Regeneration.VC: How This Venture Firm Is Supercharging Consumer-Powered Climate Innovation

Regeneration.VC: How This Venture Firm Is Supercharging Consumer-Powered Climate Innovation

Regeneration.VC is an early-stage venture fund that is Supercharging Consumer-Powered Climate Innovation driven by circular and regenerative principles. Pulse 2.0 interviewed Regeneration.VC Michael Smith to learn more.

Formation Of Regeneration.VC

Regeneration.VC launched in 2020 with the goal of reimaging consumer industries to be in line with planetary boundaries. The firm’s Co-Founders and General Partners Dan Fishman and Michael Smith spent the first part of their careers founding, operating, and investing in numerous companies within the apparel, entertainment, and consumer markets. Prior to starting Regeneration.VC, General Partner Dan Fishman founded and operated food and apparel/lifestyle brands while 

General Partner Michael Smith launched and grew media and real estate ventures before managing his climate-focused family office. Coming to terms with consumer industries’ toxic and wasteful impacts, they have designed an investment strategy targeting the white space where consumer markets meet climate technologies and catalyzed an expert advisory board spanning, among others, Leonardo DiCaprio, William McDonough (the godfather of the circular economy), former Mars Chairman Stephen Badger, former formulations at P&G and Coca-Cola, Dr. Marta Pazos, Ph.D., Andy Dunn, founder of Bonobos and pioneer of the e-commerce era and Tue Mantoni, recent chairman of Danish sovereign wealth fund Vaekstfonden (now EIFO) and CEO of European consumer brands Bang & Olufsen and Triumph Motorcycles.

Evolution Of Regeneration’s Thesis

How has Regeneration’s thesis evolved over time? Smith said:

“Regeneration.VC’s investment thesis targets the white space where consumer industries meet climate technologies, a multitrillion-dollar market capable of addressing up to 45% of greenhouse gas emissions and 90% of biodiversity deterioration. From inception, the thesis has been guided by circular and regenerative principles to invest in technologies across three themes: Design (AgTech & Aquaculture and Next-Gen Materials), Use (Apparel & Lifestyle and Food & Beverage brands), and Reuse (ReCommerce and Reverse Logistics system technologies).”

“To better define this sector of innovations, in Q1 2023, Regeneration.VC coined the term ‘Consumer ClimateTech.’ Consumer ClimateTech comprises companies generating meaningful environmental impact within the consumer value chain; representing the next chapter of materials, brands, and recovery systems necessary to progress global environmental efforts, realize outsized economic potential, and ensure prosperity for future generations.”

“The thesis has evolved to articulate the opportunity that Consumer ClimateTech (CCT) presents to corporates. To date, corporations, to respond to the rising investor and regulatory pressure around climate and biodiversity targets and gain a piece of the growing sustainable products market, have looked for offsetting solutions outside their supply chains to back claims like ‘carbon-neutral’ or ‘net-zero.’”

“Besides the greenwashing and compliance risks involved with using offsets to back climate claims, the approach is failing by design to tackle the environmental impacts embedded in their global supply chains, which is vital to meet corporate targets and uplift business models. A typical consumer good company supply chain accounts for 80% of total GHG emissions and 90% of the impact on air, land, water, biodiversity, and geological resources and holds much of the climate, regulatory, and market risk companies are beginning to face since the aftermath of Covid-19. A strategic insetting Consumer ClimateTech strategy, instead, enables the adoption of climate technologies within a company’s supply chain by investing in solutions that align sustainability and operational goals.”

“We define ‘Insetting Consumer ClimateTech’ as technical interventions addressing emissions, material resources, and/or biodiversity within a given business value chain, generating a positive impact on surrounding communities and ecosystems. Our thesis is rooted in in setting Consumer ClimateTech within a business value chain is a pathway to value creation and to future-proofing the company’s business model and supply chain.”

Investment Success Stories

Upon asking Smith about investment success stories, Smith shared:

“Regeneration.VC invested in Greyparrot Series A round and has proudly watched the company grow over the past quarters, insetting the supply chains of some of the biggest waste companies in the world, including Biffa, Suez, Veoila, and others.’

“Greyparrot’s solution is a powerful new ClimateTech tool for the positioned to immediately minimize waste and valorize post-consumer material streams. Never before has real-time waste data been accessible at this scale and in such detail, marking a true breakthrough for the waste industry. Leveraging ML-driven computer vision, Greyparrot improves material recovery facility performance by insetting downstream waste outcomes and generates valuable data to inform product and packaging design and inset upstream producers’ scope 3 emissions.”

“Portfolio company Cruz Foam is insetting upstream producers’ scope 3 emissions with a certified-compostable polystyrene alternative made of shellfish waste. Regeneration.VC invested in Cruz Foam seed round and followed on in their Series A round. The solution displaces a toxic chemical and has the potential to mitigate 17,000 tons of CO2e annually and biodegrade 98% in under 60 days for home or industrial composting environments. Cruz Foam’s packaging, once used, can improve soil health or serve as input for anaerobic digestion. Cruz Foam is working with go-to-market partner Atlantic Packaging to grow and scale a manufacturing platform of biomaterials for cold chain and packaging of products such as electronics, electric appliances, fashion, food, wines & spirits. In Q2, Cruz Foam launched two products: Cruz Cool for cold chain with commercial customers Verve Coffee and Real Good Fish and Cruz Wrap for wines & spirits with Farm Cottage Wines and Venus Spirits. The Company also entered into an agreement with Hemp Black, an Australian producer of bio-based carbon black, to manufacture packaging for their customers. Regeneration.VC is excited to continue supporting its portfolio of Consumer ClimateTech innovations insetting global consumer supply chains.”

Industry Focus

What are some of the industries that Regeneration is focused on? Smith concluded:

“Regeneration.VC targets the adoption of insetting Consumer ClimateTech across the value chain of key consumer industries, including Fashion, Food & Beverage, Personal Care, Electronics, and Home & Lifestyle. The fund also looks for technologies enabling a circular and regenerative consumption model, such as Packaging, Reverse Logistics, and Recommerce solutions. These solutions, such as Greyparrot, are the operating infrastructure enabling the transition to consumer industries operating in harmony with the people and planet.”

“Two industries alone, the fashion and agriculture industry, account for ~40% of global carbon emissions and are the two largest users of freshwater globally. These trillion-dollar industries are also major drivers of waste, material use, deforestation, biodiversity loss, and chemical pollution. In particular, the fashion industry, accounting for 2% of global GDP, produces 100 billion new garments a year, 60% of which are made of plastic, and sends to landfills or incinerators 87% of the materials used.”

“With regulatory, investor and consumer tailwinds pointing towards sustainable operations, fashion is one of the industries transforming; from luxury Kering to mass market H&M, the industry is moving towards insetting climate technologies within their own supply chains. H&M and Kering are customers and investors in multiple Regeneration.VC portfolio companies. Upstream in the group’s supply chain, Kering works with VitroLabs and Nature Coatings. Kering estimates that working on sustainable raw material production by adhering to the Kering standards can address 20% of the groups’ emissions by 2030. VitroLabs is leveraging cell-culture technology to design animal husbandry out of leather supply chains, and Nature Coatings is repurposing FSC-certified lumber industry byproducts into carbon-negative, biobased carbon black.”

“Similarly, H&M works upstream with Colorifix, a recent finalize for the Earthshot Prize, to minimize the environmental impact of industrial dyeing by replacing chemistry with biology at every step of the process, from how the dyes are created to how they are fixated into fabrics. Colorifix’s LCA results indicate this dyeing process reduces energy consumption by 53%, water usage by 77%, and chemical usage by 80%, as compared to the conventional dyeing process. These upstream solutions inset the fashion supply chain via Consumer ClimateTech to move consumer industries back in line with planetary boundaries.”