(Bloomberg) --The
Clerico, the founder and managing partner of
Clerico first became interested in such solutions after a devastating blaze razed 90 acres near his log cabin in Mendocino County, north of San Francisco, in 2018.
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Since then, his San Francisco-based Convective Capital has bankrolled 18 startups focused on preventing, monitoring or suppressing wildfires. These include Pano AI, which builds
Beyond Convective, a growing number of VC investors have raised funds in recent years for businesses focused on building resilience to global warming-linked natural catastrophes. New York-based Lightsmith Group
Yet adaptation-focused financing so far isn't enough. The world's demand for adaptation and resilience solutions
Bloomberg Green spoke with Clerico about why it's vital to get investors engaged in adaptation work, how the Los Angeles fires and other climate-fueled disasters help boost investors' commitment, and where he sees the next opportunity in wildfire-tech investment. This conversation has been edited and condensed for clarity.
The LA fires have raised serious concerns over how we cope with wildfire risks. What role do you think venture capitalists can play in wildfire management?
It's likely that the Los Angeles fires will be the most expensive wildfires of all time because of the financial damages. Anyone with a physical asset, whether you are a homeowner or if you have a business, faces an
Has investors' interest in backing wildfire-tech startups increased in recent years?
There's more and more interest as people start to understand the size and scale of this market. After the events of the last week, it will continue to increase. That being said, I think other investors consistently underestimate the demand for wildfire technologies. A lot of investors look at a potential customer like a utility or an insurance company, and say, "It's very slim and very slow. We don't want to invest in companies that sell to utilities or insurance companies." But I think utilities, insurers or many other customers of wildfire tech are very deep-pocketed. They might be slow moving in decision-making, but they have enormous exposure. Over the long run, I think wildfire-tech startups will be very successful selling to those companies, but they look different from someone selling software products to tech companies.
Is there a market in which wildfire-tech startups are more established?
Fire-tech companies that sell to utilities have gone the farthest. After Pacific Gas and Electric
Where do you think wildfire technologies are badly needed yet barely deployed?
On the government as a customer, that has lagged a little bit. I think the government has not been particularly aggressive in embracing technology. It's changing, though. Particularly after the events of the last week, there's going to be a real reckoning about what the government needs to do differently and how technology can play a role in that. I see that as one of the next big opportunities.
As an investor, what challenges have you run into in backing fire-tech startups?
I think the biggest challenge is making the case that the market for these solutions is much bigger than what people think. Many investors look at fire tech and think of it as a niche market. Our biggest challenge is reversing that perception.
When large events like the LA fires happen, that obviously shifts perception. My hope is that this conversation stays as an important one, not just for a couple of weeks but for years. The more activity there is in this space, the better it will be for society, the more solutions and more innovation we will have. And we will ultimately be able to stop catastrophic wildfires.
Have the LA fires impacted your investment thesis in any way?
It increases the urgency and the amount of capital that we look to deploy in fire-tech startups, because it is clear that the demand for these solutions is strong and that we need to go faster.
Right now, we're very focused on wildfire, which we think is the most important category in climate change adaptation and resilience. But over the long run, we can take our learnings from wildfire-tech investment and apply them in lots of other adjacent categories in this broader resilience movement.
To contact the author of this story:
Coco Liu in New York at
