After launching originally as US-based clothing company Patagonia’s corporate impact venturing fund $20m and Change in 2013, Phil Graves, recently promoted to senior director of corporate development, changed the fund’s name to Tin Shed Ventures.
He said for last year’s GCV Powerlist award: “We have far surpassed the original $20m Patagonia committed to spending on investments in outside businesses and so we changed the name to reflect Patagonia’s roots and founder Yvon Chouinard’s early days working out of a tin shed, which he still works out of from time to time today.”
The fund was GCV’s Launch of the Year when it started and its continued success has helped spawn a number of imitators, including Centrica’s Ignite Fund. It is a success built by Graves.
Rose Marcario, Patagonia’s CEO, for last year’s award said: “Phil Graves, who has run Tin Shed Ventures from the beginning, came to us from Deloitte, where he was a senior manager of business valuation.
“He is an astute judge of responsible entrepreneurs with talent and experience who have a good shot at success. So far, all the fledgling businesses we have invested in are healthy and on their way to flying solo. As for Patagonia, we are making a decent return in all ways. We are a more patient capitalist. New ideas take time to germinate. We do not go in with an exit strategy or insist beforehand on what the investment biz calls – you have to love the term – a ‘liquidity event’. We do not micromanage, nor do we seek a seat on the board of the businesses we invest in. We want these like-minded business to have the time and the freedom, as well as the wherewithal, to build in a healthy way – environmentally and socially as well as financially.”
Patagonia prides itself on its ethics and its social and environmental responsibility, and demonstrates this commitment in its investments. From the original investment date though to the end of last year, Tin Shed Ventures portfolio companies have averted about 27.7 million pounds of carbon dioxide emissions, 5 million pounds of waste, 2 million pounds of chemicals, and saved more than 100,000 gallons of water, according to Graves last year.
By having an evergreen fund structure, Patagonia has no set hold period for portfolio companies, and, as a B Corp – a company certified to be pursuing a mission involving standards of social and environmental performance, accountability and transparency – it encourages entrepreneurs to use the corporate structure as a way of combining financial and environmental goals in their mandate.
These deals include speciality flour mill Watershed Mills, California Safe Soil, which is creating organic fertiliser from unsold produce, NuMat Technologies, a materials technology company developing a nanoporous material that can change how gases are stored, transported and separated, Wild Idea Buffalo, a provider of grass-fed, naturally-raised buffalo in the US, Yerdle, a “stuff-sharing” app, Beyond Surface Technologies, a Switzerland-based chemicals company developing natural textile treatments, CO2 Nexus, which cleans and coats textiles with liquid carbon dioxide, and Bureo Skateboards, which recycles defunct fishing gear to produce skateboards and help keep oceans free from dangerous plastics.
As Alex Kramer, GCV Rising Stars 2018 award winner, said: “Tin Shed Ventures is our unique, long-term investment approach and our decision to share the innovations in which we invest with other businesses, including our competitors. Because we are the investment arm of a private, family-owned business, we have the ability to be patient with our investments and not be tied to a predetermined timeline.
“Second, while Patagonia wants to help develop an innovation and pull it through our supply chain into a final consumer product, whether it be a Patagonia Jacket or a food product as part of Patagonia Provisions, we realise that we are doing our portfolio company (and our investment) a disservice if we are the only customer. Therefore, once an innovation is commercialised, we actively approach others in the industry, even our competitors, and give them a roadmap for adoption.
“With increased adoption beyond Patagonia, not only are we benefitting as an investor, but because we focus on investments that generate an environmental and social return, this benefits the planet as well.”
And Graves is encouraging portfolio companies to work together. He said last year: “Our portfolio company, Yerdle, teamed up with Patagonia’s Worn Wear initiative to help launch a ‘recommerce’ platform, through which Patagonia will buy back used Patagonia garments and sell them on a new web platform.
“The garments that customers trade in will also be cleaned using another technology in which Tin Shed Ventures has invested. Tersus Solutions is a waterless textile processing company that cleans garments using liquid CO2 rather than water. The closed-loop nature of Tersus’s technology also allows microfibres to be captured within the system rather than flushing them into our waterways.”
Beyond Tin Shed Ventures, Patagonia has a fund to help install solar panels on 1,500 residential homes in eight US states. Patagonia is working with Kina’ole Capital Partners, a solar finance company,
Graves said Patagonia first partnered Kina’ole Capital Partners, another B Corp, three years ago in a $27m program to install residential rooftop solar panels in Hawaii and California. Last year, both launched another $40m solar fund in partnership with three other certified B Corps. Patagonia is the investor in the $40m fund, Kina’ole manages the fund, and New Resource Bank and Beneficial State Bank provided additional capital, while recently bankrupted Sungevity provided the solar technology, he added.
Graves said Tin Shed Ventures would continue to explore ways to leverage Patagonia’s tax equity dollars to fund renewable energy projects, such as wind and solar power.