The SAF Podcast with Jim Lockheed – Full transcript now available

[00:00:00] Alasdair Whyte: Welcome to The SAF Podcast from SAF Investor. As always, we’re out there trying to find capital to help fund the sustainable aviation fuel revolution. This week, we’re talking to Jim Lockheed of JetBlue Ventures. We hope you enjoy it. Hi, Jim. How are you?

[00:00:32] Jim Lockheed: Hey, Al. I’m doing great. Thanks for having me.

[00:00:36] Al: Let us start with your background. I don’t think everyone knows this, but you’re the great, great grandson of the founder of Lockheed Martin, aren’t you?

[00:00:44] Jim: [chuckles] I am, actually. Yes, it’s not something that I typically start with but, yes, great grandson of Alan Lockheed, who founded that company, actually, in San Francisco in about 1913. Anyways, yes, to my background. My background is–

[00:01:02] Al: That is true, though, isn’t it, Jim?

[00:01:05] Jim: It actually is.

[00:01:07] Al: You were always going to end up in aviation?

[00:01:11] Jim: Maybe I was destined. Maybe it’s in my blood. My great grandfather, grandfather, dad and brother have all been pilots as well.

[00:01:21] Al: That’s just so cool. The funny thing is, you’ve never told me this, and I’ve– We’ve met numerous times, and you’ve kept it a secret. We can still keep it secret if you want to.

[00:01:31] Jim: No. I mean, no, it’s not a secret. It’s just not something that I typically start my conversations with.

[00:01:38] Al: I would. If it was me, I’d do a 100% with. Anyway, sorry, Jim. Take us through your background.

[00:01:43] Jim: It definitely is an inspiration for why I’ve been close to aviation, and aerospace most of my life. Yes, and so my background is a mix of aerospace and entrepreneurship, basically. Knowing that I wanted to do something in aerospace, the first thing I did was actually to join the Air Force. I was an avionics guy, basically, working on computers for fighter jets.

From there, I went and worked for Boeing, where I was hired as a surveillance drone operator, of all things, which took me around the world, places like Iraq and Afghanistan. Lived on military bases for six, seven months at a time, and flew drones. Did that for about four and a half years. Worked in operations management for a little while for Boeing as well. Left Boeing to get an MBA at the University of Oregon.

I had always had this big interest in entrepreneurship, and decided that this would be an all right time to try that out. I didn’t necessarily have the time, but I felt it was low risk at least, and because I’d been working in drones for the last five years, and it was a brand new cutting-edge technology, I decided I’d actually start a company focused on exploring different use cases for drones.

This is 2012 when it was a new thing. It was things like roofing inspections, all kinds of aerial imagery, stuff with constructions, lots of real estate stuff. To make a long story short, I built this company on the side of my MBA program. Would go on to sell it a few years later to a competitor of mine doing about the same thing. It was never a high-growth venture type business, but it was a good profitable company, which is something to be said for.

Ended up, actually, buying and holding on to another business for a number of years that I eventually sold, and eventually, made my way into the venture capital world. Not by accident, but my interest in it came from an accident. It was really, myself thinking about trying to start another company. I wanted to learn about the venture capital financing process.

I got introduced to a couple investors. I was living in Portland, Oregon at the time. I remember just asking them about what I would need to do to prepare, and what is the process. Then, I started asking them also about their day-to-day, and just the job. I just remember getting really fascinated with this role. Your role is to explore new technologies, and to try and help people build companies.

That just started developing this huge draw for me. There’s this big vicarious entrepreneurship angle to it, I think, that was really appealing. I actually had decided I would move to the Bay Area, and to try and make my way into the industry. Try to talk to whoever I could, have coffee meetings, that sort of thing. Then, caught a little bit of a break, hit it off with a really senior investor, mostly talking about aerospace and space, and all these different things that we both found really interesting.

One day, I just pitched him, “Can I come scout, and work for you, and just learn the business?” Was able to basically spend a significant amount of time with him and his team, and get my feet wet, and just understand this industry, and how people who are really experienced do it. From there, I saw this opportunity with JetBlue Ventures, and commercial aviation, travel, all the things I was very interested, had a major appeal. Happily, I joined about four and a half years ago.

[00:05:31] Al: Actually, I guess at the time, a lot of the things you saw with the early drone stage, you’ve seen with things like VTOL. There’s real parallels there, aren’t there?

[00:05:43] Jim: Yes, I think there are. I think the main conclusion on that one is just that, these things take a while, and sometimes they take longer than people think. For good reason, we obviously need these types of technologies in these industries to be as safe as possible. The FAA needs to do their job to continue maintaining a stellar, and an incredible track record. I’m very optimistic, and hopeful about drones, VTOLs, everything that’s going on around aviation right now.

[00:06:17] Al: Do you want to explain how JetBlue Ventures works?

[00:06:23] Jim: Yes, I’m happy to give the overview. First off, it was founded in 2016, really out of this idea that, there should be some kind of effort that’s really focused on new technologies and startups, and things that might just be overlooked by a large corporation, a large airline. Awesome woman, Bonny Simi, was tasked with setting this up.

She came out, and I think she did a great amount of research, talking to very successful CVCs, talking to other financial-focus firms, and designing this style of a firm, where we’ve got a full venture investing side, where most of the investors have more of a background in tech, more of a background in VC. Then, we’ve got a full operations side, which is really our liaisons between the investment team, and the portfolio, and the startup community, in general, directly to the airline itself.

Most of that team has a background with JetBlue, or with the travel industry. Anyway, so JetBlue Ventures was set up in Silicon Valley as a subsidiary, whereas JetBlue is headquartered in New York. We’ve been around doing a fair amount of investments. We’ve done over 50 investments now. Some of the more noteworthy ones would be Flyer, would be Joby, would be Air Company, Universal Hydrogen, Asaya, Beacon AI, Avnos, the list goes on. Awesome organization that’s had an incredible run here.

[00:08:11] Al: That’s the danger of when you start naming portfolio companies, you really have to name all of them.

[00:08:16] Jim: [laughs] I know, because we love them all the same, right?

[00:08:19] Al: It’s really interesting, because Bonny was amazing, wasn’t she? She was a JetBlue pilot. She’s now at Joby, but she was a JetBlue pilot, and also competed at Bobsleigh in the Winter Olympics.

[00:08:31] Jim: [laughs] Yes. She’s an amazing figure. She’s very inspiring.

[00:08:36] Al: It’s interesting, isn’t it? For people who don’t understand venture, you’re not looking to invest in companies like the one you founded, are you? You’re looking for to put small bets in with huge returns.

[00:08:50] Jim: Yes, of course. We operate as an early-stage venture capital firm. Yes, we’re absolutely strategic, but we’re still very concerned with finding venture scale returns. The way that we invest is, like just about any other financial VC out there. We’re looking at, basically, can this company scale into a really large market opportunity? Do they have something that’s differentiated?

Do they have an awesome team? I’m sure we’ll get more into how we analyze companies later on. I could also say that, we’re an early-stage fund. What that means for us is, we’re about seed through Series B. We also, typically, don’t lead rounds. We’re typically working with a lead investor, and a syndicate of investors. On a tactical level too, where do we invest?

Obviously, we invest across commercial aviation and travel, but we do break that down. We have five themes that we like to talk about. One of those is, basically, everything customer experience. We call it Seamless Customer Journeys. This is really, where does your travel inspiration come from? Where are you booking it? What are you doing outside of your air travel? We’ve got a category around accommodations, basically re-imagining the accommodation experience. This would be mostly around unique stay types that we can offer to JetBlue passengers.

We’ve also got one that’s called Next Generation Aviation Operations and Enterprise Tech. This is, enterprise tech could be any of the regular business functions that the airline could use. Then, obviously, all of the niche airline stuff. We could be talking about crew scheduling, or maintenance, or tech ops, or weather, or whatever it is. Another category is around basically, loyalty, travel distribution, and revenue management.

Basically, how do we find more customers? How do we give them a better experience, so they’ll return? Then, lastly, but not leastly, our category is around sustainable travel. That’s the one that I think, obviously, brings us here today, and the one that I probably spend the majority of my time thinking about and working on.

[00:11:14] Al: What’s really interesting about being a corporate venture capital firm is that, if I came to you with an idea, and I haven’t got one, relax. If I came to you with an idea and went, “I’ve got a brilliant idea about scheduling,” or, physically how to fuel aircraft, or tug them around, optimizing that, you’ve got the thing where you can go straight to the airline, haven’t you, and say, “Guys, what do you think about this as an idea?”

[00:11:42] Jim: Absolutely. Yes. No, it’s a superpower for us, I’d say, as an investor. We can go, we can meet startups with all kinds of interesting ideas, and we can say, “Yes, maybe this sounds all right, but let’s go talk to the right guy in charge.” That’s also where I mentioned our operations team earlier, but this is where I’ll ask my operations team, who do we talk to about this thing, or that thing?

The fact that, our operations team has spent years at JetBlue, they know who to talk to. We don’t have to figure that out. It can also allow me to really focus on the startup community around investments, and not have to try and wear all of the hats at once.

[00:12:25] Al: You were mentioning how you– What you look for in an investment, generally, it doesn’t really change much, does it?

[00:12:36] Jim: You mean, if we’re talking around sustainability, or something like that?

[00:12:40] Al: Yes.

[00:12:41] Jim: Yes, I would say it doesn’t really change. First off, we’re going to look through just the basic general VC, or startup filter. That’s product. Is there differentiation in there? Is there any sustainable advantage against competitors? Is there IP? We’re going to look at teams. Are they uniquely qualified to do this? Do they have a history of success?

Then, we want a large market, I think there’s a cliché statement that, in venture, your market needs to be at least a billion, preferably, a lot larger than that to even be considered. Then, when we’re talking sustainability, often, we’re looking at technologies that you would consider more deep tech that has a significant science or engineering challenge attached to it.

Then, I think you also have to put on the deep tech filter, and you really need to start looking at technology maturity. You need to start thinking about technology readiness levels. Where is this actually at? Also, who is telling you that it’s that? It’s great that you can get an assessment from the team, but it’s better when you can get a techno economic analysis from a third party, or something like that.

Then, there’s also the question of, what else needs to be solved? Is the science done, and it basically just needs to be scaled, or is there still a lot of technology risks that we’re looking at? Then, probably, the biggest one is sustainability, because we’ve got such huge challenges is, does this scale? How does this scale? Who’s going to finance it? Where does this whole thing go? We look at it like any other one, but then we also, I think, put some extra filters on top of that.

[00:14:31] Al: When you’re looking at joint– When you’re looking at SAF investments, you mentioned Air Company, are you also taking the view that, that may take longer to– It may just be slower runway for that than say, an accommodation app.

[00:14:52] Jim: Yes, absolutely. I think on some of the deeper tech, some of the sustainability stuff, we do have to think that the length of time till an exit could be longer, and the length of time for technology development could be longer. I don’t think we look at it any different than, probably, your average deep tech investor. Especially, when you’re looking at something like SAF, and you’ve got massive demand for it.

As long as you can actually make the science and the cost work, you have just a confidence about the space. As long as it can work, the demand is already there. They’re going to have customers. If they can achieve certain levels of production, there’s absolutely an expectation that they would IPO, that they would, possibly, be acquired, that an exit is very possible.

[00:15:51] Al: There’s lots of SAF producers we talk to, who would love 20 million in VC to come in at the top of the company, and use it to prove the technology and maybe get them close to showing commercial scale, but they’re going to need billions to set up, or hundreds of millions for their first plant. How confident are you that, they’ll find that financing? Because that’s not where you want to play, is it?

[00:16:18] Jim: Yes, it’s really not a place that we can play, just how we’re set up. Again, we’re an early-stage investor. We’ll do our follow-ons and pro ratas, but at some point, we may even have to step out of that, if the deals get too big. This, I think you’re touching on, a known problem that a lot of people are talking about right now, and it’s that scaling gap in financing.

There’s a lot of early-stage financing, there’s venture capital, there’s deep tech financing. Then, there’s a lot of later-stage project financing guys. When something’s really been tested out at a commercial level, and you’ve got your economies of scale, then there’s people happy and willing to do more projects, and help set that up. There’s a space in between, where it’s probably several hundred million dollars that need to be raised, to really get, let’s say that, first or second really large scale plant to demonstrate.

I don’t have the perfect answer there, but I do know that there’s a lot of companies that are looking into it, a lot of investment firms that are trying to set up more of like– Not quite, project financing level, but growth stage to target this very specifically. There’s a lot of industry coalition talks about how we can make this happen. Then, I think there’s also a lot of potential for things like the Inflation Reduction Act, and different, basically, loans from the government that goes specifically into trying to help these, whether they’re first-of-a-kind, or end-of-a-kind plants that really need this financing, once a certain amount of technology has been demonstrated.

[00:17:56] Al: Do you want to take us through some of your sustainability investments? We’ve talked about Air Company, I’d love to know more about that, but do you want to take us through some of the other ones you’ve got?

[00:18:06] Jim: Well, maybe it’s a good place to just quickly start on Air Company too, just because, there are primary SAF investments, and one that we still continue to be really proud of, and love the work that they’re doing. Starting there, yes, 2021, we said, “We really want to make an investment directly in some kind of new SAF technology.” What we did was, went out to educate ourselves a little bit on the different technology pathways, different companies, different stages that we’re raising.

We talked to a lot of different companies, and talked to a lot of different investors. Was very happy to find Air Company, actually towards the, what I would consider the end of our search. We’d talked to so many companies, and then finally got introduced to Air Company, actually, through a friend and fellow investor named Robert Allen at Evok Innovations, so met them.

The thing that really stood out to me first off was, this is a company that when we met them, they had, I think, 5,000 operational hours at that point with their first plant that was in Canada. They had produced, thousands of liters. Whereas most other companies were doing, very small lab-scale quantities, these guys were actually creating product, and refining their product.

Maybe part of that is, because they actually have a strategy that has some consumer products in the beginning, where they could actually start selling products a lot sooner than other companies could. It was great to see that. It was also great to see, I think, the founder duo there of Greg Constantine and Staff Sheehan, whereas you’ve got, Greg who’s more visionary. He’s got partnership and strategy experience, and I think can just do a great job of steering a company, and creating an awesome brand.

Then, you’ve got Staff who, he’s a chemistry PhD. He’s got patents and he’s got awards, and he’s just an incredible scientist. These guys came together and said, basically, “How can we make fuels? How can we make an impact on the world?” Their first idea was, well, they could start in some high margin consumer products, help them fund their own business, while they’re working towards the technology that would ultimately scale into large commodities, and fuels markets.

They are making Air Company vodka, they make a perfume, they made hand sanitizers during the pandemic. While that was, I think, maybe scarier, or there’s questions you could say on focus, there are all these different things. I actually thought it was genius. I thought it’s a little bit of a safety net, and it’s also potentially– It was a product line that we talked about.

You could potentially, at some point, try and spin it off or sell it, and maybe you fund your own big Series C or something, and then you continue on. There’s just so many things that I actually liked about it. Then, the last thing about– [crosstalk]

[00:21:09] Al: Some VCs would have hated it, wouldn’t they? Because during the pandemic, when they– vodka has died, they went, “We can make hand sanitizer.” Some VCs would be, “Why you’re wasting your time on that? It’s never going to be your big market,” but you like the fact that they always want revenue coming in?

[00:21:24] Jim: Well, what I also believed the discussions that we had with them, that a lot of the technology is very similar, and that it’s building on it– Yes, there’s some different setups, and there’s different tweaks, but a lot of the stuff that they’re doing in the consumer products, translates directly to stuff that they needed to do anyways to develop their fuels market.

It’s basically them doing their testing, and their design, while actually making some money, and building a brand around it at the same time. The last thing that I’ll say, which I think is important is, when I met them, I think there was some really knowledgeable groups involved, knowledgeable investors involved. Carbon Direct stands out with a large team of PhDs who focus on engineering and chemistry, who dig into this stuff significantly.

I’m not going to try and say that I’m a scientist, or that I’m ever going to be an expert in any of these categories, so I can read, and I can learn as much as I can, but at some point, we really need to rely on expert analysis. That was really great to partner with some of their other investors, Carbon Direct, Toyota Ventures, for example, and get comfortable and then, that’s our main top investment today, and that’s one that I’m very proud of, and really love those guys, and the work they’re doing.

[00:22:40] Al: Jim, do you want to mention some of the other sustainability investments you’ve made?

[00:22:45] Jim: Yes, more than happy to. Yes, 2021 was a big kickoff for our, I guess, renewed sustainability focus. Sustainability has been an important category for JetBlue for quite a long time, but really getting into, trying to use technology and startups as a tool to help the airline meet its goals, has really only started to crystallize, I’d say around maybe 2020.

Air Company, I’ve talked about Air Company, an incredible one. Another one that I’m very proud of, and they’re doing awesome work is a company called Universal Hydrogen. Also invested in them the first time in 2021. What they’re focused on is, basically, that long term decarbonization of aviation, and trying to use hydrogen as a fuel source to do that. They do work on powertrains for aviation.

They actually just flew the largest aircraft ever flown on hydrogen fuel cells in March. However, their real focus as a company, is to be a hydrogen distributor, basically. They want to establish the actual supply chains that enable moving hydrogen around. That’s different kinds of containment systems, that’s different kinds of filling stations, and that’s buying basically hydrogen wholesale from green hydrogen producers, and moving it around to where it needs to be done.

They’re also pioneering some hydrogen for ground support equipment to help decarbonize ground support operations, especially, where the viability of putting in a new charging infrastructure is impossible right now. A lot of airports don’t have a ton of money, and some of these [chuckles] charging retrofit projects are in the hundreds of millions of dollars. This is a great solution there. Yes, very excited about Universal Hydrogen.

What I can also note that, we’re not here to be the picker of one technology over another necessarily, we acknowledge that all of these are decarbonization pathways, and our goal is to, basically, pick what we think are the best, most promising technologies in each category, and to support them. I bring that up because sometimes the SAF guys and the Hydrogen guys battle a little bit, and I’m just not a part of that battle, I support them all. That’s a great one.

The last thing I’d say about them is, maybe to try and understand their business model, it’s worth noting that, they’re trying to be a bit like Keurig coffee, the Keurig coffee pod. They create the pod, they create the technology, and maybe license it out as the coffee machine, which is the drivetrain. Then, they basically want to be distributing those coffee pods. That’s a great one.

Another one that’s relevant to talk about with the company called Avnos, which actually, we learned about from some of our friends over at Shell, and Shell Ventures, who had been working with them for quite a while. These guys are commercializing some technology out of the Pacific Northwest National Laboratory. It’s a direct air capture technology, but it also combines atmospheric water extraction, and so they’re calling it a hybrid DAC system.

For every ton of CO2 that they produce, they believe that they can produce something like three or four tons of water as well, which is a really interesting output that you could think of having pretty positive impacts around the world. Why this is also relevant to SAF is, if we’re talking about power-to-liquids in the e-fuel space, we’re talking about having basically the CO2 captured, either it’s point source, or it’s directly out of the air, most often combined with hydrogen in the system.

These guys are building a high energy efficiency system that we think we can get the cost of captures down to, where someday it’d be pretty reasonable to be fed directly into sustainable aviation fuel production, like in our company, for example. They’re great. Then, we’ve got a number of other investments, maybe we’ll touch on really quickly.

Beacon AI is a pretty incredible system, that they’re building basically an AI assistant concept, that eventually becomes more like an AI copilot. It’s taking advancements in AI, and advancements around the self-driving car space, and applying it to, basically, all aviation operations for an airline, and basically, benchmarking everything, looking at everything, and saying, “What could you do better to be either safer, or more fuel efficient?”

When it comes to pilots themselves, the system is basically analyzing everything that’s going on with the aircraft, all the configuration, all of your throttle, and your altitude and everything else. It’s going to be suggesting things that you could do to be more fuel efficient. I think that there’s a significant percentage gain that can be had there.

Then, maybe the last one I’ll touch on would be a company called i6, that actually, interestingly, came to us from JetBlue fuel team. This is one of the cases where the airline actually met this company, and was evaluating them. They said, “You guys should talk to this company. They’re early-stage, and thinking about raising some funding.” This company is a fuel management platform, and basically helps reconcile fuel transfers between airlines, airports, and fuel suppliers, gives you a complete digital observability to what’s going on.

It’s also really interesting for sustainability, because until systems like this are available, and I think this is the leading one, there just hasn’t really been as accurate accounting for what’s going on with fuel, as you would need. There’s a lot of issues where the numbers don’t match up, and they don’t know [chuckles] where this fuel was lost somehow. There’s like, “Let’s increase the accuracy of what’s going on, or at the fuel. “

There’s also the situation where, in most cases, airlines are over fueled a certain amount. I think the average is around 300 pounds or so of fuel. Yes, the airline or the aircraft doesn’t go all the way to zero, so it’s not on there the entire time, but what it does do is, if you extrapolate that out and say, almost every aircraft everywhere is fine with an extra 300 pounds, there is some amount of extra fuel burden associated with carrying that extra weight. If you put that across all of the flights around the world, it ends up actually being a pretty significant impact. That’s a handful of our investments.

[00:29:33] Al: I think that’s secret. It’s not just about decarbonizing aviation, it’s going to take direct air capture, it’s going to take new air traffic control, it’s going to take everything to get it done, and of course–[crosstalk]

[00:29:46] Jim: Absolutely. I agree with that.

[00:29:49] Al: You had mentioned earlier that you’re not bothered about being the lead investor, and you’ve also invested in the United SAF fund as well, haven’t you? Sorry–[crosstalk]

[00:29:58] Jim: We have, yes.

[00:29:59] Al: The United Ventures SAF fund?

[00:30:03] Jim: Yes, exactly. That one was just, SAF is really important to us. I think any we look at decarbonizing aviation, and we look at the different pathways that can help do that, and everyone agrees that SAF is going to be a big part of that. Now, it’s not the only part of it. We still think that new kinds of aircraft, fleet renewals, hardware and software upgrades to the aircraft, novel propulsion, batteries, hybrids, hydrogen, all these areas are important, and they have their time and place, but SAF is a big one.

I think the idea there was to support the industry to support the coalition that’s forming to try and encourage more SAF development. That was something we were happy to become a part of.

[00:30:51] Al: One of the questions I’ve asked you loads of times before, is if I came to you and said– You’ve got one investment with Air Company, if I came to you saying I’ve got a different pathway, completely different, non-competitive, would you be interested?

[00:31:09] Jim: Yes. That’s a great question actually. Normally, we stick to about one company per category, but because SAF is so important to the industry, so important to the airline, we’ve talked about it, and figured out that, our path for at least the moment is that, we would be interested in other SAF investments, ideally, in different pathways. We’ve got Air Company that’s more in the e-fuels or power-to-liquids. We haven’t really done anything in alcohol-to-jet, or we haven’t really done anything quite yet in more Fischer–Tropsch related technology sets.

We’re probably not as excited about the HEFA pathway at this moment, just because everyone agrees that, at some point, the feedstocks really start becoming an issue. Yes, we continue to evaluate one– Sorry, we continue to evaluate a lot of companies in this space. We’re looking at one right now that we’re decently far along with, that I can’t really share much about. We will, absolutely open to continue to looking at other pathways.

[00:32:12] Al: Roughly, how many opportunities do you look at for an investment generally?

[00:32:20] Jim: You mean within a particular category, or?

[00:32:23] Al: I’m thinking what’s your coffee-to-closing ratio?

[00:32:29] Jim: Oh, yes. As a firm, I know that we will definitely look at over a thousand companies a year. I think we might even be significantly higher than that already this year. We’ll typically make around six new investments a year, something I’d say that’s maybe a decent average for us. That tells you right there. We see a lot of companies, and only invest, and that’s I think what the same for most venture capital firms. It’s a very high bar to get across.

[00:33:04] Al: The market, when you did Air Company, I think two years ago, didn’t you? You invested there, or roughly two years ago. Is it harder now to find VC, generally, than it was two years ago?

[00:33:26] Jim: Yes. I think that’s maybe a little bit of an obvious one. The answer is probably, yes. There was a boom time around all industries, and sustainability also had a boom time. I think it continues on in climate tech and sustainability, but you are just seeing still a bit of uncertainty with everything going around the world. A lot of macro-political issues that are, I think, impacting the funding market.

I think there’s just a little bit of hesitancy. You’re seeing investment dollars and deal counts go down significantly across most stages right now. I think that does translate to a harder-to-raise environment. Good companies will continue to figure it out, and continue to find a way.

[00:34:18] Al: As a VC, you say you’re not a scientist, but I’m sure you’ve analyzed this market. I know you’ve spent hundreds of hours looking at this market. Do you think that the industry projections to get to net zero by 2050, which rely hugely on SAF, are going to be achieved?

[00:34:45] Jim: Tough question. By 2050, at least, we’ve got a bit of time there. It may be more possible. What I do think is that, some of the shorter-term targets, the percentages and stuff that we’re trying to be accomplished by let’s say 2030 and 2035, I’m not as quite confident about those, just because the magnitude of staff production required is just so huge, and it’s going to take so much investment.

I think it was last year, I think in 2022, there’s somewhere around 80 million gallons of SAF produced, roughly. The industry used, I think 95 billion gallons of jet fuel. The gap is just absurd. You’ve got the White House SAF challenge, I think targeting 2030 for three billion gallons of SAF production. I think, in the shorter term goals, I think those are going to be really hard to hit.

I hope we can hit them. Then, in the longer term, especially, if some of these technologies like what Air Company’s working on, really gets proven out on large scales, and the economies of scale kick in, and they actually get cost competitive with Jet Air, or at least within a subsidies’ distance, then I think, yes, there’s going to be massive projects.

My answer I think is, I am not necessarily hugely bullish on hitting our early targets, but I am actually still bullish on individual companies who really put out a great product, and really understand how to produce it, because I think they tap into just this insane massive demand.

[00:36:32] Al: Actually, that’s what you are trying to do, isn’t it? Because you are trying to find– You’re not up to 2030, it’s largely going to be HEFA and alcohol-to-jet. What you are hoping to do is, make your investments the ones which make a difference in the 2030s and 2040s.

[00:36:49] Jim: Yes, absolutely. Even these companies, while they do have longer timelines to get to really massive volumes, they can also get to scales of tens of millions, getting towards a 100 million within a reasonable amount of time. I go back to an earlier comment I made that, the possibility of an IPO for some of these SAF technology companies, I would say maybe, let’s say they’re doing 50 million gallons, or something like that. That could potentially be enough to actually IPO the company.

If you’re doing over, let’s say, a 100 million in revenue, that’s the traditional average of where a company usually goes public around. While getting to massive scale, may take a long time, I do still think that there’s possible exit opportunities for investors in the interim.

[00:37:51] Al: Obviously, you’ve got so many readily identifiable trade buyers. If you can produce the process, you’re suddenly very attractive to an oil and gas major.

[00:38:03] Jim: Absolutely. You’re already, I think, seeing a lot of partnerships across that space. For us, trying to find these deals, that’s actually been a great source for us is, partnering with these energy companies, who really want to be on the pulse of what’s going on, because it’s going to be really important to their business model. If somebody can really prove out the technology they want to be a partner, or maybe a potential acquirer, or something like that down the way. We work pretty closely with most of the oil and gas energy majors, Shell, Chevron, Saudi Aramco, pretty much everyone you can name. BP.

[00:38:43] Al: If I’m a scientist, and I’ve got I’ve got the PhD, I’ve got a couple of patents, I’ve got a couple of new processes, and maybe I’ve got a commercial business partner who’s great at talking to airlines, and getting an offtake agreement signed up, how do I find venture capital?

[00:39:07] Jim: I think your probably best step would be to start with firms that are focused on climate tech that, are focused on sustainability, would be one step. I think a quick Google search would give you a large list of companies who say that they’re interested in climate tech, and sustainability. Another place to start would be absolutely talk to CVCs in the industries, who would be impacted, and who are looking for this kind of stuff. Talk to us.

Talk to maybe some of the automotive CVCs as well, your Toyotas and your Porsches and whatnot, because everyone’s interested in sustainable fuels, and firms have different stages that they’ll interact. Even if it’s too early, it’s good to make those relationships, and to let people know what you’re working on.

[00:40:00] Al: I send an unsolicited email, I don’t hear anything. When can I call?

[00:40:07] Jim: [laughs] My preference would be, please don’t call, you can send a few more emails, you’ll get a response. The only reason you probably haven’t gotten a response would be that, we just receive a high volume, and we don’t have a huge amount of staff. It’s not personal, and you should receive a, “Yes, we’d love to talk,” or maybe, “Hey, this is too early.” We want to be honest, we can’t necessarily talk to every single company.

Also, just make sure that you’re talking to the right companies. You need to talk to people that are in your niche. This is all stuff that, as a savvy entrepreneur, you should be able to Google and find out who’s interested in the things that I’m making. If you can, obviously, trying to get some kind of introduction is helpful, but I don’t love that idea that, “Oh, you’re not going to get taken seriously or funded, if you don’t have someone walk you into the front door of a VC firm.” Don’t believe that that’s true. I’ve cold emailed people plenty of times, and I’ve made a lot of great connections, and a lot of great steps in my career from doing that very same thing.

[00:41:16] Al: How professional does my pitch book have to be? Do I have to hire someone who’s a designer, or will you look past that?

[00:41:28] Jim: It’s pretty important actually. I think it’s a level of professionalism, it’s also a level of problem solving, and knowing what you can do, and what you can’t do. It’s fine if you’re not a creative marketing designer type, and you can’t personally make this great pitch deck, but you should be creative, and a good enough problem solver to either hire someone who can, or to have someone on your team help you out with it, and to be responsible for that final product.

You don’t have to do it yourself, but you have to show the ability to actually get something high quality done, at least to that degree. It might suck, you might have to spend a couple thousand dollars on it, but it is an important, I think sign of professionalism that you can create something. Also, something that’s important is, a lot of these concepts are really complex.

They’re really complex, and to raise fundraising, sometimes the biggest part is, distilling a complex idea down into something very simple. If you can’t explain your idea to someone in a few sentences, and very simply, if you have to go on a long educating explanation, then you probably need to rethink how you’re communicating it, and your narrative, and the story, because it needs to be able to sink in quickly, at least. The technical details we can get into later, but the actual concept itself, and the persuasiveness of it, you need to figure that out.

[00:43:00] Al: Which is actually going back to the Air Company, it was part very genius, because–

[00:43:06] Jim: Absolutely.

[00:43:07] Al: You go, “I’ve got a bottle of vodka I’ve made from the air. I can make anything from that. I can make feel that way.” It’s really clever.

[00:43:14] Jim: I would completely agree.

[00:43:17] Al: Jim, that’s excellent. I guess you’ve told us that you see thousands of pictures, your odds are very slow. It’s the same when you’re raising funding as well, isn’t it? You shouldn’t rely on one VC, you should be going out to as many as possible, provided you fit their criteria.

[00:43:40] Jim: Absolutely. Unfortunately, as a founder, you have to be comfortable with a little bit of salesmanship. What I mean by that is, you may have to go talk to a hundred or hundreds of VCs to get the funding, but you only need a couple “yeses” to make it happen. I would point at very famous examples in history, Airbnb, for example, I think the famous story is they pitched a hundred investors, didn’t get any, or something like that.

It’s happened over and over again, especially, if something is counterintuitive. I think even your average, companies that don’t have a really hard time fundraising, they probably still pitch many tens and probably up more than 50 investors I would guess easily. Then, probably your average company is easily pitching a 100. I wouldn’t be surprised.

[00:44:38] Al: It’s not going to be quick. It’s–[crosstalk]

[00:44:43] Jim: No, and things are slowing down right now, unfortunately. In the last couple years, sometimes we had these exploding deadline rounds. It’s because I guess the power dynamic has swung back a little bit on the pendulum. There used to be so much money chasing, not as many deals, and now there’s just less money. There’s just more deals, it takes longer, and it doesn’t have to be a rush, and it doesn’t have to be, “You got to let me know by Friday,” sort of thing anymore.

I think it’s heading back towards more in the middle, where it should be. Neither side should have all the power. I don’t think that’s necessarily healthy, and I think everyone should just be reasonable about– Investors shouldn’t take too long, but startups also can’t say, “You’ve got three days to decide.” That’s just not reasonable.

[00:45:41] Al: It’s an easy question. In 10 years’ time or 15 years’ time, one of the ways your measured success of your SAF investments is financially, but is there something bigger there? Are you also going to be looking– Are you hoping in 10, 15 years’ time to be going, “I can’t believe that the companies we’ve backed, have brought in so many million tons of SAF.”?

[00:46:06] Jim: Yes, absolutely. That’s where our strategic connection and mandate come in here. We are fully a strategic fund that does care very much about financial returns. When we talk about sustainability, what we’re basically doing is, we’re looking at what are all those different levers that we can use, all those technology pathways to help decarbonize the airline?

We want to make money doing it as an investor, but we wouldn’t exist here. if it wasn’t for trying to help the airline decarbonize, as part of our investment focus. Absolutely part of our impact is going to be offtake agreements, impact, and partnerships and all these kind of things. That’s something that we’re also judged on internally. For our performance as a firm is, how many POCs, and partnerships, and agreements are coming out of it.

Yes, we’re actually going to be judged on our financial performance, but also how much did we impact JetBlue, their 2040 goal, and how much did we impact the industry?

[00:47:12] Al: Brilliant. Jim, thanks so much your time.

[00:47:15] Jim: Thank you.

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[00:47:35] [END OF AUDIO]