Member Spotlight: Russell Sprole
This week, I spoke to Russell Sprole, founder and managing partner of Virta Ventures, an early stage fund backing entrepreneurs and companies building sustainable businesses. We discussed equity-light climate tech, why founders can fail with great product, and how AI could set back our climate progress.
Will Hespe: What about a company makes it right for Virta? Can you explain “equity-light” climate tech and why it excites you?
Russell Sprole: We're a pre-seed/seed stage investor, and climate tech generalists other than the fact that we focus on equity light solutions. Equity light, to us, means companies that are software-centric—software-enabled hardware, hardware-enabled software—with products and platforms that don’t require a ton of time and capital to get to market. We want our checks to go a relatively long way, and therefore don’t focus on investments in companies that require a ton of capital over time to get to market and scale up. Beyond that, we invest in teams and people more than anything. We're investing early, so the majority of our decision revolves around the founders themselves. We look for folks that are either deep experts in their industry—they’ve identified and lived a real pain point, or industry outsiders that are bringing a relevant skill set with a unique approach.
Will Hespe: What are the most prominent trends in climate, and how do they make you feel about the future of climate tech?
Russell Sprole: The biggest topic discussed today is the impact of AI on climate, and the proliferation of data centers that are going to be powering AI development and operations. The growth we see in the AI space today creates both opportunities and challenges in climate. In the companies and sectors we're investing in, there are opportunities to leverage AI to build more efficiently, create more compelling solutions, and help us grow and proliferate available solutions. On the flip side, the massive power demand from AI and the data centers that power it creates a large climate challenge. Companies building AI are not going to wait for renewable plants to be developed to power these new data centers. We’re seeing the high likelihood that a significant portion of these data centers will end up being powered by fossil fuels, natural gas, etc. That is really going to set us back on the progress we've made towards our climate goals, both at a national and global level. We’ve seen Microsoft and Google, among others, already walk back on many of their climate commitments, almost entirely because of AI. Our team actually shared our thoughts on the potential for software to help solve this challenge.
Will Hespe: What advice do you have for founders in climate tech?
Russell Sprole: One thing that we can forget, for venture backed businesses—and any business that's taking investor money—investors are ultimately looking to invest in businesses and business models, not just technologies. So you can have great IP, and you can have great technology, whether it's hardware or software, but if there's not a clear business model around that, it's going to be very, very hard to find capital, especially in this environment where fundraising is already more difficult than it was a few years ago. You have to have a compelling value proposition and a revenue model, or at least good ideas as to what that revenue model is going to be, and you have to be providing significantly more than whatever costs it takes to deliver that value.
Will Hespe: Why did you choose to collaborate with 9Zero?
Russell Sprole: I am a huge believer in community-building, and am always looking for ways to engage with and foster the climate tech community. I think having a space that is climate tech-focused in a very intentional way brings together founders, investors, and other folks in the ecosystem to build and collaborate in a way that is really exciting. At a relatively early stage, 9Zero is clearly starting to build momentum and community. I'm excited for what the future holds.
