Wealth DFM Magazine sat down with Jonathon Spanos, who heads up Venture Capital Investment at Vala Capital, to talk about the role early-stage companies play in achieving the change we, the planet, need.
In 2020 Vala Capital launched its £20m EIS fund for sustainable start-ups. Since its launch. Vala have invested in some of the markets most exciting companies, which we will get into later.
Jonathon started our conversation by highlighting Vala’s intent, saying, “We make it our mission to back and help build these emboldened start-ups that we feel can have an impact on the markets and overall society.”
But how exactly do early-stage companies make an impact on climate change?
Jonathon pointed out the key to any successful business is innovation, and while many large corporations are endeavouring to meet the challenges of climate change, they still have barriers that are deeply entrenched within their organisational structures.
Spanos explained, “These barriers may be red tape, complex hierarchies, or just general stagnation.” Continuing, Spanos used the analogy of a big ship turning for these large corporates, while startups represent the “little rebel yacht that can turn on a dime.”
In the tech start-up space its widely acknowledged that big corporations need the path of innovation found by early-stage businesses. This is what Vala realised; the demand from governments and external corporates looking to collaborate with innovative start-ups on climate change is vast, and will only grow following the pledges of COP26.
Jonathon put emphasis on what exactly Vala looks for in earlystage companies, and that’s purpose driven founders. Elaborating Jonathon said, “maybe a founder’s purpose is to make a lot of money – that’s great, but we’ve also got a few key themes that we’re most excited about.”
The founders that get Vala the most excited are those with visionary business ideas, committed to protecting the Earth’s finite resources, restoring the environment through a range of sectors including clean energy, environmental health, transportation, logistics and infrastructure.
Jonathon couched this sentiment by noting Vala is not necessarily only addressing these themes, understanding that innovation requires flexibility.
For Jonathon amongst the most exciting investment Vala’s Sustainable Start-up Fund has made is in a company called Q-Flow. Q-Flow is a business that has a smart machine learning platform for construction sites. The construction industry is one of the largest emitters of waste and carbon emissions – “It’s an industry that lacks innovation,” Jonathon said.
Q-Flow scans materials and other items that come onto construction sites, identifying exactly what that material is and whether it has the right sustainability spec for the building under construction. It helps reduce waste, audits the materials used and prevents carbon emitting mistakes from happening.
Jonathon commented, “Q-Flow is a really smart use of machine learning and algorithms to drive change within the construction sector. It’s a team of two fantastic female founders who have worked on a number of projects including the Canary Wharf area – we’re really excited about its potential.”
Jonathon highlighted these two founders’ purpose, “They lived and breathed this challenge, they saw the amount of buildings being built with sustainability credentials, and said ‘hey, there needs to be something here to make sure that mistakes are not caught at the very end.”
Another key area of focus for Vala are the kinds of businesses in the circular economy – responsible commerce, consumption, production and sustainable agriculture.
A really interesting business Vala has invested in, in this area, is OxWash. The OxWash founders are former NASA engineers, both Oxford graduates, “Really smart guys,” Jonathon added.
The pair of founders are looking to disrupt the dry-cleaning business, using oxidisation technology to kill bacteria in clothes. They are currently working with the AstraZeneca clinical trials to sterilise the team’s lab gowns.
The benefits of this technology are numerous, it uses 80% less water and removes toxic chemicals from the petrochemicals industry, that come with typical dry-cleaning. The technology also catches micro plastics which are currently broken down from synthetic clothing during the washing cycle and flushed into the ocean.
Vala helped OxWash engage with Soho House Group, Jonathon commented, “This is something Soho House Group hadn’t thought about.” With 28 clubs and hotels world wide and a membership of over 119,000 the dry cleaning requirements of the group are truly vast.
This last example brings us back to the title at hand, why are early-stage businesses the most important engine room for driving change? They offer innovation and a chance for larger slower moving companies to collaborate with them.
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This is an except from Wealth DFM Magazine’s comprehensive 2021/22 ESG report. To access the full report, please click here.