Can We Buy Our Way to Sustainability? A VC's Perspective

In a discussion with Dharmo, Ramanan, co-manager of Amasia, elaborates on their venture firm's focus on sustainability and climate-related investments. Amasia, a small venture firm with offices in the Bay Area and Singapore, targets early-stage investments primarily in software-based companies within five themes: AI and data for sustainability, circular economy, sustainable supply chains, sustainable cities, and clean energy transitions. Ramanan emphasizes the importance of behavior change in addressing excessive consumption and highlights challenges for sustainability-focused companies in 2025-2026, advising startups to consider diverse financing sources and remain hopeful amidst market difficulties.

• Amasia is a boutique early-stage venture firm focused on sustainability and climate-related investments.
• The firm primarily invests in the US, with a portion of its portfolio in Southeast Asia.
• Amasia specializes in investing from seed to Series A, with check sizes ranging from $1 million to $5 million.
• The firm emphasizes software-based businesses due to the founder's extensive experience in VC and growth equity investing in software.

"We elected to specialize in sustainability and climate. So we built a very robust thesis which I know we'll talk about a little bit as we go along."

• Amasia has chosen to focus on sustainability and climate, recognizing it as a significant economic trend.

• The investment thesis is structured around five themes: AI and data for sustainability, the circular economy, sustainable supply chains, sustainable cities, and clean energy transitions.
• These themes are designed to make the thesis more concrete and understandable.

"So the answer to your question is five themes. AI and data for sustainability, the circular economy, sustainable supply chains, sustainable cities, and clean energy transitions."

• The five themes provide a framework for identifying and investing in companies that align with sustainability and climate goals.

• Clarity: An air quality management solutions business that uses AI and data for sustainability.
• Topanga: A SaaS business in the circular economy that tracks the reuse of containers to reduce emissions.
• Tree Dots: A company focused on reducing food waste in the supply chain in Southeast Asia, contributing to climate change mitigation.

"On AI and data for sustainability, a great example in our portfolio is Clarity, which is an air quality management solutions business."

• Clarity exemplifies how AI and data can be leveraged for sustainability by managing air quality.

"In the circular economy, a great example is Topanga, which is a SaaS business that sells to campuses."

• Topanga illustrates the impact of the circular economy by tracking container reuse to lower emissions.

"Sustainable supply chains are super interesting. The one I will highlight is Tree Dots which is in Singapore, which helps cut waste from the food supply chain in Southeast Asia."

• Tree Dots addresses the issue of food waste in supply chains, a major contributor to climate change.

• The circular economy is a significant topic, with innovations often related to plastics and material recycling.
• The circular economy aims to reduce waste and promote the continual use of resources.

"The circular economy, big, big topic. We have had a few companies in the show who have been doing something innovative there."

• The circular economy theme is vital for sustainability, focusing on reducing waste and recycling materials.

• The concept of a circular economy is essential for creating a sustainable future by ensuring that the economy operates within the limits of nature's ability to sustain life.
• The circular economy involves recycling materials, but it must also address the core issue of excessive consumption, particularly among affluent individuals.
• Technological solutions alone are insufficient; there must be a shift in consumption habits to truly address sustainability challenges.

"Economy should be based on nature's ability to sustain life on this planet. I think circular economy is kind of crucial part in that equation."

• Emphasizes the need for an economy that respects the planet's ecological limits, with the circular economy being a vital component.

"When we talk about recycling materials, underlying all of this is the idea that there is consumption. And our thesis is built around the idea that there is excessive consumption."

• Highlights that recycling is only part of the solution; the main issue is the excessive consumption driving environmental problems.

• The fundamental foundation of sustainability is behavior change, particularly in reducing consumption levels.
• There is a need to distinguish between necessary consumption for those in poverty and excessive consumption by the affluent.
• Technological and systemic solutions should facilitate behavior change without relying solely on individual actions.

"Nothing's going to work if we don't change how and how much we consume."

• Stresses the importance of altering consumption habits as a critical aspect of solving sustainability issues.

"If you haven't flown commercial in 30 years because you've been flying private and you have seven homes and 19 cars, remember you can't sit in 19 cars at the same time."

• Uses an extreme example to illustrate the problem of excessive consumption among the wealthy.

• Changing human behavior is one of the most challenging aspects of addressing climate change and sustainability.
• Younger generations often feel hopeless about climate change due to the perceived lack of progress and the severity of the issues.
• Innovative solutions and examples from companies can help inspire and facilitate behavior change.

"The human behavior is the toughest one to actually change."

• Acknowledges the difficulty in altering ingrained consumption habits and behaviors.

"There's a lot of, how to say, hopelessness among the especially younger crowd who see that basically we, you and me, the generation of ours has kind of fucked it up."

• Reflects the sentiment of despair among younger people regarding the state of climate change and the role of older generations.

• Companies are integrating behavior change into their products and services to promote sustainability without requiring significant individual effort.
• Examples include companies like Topanga, which promote reuse through their product offerings in institutional settings.
• Consumer-facing apps like Commons help individuals make more sustainable purchasing decisions and offset carbon emissions.

"A great example is the company I mentioned before, Topanga, where even if you don't want to reuse, you will end up reusing if you go to a university or a senior living or you're at a senior living facility that uses these products."

• Describes how systemic solutions can drive sustainability by embedding behavior change into everyday practices.

"Commons is a consumer app. It allows you to do two different things. One, it connects to your credit card if you want it to connect to your credit card, analyzes all of your expenditures and tells you how you can make more sustainable choices."

• Illustrates how technology can empower consumers to make more informed and sustainable choices in their daily lives.

• Despite challenges, there is hope in the collective efforts of individuals and organizations working towards sustainability.
• Historical examples show that humanity has overcome significant challenges in the past, suggesting that current issues can also be addressed.
• Individuals are encouraged to focus on what they can control in their own lives to contribute to sustainability.

"I am full of hope. I am very full of hope. My view is at any given point in time, mankind has faced various catastrophes."

• Expresses optimism about the potential for positive change and resilience in the face of environmental challenges.

"Control what you can control, right? You can't control the guy who's flying private and lives in nine homes. But you can control how you live."

• Encourages personal responsibility and empowerment in making sustainable choices within one's own sphere of influence.

• Carbon offsets are not viewed as an investable theme but rather as a tool with significant problems and verification issues.
• The use of carbon offsets is seen as a temporary solution, not a primary strategy for addressing environmental issues.
• The focus should be on changing behavior to reduce consumption rather than relying on offsets.

"We don't view those as a theme. Right. We view them as a tool."

• Carbon offsets are considered a tool rather than a central investment theme, indicating skepticism about their effectiveness as a long-term solution.

"The circular logic around offsets, that has never made a whole lot of sense to me."

• The speaker questions the logic of offsets, suggesting that they may not address the root causes of environmental problems.

"If you have quality offsets and they're very highly verified, they are one of many arrows in the quiver and in my view, not the most important arrow."

• While acknowledging the potential utility of verified offsets, the speaker emphasizes that they are not the most crucial strategy for environmental impact.

• Personal goal to drive towards more sustainable purchasing and reduce consumption.
• The clean energy transition is a significant focus area, with an emphasis on improving energy reliability and efficiency.
• Interest in software companies related to electrical grid management and energy asset management.
• The paradox of challenging financing periods potentially being good investment opportunities.

"On a personal level, I would like to continue driving towards more sustainable purchasing."

• The speaker outlines a personal commitment to sustainability, highlighting an ongoing effort to reduce consumption.

"The clean energy transition is an area that is of high interest to us."

• The clean energy transition is identified as a key area of interest, underscoring its importance in future investment strategies.

"We think 25 and 26 will be difficult years for sustainability focused companies from a financing standpoint."

• The speaker predicts challenges for sustainability companies in the coming years, indicating potential difficulties in securing financing.

• Interest in the circular economy despite challenges, such as a lack of innovation and many "Me too" companies.
• The necessity for more software and market-driven innovation in the circular economy.
• Historical context of the circular economy with companies like eBay setting early examples.

"The issue with the circular economy from a venture standpoint is many companies are sort of Me too companies."

• The speaker acknowledges the challenge of finding unique and innovative companies within the circular economy space.

"We need more software and market driven innovation in those spaces."

• There is a call for increased innovation and technological solutions within the circular economy to drive progress.

• Historical lessons from Cleantech 1.0 where companies unsuitable for venture capital received funding.
• The importance of aligning company needs with appropriate funding sources.
• Anticipation of a market shakeout in 2025 and 2026 due to previous funding misalignments.

"A lot of companies got funded for whom early stage venture capital funds are not really the right source of funding."

• The speaker highlights a mismatch in funding strategies, where capital-intensive companies were inappropriately funded by venture capital.

"Our hope, when we wrote Our thesis was cleantech 2.0 would be different and unfortunately it wasn't right."

• Despite hopes for improvement, Cleantech 2.0 repeated past mistakes, leading to anticipated challenges in the coming years.

• Startups should consider shrinking to a minimum viable team to survive economic downturns. This approach helps conserve resources while waiting for market conditions to improve.
• It's crucial for startups to evaluate whether their solutions have commercial scalability in their target markets. If not, they need to consider pivoting to new markets or product variations.
• Maintaining hope and passion is essential, even if the business faces challenges. The initial motivation for starting the business should remain a driving force.

"I think you've put your finger on the first thing you do, which is to shrink to the minimum viable team. And you do that relatively quickly."

• Explanation: Emphasizes the importance of reducing team size to the essentials to ensure the survival of the business during tough times.

"You want to think about whether the solution you're working on has real commercial scale possibilities in your target market."

• Explanation: Highlights the need for startups to critically assess the market potential of their solutions to determine the next steps.

"What you should not do, in my opinion, is lose hope. You started this business because you believe this is one of the great problems of our time and you are passionate about it."

• Explanation: Encourages entrepreneurs to retain their initial passion and hope despite business challenges, as these are vital for long-term success.

• Founders should consider non-traditional financing sources, such as family offices, which may offer different timelines and perspectives compared to classical VC firms.
• Economic downturns can present opportunities for startups to gain visibility and expand their customer base while competitors are struggling.
• Creative thinking about capital providers is crucial, as relying solely on traditional VC funding might not be feasible in challenging times.

"The bold solution is probably also to rethink the financing options. If everybody around you is shrinking and trying to survive, you go to, I don't know, the non-classical VC route, try to find funding from somewhere else and scale when everybody else is dying around you."

• Explanation: Suggests exploring alternative funding avenues to gain a competitive edge by scaling when others are retracting.

"One company in our portfolio has reacted to looks like a tough time for climate and sustainability by doubling and tripling down on getting their solution out to the world with very positive results."

• Explanation: Provides an example of a company successfully expanding its market presence during challenging times by being proactive.

"There are other categories of investors. Specifically, I'm thinking of families, family offices who have a very different lens and a very different timeline."

• Explanation: Points out the potential of family offices as alternative investors who might be more aligned with the long-term goals of sustainability startups.