitter @JJacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoy the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers maybe say that. Thank you.
