Enduring Planet, a new fintech firm that exclusively funds climate entrepreneurs, is taking the wraps of its first product after securing $5 million in debt and equity financing.
The company aims to deliver fast debt capital to startups and small businesses that focus on climate, such as by mitigating emissions or helping humanity adapt to the disastrous effects of burning fossil fuels. “When the world's on fire, it's pretty important that we move quickly and not take six months to underwrite a deal,” co-founder and CEO Dimitry Gershenson said in a call with TechCrunch, pledging to deliver checks up to $500,000 in under 30 days to companies that meet certain criteria.
Out of the gate, Enduring Planet offers revenue-based financing to companies that bring in more than $25,000 per month. In exchange, companies must hand over a chunk of their monthly revenue (up to 7%) to Enduring Planet, in addition to as much as 3% more off the top, and a 1% origination fee, until the loan is paid back. So far, it’s funded two startups: New Sun Road, which builds software for renewable microgrids, and Aquaoso, a climate risk data company.
Lots of revenue-based financing options have cropped up in recent years, including offerings from Stripe and Uncapped, which slurp up sales data to predict future revenue. Enduring Planet does this too, casting its model as an alternative (or supplement) to dilutive venture dollars.
In the VC world, founders hand over some control of their business to venture capitalists — and, by extension, their limited partners, many of whom are entrenched in the fossil fuel industry. By contrast, Enduring Planet doesn't take shares or collateral, but it has other requirements, including that businesses have sizable gross margins (north of 35%) so they can weather the monthly payments. The model is incompatible with startups with razor-thin margins, such as emerging electric vehicle firms, but there’s some flexibility built in: “If a startup is having a bad month, they are not on the hook for a big principal and interest payment,” said Gershenson, adding that Enduring Planet is “already piloting a second instrument that allows us to offer non-dilutive capital to entrepreneurs” who don’t qualify for revenue-based financing.
Enduring Planet’s $5 million raise includes approximately $2.4 million in pre-seed equity and $2.6 million in debt, the latter of which is funding its first loans ahead of future raises. The company's backers include Climate Capital, Common Sense Fund, KD Venture Partners, Keiki Capital, Portland Seed Fund and Susquehanna Foundation.