Nancy Pfunds New Investment Strategy Involves Forests and Funerals
(Bloomberg) -- When out in search of crazy ideas that might just change the world, Nancy Pfund—founder and managing partner of DBL Partners and an early Tesla Inc. investor—sometimes runs across plain-old crazy ideas.Then there was the idea behind Better Place Forests, which protects privately owned trees from becoming casualties of future development by offering them as burial sites, where loved ones’ cremated remains help fertilize living, growing things. “We’ve seen some unusual pitches in our time,” Pfund said of her team’s initial 2016 meeting with the company. “And this one was way out there.”Way out there in a great way, she added. “We were just enthralled with this notion.”Better Place Forests, they realized, could be the breakthrough they were looking for. Pfund and her colleagues had identified forests as a major, untapped opportunity for entrepreneurs bent on cutting climate pollution. But until then they hadn’t found an investable idea. Better Place was a golden opportunity, they thought. “This sleepy industry, that really has practices left over from the 19th century, is going through a metamorphosis,” Pfund said.Plus, forest destruction drives about 10% of carbon-dioxide emissions globally. “We look at sectors and when we see a carbon impact, we go ‘Can we change that?’” Pfund said. “We know that deforestation is a big contributor.”At first she was afraid that DBL would “be alone with these trees,” Pfund said. But “it was just the opposite.” Other investors joined in—including True Ventures, which funded Peloton, Fitbit, and Blue Bottle Coffee, among other companies you’ve probably heard of.Today, Pfund is unveiling a new initiative that incorporates her first conservation investment into a comprehensive strategy for harnessing capital to protect forests. The analysis, Forests of Innovation, is simultaneously a call-to-arms and a how-to guide for investors and businesses who want to make conservation a byproduct of things people want anyway. That could mean reinventing meaningful memorials, as Better Place Forests promises to do. It could also mean renting undeveloped land for campsites, Airbnb-style, developing new construction materials, or generating carbon credits, a.k.a. “offsets” because they’re used to offset companies’ pollution.Setting entrepreneurs to work on conservation could bring energy and creativity to a field that has historically attracted only governments and nonprofits. “In transportation,” Pfund explained, “the incumbents in the field are 100 years old or more. They were optimized for generating carbon back in the last century, not reducing it.” When her team set out to look at corporate strategy around conservation, however, “we could not find any corporations at all to compare,” she said.“That was the light bulb that went off for us. If they aren't there, they need to be there in the 21st century.”Pfund spoke to Bloomberg Green about the new Forests of Innovation report, her investment strategy and history, and her own relationship to tree-hugging. The following transcript has been edited for length and clarity.Bloomberg Green: What was meeting Better Place Forests like?Nancy Pfund: The founders of Better Place Forests walked into our conference room, and told us about how they wanted to use nature to transform the end-of-life experience for folks. It all came together. That was the a-ha moment.We found out there's been a whole move to cremation, away from burials of caskets. There were just a lot of trends that supported this approach that had nothing to do with forests. It had to do with people’s attitudes towards eternity.How can you do a Tesla for forests? Is that even possible?We hoped that Tesla would help to transform the overall industry. But we we weren't counting on that. When we look at a company like Better Place Forests or some of these others, you need a portfolio out there [where] one of these is going to hit, get a loyal following, get coverage, seep into the popular culture, and become an icon in its own right,The early signs are there—people are gravitating towards a more sustainable and more meaningful way to honor their loved ones. Everyone goes through this experience, and the sad part of it is the industry has not been responsive to families, to make it a better experience. [Better Place Forests] elevates something that’s often diminished in the way we experience it today. That’s the whole point. This does not have to be so sad. It can be uplifting and legacy-building.Are there specific things that could happen in Washington and Sacramento that would enable more conservation-minded investing?It doesn't require it. A company like Better Place Forests hasn’t really benefited from any of that and it’s still growing very nicely because it’s tapping into consumer trends.As we’ve learned in transportation and renewable energy, it does help when there are policies that reward innovation and create a framework for innovating. We mentioned in the report the U.S. Forest Service Wood Innovations Grants, the Innovative Finance for National Forests Grant Program—these are tiny today. It’s like when the California Energy Commission in the early 2000s wrote these teeny little grants to companies like SunPower and some of the early players. These are indicators that if you could grow these programs and get more financing for some of these embryonic efforts, then you start to create the ecosystem whereby the ones that do well go to the next stage and start to attract people like me and firms like DBL to help them scale.In the report you cite Boston Common, created in 1634, as an example of early public land protection. How relevant is that, really, today?As a society, we’ve gone through centuries of approaches to nature, starting with the Boston Common example. Then you fast forward to the age of timber companies and the paper industry, where nature was more of something to conquer as opposed to something to preserve and share. That was a dominant approach for a long, long time. You saw cracks in the armor in the ‘90s to 2000 time, when people began to protest—the whole tree-sitting movements that went on in the Pacific Northwest, mostly. What we’re seeing now are actually coming back to the Boston Common approach.What’s your own relationship with forests?Forests are a huge presence for me. The day after I graduated from college, I went to work as an intern in Washington, D.C., for the Sierra Club. One of the projects was the attempt to pass the Alaska National Interest Lands Conservation Act, which of course is a behemoth now in terms of U.S. conservation legislation. Back then we thought it was big, but we didn’t know how important it would be, and it was somewhat contentious. That opened my eyes to the role that policy can play in protecting forests and also how adversarial that job can be. But we prevailed. A lot of our work today is knitting together an attractive investment thesis with an examination of what policies will either help or hurt that thesis.Why not just pack up and move in among the trees?Like, 25 years ago, we got a weekend place up in western Sonoma County. It was an area that was heavily logged. But there was an old growth redwood on the property that had this huge burl at the bottom of the tree. And that burl protected it from being logged. So in the middle of this second-growth forest, there’s this ancient growth redwood tree that just soars above everything around it. When you look up, you can’t even see the top of the tree.Have you read The Overstory? It’s a Pulitzer-winning novel about forests.When I hang up I'm gonna check it out.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Bloomberg · 1h ago