Physic Ventures follows a thesis driven investment practice. At the beginning of each year we review the recent science and technology developments, markets trends, and regulatory drivers that influence our investment practice. We use these to develop a thesis for which sectors and business models we expect to provide attractive investment opportunities.
Throughout the year we select some of these sectors to perform a deep-dive landscape analysis. We talk with numerous companies in the sector, their customers, their suppliers, and their competitors. We develop a position on what we think the leading company in a given sector should look like. If there’s already a company that fits our model, then we’ll explore whether we can invest in that company. If such a company doesn’t exist and we think the opportunity is large enough, then we recruit the entrepreneurs, acquire the technology and identifying the partners to create a category leading company.
Here is the first draft of our 2012 Sustainable Living investment thesis. For regular readers of this blog, you won’t be surprised to see an emphasis on investments in resource efficiency. We continue to look for opportunities to increase adoption of the traditional 3Rs: Reduce, ReUse and ReCycle, as well as focusing on the collective behaviors of Collaborative Consumption and the Share Economy.
One area that we’re paying increased attention to 2012 are opportunities at the intersection of Big Data and Sustainability. This trend is driven by the growth in ubiquitous connectivity, low cost cloud-based storage and computation, and an industry recognition that businesses providing data-enabled resource efficiency are both capital efficient and rapidly scalable. This sector is often referred to as Green IT. I prefer the description of Spring Ventures founder, Sunil Paul, who calls this sector the CleanWeb: “a category of clean technology that leverages the capability of the Internet, social media and mobile technologies to address resource constraints.” Irrespective of it’s name, in 2012 we expect to see businesses harnessing the power of cloud storage and computation to address resource constraints in sectors as diverse as energy, materials, food, water, and transportation – just to name a few.
We’ve already made a great start to building a portfolio in this sector with companies like EnergyHub, Gazelle, GoodGuide, Recyclebank and WaterSmart. We look forward to adding several more in 2012. It’s going to be a busy year!
If you think we’ve missed an exciting sector or business model within sustainability, let us know where you think are the opportunities for highest impact.