Our April 2024 Community Spotlight features Ryan Taylor, Investor at Azolla Ventures and BLCK VC Boston chapter co-lead. Ryan joined Azolla Ventures from a career in the electric power sector across a broad range of roles, most recently financing utility-scale solar and wind projects as part of the acquisitions team at Enel Green Power. Earlier, Ryan was on the strategy team at Guidehouse (formerly known as Navigant Consulting) where he supported clients in the deployment of grid modernization and energy efficiency technologies. Ryan holds a B.S. in Chemical Physics from the University of California, Davis and is currently pursuing his M.S. in Systems Engineering from Johns Hopkins University.
Pen Howell (Head of Community, BLCK VC): What inspired your journey into VC?
Ryan: I really appreciate the question, It’s a good one. My journey into VC is a long and somewhat arduous tale of trying to answer a question that I’ve always been passionate about, which is “what’s the highest leverage point for meaningful change in the world?”
If you’re if you’re trying to seriously answer the question of highest leverage point for meaningful change, and for me identifying as a mixed race man in the US, but more importantly, as a Black man in the US raised by a Black mother, I really wanted to find something that gave me not only the opportunity to create, but also the opportunity to redistribute resources and in particular, redistribute power.
I grew up in a really humble town in central California called Bakersfield. It’s an agricultural town known for supplying the country with almonds and strawberries, also known as the place where a lot of the oil and gas that services the state comes from. So that notion of reallocating resources, power and capital came, frankly, from growing up without it. I grew up in a single parent household with the kind of standard conditions that you might expect. But I didn’t let it stop me, I didn’t let it limit my motivation, potential, or interest. And some of those early interests were really around the role that science and engineering could play. Both in terms of getting people in positions to make a bunch of money, but also, as change agents in their own community; either by dissemination of information, or by creating things that don’t exist today, while seeding a little piece of blackness in that creation.
I was a scientist in my early academic career, studying chemistry and physics. I really enjoyed research, as it was challenging intellectually in ways that formal school wasn’t, and also gave me a huge creative whitespace to just ask questions. I had planned to pursue a PhD in chemistry, and while that would have been incredibly, personally gratifying in some ways, it wasn’t fulfilling in all respects. I felt it really left a gap in trying to understand what from research is practical. And if you look at, you know, PhDs the world over, there are a ton of really phenomenal scientists who don’t produce anything in their lifetime that’s meaningful, as a way to increment the world.
So, that was existential crisis number one. Thankfully, I was surrounded by a community of phenomenal leaders, scientists and engineers that were a part of the broader diaspora. Through my early involvement in an organization called the National Society of Black Engineers (NSBE), I was pushed to apply some of my science and engineering background to things that were practical. Because I wasn’t a hardcore engineer, the closest that I could get to that was consulting. I joined a firm that allowed me the chance to learn about the sector that I cared the most about, which was energy and climate. As I mentioned at the start of my story, energy and climate was a part of that early lived experience for me. So that’s where I planted my roots, thinking about the deployment of technology, how to help very large companies be swift in their evaluation of new technologies, and then secretly seeding environmental justice into projects.
At the end of my time in consulting, close to five years later, I was working in Puerto Rico, which was game changing because it allowed me to tackle that core question at the beginning. We were helping the government to evaluate a multi-billion dollar capital plan to rebuild the infrastructure post-hurricane Maria. I thought, “that’s about as close as you can get to real equity work, real allocation of resources for real people that exist and are marginalized today.” But, there comes existential crisis number two, when I realized that consulting is incredibly extractive, and that my time in Puerto Rico where I thought I was the hero, in actuality, I was a part of the crew of villains that were exploiting the local community.
So, I took a few months off to think critically about what to do next, and the only answer I found was reallocating capital towards energy and environmental causes that I thought made sense, not just in the context of broader cycles of technology, not just in the context of the explosive wave of new tech that’s being capitalized; technology that I thought would be good for society and good for people that look like me.
I took a first pass at that while working at a later stage, project financer, an Italian-based utility, essentially, that acquired large solar and wind projects to put them on the balance sheet. That was an awesome, interesting, great first exposure to later stage capital projects and the level of rigor and financial evaluation required to ultimately make somebody more money than I’ve ever seen in my life. That was interesting, but it wasn’t fulfilling because it felt very removed from the communities that I knew and the ones that I wanted to work with; It also felt kind of slow. And so on nights and weekends, secretly, I was trying to explore VC and whether there was a firm that I could see myself getting passionate about. At first, VC actually didn’t make any sense for me. I found that venture capital as an approach to capital allocation actually is poorly suited for climate and environmental investments. In addition, I didn’t see a lot of Black and Brown folk to be honest. There were a handful that I knew personally that I really admired, but there was a lack of capital flowing to people that look like me that furthered the skepticism or the challenge there.
What ended up changing that, for me, was realizing that a VC actually might make sense for climate if you do it a particular way. I started to find specific funds that were deploying capital in really unique ways, working directly with the companies that I used to consult with to develop technologies that had a business imperative and also made a dent in terms of emissions, and got us on the path to decarbonisation. I also found that the pool of Black investors, while small, was mighty. I really had the opportunity, in large part due to BLCK VCs programming, to get direct exposure to phenomenal investors that happened to be people of color, and women. That was just awesome to see, and gave me a lot of motivation. From there, I began my formal pursuit of a VC role.
PH: I, like you, have a background in sustainability and understand the unique challenges of scaling innovative climate-related projects such as carbon capture and solar. Now that you’re funding companies in this space, what do you look for? What types of ideas stand out to you?
Ryan: There’s no other point in modern human history where we, as a global community and as a species, have been serious about our existential role and relationship with our home, the planet. You can see that in the various historical waves of innovation, none of which speak to the role that we should have with our surroundings. And that’s unfortunate to me, because a lot of that is fundamentally true, and was always considered in the rich culture in history of the people that came before us, right? If you look at that, from a geopolitical perspective or from a local indigenous culture perspective, there’s a weird dissonance between “modern” society and older practices that I think is a big part of that gap. It’s encouraging to see some of that come back in ways that aren’t just being productized and commodified, but in real ways.
Outside of the system’s level challenges and the foundational misalignment, I think there are some practical challenges that investing in climate and energy in particular face. On the environmental side, there have not been really strong business imperatives and incentives in place to promote environmental innovation in terms of corporations; a lot of that work historically has been housed within and maybe unfairly left to the government to oversee and regulate. And I think the government has done a phenomenal job — You see that in the EPA, in the inflation Reduction Act… but it’s still somewhat limited in its efficacy, if it only exists in policy form. On the energy side, there were serious bets made as early as 2003 to 2009, affectionately called cleantech 1.0. Where people were investing in all kinds of things that today we see at price parity with existing resources- solar wind batteries, etc. Most investors lost a ton of money, and so there’s this perception that it’s an uninvestable category, as a whole. The things that would be interesting or exciting, that even the high risk investors would want to take on, they’re no longer willing to take on because of the negative perception as a function of the losses from prior experience. And so both of those are unique, but they’re somewhat structural challenges to investing in environment and energy, and climate is an extension of both.
What’s exciting is the amount of capital that was lost in that first cycle, actually created the ecosystem for this next cycle to succeed. So now, we’re not just talking about renewable energy as a concept, but as very sophisticated use cases. Concepts that years ago were just niche projects are now full fledged businesses, with phenomenal fundraising and big investors like Khosla ventures and others backing them. But the challenge is that when you’re doing anything in environment and energy, you naturally have to touch a piece of infrastructure. If you want to solve energy access in the Midwest, you have to touch the grid: something real and physical. I think a lot of investors historically have been nervous about that, because risk is very different from what some investors might be anticipating. That being said, there are a lot of sophisticated investors utilizing blended or layered funds — that’s what Azolla does. So, that landscape has evolved quite a bit.
Finally, to be frank, I think a lot of folks don’t have a sophisticated way of understanding emissions reduction or quantifying the net positive impact. I mean, we’ve been running our model for almost a decade now, from syndication to first fund to now a quarter of a billion dollar fund. We still only have a very simplistic way of evaluating impact. Whether you’re modeling carbon dioxide reduction or some other molecule that exists in the atmosphere, or the downstream effects on coastline communities, or modeling forest fire frequency in places like Napa Valley, it’s really, really complicated, and the level of sophistication in articulating climate science, frankly, is lacking. The good news is there are a whole bunch of organizations that are trying to tackle that exact problem.
PH: Where do you find the most excitement in this innovation landscape? What ideas or opportunities catch your attention the most right now?
Ryan: That’s a great question. Our fund is purpose-built to identify the exceptional that is often overlooked. We seek exceptional people, exceptional ideas, and the intersection of what might be disregarded by others. True innovation is found there. Personally, I find this reflected in the investments we make. I get excited about exceptional individuals who have innovative, courageous, humble, adaptable, and ambitious ideas. While many people possess some of these qualities, few have them all. And if it’s a person that I have some affinity for that as a shared lived experience, that’s even better
Secondly, I’m enthusiastic about technologies or solutions that approach age-old problems in entirely new ways. Finding true novelty is challenging given the significant capital available for climate and energy solutions, especially at the early stages. More common are approaches to old businesses in entirely new ways. These excite me because the energy and environmental sectors have historically changed by increments. And you can take the incremental change approach, but we’re going to end up basically in the same place in 50 years that we are in today; we’re not going to meet any of the Paris Climate Accord 2050 goals, we’re not gonna meet any of the short term 2030 goals. It’s already 2024. So good luck. We need people who are willing to challenge the status quo, such as offering their technology as a service rather than the traditional outright sale model.
Thirdly, I’m up to my eyes in several categories that are currently super interesting to me. One of these is methane and other short-term forcing agents with greater radiative forcing potential than carbon dioxide. Methane can be 20 to 80 times more damaging than carbon dioxide and represents a trillion-dollar market waiting to be tapped. But, it needs good science and good regulation to ensure the technology is deployed responsibly. I’ve spent the past two years delving into this area and will be hosting a 300-person event as part of SF Climate Week next Monday on this topic.
Another area I’m passionate about is new and novel approaches to materials. There are tons of innovative materials out there, from textiles and plastics to carbon fibers and lightweight aerospace materials. Materials are often overlooked because people don’t fully understand the value chain. However, when you trace back the origin of materials, you realize they all come from the same fundamental limited resources. And so at some point, we’re going to get to a pinch point with things that we need that are new, that we can get in, in large volumes.
And then another one that’s emerging, in my mind, and it’s really an extension of some of the methane work, is looking at ways in which the evolving aerospace and space innovation areas will have a disproportionate impact on climate. It’s great if we solve all of the true terrestrial issues, like, you know, changing all the gas vehicles to EVs, and changing all the buildings from natural gas to being electrified. But if the space industry takes off in the way that we think it will, it can basically reverse all of the good that we do. Dispersing certain pollutants higher in the atmosphere actually has a greater effect on global warming than if it was dispersed closer to the ground. And so that’s something that I’m, like, passionate about, because I’m terrified about futility. And I don’t want us to do a bunch of things that don’t mean anything in the grand scheme.
PH: I have two final questions, and you can choose which one speaks to you. Earlier you referenced climate justice and the role that plays in building sustainable solutions. How do you see that impacting the future of your work? Or, speaking directly to the BLCK VC audience, what recommendations, inspiration, or resources do you suggest for an investor who’s considering this kind of direction, both in VC and specifically in climate?
Ryan: I’ll try to do the ambitious thing, which is to interweave both. Here are three quick takeaways that I would want the audience to have, both on justice at the intersection of investing in climate and then also what I think other investors should look at immediately if they want to get savvy on climate or at least get passionate about the topic as a whole.
Number 1: I think everyone serious about justice should make a concerted effort to understand the history of environmental justice in the United States. Specifically, ‘d recommend people get savvy about the difference between environmental justice, climate justice, and the newer concept, which is energy justice. I think if you really do some reading about those, you’ll understand where we are broadly in the justice fight and can decide where you want to have the greatest impact.
Number 2: Build on that by forming a climate thesis. Anyone passionate about resource allocation for this topic should start to form a climate thesis. It doesn’t need to be sophisticated; just decide on your position regarding climate issues and where resources should be allocated. What technologies do you think are important? Whether it be nuclear or something else, have a position and then layer on your learning about justice to inform your position. Many people in my community and close personal circle, including friends and family, have started to engage in this kind of thinking, and I think it’s essential for taking action on the concept seriously.
Number 3: Go to a community and learn openly without superimposing your experience. Learn about the issues of that community. I would recommend a couple of experiences, often talked about by organizations like the EDF, called “toxic tours”. If you look it up, you’ll find these tours where you visit a part of the world where communities have been disenfranchised and have real issues and concerns. I recently visited an area in Louisiana called Cancer Alley. I would recommend people look it up and learn about its history in the context of the environmental justice movement. Most of the exciting carbon capture technologies are being deployed in that part of Louisiana, where the same industrial corridor exists that has dumped toxic waste into communities of color. This is a live issue happening today.
So those are the three takeaways: learn about environmental justice, build a climate thesis, extend that with a justice thesis, and then go to a real community and learn about their issues.
