1 00:00:07,880 --> 00:00:09,920 Hello and welcome. To the Reversing Climate Change 2 00:00:09,920 --> 00:00:11,840 podcast. I am Ross Kenyon. 3 00:00:11,840 --> 00:00:15,680 I'm a long time carbon removal and climate tech entrepreneur. 4 00:00:16,280 --> 00:00:19,960 Today I'm very excited to be speaking with Andrew Jones, the 5 00:00:19,960 --> 00:00:24,800 Co founder and CEO of Carba. Carba is a Minneapolis company 6 00:00:24,960 --> 00:00:28,800 that works with waste biomass, turns it into biochar, and 7 00:00:28,800 --> 00:00:32,360 prevents biomass from entering the landfill unnecessarily. 8 00:00:33,160 --> 00:00:37,960 Carbon had the good fortune of landing A5 year 44,000 ton 9 00:00:38,000 --> 00:00:41,880 carbon removal credit deal with Microsoft, which is a big deal. 10 00:00:42,320 --> 00:00:46,320 Getting a guaranteed demand signal like a long term contract 11 00:00:46,320 --> 00:00:49,920 with Microsoft is pretty much as good as it gets in carbon 12 00:00:49,920 --> 00:00:52,880 removal. These are serious people who 13 00:00:52,880 --> 00:00:55,360 diligence carbon removal deals at Microsoft. 14 00:00:55,720 --> 00:00:59,400 Microsoft broadly gets their pick at the litter, same with 15 00:00:59,400 --> 00:01:03,040 Frontier, Google or others who are making these very large 16 00:01:03,040 --> 00:01:06,000 carbon removal purchases. So getting that stamp, you have 17 00:01:06,000 --> 00:01:07,840 to put it on your website, you have to tell people that 18 00:01:07,840 --> 00:01:09,560 Microsoft is one of your customers. 19 00:01:09,680 --> 00:01:12,200 Your parents know who Microsoft is as a customer. 20 00:01:12,200 --> 00:01:15,240 That is a known quantity. Fortune 101 of the biggest 21 00:01:15,240 --> 00:01:16,760 companies in the world is your customer. 22 00:01:16,960 --> 00:01:21,560 It's a great sign for any company that is able to achieve 23 00:01:21,640 --> 00:01:24,600 a deal with a customer like Microsoft. 24 00:01:25,240 --> 00:01:28,680 Once you have guaranteed demand like that, it unlocks the 25 00:01:28,680 --> 00:01:34,040 possibility of finance. So Karba has this deal for five 26 00:01:34,040 --> 00:01:37,040 years and 44,000 tons of carbon removal credits. 27 00:01:37,480 --> 00:01:41,760 And that doesn't mean that Microsoft bought all of those 28 00:01:41,760 --> 00:01:44,600 credits up front. Often times these deals are 29 00:01:44,600 --> 00:01:46,720 structured to have milestone unlocks. 30 00:01:46,880 --> 00:01:51,080 Carpet would need to provide certain metrics of progress 31 00:01:51,080 --> 00:01:54,400 during this time in order to continue the process. 32 00:01:54,440 --> 00:01:56,400 In general terms. That's how I've seen it done in 33 00:01:56,400 --> 00:01:58,360 other places. For other off takes, I imagine 34 00:01:58,360 --> 00:02:00,160 that's similar for them, although I do not know. 35 00:02:00,640 --> 00:02:02,480 I imagine that's similar in this case. 36 00:02:02,960 --> 00:02:06,400 I think people don't always realize is that these big off 37 00:02:06,400 --> 00:02:10,720 take agreements do not just mean that companies get access to a 38 00:02:10,720 --> 00:02:15,640 very large pot of money upfront. And so my other guest today is 39 00:02:15,640 --> 00:02:19,320 Matt Schmidt, who is the CEO and founder of Structure Climate 40 00:02:19,480 --> 00:02:22,440 where I am an advisor. I've known Matt for a long time. 41 00:02:22,440 --> 00:02:24,920 He served on Nori's board years ago. 42 00:02:25,320 --> 00:02:28,480 I have really enjoyed my time working with Matt on what 43 00:02:28,480 --> 00:02:32,240 Structure is doing here. The Structure is working on 44 00:02:32,640 --> 00:02:37,160 innovative financing mechanisms for carbon removal and climate 45 00:02:37,160 --> 00:02:39,640 tech companies. Because I'll just back up here 46 00:02:39,640 --> 00:02:41,720 and I'm going to imagine that if you're a listener, maybe you 47 00:02:41,720 --> 00:02:45,480 don't know much about equity versus debt financing for 48 00:02:45,480 --> 00:02:48,280 startup companies. But if you've watched Silicon 49 00:02:48,280 --> 00:02:51,920 Valley, if you're familiar at all with how equity works, is 50 00:02:51,920 --> 00:02:54,360 that you sell a portion of your company. 51 00:02:54,560 --> 00:02:57,920 You sell equity in your company to investors and they expect 52 00:02:57,920 --> 00:03:01,680 most of their bets to fail, but the best that do succeed, they 53 00:03:01,680 --> 00:03:05,840 expect to make large multiples off of could be 10X. 54 00:03:06,120 --> 00:03:09,840 Ideally, it's closer to 100 and up from there. 55 00:03:10,240 --> 00:03:12,960 Some of the big deals that you're familiar with, Angel 56 00:03:12,960 --> 00:03:17,440 investors or a seed investors of Uber, for example, became very, 57 00:03:17,440 --> 00:03:21,080 very wealthy as a result. The good thing about equity is 58 00:03:21,080 --> 00:03:24,120 that there aren't terms on it. Typically. 59 00:03:24,240 --> 00:03:29,320 It's not like you have to get them a return within five years 60 00:03:29,320 --> 00:03:33,200 or there are penalties. Equity investing is a longer 61 00:03:33,200 --> 00:03:36,240 term approach, or it tends to be, not always. 62 00:03:36,240 --> 00:03:37,840 I mean everything I've said so far. 63 00:03:37,840 --> 00:03:39,440 I can think of counter examples too. 64 00:03:39,640 --> 00:03:41,840 In general that is pretty much how it works. 65 00:03:42,280 --> 00:03:47,200 But debt is not like that. Debt has strict repayment terms, 66 00:03:47,800 --> 00:03:52,280 interest rates, and there are often penalty clauses for for 67 00:03:52,280 --> 00:03:55,760 failing to repay on time. That could result in the debt 68 00:03:55,760 --> 00:04:00,280 converting into equity, or the interest rate going up, or both. 69 00:04:01,440 --> 00:04:04,680 It's actually really hard to raise debt as a startup company 70 00:04:05,040 --> 00:04:09,520 because lenders don't want to lend to startups that represent 71 00:04:09,640 --> 00:04:12,480 enormous risk for a fixed return. 72 00:04:12,760 --> 00:04:16,160 The benefit of investing in equity in a startup is that 73 00:04:16,440 --> 00:04:19,560 there's a lot of risk, but the risk is also positive. 74 00:04:19,560 --> 00:04:23,200 The risk could also represent unlimited returns, but debt 75 00:04:23,200 --> 00:04:25,360 isn't like that. They're still making a bet on an 76 00:04:25,360 --> 00:04:29,440 untested startup or fairly young startup, but at most they're 77 00:04:29,440 --> 00:04:33,240 only going to make the interest rate or the interest rate plus 78 00:04:33,240 --> 00:04:35,800 whatever penalty provisions are in the debt contract. 79 00:04:36,000 --> 00:04:41,280 It's not like they can also make an unlimited upside in investing 80 00:04:41,280 --> 00:04:44,280 in debt for this company. Oftentimes companies can't even 81 00:04:44,280 --> 00:04:47,280 get debt. When young companies can get 82 00:04:47,280 --> 00:04:51,160 debt, it's often times at usurious interest rates. 83 00:04:51,520 --> 00:04:54,960 We joke about it in the show. It's closer to consumer credit 84 00:04:54,960 --> 00:04:58,520 card amounts, 20% plus in some cases. 85 00:04:59,080 --> 00:05:01,960 This might not look like a lot and it will probably only make 86 00:05:01,960 --> 00:05:04,280 sense to you if you've bought a house or done. 87 00:05:04,280 --> 00:05:07,920 This is a company where a 1% raise in your interest rate may 88 00:05:07,920 --> 00:05:10,920 not look like a lot when you're financing a house purchase. 89 00:05:11,280 --> 00:05:14,640 But when you add up how much that is every month and then you 90 00:05:14,640 --> 00:05:19,400 multiply that out over the presumable 30 year duration of 91 00:05:19,400 --> 00:05:22,840 an average mortgage, it represents huge amounts of 92 00:05:22,840 --> 00:05:25,560 money. And so for companies that are 93 00:05:25,600 --> 00:05:29,440 small like this, changes in interest rates matter a lot to 94 00:05:29,440 --> 00:05:33,680 them. And so structure through various 95 00:05:33,680 --> 00:05:37,240 ways of blending philanthropic capital as well as commercial 96 00:05:37,240 --> 00:05:41,320 capital, are able to put together deals that are more 97 00:05:41,320 --> 00:05:43,320 palatable to a company like Karba. 98 00:05:43,720 --> 00:05:46,480 We also talked about why doesn't Microsoft or bigger companies 99 00:05:46,480 --> 00:05:49,160 like this just finance these deals themselves. 100 00:05:49,160 --> 00:05:51,600 That's another really good question that we get into. 101 00:05:52,080 --> 00:05:55,240 If you've been dying to learn more about carbon removal 102 00:05:55,240 --> 00:05:58,920 startups, climate tech startups, raising money, the difference 103 00:05:58,920 --> 00:06:02,000 between equity and death, why you might want one in one 104 00:06:02,000 --> 00:06:04,040 circumstance and another in a different circumstance. 105 00:06:04,040 --> 00:06:05,520 We're going to get into all of that. 106 00:06:06,000 --> 00:06:10,040 I hope you enjoy links to both Karba, the announcement 107 00:06:10,160 --> 00:06:12,200 structure, climate, or in the show notes. 108 00:06:12,640 --> 00:06:15,560 This show is paid for by subscriptions and if you love 109 00:06:15,560 --> 00:06:17,360 what we're doing here, if you look forward to the next 110 00:06:17,360 --> 00:06:18,440 episodes. If you could. 111 00:06:18,440 --> 00:06:21,480 Please become a paid subscriber. It would mean a lot to me. 112 00:06:21,560 --> 00:06:23,960 It really helps a lot. It's a good signal that there's 113 00:06:24,120 --> 00:06:26,080 product market fit here. For the podcast. 114 00:06:26,360 --> 00:06:29,400 It's $5 a month. You can do it on Spotify and I 115 00:06:29,400 --> 00:06:30,720 will put the link in the show notes. 116 00:06:31,080 --> 00:06:33,280 If you cannot afford to do that right now. 117 00:06:33,640 --> 00:06:37,480 A great rating on Spotify, five stars or the same on Apple 118 00:06:37,480 --> 00:06:40,080 Podcast, plus a review. Write some nice things about the 119 00:06:40,080 --> 00:06:42,520 show. Also super valuable for getting 120 00:06:42,520 --> 00:06:44,560 the show out to more people and helping it grow. 121 00:06:44,960 --> 00:06:46,960 Thank you so much for listening and here is your show. 122 00:06:54,720 --> 00:06:57,440 Matt and Andrew, I'm happy to be able to announce what you're 123 00:06:57,440 --> 00:07:00,120 working on on the show and we will get into what we're going 124 00:07:00,120 --> 00:07:02,560 to announce, but we should just start at the basics here. 125 00:07:02,680 --> 00:07:04,480 So the announcement even makes sense. 126 00:07:04,480 --> 00:07:06,240 I think if we go announcement first, it's not going to make 127 00:07:06,240 --> 00:07:08,480 sense. So Matt, let's start with you. 128 00:07:08,480 --> 00:07:11,280 What is structure climate? Yeah, Thanks Ross. 129 00:07:11,920 --> 00:07:16,240 Structured climate provides project finance services to for 130 00:07:16,240 --> 00:07:21,680 profit companies that are doing climate positive projects that 131 00:07:21,680 --> 00:07:24,440 we work across tech technology verticals. 132 00:07:25,360 --> 00:07:27,960 So anything that's that's good for the climate, let's let's 133 00:07:27,960 --> 00:07:33,160 have a conversation. We focus on projects where there 134 00:07:33,160 --> 00:07:37,920 are good reasonable off take terms, you know, there's a a 135 00:07:37,920 --> 00:07:44,280 buyer for whatever is happening and where unit economics are are 136 00:07:44,280 --> 00:07:48,880 maybe a little challenging and some of the conventional project 137 00:07:48,880 --> 00:07:52,560 financing setups. And one of the main tools that 138 00:07:52,560 --> 00:07:56,080 we used to be able to engage early and at a small level is 139 00:07:56,080 --> 00:08:00,960 the the syndication or the the pooling of charitable and 140 00:08:01,000 --> 00:08:03,800 philanthropic capital into loans. 141 00:08:04,400 --> 00:08:09,880 So we take the tax advantage flexibility of this charitable 142 00:08:09,880 --> 00:08:15,480 capital and put it into terms and structures for companies 143 00:08:15,520 --> 00:08:20,760 like Karva that set them on a path to more conventional 144 00:08:20,760 --> 00:08:25,160 financing as as they prove out. So our, our, our goal is to make 145 00:08:25,160 --> 00:08:29,320 those first projects, you know, that much easier to get done so 146 00:08:29,320 --> 00:08:32,280 that companies can spend that much more time focus on what 147 00:08:32,400 --> 00:08:34,880 they need to do, which is already hard enough. 148 00:08:35,840 --> 00:08:40,039 And so we're we're here to help. You're telling me that the most 149 00:08:40,039 --> 00:08:43,600 generically named person in carbon removal has a financeable 150 00:08:43,600 --> 00:08:49,280 project? Yes, the, we often find that, 151 00:08:49,280 --> 00:08:52,880 you know, the the more boring a deal might sound on on the 152 00:08:52,880 --> 00:08:54,760 outside, the more interesting it is to us. 153 00:08:55,520 --> 00:08:57,880 But no, I, I think this is something that probably a lot of 154 00:08:58,560 --> 00:09:03,120 a lot of climate companies face is that there are all sorts of, 155 00:09:03,520 --> 00:09:08,400 of sources of friction in these deals or transactions or sales 156 00:09:08,720 --> 00:09:13,200 that are completely unrelated to the technology that's that's at 157 00:09:13,200 --> 00:09:15,840 at the center of it or the service or the offering or, or 158 00:09:15,840 --> 00:09:19,080 the product. And so if there are challenges 159 00:09:19,080 --> 00:09:23,000 in, you know, timing of cash flows or procurement processes 160 00:09:23,000 --> 00:09:26,560 from a corporate customer or your balance sheet or, you know, 161 00:09:26,560 --> 00:09:29,120 your capital cost or loan to value, or you don't, you know, 162 00:09:29,120 --> 00:09:32,120 you can't meet the debt service coverage ratio your bankers 163 00:09:32,120 --> 00:09:36,480 telling you to meet or you're trying to use venture capital 164 00:09:36,480 --> 00:09:41,640 dollars for concrete and steel. Yeah, let's, let's talk about 165 00:09:41,640 --> 00:09:43,680 that. I mean, it's the, the way I like 166 00:09:43,680 --> 00:09:45,160 to describe structures sometimes. 167 00:09:45,160 --> 00:09:48,200 And, and maybe I'll, I'll give away my background in the Army 168 00:09:48,200 --> 00:09:51,640 here, but you know, the technology companies like Carba, 169 00:09:51,640 --> 00:09:55,800 like they are the tip of the spear And, and we, we need the 170 00:09:55,800 --> 00:09:58,880 tip of the spear, but we also need the heavy wooden shaft that 171 00:09:58,880 --> 00:09:59,960 connects to the tip of the spear. 172 00:10:00,360 --> 00:10:04,160 And, you know, if you're fishing with the spear or hunting or, 173 00:10:04,280 --> 00:10:06,120 you know, performing the ceremony, whatever, like they're 174 00:10:06,120 --> 00:10:07,400 all sorts of different tips of the spear. 175 00:10:07,400 --> 00:10:09,440 That's great. Well, we're here to make them 176 00:10:09,440 --> 00:10:11,840 all effective in whatever they need to do. 177 00:10:13,240 --> 00:10:15,920 I'm not going to take offense to that there. 178 00:10:15,960 --> 00:10:18,800 There may be a lot of Andrew Jones's, but I'm a millennial, 179 00:10:19,040 --> 00:10:20,360 so I'm a special snowflake. Oh. 180 00:10:21,680 --> 00:10:23,840 God, I can just see you over. There, just waiting for your 181 00:10:23,840 --> 00:10:25,680 chance, like shut up, Matt. That's my time, Matt. 182 00:10:25,720 --> 00:10:30,240 I gotta get in there. Also, Matt, I don't think you 183 00:10:30,240 --> 00:10:32,400 used a spear in in the army, did you? 184 00:10:32,800 --> 00:10:34,680 Otherwise, that was That was a very long time ago it. 185 00:10:35,000 --> 00:10:37,400 Was a different. For a long time. 186 00:10:41,480 --> 00:10:46,600 I guess you know a bayonet is a a type of spear, but yeah, it's 187 00:10:46,640 --> 00:10:46,960 true. Please. 188 00:10:49,680 --> 00:10:51,920 Save us Andrew, please tell us what carbon is. 189 00:10:53,600 --> 00:10:55,160 Yeah. Well, I don't know if I can top 190 00:10:55,160 --> 00:10:58,920 that, but yeah, Carba. So essentially, at our core with 191 00:10:58,920 --> 00:11:00,920 Carba, we're a waste to value company. 192 00:11:01,320 --> 00:11:04,720 We find waste and we figure out how to valorize it in the best 193 00:11:04,720 --> 00:11:08,520 possible way with a very strong focus on climate. 194 00:11:08,680 --> 00:11:11,080 So we're a carbon removal company as well. 195 00:11:11,160 --> 00:11:14,240 And so it turns out there's a lot of value in the carbon 196 00:11:14,240 --> 00:11:17,840 that's in waste if you can lock that carbon up and then sell the 197 00:11:17,840 --> 00:11:20,680 resulting carbon credits. And so that's what we've been 198 00:11:20,680 --> 00:11:23,000 able to do here. And there's a lot of sort of 199 00:11:23,000 --> 00:11:25,120 variations on that theme that we're looking at. 200 00:11:26,040 --> 00:11:29,920 But at its core, it's this premise of where are all these 201 00:11:29,920 --> 00:11:32,200 pockets of waste in the world that aren't being utilized 202 00:11:32,200 --> 00:11:33,880 today, They're low or negative value. 203 00:11:34,320 --> 00:11:39,040 And how do we upcycle them, if you will, and convert a, convert 204 00:11:39,040 --> 00:11:41,800 them into a product that's actually valuable, whether it be 205 00:11:41,800 --> 00:11:44,960 carbon removal credits or some sort of carbon product? 206 00:11:47,000 --> 00:11:49,880 Which waste stream did you discover was undervalued and 207 00:11:49,880 --> 00:11:52,960 decide to dedicate valuable career time to solving? 208 00:11:54,440 --> 00:11:58,400 Well our our beach head here, which is really exciting is 209 00:11:58,600 --> 00:12:01,960 looking at waste, municipal wood waste. 210 00:12:02,440 --> 00:12:04,160 All right, you got to go back. You got to choose something more 211 00:12:04,160 --> 00:12:06,280 army related I guess. Yeah, right. 212 00:12:06,720 --> 00:12:11,080 I wasn't in the military. I wasn't in the military, but I 213 00:12:11,080 --> 00:12:14,920 was a pyromaniac as a kid, so that actually might tie into 214 00:12:14,920 --> 00:12:17,560 this. As a 12 year old, I used to make 215 00:12:18,000 --> 00:12:21,680 carbon in my fireplace, which turned out to be biocharred and 216 00:12:21,680 --> 00:12:24,840 know it at the time. And I would mix that with sulfur 217 00:12:24,840 --> 00:12:29,800 and potassium nitrate to make a crude gunpowder, which I guess 218 00:12:30,080 --> 00:12:34,320 makes me sort of of the vintage of Spears that Matt was Speaking 219 00:12:34,480 --> 00:12:39,760 of. So I was making biochar before 220 00:12:39,760 --> 00:12:43,760 it was cool, you know, when I was a wild tween or adolescent. 221 00:12:44,440 --> 00:12:48,040 And you know, kind of Fast forward later in my career, I 222 00:12:48,040 --> 00:12:50,640 got into chemical engineering and learned about how chemicals 223 00:12:50,640 --> 00:12:54,880 are made and how you can, you know, transfer chemicals from 224 00:12:54,880 --> 00:12:57,000 one state to the other and make and break chemical bonds. 225 00:12:57,400 --> 00:13:01,880 And really got started in catalytic pyrolysis, how we use 226 00:13:01,880 --> 00:13:06,280 catalysts to make it better and started CARBA to take advantage 227 00:13:06,280 --> 00:13:10,080 of all the wood waste and agricultural waste and yard 228 00:13:10,080 --> 00:13:14,000 debris that's out there. And so our first project here is 229 00:13:14,000 --> 00:13:18,480 in Minnesota at a landfill site where we actually take wood 230 00:13:18,480 --> 00:13:23,200 waste from the the area, which is diseased or, or degraded and 231 00:13:23,200 --> 00:13:26,640 would otherwise burn or compost. And we could take that converted 232 00:13:26,640 --> 00:13:30,560 into biochar through a pyrolysis or, you know, very similar to 233 00:13:30,560 --> 00:13:33,960 what I did when I was 12 year old and suffocating a fire. 234 00:13:34,560 --> 00:13:38,280 And we can take that black biochar, which is this stuff. 235 00:13:39,400 --> 00:13:41,440 Ross It doesn't look like a giant turd. 236 00:13:42,480 --> 00:13:45,680 You can cut that off. Thank you for fixing it. 237 00:13:45,720 --> 00:13:48,600 Yeah. We, we could take this, this 238 00:13:48,600 --> 00:13:52,720 black biochar which is now devoid of food value and we can 239 00:13:52,720 --> 00:13:55,880 put it into environments where it has Co benefits. 240 00:13:55,880 --> 00:13:59,120 And the first one we chose was a landfill because it turns out 241 00:13:59,120 --> 00:14:01,600 landfills leach out a lot of chemicals. 242 00:14:01,880 --> 00:14:04,360 They have odors, they have fugitive methane emissions. 243 00:14:04,760 --> 00:14:08,840 We can reduce all of that by putting this into a landfill and 244 00:14:08,840 --> 00:14:12,000 it the burial they're already burying soil. 245 00:14:12,280 --> 00:14:15,160 So we can mix in with that soil and provide all these 246 00:14:15,160 --> 00:14:17,920 environmental Co benefits as well as lock up the carbon in 247 00:14:17,920 --> 00:14:19,840 the landfill. And so we have a big projects 248 00:14:20,200 --> 00:14:22,560 that we're building out here in Minnesota. 249 00:14:24,040 --> 00:14:29,280 The language I think is, is so interesting and, and can frame 250 00:14:29,280 --> 00:14:32,560 up so much of the the thinking or discussion here and and that 251 00:14:32,560 --> 00:14:36,320 is that, you know, sometimes even the language of Co 252 00:14:36,320 --> 00:14:39,000 benefits, I think misses some of the mark. 253 00:14:39,000 --> 00:14:41,560 We we like to talk about, you know, let's understand the 254 00:14:41,560 --> 00:14:43,840 entire surface area of a project. 255 00:14:44,920 --> 00:14:52,120 And So what Andrew's project represents is not just storing 256 00:14:52,120 --> 00:14:55,280 carbon out of the atmosphere in a a way that that keeps it out 257 00:14:55,280 --> 00:15:00,800 of those short term carbon cycles, but also means fewer 258 00:15:00,800 --> 00:15:04,320 trucks on the road hauling soil and to maintain landfill cover. 259 00:15:04,320 --> 00:15:07,760 It means fewer micro plastics and local water systems. 260 00:15:07,760 --> 00:15:12,960 It means more revenue at the landfill that is able to receive 261 00:15:12,960 --> 00:15:15,680 this wood waste that otherwise it it can't receive it. 262 00:15:15,680 --> 00:15:19,000 It means fewer emissions in the air. 263 00:15:19,000 --> 00:15:22,280 If you were kind of rogue, you know, just like wood chip piles 264 00:15:22,280 --> 00:15:24,280 that turn into potential fire hazards. 265 00:15:24,920 --> 00:15:30,320 And it's not that any one of those needs to be a strong 266 00:15:30,320 --> 00:15:33,440 enough or convincing enough, you know, case to say, let's get 267 00:15:33,440 --> 00:15:36,240 this project funded. It's that we can pull together 268 00:15:36,240 --> 00:15:39,120 capital interested in this project for all sorts of 269 00:15:39,120 --> 00:15:42,280 different reasons. And that's and that's great. 270 00:15:42,280 --> 00:15:45,400 That's like the, the projects like Andrew's have again, 271 00:15:45,400 --> 00:15:49,640 there's like big surface area that, you know, their carbon and 272 00:15:49,640 --> 00:15:54,600 water and air and jobs and resilience and local and you 273 00:15:54,600 --> 00:15:56,400 know, all all these other things together. 274 00:15:56,920 --> 00:15:59,880 And so I just as as you look at projects, I, I would say the 275 00:15:59,880 --> 00:16:03,520 language of talking about Co benefits I think often misses 276 00:16:05,160 --> 00:16:08,680 the, the realities of what these projects can represent. 277 00:16:10,200 --> 00:16:13,040 That's a good point. We, we certainly loss over it 278 00:16:13,040 --> 00:16:16,600 when we just use one big word to cover up all of these very 279 00:16:16,600 --> 00:16:19,560 immediate health impacts and other benefits here. 280 00:16:20,280 --> 00:16:24,080 But who's the customer for this work, Andrew is, is the city or 281 00:16:24,080 --> 00:16:27,440 the county or the state paying you to to do biomass diversion? 282 00:16:27,440 --> 00:16:29,960 Is it something like that? Yeah. 283 00:16:29,960 --> 00:16:35,040 I think long term we see this as sort of a future waste 284 00:16:35,040 --> 00:16:38,840 management lever. So right now we pay to get rid 285 00:16:38,840 --> 00:16:41,440 of our trash, we pay to get rid of our recycling. 286 00:16:42,120 --> 00:16:45,360 No, we don't pay to get rid of the CO2 because it's invisible. 287 00:16:45,360 --> 00:16:47,560 It comes out of our tailpipe and and we don't see it. 288 00:16:47,560 --> 00:16:52,080 But really that's kind of the the third arm of of the waste 289 00:16:52,080 --> 00:16:55,400 that we produce. And I think long term that that 290 00:16:55,400 --> 00:16:59,440 can be part of the conversation today we're we're funded by 291 00:16:59,440 --> 00:17:02,680 carbon credit purchasers. So companies that are or 292 00:17:02,680 --> 00:17:05,800 individuals that are trying to reduce their carbon footprint 293 00:17:06,040 --> 00:17:09,280 hit their net 0 targets and purchasing carbon credits 294 00:17:09,280 --> 00:17:11,720 directly from carbon or through marketplaces. 295 00:17:12,760 --> 00:17:16,920 I'm really excited to announce for the first time that we have 296 00:17:16,920 --> 00:17:22,040 sold a large off take to Microsoft, who is of course one 297 00:17:22,040 --> 00:17:26,680 of the leading buyers and has a very rigorous diligence process. 298 00:17:26,680 --> 00:17:30,120 And they were, you know, attracted to our solution, both 299 00:17:30,120 --> 00:17:33,000 because of its carbon removal potential, but also the Co 300 00:17:33,000 --> 00:17:37,720 benefits and the, you know, the the simplicity of the project 301 00:17:37,720 --> 00:17:42,160 being completely Co located. And so this is a multi year 302 00:17:42,320 --> 00:17:45,800 large off take agreement. We're super excited and, and 303 00:17:45,800 --> 00:17:49,760 really thankful for the support that Microsoft provides to this 304 00:17:49,760 --> 00:17:52,440 to let us get off the ground and really show the world, you know, 305 00:17:52,440 --> 00:17:56,320 how valuable this can be. And so part of this is learning 306 00:17:56,840 --> 00:18:00,040 all the benefits that go along with our process. 307 00:18:00,040 --> 00:18:04,360 And so we're doing some studies to get some real good real world 308 00:18:04,360 --> 00:18:08,160 data in the landfill for, you know, to measure exactly all the 309 00:18:08,160 --> 00:18:10,680 impacts that we're going to have on the landfill. 310 00:18:12,400 --> 00:18:14,960 Congratulations. That's amazing news and very 311 00:18:14,960 --> 00:18:17,120 big. I think people listening and 312 00:18:17,120 --> 00:18:21,040 would assume that if Microsoft is 1's customer, that you've 313 00:18:21,040 --> 00:18:24,000 basically got it made and you probably don't need that many 314 00:18:24,000 --> 00:18:26,160 other people like Matt flitting around. 315 00:18:26,160 --> 00:18:28,720 I was going to say, pecking your carcass. 316 00:18:28,720 --> 00:18:30,640 No, I'm sorry, I'm not going to roll that back. 317 00:18:32,760 --> 00:18:34,160 I'm not a carcass yet. It's. 318 00:18:34,400 --> 00:18:38,240 Actually, I mean, let me, let me come at this from the Microsoft 319 00:18:38,240 --> 00:18:39,640 side, right? Like I've, I've, I've known the 320 00:18:39,640 --> 00:18:43,880 Microsoft team for years. Ross, you and I first met when I 321 00:18:43,880 --> 00:18:48,600 was at Cargill and you were at Nori many, many years ago. 322 00:18:49,720 --> 00:18:53,680 And Microsoft was, you know, they announced their, their 323 00:18:53,680 --> 00:18:57,800 purchasing intent and I think 2020 not not too long after 324 00:18:57,800 --> 00:19:01,440 Stripe. And I've, so I've, I've known 325 00:19:01,440 --> 00:19:03,960 the team there at Microsoft for a number of years. 326 00:19:04,440 --> 00:19:08,160 And we, we at, at structure actually maintain active 327 00:19:08,160 --> 00:19:11,320 discussions with them simply because, you know, Microsoft has 328 00:19:11,320 --> 00:19:16,720 a buyer, their, their finance team wants to buy carbon credits 329 00:19:16,720 --> 00:19:19,640 just like they buy, you know, software subscriptions and 330 00:19:19,680 --> 00:19:23,520 professional services and, you know, property services and 331 00:19:23,520 --> 00:19:28,000 employee benefits and all that. Which is to say that they that 332 00:19:28,000 --> 00:19:30,760 have contracts with the vendors that they want to source from 333 00:19:31,480 --> 00:19:34,520 those vendors perform that service or deliver that product 334 00:19:34,520 --> 00:19:38,320 and the Microsoft pays. And this is how, you know, the 335 00:19:38,320 --> 00:19:41,520 transactions the world over happen in all sorts of different 336 00:19:41,520 --> 00:19:44,560 industries. And in established industries, 337 00:19:44,560 --> 00:19:47,480 there are all sorts of established financing mechanisms 338 00:19:47,480 --> 00:19:50,840 to support those transactions. And so one of the ways that I 339 00:19:50,840 --> 00:19:54,920 think about structures that we are bringing the the patterns 340 00:19:54,920 --> 00:19:59,160 for those financing products to emerge in this new kind of 341 00:19:59,160 --> 00:20:02,720 industry. And so as, as we talked to 342 00:20:02,720 --> 00:20:05,480 Microsoft, they actually introduced us to the suppliers 343 00:20:05,480 --> 00:20:09,560 that they that Microsoft wants to be able to buy from because 344 00:20:09,680 --> 00:20:13,040 as much as they are doing to catalyze demand in this market 345 00:20:13,040 --> 00:20:17,680 and a really you know, leaders here again, they are corporation 346 00:20:17,680 --> 00:20:20,800 going through their corporate procurement processes and as a 347 00:20:20,800 --> 00:20:23,800 publicly traded company, I mean they have certain compliance 348 00:20:23,800 --> 00:20:26,880 requirements and. The more consistently they can 349 00:20:26,880 --> 00:20:30,760 procure and and purchase, the more of that they can do. 350 00:20:30,800 --> 00:20:34,920 And so having mechanisms to support that and not just their 351 00:20:34,920 --> 00:20:37,960 everyday items, but also their kind of emerging areas like 352 00:20:38,040 --> 00:20:41,560 carbon credits and so on, makes it that much easier, not just 353 00:20:41,560 --> 00:20:43,840 for Microsoft, but then for the companies that want to follow in 354 00:20:43,840 --> 00:20:45,720 the footsteps of what what Microsoft buys. 355 00:20:47,240 --> 00:20:50,440 Why wouldn't they just cut Karba a check? 356 00:20:50,440 --> 00:20:53,680 What blocks deals from happening in that sort of straightforward 357 00:20:53,680 --> 00:20:55,840 way that we might expect from being consumers in other parts 358 00:20:55,840 --> 00:20:57,720 of our lives? Yeah. 359 00:20:57,720 --> 00:21:00,320 So this is where I, I, I think, you know, we all have 360 00:21:00,320 --> 00:21:03,320 experiences with this. You know, if you're a, the 361 00:21:03,320 --> 00:21:07,160 homeowner that has done some remodeling or if you're, you 362 00:21:07,160 --> 00:21:09,400 know, at a company that's purchased services, whether 363 00:21:09,400 --> 00:21:11,800 that's, you know, consulting or software development or so on 364 00:21:13,040 --> 00:21:15,760 there, there might be some cash that you pay upfront to, to 365 00:21:15,760 --> 00:21:18,680 retain services. But a lot of what it takes to 366 00:21:18,680 --> 00:21:21,360 actually get done what you're aiming to get done takes takes 367 00:21:21,360 --> 00:21:22,400 time. And then you want to make sure 368 00:21:22,400 --> 00:21:24,760 that that was done appropriately and received. 369 00:21:25,240 --> 00:21:28,520 And again, as corporate procurement processes work, they 370 00:21:28,520 --> 00:21:32,520 have their own, you know, systems for moving from vendor 371 00:21:32,520 --> 00:21:35,200 setup to invoice to pay and so on. 372 00:21:36,560 --> 00:21:39,800 And you know, to, to pull an example from the auto industry, 373 00:21:39,800 --> 00:21:44,640 you know, if, if Toyota places an order with a manufacturer for 374 00:21:44,800 --> 00:21:48,800 a set of bumpers for a certain car, that company that makes the 375 00:21:48,800 --> 00:21:52,680 bumpers can go buy the, buy the steel, the raw materials. 376 00:21:52,680 --> 00:21:55,360 You know, they, they can make those bumpers using funds that 377 00:21:55,360 --> 00:21:59,240 they can borrow against the value of that order, that 378 00:21:59,240 --> 00:22:02,720 purchase order from a company like Toyota. 379 00:22:03,520 --> 00:22:07,640 And so the, the fact is that, you know, just companies like 380 00:22:07,640 --> 00:22:12,080 Microsoft managing capital at that scale, like to manage their 381 00:22:12,160 --> 00:22:14,200 capital, which is to say they, they like to keep a hold of it 382 00:22:14,200 --> 00:22:17,360 until they absolutely have to get it out the door to whatever 383 00:22:17,360 --> 00:22:20,240 it is that they have, you know, purchased or, or committed to. 384 00:22:21,200 --> 00:22:25,120 And so we enable the purchase of carbon credits to be like the 385 00:22:25,120 --> 00:22:28,440 purchase of, you know, again, any of a number of other 386 00:22:28,920 --> 00:22:33,680 standard kinds of corporate services or products or 387 00:22:33,680 --> 00:22:35,640 something. I think I can layer on top of 388 00:22:35,640 --> 00:22:38,040 that too, Ross. Like the, the way I see it is 389 00:22:38,720 --> 00:22:40,880 someone like Microsoft, they want to be able to buy the 390 00:22:40,880 --> 00:22:44,040 product, which is the credits. They don't want to fund the 391 00:22:44,040 --> 00:22:45,520 project. They don't want to be product 392 00:22:45,520 --> 00:22:50,160 developers or put in the capital to, to make to bring a product 393 00:22:50,160 --> 00:22:52,920 online. That's a very different ask and 394 00:22:52,920 --> 00:22:57,000 very different sort of financial risk profile and they have done 395 00:22:57,000 --> 00:23:00,200 things like that, but it that's not a model that's scalable. 396 00:23:00,240 --> 00:23:04,160 And so where structure comes in and why we partner with 397 00:23:04,160 --> 00:23:07,280 structure and why it's such a valuable, you know, partnership 398 00:23:07,280 --> 00:23:10,040 is structure helps us get these projects off the ground, whether 399 00:23:10,040 --> 00:23:14,360 it's a folk or a nook, which I hate the term nook, I mean, come 400 00:23:14,360 --> 00:23:16,920 on. But whether it's the first or 401 00:23:16,920 --> 00:23:23,880 many of a kind, you know that we need project financing and that 402 00:23:23,880 --> 00:23:27,560 gets very difficult at the first of a kind stage, less and less 403 00:23:27,560 --> 00:23:29,400 difficult as you go on and you build out the model. 404 00:23:30,360 --> 00:23:33,440 That's not something you can in really any industry rely on the 405 00:23:33,440 --> 00:23:36,520 buyers to to provide the capital for. 406 00:23:36,520 --> 00:23:39,400 And so that's where structure comes in play and that gives. 407 00:23:39,440 --> 00:23:41,720 The. The buyers of credits, a lot of 408 00:23:43,200 --> 00:23:45,160 confidence that these projects are going to get done. 409 00:23:45,160 --> 00:23:47,880 You have, you know, the capital, you have the sites, you have the 410 00:23:47,880 --> 00:23:51,400 partnerships, and you can make these projects go forward. 411 00:23:51,800 --> 00:23:54,200 But yeah, there's a lot of partners that that there's a lot 412 00:23:54,200 --> 00:23:56,480 of things that have to come together to make these things 413 00:23:56,480 --> 00:23:58,480 happen, which is why they're so difficult. 414 00:23:59,760 --> 00:24:03,320 I think it's such a good illustrative case because if 415 00:24:03,320 --> 00:24:07,360 Microsoft cannot internally finance this in an effective 416 00:24:07,360 --> 00:24:11,120 way, I think it just goes to show how needed specialists are 417 00:24:11,120 --> 00:24:14,160 like structure essentially, because Microsoft has an 418 00:24:14,160 --> 00:24:16,040 enormous finance team. I'm sure I don't know how many 419 00:24:16,040 --> 00:24:18,440 people work over there and there, but it's 3 digits. 420 00:24:18,440 --> 00:24:21,560 Is it possibly 4 digits of personnel that are doing these? 421 00:24:21,640 --> 00:24:26,160 Yeah, I mean they they are quite active, but they also want to 422 00:24:26,240 --> 00:24:28,680 spend their time and effort doing the things that they are 423 00:24:28,680 --> 00:24:30,360 best at. So, you know, planning data 424 00:24:30,400 --> 00:24:33,120 center infrastructure and cloud compute and, you know, their, 425 00:24:33,160 --> 00:24:36,000 their products and services for their core customers. 426 00:24:37,200 --> 00:24:41,360 And so, you know, just like they're probably not financing, 427 00:24:41,360 --> 00:24:46,760 you know, I don't know a lot of landscaping services or, you 428 00:24:46,760 --> 00:24:49,040 know, they're, they're all, all sorts of things that Microsoft 429 00:24:49,040 --> 00:24:53,600 uses that they are not in the financing industry for. 430 00:24:53,600 --> 00:24:54,880 And, and, and that's totally fine. 431 00:24:54,880 --> 00:24:58,000 You know, it's just like we as consumers can go to grocery 432 00:24:58,000 --> 00:25:01,480 store and and buy food without having to think about, you know, 433 00:25:01,480 --> 00:25:04,760 the financing processes used to put in the food safety, you 434 00:25:04,760 --> 00:25:07,800 know, measurement equipment and the standards and sort of how 435 00:25:07,800 --> 00:25:11,520 all of the invisible pieces come together to make that food safe 436 00:25:11,520 --> 00:25:13,240 to buy at that point of purchase. 437 00:25:13,680 --> 00:25:15,400 We just were able to to purchase that. 438 00:25:15,400 --> 00:25:19,640 And so the more that we can get the right kinds of tools, the 439 00:25:19,640 --> 00:25:22,720 right kinds of capital in for these projects, the more that 440 00:25:22,720 --> 00:25:25,880 the buyers can focus on buying what they want to buy and then 441 00:25:26,680 --> 00:25:28,480 go back to doing what they want to do. 442 00:25:30,680 --> 00:25:33,200 Minds me mad of the the zone of genius, right? 443 00:25:33,200 --> 00:25:35,440 You, you don't want to be operating outside of your zone 444 00:25:35,440 --> 00:25:36,880 of genius or you're not effective. 445 00:25:36,880 --> 00:25:40,520 And and so doesn't make sense for Microsoft to become a or, or 446 00:25:40,520 --> 00:25:44,640 any, you know, tech company to become a carbon removal company 447 00:25:44,640 --> 00:25:47,040 that or, or finance those projects. 448 00:25:48,680 --> 00:25:51,200 Yeah, Everyone talks about how difficult, especially first of a 449 00:25:51,200 --> 00:25:54,840 kind folk deals are. NOC is like end of a kind. 450 00:25:54,840 --> 00:25:58,000 So just like 2 plus whatever deals. 451 00:25:58,160 --> 00:26:01,000 It's obviously much easier to go through deals once the first one 452 00:26:01,000 --> 00:26:03,080 has already happened. We've learned from it, we can 453 00:26:03,080 --> 00:26:05,960 move on. But people often say that carbon 454 00:26:05,960 --> 00:26:08,400 removal companies, even with a blue chip counterparty 455 00:26:08,400 --> 00:26:11,600 potentially like Microsoft, cannot get debt financing for 456 00:26:11,600 --> 00:26:14,520 deals because there's just no track record. 457 00:26:14,600 --> 00:26:17,320 These companies don't have cash flow statements that go back far 458 00:26:17,320 --> 00:26:19,160 enough in time that are credible. 459 00:26:19,400 --> 00:26:21,760 You know, a commercial lender is non concessionary. 460 00:26:21,760 --> 00:26:24,640 Lenders are just not going to put money up for projects like 461 00:26:24,640 --> 00:26:27,000 this, even with Microsoft on the line. 462 00:26:27,120 --> 00:26:28,080 Is that still true? By the way? 463 00:26:28,080 --> 00:26:30,160 I've heard some pushback on that characterization. 464 00:26:30,400 --> 00:26:32,240 Are you still seeing that, or is that something I could have said 465 00:26:32,240 --> 00:26:34,120 six months ago, but it's maybe less true now? 466 00:26:35,240 --> 00:26:41,480 From what I've seen, it's even more more true now the so like 467 00:26:41,520 --> 00:26:44,720 as structure, like I said, we work across tech verticals. 468 00:26:44,720 --> 00:26:46,920 We talk with companies doing all sorts of different climate 469 00:26:46,920 --> 00:26:55,160 positive things, so water waste would biodiversity, recycling 470 00:26:55,160 --> 00:27:00,800 power, etcetera. And we specifically focused on 471 00:27:00,800 --> 00:27:02,520 kind of the smaller scale of projects. 472 00:27:02,520 --> 00:27:07,400 So think like sub 20 million, we see a lot of demand in the 473 00:27:07,520 --> 00:27:10,320 roughly like 3 to $8 million range. 474 00:27:11,120 --> 00:27:14,120 And what we hear from the companies we talked with is if 475 00:27:14,120 --> 00:27:19,000 they can get quotes to borrow from, from banks, even banks 476 00:27:19,000 --> 00:27:21,520 that they have established relationships with, you know, 477 00:27:21,520 --> 00:27:26,040 they're, they're getting rates north of 20% for. 478 00:27:26,040 --> 00:27:27,800 Like consumer credit card number. 479 00:27:27,800 --> 00:27:29,760 Yeah, right. It would be like, you know, 480 00:27:29,760 --> 00:27:32,920 going to a car dealership and saying like, Hey, I, I know I 481 00:27:32,920 --> 00:27:35,760 get an auto loan for, you know, 8%, but I'd like to put this car 482 00:27:35,760 --> 00:27:39,760 in my credit card and pay like 23% or something. 483 00:27:40,760 --> 00:27:44,040 And, and so, you know, the reason you can get an auto loan 484 00:27:44,120 --> 00:27:48,960 for a lot less than a, a credit card rate is that if the car, 485 00:27:49,120 --> 00:27:51,280 you know, if you fall behind on payments, they have a car they 486 00:27:51,280 --> 00:27:53,760 can go get, whereas a credit card, you can pull out that 487 00:27:53,760 --> 00:27:57,840 number for Nye upon anything. And so there's this kind of 488 00:27:57,840 --> 00:28:02,000 trade off between the cost of capital and the flexibility of 489 00:28:02,000 --> 00:28:05,360 the capital. And so cars and houses and 490 00:28:05,360 --> 00:28:08,640 buildings and equipment and, you know, things that can be, you 491 00:28:08,640 --> 00:28:11,440 know, collateralized or repossessed or claimed. 492 00:28:11,440 --> 00:28:14,400 I mean, there, there tends to be a lower cost of capital when 493 00:28:14,400 --> 00:28:18,480 you're talking about a distinct thing that is believed to retain 494 00:28:18,480 --> 00:28:22,520 its value. And there tends to be a higher 495 00:28:22,520 --> 00:28:26,200 cost of capital when you the the borrower, the, the person 496 00:28:26,200 --> 00:28:28,160 receiving the capital has more flexibility. 497 00:28:28,160 --> 00:28:32,800 So start up founder can raise venture capital and you know, 498 00:28:32,800 --> 00:28:36,720 can can do just about anything they want, which is why 499 00:28:36,840 --> 00:28:41,040 investors at at those stages put in, you know, mechanisms to 500 00:28:41,040 --> 00:28:43,920 manage the governance and the boards and decisions. 501 00:28:43,920 --> 00:28:48,280 And like they, they build up a framework to bring the control 502 00:28:48,280 --> 00:28:54,360 because the control is not around a tangible thing, but in 503 00:28:54,520 --> 00:28:57,840 in real asset, you know, type projects, it is a a very 504 00:28:57,840 --> 00:29:03,240 tangible thing. And so it's, yeah, I don't know, 505 00:29:03,240 --> 00:29:05,960 there's, there's a like, I don't know how much to get into sort 506 00:29:05,960 --> 00:29:09,680 of like risk return curve and, and financial, you know, one O 1 507 00:29:09,680 --> 00:29:14,960 or theory or, or whatever. But it's like the it's one thing 508 00:29:14,960 --> 00:29:18,280 to, to get the blueprints for a house. 509 00:29:18,280 --> 00:29:20,400 You know, like you'd say that you're planning a housing 510 00:29:21,080 --> 00:29:24,400 community and you're going to just cookie cutter every house. 511 00:29:24,400 --> 00:29:27,280 You can, you know, design the, the blueprints once and, and use 512 00:29:27,280 --> 00:29:30,400 them a bunch, but every house you build, like you need cash 513 00:29:30,400 --> 00:29:32,360 for that. You need to cash to buy the wood 514 00:29:32,360 --> 00:29:35,120 and the concrete and the, you know, to pay the people to move 515 00:29:35,120 --> 00:29:36,800 the stuff around on on the ground. 516 00:29:38,240 --> 00:29:43,200 Or it's like a, a kid that hears a joke and shares a joke and 517 00:29:43,200 --> 00:29:46,920 share that joke, you know, many, many, many, many times without 518 00:29:47,320 --> 00:29:49,200 any additional cost. But like, if they're going to 519 00:29:49,200 --> 00:29:52,160 run a lemonade sand, they need to buy the lemonade supplies. 520 00:29:52,160 --> 00:29:54,720 They need to buy the, you know, the, the material. 521 00:29:54,720 --> 00:30:00,880 So to make that happen and so we, sorry, Ross, I, I feel like 522 00:30:01,120 --> 00:30:04,440 I'm, I'm wondering on the answer here, but it's like the, the 523 00:30:04,440 --> 00:30:08,120 companies that we talked to, they have customers that want to 524 00:30:08,120 --> 00:30:10,320 buy whatever it is they can produce. 525 00:30:11,680 --> 00:30:15,280 And so we're here to say, let's line up the the cash and the 526 00:30:15,280 --> 00:30:19,960 capital that can be flexible enough to meet what your, you 527 00:30:19,960 --> 00:30:24,680 know, project needs. They also probably don't want to 528 00:30:24,680 --> 00:30:27,240 be on the hook in case, you know, knock on wood here. 529 00:30:27,240 --> 00:30:29,880 Andrew Carba fails and fails to deliver. 530 00:30:29,880 --> 00:30:32,560 If they had pre purchased, I imagine there's probably less 531 00:30:32,560 --> 00:30:34,160 recourse. That risk is probably with the 532 00:30:34,160 --> 00:30:37,440 buyer and they don't want that. Someone would lose their job 533 00:30:37,440 --> 00:30:39,920 potentially if that happened, if they bought something that fell 534 00:30:39,920 --> 00:30:42,000 through. Yeah, you're really sticking 535 00:30:42,000 --> 00:30:45,360 your neck out, right and doing something that's not core to the 536 00:30:45,360 --> 00:30:49,480 company as well. So yeah, I kind of look at it, 537 00:30:49,760 --> 00:30:52,520 you know, from the entrepreneurial perspective, I'm 538 00:30:52,520 --> 00:30:55,720 doing a climate start up and climate is tough, right, For all 539 00:30:55,720 --> 00:30:58,600 the reasons we've said. I have a couple options. 540 00:30:58,600 --> 00:31:00,240 How am I going to get this project off the ground? 541 00:31:00,240 --> 00:31:04,000 I've got a project I can go to a customer, I can try to get 542 00:31:04,000 --> 00:31:06,480 prepayment. That's, you know, more and more 543 00:31:06,480 --> 00:31:12,480 difficult as as this as this industry matures, I can go out 544 00:31:12,480 --> 00:31:16,320 and try to get debt financing, which we mentioned is, is very 545 00:31:16,320 --> 00:31:18,640 difficult that a lot of times these off take agreements aren't 546 00:31:18,840 --> 00:31:24,080 bankable, meaning you can't leverage them necessarily for 547 00:31:24,080 --> 00:31:27,360 traditional debt for a first of a kind, because that risk is 548 00:31:27,360 --> 00:31:32,760 there because this market is is chaotic and not established. 549 00:31:33,400 --> 00:31:36,960 And and or I can go out and get venture, you know, so equity 550 00:31:37,520 --> 00:31:42,360 financing, you don't really want to equity finance the capital of 551 00:31:42,360 --> 00:31:44,480 your first of a kind. I mean, that's very expensive 552 00:31:44,480 --> 00:31:48,160 capital. That's not a first of all, it's 553 00:31:48,160 --> 00:31:51,760 not a very sustainable model, but also it's, it's a very 554 00:31:51,760 --> 00:31:54,440 expensive model. I've heard you know Venture, 555 00:31:54,440 --> 00:31:56,680 Matt, you correct me if I'm wrong, but I've heard Venture is 556 00:31:57,200 --> 00:32:02,080 equivalent to taking like a 30% rate loan. 557 00:32:02,800 --> 00:32:07,400 Yeah, that's kind of or or more. I mean it it it, it depends on 558 00:32:07,400 --> 00:32:11,080 more than you're exact. And it comes with a lot of teeth 559 00:32:11,320 --> 00:32:12,840 sometimes. Yeah. 560 00:32:12,840 --> 00:32:15,440 And so it's so it's not cheap. So you don't want to do that if 561 00:32:15,440 --> 00:32:17,960 you can avoid it, especially for capital for people, it's a 562 00:32:17,960 --> 00:32:21,400 little bit different. But and so then, you know, come 563 00:32:21,400 --> 00:32:24,320 in structure, climate and Mat, they've got this alternative 4th 564 00:32:24,320 --> 00:32:28,600 pathway, which is this is debt, but it's philanthropic debt, you 565 00:32:28,600 --> 00:32:30,040 know, mixed with some private debt. 566 00:32:30,680 --> 00:32:33,640 And he can talk about that more, but it's a way to get much lower 567 00:32:33,640 --> 00:32:38,320 cost of capital that's now enabled us to do first of a kind 568 00:32:38,320 --> 00:32:41,520 build outs. And we can touch on, you know, 569 00:32:41,680 --> 00:32:44,680 DOE as well. But yeah, it's a it's a door 570 00:32:44,680 --> 00:32:48,480 opening lever for us. And, and has really allowed us 571 00:32:48,480 --> 00:32:52,400 to, to take advantage of, of, you know, building a first of a 572 00:32:52,400 --> 00:32:57,160 kind new, new technology to really save the planet and save 573 00:32:57,160 --> 00:33:01,280 and, and improve landfills and air and water, water quality. 574 00:33:02,320 --> 00:33:04,560 Yeah. And you know, I, I, I want to be 575 00:33:04,560 --> 00:33:09,000 clear that this is, this is not sort of the end all be all, you 576 00:33:09,000 --> 00:33:10,760 know, solution for everything there. 577 00:33:10,760 --> 00:33:15,480 There is absolutely a need for early stage venture capital. 578 00:33:15,480 --> 00:33:19,320 And if, if you're a climate company getting started and you 579 00:33:19,320 --> 00:33:22,160 know, you're figuring out your science or your technology or 580 00:33:22,160 --> 00:33:25,480 you're figuring out your team, like equity financing is a great 581 00:33:25,480 --> 00:33:27,760 tool for that. And, and really, I think a 582 00:33:27,880 --> 00:33:31,680 helpful way to, to look at this is for anything that your 583 00:33:31,680 --> 00:33:35,560 company can use, you know, everywhere, would you say your 584 00:33:35,560 --> 00:33:39,800 IP, your talent, your, you know, science, look at equity 585 00:33:39,800 --> 00:33:42,080 financing options. I mean that that's really where 586 00:33:42,960 --> 00:33:45,800 you should be putting that kind of capital into play. 587 00:33:46,440 --> 00:33:50,760 And then for anything where you're doing something specific 588 00:33:50,760 --> 00:33:55,240 to a place or a customer or a set of materials or something 589 00:33:55,240 --> 00:33:58,480 like that where it's like almost like one time use capital. 590 00:33:58,480 --> 00:34:01,560 So trucks, concrete, steel, etcetera, you, you have to pay 591 00:34:01,560 --> 00:34:05,560 for those physical things, look at debt solutions. 592 00:34:06,320 --> 00:34:11,040 And so the, the right kind of capital tool for the right kind 593 00:34:11,040 --> 00:34:14,480 of job is, is really what we are here to, to build. 594 00:34:14,480 --> 00:34:18,440 And we find that a lot of climate companies really could 595 00:34:18,480 --> 00:34:20,760 have don't necessarily have the awareness because they haven't, 596 00:34:20,800 --> 00:34:23,159 you know, they haven't been forced to figure that out. 597 00:34:23,719 --> 00:34:26,600 We're here to say, hey, let's get more smaller projects funded 598 00:34:26,600 --> 00:34:31,800 faster with capital tools that are recognizable to more mature 599 00:34:32,360 --> 00:34:34,120 markets and and sources of capital. 600 00:34:34,480 --> 00:34:37,639 And that way, you know, across a variety of technologies, we'll 601 00:34:37,639 --> 00:34:42,719 just we'll see the and show the commercial maturity that's 602 00:34:42,719 --> 00:34:46,199 that's possible. Well, if this. 603 00:34:46,199 --> 00:34:50,400 Particular type of debt financing is only for a smaller 604 00:34:50,400 --> 00:34:53,159 subset of lenders. What kind of maniacs are 605 00:34:53,159 --> 00:34:55,040 interested in deal flow like this? 606 00:34:55,520 --> 00:34:57,680 How are you able to attract people that want to fund 607 00:34:57,680 --> 00:34:59,880 projects like this? Matt, I imagine it could be a 608 00:34:59,880 --> 00:35:03,320 difficult pitch. You know this is where. 609 00:35:04,520 --> 00:35:07,840 Again, we we really focus on the entire surface area of the 610 00:35:07,840 --> 00:35:12,720 project and so you know, to call out like what what Karva is 611 00:35:12,720 --> 00:35:15,200 doing and and just a dig it into the specifics of that a little 612 00:35:15,200 --> 00:35:18,480 bit. So Karva needed needs is you 613 00:35:18,480 --> 00:35:21,680 know, is using some project financing to put this first site 614 00:35:21,680 --> 00:35:30,000 here into the site in Minnesota. And the loan that we syndicated 615 00:35:30,000 --> 00:35:36,360 is, is made-up of a handful of what are essentially donors who 616 00:35:36,360 --> 00:35:40,680 are providing the the capital that is being pooled into this 617 00:35:40,680 --> 00:35:44,440 loan product with terms for Carba that can work for Carba. 618 00:35:45,280 --> 00:35:49,840 And so in this case, the the primary donor that the main 619 00:35:49,920 --> 00:35:53,600 anchor donors actually Eric Schmidt's Family Foundation, 620 00:35:54,160 --> 00:35:58,760 they are an active grant maker in areas related to waste and 621 00:35:58,760 --> 00:36:02,040 and water. And so this opportunity to not 622 00:36:02,040 --> 00:36:06,840 only achieve impacts in in waste and and water like what Parba is 623 00:36:06,840 --> 00:36:10,600 is able to do, but also to utilize their rant making 624 00:36:10,600 --> 00:36:16,520 capital as a as a proof point for building that credit 625 00:36:16,520 --> 00:36:18,840 transaction history was was was really meaningful to them. 626 00:36:19,240 --> 00:36:22,560 But then aside from that, you know, there are some local 627 00:36:22,560 --> 00:36:25,920 donors that you know, have known Andrew through other networks 628 00:36:25,920 --> 00:36:30,280 and and like to support local entrepreneurs. 629 00:36:30,520 --> 00:36:33,360 There's a local software company is supporting this project 630 00:36:33,360 --> 00:36:36,000 again, because it's, it happens to be in, in Minnesota. 631 00:36:36,320 --> 00:36:40,200 Whether you're looking at this for, you know, Minnesota or 632 00:36:40,200 --> 00:36:44,200 wastewater, carbon, climate, small communities, rural 633 00:36:44,200 --> 00:36:47,840 economic development, you know, maybe you, you want to support 634 00:36:48,520 --> 00:36:51,880 US manufacturing jobs or entrepreneurs that, you know, 635 00:36:51,880 --> 00:36:54,640 went to EU University of Minnesota or they went to 636 00:36:54,640 --> 00:36:56,840 Berkeley or, you know, have the last name Jones. 637 00:36:56,840 --> 00:37:01,000 Like, I don't know, there can be a whole surface area for these 638 00:37:01,000 --> 00:37:02,440 projects. And, and we're going to say 639 00:37:02,440 --> 00:37:04,160 that's great. You know, all of this capital 640 00:37:04,160 --> 00:37:07,160 can work together. And we're here to make it easy 641 00:37:07,160 --> 00:37:10,440 for that capital to make projects like what Carba is 642 00:37:10,440 --> 00:37:14,880 doing successful and and able to achieve the impact that they are 643 00:37:14,920 --> 00:37:18,960 able to achieve. I love the idea of some analyst 644 00:37:18,960 --> 00:37:22,640 or associate with their first job in VC pitching A thesis 645 00:37:22,760 --> 00:37:26,080 correlating will people with last name of Jones to alpha 646 00:37:26,440 --> 00:37:28,040 being like this is where the this is where we should be 647 00:37:28,040 --> 00:37:30,040 investing right now, the Jones portfolio. 648 00:37:32,440 --> 00:37:35,360 I'm all for it. I bet you are for you to oppose 649 00:37:35,360 --> 00:37:37,200 it. I bet there's a correlation. 650 00:37:37,200 --> 00:37:39,400 I don't know if there's a causation, but there might be a 651 00:37:39,400 --> 00:37:42,160 correlation. That you mentioned that you see 652 00:37:42,160 --> 00:37:45,000 these people as donors. Is it all concessionary capital 653 00:37:45,000 --> 00:37:47,080 like that or are these people getting a return? 654 00:37:47,080 --> 00:37:49,760 Are they? How are they seeing it and what 655 00:37:49,760 --> 00:37:50,920 does it look like? Yeah. 656 00:37:50,920 --> 00:37:54,480 No, great, great question. A couple of couple of terms that 657 00:37:54,480 --> 00:37:58,080 I I think are important to lay out to understand the landscape 658 00:37:58,080 --> 00:38:01,280 here. One is that this, this entire 659 00:38:01,280 --> 00:38:06,240 concept of lending, you know, charitable or tax advantage or 660 00:38:06,240 --> 00:38:08,880 philanthropic capital, all, all terms are basically the same 661 00:38:08,880 --> 00:38:11,920 thing. This concept has been around for 662 00:38:12,960 --> 00:38:15,160 decades, like it's, it's been something that's been part of 663 00:38:15,160 --> 00:38:21,360 the tax code since the 60s, but only private foundations in, in 664 00:38:21,360 --> 00:38:24,800 the tax code are, are able to utilize it. 665 00:38:24,800 --> 00:38:27,920 And the biggest foundations, you know, the ones that everyone has 666 00:38:27,920 --> 00:38:31,000 probably heard of it, Gates and MacArthur and Ford and so on. 667 00:38:32,040 --> 00:38:34,240 I've done this, you know, using the hundreds of millions of 668 00:38:34,240 --> 00:38:40,200 dollars and it is, it is an active capital flow, you know, 669 00:38:40,880 --> 00:38:42,680 mechanism for those types of groups. 670 00:38:43,360 --> 00:38:50,160 What we are doing by providing services that pool the capital 671 00:38:50,160 --> 00:38:54,160 is utilizing that part of the tax code, but also making it an 672 00:38:54,160 --> 00:38:58,440 option for individuals. And in that want to, you know, 673 00:38:58,440 --> 00:39:02,280 make a charitable contribution out of a donor advised fund or 674 00:39:02,560 --> 00:39:05,880 had a, a liquidity event and, and want to, you know, put some 675 00:39:05,880 --> 00:39:09,440 of that capital to work in this kind of find it project 676 00:39:09,440 --> 00:39:13,360 financing. And when you look at the entire 677 00:39:13,360 --> 00:39:17,240 landscape of charitable dollars and how they flow, private 678 00:39:17,240 --> 00:39:21,200 foundations are only about 1/4 of the transactions out there 679 00:39:22,120 --> 00:39:24,160 as, as, as measured by, by dollars. 680 00:39:24,160 --> 00:39:27,160 And So what we're saying is, you know, there's a whole whole 681 00:39:27,160 --> 00:39:30,040 bunch of smaller projects that can utilize this kind of 682 00:39:30,040 --> 00:39:31,720 capital. And there's a whole bunch of 683 00:39:31,720 --> 00:39:34,840 capital that can, you know, that loves these kinds of projects 684 00:39:34,840 --> 00:39:36,160 for all sorts of different reasons. 685 00:39:36,520 --> 00:39:39,640 And so we're here to facilitate that connection. 686 00:39:39,640 --> 00:39:44,160 And so they are in the eyes of the IRS, they are donors. 687 00:39:44,200 --> 00:39:49,480 You know, this is charitable or tax advantage capital that has 688 00:39:49,480 --> 00:39:52,760 generated a tax deduction opportunity. 689 00:39:54,200 --> 00:39:59,080 And yet because we bundle the dollars into a loan that 690 00:39:59,080 --> 00:40:03,480 actually preserves the charitable capital so it it pays 691 00:40:03,480 --> 00:40:06,960 back. And the donor at the end of it 692 00:40:07,920 --> 00:40:13,160 can elect to receive their principal plus interests and and 693 00:40:13,160 --> 00:40:16,360 put it towards other charitable causes. 694 00:40:16,360 --> 00:40:18,800 So, you know, in, in the case of the Schmidt Foundation, for 695 00:40:18,800 --> 00:40:23,280 instance, we've talked with them about recycling this capital 696 00:40:23,280 --> 00:40:26,440 into other projects like this, which they're they're great 697 00:40:26,440 --> 00:40:29,480 with. But you know, the local software 698 00:40:29,480 --> 00:40:31,560 company, they're probably going to find some other projects 699 00:40:31,560 --> 00:40:33,920 happening in, you know, education or healthcare or 700 00:40:33,920 --> 00:40:36,640 something in the Twin Cities that that they'll put that 701 00:40:36,640 --> 00:40:38,440 capital to once once it gets repaid. 702 00:40:38,760 --> 00:40:41,000 And that, and that's fine. Like that's we're here to say, 703 00:40:41,360 --> 00:40:43,680 you know, if you want to support this project, here's a mechanism 704 00:40:43,680 --> 00:40:46,000 by which that can happen. And when the project is done, 705 00:40:46,080 --> 00:40:47,560 you know, thank you for your support. 706 00:40:48,920 --> 00:40:53,480 And so it's the the preservation of the charitable capital that 707 00:40:53,480 --> 00:40:56,160 really starts to make it a little bit different than kind 708 00:40:56,160 --> 00:40:59,560 of how you might think about a donation in general. 709 00:41:01,280 --> 00:41:05,480 Are there lenders in this loan who expect at least something 710 00:41:05,480 --> 00:41:07,920 above the risk free rate for making a loan? 711 00:41:07,920 --> 00:41:11,200 Or is it all sort of philanthropic capital at this 712 00:41:11,200 --> 00:41:14,600 point? At the moment it is all 713 00:41:14,600 --> 00:41:19,440 philanthropic capital. As Karba you know matures though 714 00:41:19,440 --> 00:41:21,440 and this is kind of what we talked about with getting them 715 00:41:21,440 --> 00:41:23,960 ready to move to more conventional sources of 716 00:41:23,960 --> 00:41:28,120 financing. There are lots of you know 717 00:41:28,120 --> 00:41:32,640 larger scale or mid mid market type infrastructure investors 718 00:41:32,640 --> 00:41:37,480 that that finance landfill type projects or municipal projects 719 00:41:37,480 --> 00:41:41,560 that are that want to see this kind of technology start to gain 720 00:41:41,560 --> 00:41:44,800 traction. But because of the kinds of 721 00:41:44,800 --> 00:41:47,880 investors they have and their capital requirements can't take 722 00:41:47,880 --> 00:41:51,520 this kind of early risk. And so part of what structure 723 00:41:51,520 --> 00:41:56,880 does is, is build that bridge that puts companies like Carva 724 00:41:56,880 --> 00:42:01,040 on a path to really show or prove out their commercial 725 00:42:01,080 --> 00:42:04,800 viability to any of a number of different types of other 726 00:42:04,800 --> 00:42:08,960 investors. And so the catalytic or 727 00:42:08,960 --> 00:42:13,520 philanthropic capital at the start can get replenished and 728 00:42:13,520 --> 00:42:15,760 can stay at that that leading edge. 729 00:42:17,080 --> 00:42:19,840 And that's where, you know, and again, we're we're building 730 00:42:19,840 --> 00:42:24,000 this, this bridge to bankability or over the valley of death or, 731 00:42:24,040 --> 00:42:25,480 you know, pick your metaphor here. 732 00:42:26,280 --> 00:42:29,880 But the the point is, let's, let's meet the projects where 733 00:42:29,880 --> 00:42:34,760 they are today using capital that is kind of the right cost 734 00:42:34,760 --> 00:42:37,720 in the restructure for them today, but done in a way that 735 00:42:37,720 --> 00:42:42,200 makes them recognizable. And so that the returns the, the 736 00:42:42,200 --> 00:42:46,720 rates, you know that, that we talk about, it's, you know, we, 737 00:42:46,760 --> 00:42:49,280 we have a lot of flexibility within that. 738 00:42:49,280 --> 00:42:53,480 But generally think, you know, 5 to 7%, five to seven years, 739 00:42:53,480 --> 00:42:58,480 that's kind of where we aim to land because we're balancing a 740 00:42:58,560 --> 00:43:01,520 couple of things. One is that we want the rates to 741 00:43:01,520 --> 00:43:06,240 be low enough that the companies like Carba have have enough 742 00:43:06,240 --> 00:43:09,680 space and flexibility to do what they need to do while making the 743 00:43:09,680 --> 00:43:12,880 rates high enough that they become a meaningful part of that 744 00:43:12,880 --> 00:43:17,040 company's credit transaction history so that they can go to a 745 00:43:17,040 --> 00:43:19,160 bank next time. And the bank might say, oh, you 746 00:43:19,160 --> 00:43:21,000 like you got a really good rate on your first loan. 747 00:43:21,000 --> 00:43:23,120 How did you do that? Like, well, here's a story about 748 00:43:23,120 --> 00:43:25,760 how we did that and and that's fine like that, that's great. 749 00:43:26,040 --> 00:43:28,240 You know, it's like, oh, well, you, you know, you borrow that 750 00:43:28,240 --> 00:43:29,760 on these terms and paid that off Great. 751 00:43:29,760 --> 00:43:31,720 Here's you know, here's the offer that that we'd like to 752 00:43:31,720 --> 00:43:34,720 make. So very. 753 00:43:34,720 --> 00:43:37,320 Attractive thing to be able to offer a young company. 754 00:43:38,080 --> 00:43:41,360 Andrew, when you were looking for financing for this project, 755 00:43:41,600 --> 00:43:43,680 did you have many options? Are there a lot of people 756 00:43:43,680 --> 00:43:46,160 floating around trying to provide this service or is it 757 00:43:46,160 --> 00:43:49,680 pretty open? There's not a lot of options to 758 00:43:49,680 --> 00:43:52,160 be honest. You know, we talked to to 759 00:43:52,160 --> 00:43:56,640 venture Angel investors about equity financing and you know I 760 00:43:56,640 --> 00:44:01,320 talked about that before. We also spoke to infrastructure 761 00:44:01,320 --> 00:44:03,640 funds. There's even sort of blended 762 00:44:03,640 --> 00:44:08,400 infrastructure funds that are kind of more venture style early 763 00:44:08,400 --> 00:44:12,320 stage infra. But even that it's, it's 764 00:44:12,320 --> 00:44:16,480 difficult in the climate space. But yeah, it's it's, we looked 765 00:44:16,480 --> 00:44:18,640 at a lot of different areas to answer your original question. 766 00:44:18,640 --> 00:44:20,880 And there's just not a lot of options, which I think is what 767 00:44:20,880 --> 00:44:25,280 you see a lot of these climate companies struggling with, even 768 00:44:25,280 --> 00:44:28,720 ones that have gotten VC funding and have been able to build sort 769 00:44:28,720 --> 00:44:31,680 of small pilots, they can't get to that next stage to really 770 00:44:31,680 --> 00:44:35,960 prove out commercial viability. And they're the ones with, you 771 00:44:35,960 --> 00:44:39,720 know, off take contracts with marquee customers, you know, 772 00:44:39,720 --> 00:44:43,160 with, with great investors on their, their cap table. 773 00:44:43,160 --> 00:44:45,080 You know, they've raised a, a, a ton of money. 774 00:44:45,960 --> 00:44:49,880 But if it's not the kind of capital that the investors 775 00:44:49,880 --> 00:44:52,560 you're going to are, are looking to get out and it's not the 776 00:44:52,560 --> 00:44:54,440 right kind of capital for what you're doing, then then it it 777 00:44:54,440 --> 00:44:58,360 becomes a hard a hard sell. And then and Andrew, maybe the, 778 00:44:59,320 --> 00:45:01,720 you know, certainly I, I see this a lot, but I feel like 779 00:45:01,720 --> 00:45:06,080 there are a lot of options that want to talk to you once you've 780 00:45:06,080 --> 00:45:09,560 done something. And, you know, like once, once 781 00:45:09,560 --> 00:45:12,040 you get started, once you're, you know, once you have that, 782 00:45:12,040 --> 00:45:14,480 that first project or the first two or three, you know, 783 00:45:14,480 --> 00:45:18,480 projects, then yeah, they, they would love to write the checks 784 00:45:18,480 --> 00:45:21,200 to fuel that growth. And, and that's like, that's not 785 00:45:21,200 --> 00:45:25,200 just Carba or biochar. I mean, we see that everywhere, 786 00:45:25,200 --> 00:45:30,320 every every kind of climate project like this faces the the 787 00:45:30,400 --> 00:45:34,360 same kind of challenges and like how do you how do you start 788 00:45:34,720 --> 00:45:40,760 something that is so new and when all of the capital that 789 00:45:40,760 --> 00:45:43,840 might help you start wants to see it already having been done 790 00:45:43,840 --> 00:45:47,920 before? This might go in bonus content 791 00:45:47,920 --> 00:45:51,840 because it's a little bit eccentric or maybe naive, but 792 00:45:52,320 --> 00:45:55,720 Minnesota is a very progressive state and I see it as a very 793 00:45:55,720 --> 00:46:00,120 creative state financially too. In terms of policy, is there any 794 00:46:00,120 --> 00:46:03,960 opportunity for carbon removal projects that intersect with 795 00:46:04,320 --> 00:46:09,920 conventional city or county or state operations to have access 796 00:46:09,920 --> 00:46:13,840 to municipal bonding? Is there any ability to have tax 797 00:46:13,840 --> 00:46:17,680 advantage bonds working in favor of carbon removal at the state 798 00:46:17,680 --> 00:46:22,000 level? Maybe down, down the road. 799 00:46:22,000 --> 00:46:26,600 I, I think that you're better bet for it for right now, at 800 00:46:26,600 --> 00:46:30,360 least for the next, you know, three 5-10 years would be to get 801 00:46:30,360 --> 00:46:35,880 enough debt funded transactions such that the kind of bond 802 00:46:35,880 --> 00:46:38,360 underwriters that are going to come in for really big deals 803 00:46:38,360 --> 00:46:41,000 have feel like they have enough of a data set to start to price 804 00:46:41,000 --> 00:46:44,280 it as something that that makes it appropriate to both the city 805 00:46:44,280 --> 00:46:46,000 and the investors that they want to attract. 806 00:46:47,680 --> 00:46:52,240 And this is where, you know, it's like solar and, and solar 807 00:46:52,240 --> 00:46:56,320 PVI think is, is such a great example of, you know, in the 808 00:46:56,320 --> 00:47:01,720 last dozenish years as has really sort of become large 809 00:47:02,120 --> 00:47:05,160 scale and boring and that and like, that's fantastic, right? 810 00:47:05,160 --> 00:47:09,720 Like we want, we want that kind of technology to be financed at 811 00:47:09,720 --> 00:47:12,920 a massive scale and financed by, you know, all of these like 812 00:47:12,920 --> 00:47:16,520 pension funds that want, you know, 0 risk and and accept low 813 00:47:16,520 --> 00:47:17,920 returns. Like that's fantastic. 814 00:47:18,480 --> 00:47:23,080 And yet it took 50 plus years for solar to get there. 815 00:47:23,080 --> 00:47:26,120 And you know, when Jimmy Carter put, put panels on the on the 816 00:47:26,120 --> 00:47:28,680 White House in the 70s, like it wasn't because of the 817 00:47:28,680 --> 00:47:31,440 spreadsheets had, you know, perfectly mapped out the, the 818 00:47:31,440 --> 00:47:34,440 growth plan. It was because he wanted to show 819 00:47:35,320 --> 00:47:38,480 what it looked like, you know, show that it could be done. 820 00:47:39,600 --> 00:47:43,560 And that's really kind of part and parcel with our theory of 821 00:47:43,560 --> 00:47:48,920 changes as we get more smaller projects started faster than 822 00:47:48,920 --> 00:47:52,240 more people can see what climate projects look like, and they can 823 00:47:52,240 --> 00:47:55,880 start to think about what that means for their community, their 824 00:47:55,880 --> 00:47:58,080 city, their municipality. Yeah. 825 00:47:58,080 --> 00:48:03,040 Just to layer on that, I, it's, it's very clear to me that when 826 00:48:03,040 --> 00:48:06,040 we demonstrate this at a commercial scale and show its 827 00:48:06,120 --> 00:48:10,640 profitability in the numbers, it becomes way more bankable. 828 00:48:10,680 --> 00:48:15,400 And so we, you know, there are the, there are these early stage 829 00:48:15,400 --> 00:48:17,680 infra funds that will take you from 2:00 to 10:00. 830 00:48:17,960 --> 00:48:21,080 There are the later stage that will take you from 10 to 100. 831 00:48:21,840 --> 00:48:25,080 You know, once you prove that out, it's, it's these, these 832 00:48:25,080 --> 00:48:28,960 first of a kinds that are, are very difficult to to fund. 833 00:48:28,960 --> 00:48:32,160 And that's, you know, I think a huge lever for Matt. 834 00:48:32,160 --> 00:48:34,960 And I think, Matt, you also are hoping to get into sort of the 835 00:48:35,480 --> 00:48:39,400 two to 10 and beyond stage as well and then kind of help us as 836 00:48:39,400 --> 00:48:43,040 a company grow, grow that credit rating, grow that ability to 837 00:48:43,360 --> 00:48:45,600 attract, yeah, that type of funding. 838 00:48:46,600 --> 00:48:47,680 Exactly right. Yeah. 839 00:48:47,680 --> 00:48:51,360 I mean we're, we're here as early as we can be and engaging 840 00:48:51,360 --> 00:48:55,320 in a way that we believe we'll we'll have have you on that 841 00:48:55,320 --> 00:48:56,680 path. And then hopefully we continue 842 00:48:56,680 --> 00:49:00,600 to do our job well and and remain that that partner for you 843 00:49:00,600 --> 00:49:04,160 as as you grow. And Minnesota kind of the, to 844 00:49:04,160 --> 00:49:07,080 touch on that piece, Ross, like Minnesota is a great state for 845 00:49:07,080 --> 00:49:08,400 this. I moved out of California to 846 00:49:08,400 --> 00:49:10,800 come to Minnesota, which, you know, Californians thought I was 847 00:49:10,800 --> 00:49:14,520 crazy, but I'm from here. So but it is a very progressive 848 00:49:14,520 --> 00:49:18,560 state and we have a lot of policies, you know, pushing for 849 00:49:18,920 --> 00:49:21,680 solar and and renewable and sustainability. 850 00:49:22,320 --> 00:49:24,760 You know, Excel Energy, for example, has to be net 0 by 851 00:49:24,760 --> 00:49:26,640 2030, which is only five years away. 852 00:49:27,640 --> 00:49:30,160 And so there's, there's some really big levers and on the 853 00:49:30,160 --> 00:49:34,520 municipal, municipal angle actually, sorry, I have a 854 00:49:34,520 --> 00:49:35,320 cuckoo. Clock. 855 00:49:35,320 --> 00:49:37,640 I love it if there's. Been cuckoo clock going off this 856 00:49:37,640 --> 00:49:38,840 entire time. What's? 857 00:49:38,840 --> 00:49:45,760 Funny about I I enabled an Alexa skill last night to to alarm me 858 00:49:45,760 --> 00:49:49,360 at an hour because I was perpetually late to things. 859 00:49:49,360 --> 00:49:54,520 So it I tried to disable it by putting do not disturb but it 860 00:49:54,520 --> 00:49:56,360 didn't listen. So apologies. 861 00:49:56,360 --> 00:49:58,440 You'll have to edit some of those Cougars out, Ras. 862 00:49:59,120 --> 00:50:00,920 Not stay in it but anyways please. 863 00:50:00,920 --> 00:50:05,480 Stay in it. So on the Minnesota angle, the 864 00:50:05,480 --> 00:50:09,440 city of Minneapolis has actually funded the first biochar 865 00:50:09,440 --> 00:50:13,960 facility in in the US, maybe the world funded by a municipal 866 00:50:15,920 --> 00:50:17,440 funding source. I don't know exactly how the 867 00:50:17,440 --> 00:50:20,640 money was appropriated. So the city of Minneapolis and 868 00:50:20,640 --> 00:50:23,920 then the along with the cities of Lincoln, NE and Cincinnati, 869 00:50:23,920 --> 00:50:29,320 OH, through a really competitive process, got selected by Michael 870 00:50:29,320 --> 00:50:34,520 Bloomberg's foundation to to implement these municipal level 871 00:50:35,800 --> 00:50:39,560 biochar projects. So yeah, it's just like a, a, a 872 00:50:39,560 --> 00:50:43,520 great example of like making it local, making it real, making it 873 00:50:43,520 --> 00:50:46,720 tangible for people. And that, and that's a huge 874 00:50:46,720 --> 00:50:48,880 growth area for us. So they're focused on biochar 875 00:50:48,880 --> 00:50:53,200 that kind of line the streets or the, the roadways that 876 00:50:53,640 --> 00:50:57,320 landscapes on the side of the roads with biochar, this 877 00:50:57,320 --> 00:51:01,920 municipal angle of waste aggregation and landfills and 878 00:51:01,920 --> 00:51:05,680 burial. It is, you know, Corda, what 879 00:51:05,680 --> 00:51:08,840 we're doing as well. And so it's it, it all ties 880 00:51:08,840 --> 00:51:11,400 together. And I think Minnesota is a 881 00:51:11,400 --> 00:51:13,680 leader there, and we're leaning into that for sure. 882 00:51:16,400 --> 00:51:19,480 Are there green bonds that might be applicable to work like this, 883 00:51:19,480 --> 00:51:22,320 or is this as far away as municipal bonds are? 884 00:51:22,320 --> 00:51:29,320 Maybe again, the the challenge with that often comes in with 885 00:51:29,320 --> 00:51:33,360 scale and costs for establishing credit ratings and having the 886 00:51:33,360 --> 00:51:36,840 data set to get the ratings done and so on. 887 00:51:38,640 --> 00:51:42,840 And there are certainly, you know, those kinds of financing 888 00:51:42,840 --> 00:51:48,480 instruments for more established clean energy projects, solar, 889 00:51:48,480 --> 00:51:53,320 wind, batteries, etcetera. What structural climate is 890 00:51:53,320 --> 00:51:58,360 focused on is companies like what Carba is doing or, you 891 00:51:58,360 --> 00:52:02,240 know, some of the other like small modular tech companies 892 00:52:02,240 --> 00:52:06,240 where they have something that a customer can see for themselves 893 00:52:06,240 --> 00:52:08,640 and that that that the customer wants. 894 00:52:09,120 --> 00:52:13,040 And the particular, you know, parts of the project are they 895 00:52:13,040 --> 00:52:17,160 don't necessarily fit a a conventional scene, but there is 896 00:52:17,560 --> 00:52:22,560 tax advantage capital that is willing to and wants to see this 897 00:52:22,560 --> 00:52:26,880 kind of impact. So, you know, private market 898 00:52:27,600 --> 00:52:31,400 transactions are what, hundreds of trillions of dollars, I mean, 899 00:52:31,600 --> 00:52:34,240 kind of wrap wrapped together the whole bunch of numbers 900 00:52:34,240 --> 00:52:36,200 there. And I don't, I don't want to 901 00:52:36,200 --> 00:52:39,440 apply for a second that Phil and cloud Picker charitable capital 902 00:52:39,440 --> 00:52:41,840 is, is, is anywhere close to that like, but it, it doesn't 903 00:52:41,840 --> 00:52:46,280 have to be to get started. So these capital sources can be 904 00:52:46,280 --> 00:52:51,360 really, really shallow, but by being shallow, they are also 905 00:52:51,360 --> 00:52:53,600 really broad. And so that's again like how we 906 00:52:53,600 --> 00:52:58,680 activate the entire surface area and we get the capital that a 907 00:52:58,680 --> 00:53:03,760 company like Carba is ready for and done in a way that again 908 00:53:03,760 --> 00:53:05,760 puts them on that that path to growth. 909 00:53:07,920 --> 00:53:12,240 You mentioned APRII, imagine that might be a new acronym for 910 00:53:12,240 --> 00:53:14,200 People Listening. What is APRI? 911 00:53:15,000 --> 00:53:18,040 Yeah. So Apri, since we're program 912 00:53:18,120 --> 00:53:23,680 related investment and when I I mentioned the, the mechanism 913 00:53:23,680 --> 00:53:26,760 that private foundations have been using for, for decades to 914 00:53:26,760 --> 00:53:29,960 make these kinds of transactions happen, that's, that's all 915 00:53:29,960 --> 00:53:35,320 grouped under what the IRS calls a program related investment. 916 00:53:36,480 --> 00:53:41,280 So there are a couple of tests that we have to meet to make 917 00:53:41,280 --> 00:53:45,280 sure that this kind of capital tool is appropriate for how 918 00:53:45,280 --> 00:53:50,760 we're aiming to use it. And we partner with five O 1C 919 00:53:50,760 --> 00:53:54,760 threes that provide the syndication and the actual 920 00:53:54,760 --> 00:53:58,880 handling and, and receipt of the donations and the, the 921 00:53:58,880 --> 00:54:02,160 charitable dollar. So makes it easy for groups like 922 00:54:02,160 --> 00:54:04,200 the Schmidt Foundation to, to give grants. 923 00:54:05,040 --> 00:54:07,120 And then that's the, the transformation point. 924 00:54:07,120 --> 00:54:12,160 In this case, we've been working with the Venn Foundation Venn as 925 00:54:12,160 --> 00:54:14,320 though at the intersection of purpose and profit. 926 00:54:14,800 --> 00:54:19,080 They are also a local group here in, in Minnesota and they have 927 00:54:19,080 --> 00:54:24,720 been a fantastic partner. They, they work with a whole 928 00:54:24,720 --> 00:54:28,040 host of different, you know, impact areas, education and 929 00:54:28,040 --> 00:54:30,680 healthcare, community developments, you know, and so 930 00:54:30,680 --> 00:54:35,440 on. And so they've done some things 931 00:54:35,440 --> 00:54:39,160 in water before, but nothing really so climate focuses as 932 00:54:39,160 --> 00:54:42,480 this, but we are we are changing that quickly. 933 00:54:43,880 --> 00:54:47,080 Depending on your sort of exposure to impact investing, 934 00:54:47,120 --> 00:54:51,440 you might hear terms like mission related investments or 935 00:54:51,640 --> 00:54:57,120 Mr. is that's not established within the the tax code like 936 00:54:57,120 --> 00:55:01,160 like PR is are, but you know, just can can again refer to a 937 00:55:01,160 --> 00:55:05,640 type of investment where there might be some kind of impact 938 00:55:05,640 --> 00:55:08,720 return in addition to a financial return. 939 00:55:10,880 --> 00:55:14,880 Andrew, did your equity investors have any questions on 940 00:55:14,880 --> 00:55:21,400 the PRI, like how did that go? No, I, I think they were, they 941 00:55:21,400 --> 00:55:25,000 were excited about it because they saw the value, you know, to 942 00:55:25,000 --> 00:55:29,960 them being equity investors, it's, it's a low cost capital 943 00:55:29,960 --> 00:55:34,560 approach to get this thing done and get us to the next stage. 944 00:55:34,560 --> 00:55:38,920 So I think it was it was welcomed with open arms. 945 00:55:38,920 --> 00:55:42,480 I think not everyone had heard of the term PRI and we had to 946 00:55:42,480 --> 00:55:46,360 explain it but. So Andrew Carver's not your 947 00:55:46,440 --> 00:55:50,720 first company and I, I believe one of the donors that came in 948 00:55:50,720 --> 00:55:53,760 to support this PRI was actually an Angel investor from a, a 949 00:55:53,760 --> 00:55:56,560 prior company. Can you share a little bit about 950 00:55:56,560 --> 00:56:00,480 that? Yes, actually, yeah. 951 00:56:00,480 --> 00:56:04,360 I had a previous company before this that I built detection 952 00:56:04,880 --> 00:56:08,000 equipment, actually some of the best detectors for pyrolysis 953 00:56:08,000 --> 00:56:12,160 gases and and other sorts of things and ended up selling, you 954 00:56:12,160 --> 00:56:14,840 know those assets off to Shimatsu Corporation out of 955 00:56:14,840 --> 00:56:17,480 Japan. And so that was a successful 956 00:56:17,480 --> 00:56:20,600 exit loosely related to what we do here. 957 00:56:20,600 --> 00:56:25,880 And someone related to that company also invested in Karba 958 00:56:26,080 --> 00:56:30,600 as an early Angel and then went on they have a foundation and 959 00:56:30,600 --> 00:56:33,360 that foundation went on to invest through the PRI. 960 00:56:34,040 --> 00:56:38,600 So it was a really interesting opportunity to invest sort of 961 00:56:38,600 --> 00:56:42,480 private capital in an equity stake, but then also through a 962 00:56:42,480 --> 00:56:45,400 foundation philanthropic capital. 963 00:56:47,000 --> 00:56:48,320 Oh, that's interesting. Yeah. 964 00:56:48,360 --> 00:56:51,440 And and this is where I think understanding the the landscape 965 00:56:51,440 --> 00:56:54,040 of capital can become really important. 966 00:56:54,040 --> 00:56:58,920 And you know, the groups like Schwab and Vanguard and Fidelity 967 00:56:58,920 --> 00:57:04,240 are, are the largest 5O1C threes in the world just by assets 968 00:57:04,240 --> 00:57:09,760 under management because they manage donor advised funds for 969 00:57:09,840 --> 00:57:15,040 so, so many people. And there are lots of reasons 970 00:57:15,040 --> 00:57:20,400 why someone might make a charitable contribution, you 971 00:57:20,400 --> 00:57:22,720 know, whether that's for like tax efficiency or tax 972 00:57:23,280 --> 00:57:25,760 streamlining. Certainly anyone who's 973 00:57:25,760 --> 00:57:31,280 considering like a tax loss harvesting strategy can, can 974 00:57:31,280 --> 00:57:35,200 look at this, you know, this, this kind of opportunity to get 975 00:57:35,200 --> 00:57:40,280 a similar outcome. And so it doesn't have to be 976 00:57:40,280 --> 00:57:45,000 someone that you know, is big into philanthropy or big into 977 00:57:45,000 --> 00:57:46,520 charity. It's you know, if you have 978 00:57:46,520 --> 00:57:50,800 dollars and a daft that are just sitting in the S&P and you want 979 00:57:50,840 --> 00:57:54,280 something more interesting to do with them like we've we've got a 980 00:57:54,280 --> 00:57:56,640 bunch of projects that would that would love to get that that 981 00:57:56,640 --> 00:57:59,720 kind of support. And at the other plug I'll give 982 00:57:59,720 --> 00:58:01,680 too is, you know, if you're someone sitting with the 983 00:58:01,680 --> 00:58:04,120 foundation or philanthropic capital or you want to just make 984 00:58:04,120 --> 00:58:07,640 a donation, it's, it becomes catalytic capital. 985 00:58:07,640 --> 00:58:10,680 So it's not like you're giving it away and it's, you know, it's 986 00:58:10,680 --> 00:58:13,400 a traditional donation. It's actually a loan vehicle 987 00:58:13,400 --> 00:58:17,160 that goes back and then you can reuse that for a catalytic for a 988 00:58:17,240 --> 00:58:21,000 charitable purpose again. So the, you know, as Karba pays 989 00:58:21,000 --> 00:58:23,520 these loans back, you get to reuse that capital, which is 990 00:58:23,520 --> 00:58:26,760 incredibly catalytic and very different from just, you know, 991 00:58:26,760 --> 00:58:28,280 donating the money traditionally. 992 00:58:29,400 --> 00:58:34,760 Right. And the I, I, I do want to like 993 00:58:34,760 --> 00:58:38,160 one thing I, I always want to emphasize or, or be clear on is 994 00:58:38,160 --> 00:58:42,960 that there are, there are lots of areas where donations are 995 00:58:42,960 --> 00:58:47,200 just a, a critical tool for a given issue. 996 00:58:48,040 --> 00:58:52,560 And the lots of areas where you know, a, a, a donor that that 997 00:58:52,560 --> 00:58:56,200 gives is, is absolutely what is needed and there is no mechanism 998 00:58:56,200 --> 00:58:57,760 for return. I'm not. 999 00:58:57,840 --> 00:58:59,880 Like we shouldn't, we shouldn't charge, you know? 1000 00:59:02,280 --> 00:59:07,320 Getting fed or whatever, but in in the theory of change. 1001 00:59:07,320 --> 00:59:11,360 Like the sooner that climate positive business models can 1002 00:59:11,360 --> 00:59:16,880 just become business models, the sooner we get the scale of 1003 00:59:16,880 --> 00:59:20,880 impact that we're all after. And so that's really our focus 1004 00:59:20,880 --> 00:59:26,080 is saying we can work across a wide variety of types of impact, 1005 00:59:26,120 --> 00:59:28,960 you know, water, waste, air, etcetera. 1006 00:59:29,560 --> 00:59:34,800 And one metric that we create across all of them is a return 1007 00:59:34,800 --> 00:59:37,960 on on capital. And so again, with the goal of 1008 00:59:38,280 --> 00:59:41,440 getting more conventional or or kind of, you know, fully 1009 00:59:41,440 --> 00:59:46,120 conventional financing systems in play for these climate 1010 00:59:46,120 --> 00:59:50,840 positive projects and impacts and really like accelerating the 1011 00:59:50,840 --> 00:59:55,520 path to commercial maturity for a wide variety of climate 1012 00:59:55,720 --> 00:59:59,080 technologies. Thank you so much for being 1013 00:59:59,080 --> 01:00:01,480 here. Congratulations on the big off 1014 01:00:01,480 --> 01:00:02,960 take, Andrew. That's amazing. 1015 01:00:03,160 --> 01:00:05,400 I'm happy that structure was able to participate too, and 1016 01:00:05,400 --> 01:00:08,080 make all this happen and tie it all together so neatly. 1017 01:00:08,400 --> 01:00:10,840 Really interesting to hear more about what it's like to be 1018 01:00:10,840 --> 01:00:14,760 working on debt financing, both as a project developer and then 1019 01:00:14,760 --> 01:00:17,200 also being on the finance side. Thank you for sharing both of 1020 01:00:17,200 --> 01:00:18,200 you really. Appreciate it. 1021 01:00:19,600 --> 01:00:20,440 Yeah. Thank you, Ross. 1022 01:00:20,520 --> 01:00:22,520 Thanks for having us. Appreciate it.