Amasia’s Investment in Clarity Movement
Last week Amasia co-led a Series A investment in Clarity Movement. Marc Tarpenning and I have joined the board of the company. Marc, a co-founder of Tesla, is a venture partner at Spero Ventures, our co-lead.
Clarity, based in Oakland, California, provides a platform for air pollution data measurement and management. It offers low-cost and high-resolution air quality data for municipalities and corporations.
We came to our investment decision on Clarity several weeks ago and the coronavirus crisis was not a factor in our decision. However research has unsurprisingly indicated that air pollution and susceptibility to respiratory infection are highly correlated.
We are grateful that the company has a role to play in this difficult moment. The company has expanded its opensource maps to include COVID-19 information. Their overview can be found here, and I expect more information and analyses to follow.
Clarity represents the fourth investment by Amasia in the last nine months within the framework of our climate and sustainability thesis.
We have made two each in our target geographies of the US and Southeast Asia. Two have been at the seed stage; two, including Clarity, at the A. We are not temperamentally suited to being passive investors on a cap table; in each of these four investments, we play a board role.
We build highly concentrated portfolios and make very few investments each year. I thought it might therefore be useful to lay out how Clarity fits our investment criteria.
Our investment thesis around climate and sustainability, because it is topical, can obscure an important fact: we are not “impact” investors. We are an old-fashioned VC firm — we just happen to believe that large companies will get built in the cause of fighting the climate crisis.
In other words our companies need to fulfill our many other criteria, including operating traction.
In Clarity’s case, this includes growing annual recurring revenue (ARR) 21x from December 2018 to December 2019; remarkable capital efficiency (the company has raised a laughably small amount of capital relative to the oversized rounds we read about); and strong internal processes for a company at this stage.
The fit with our investment thesis, as outlined in our framework last year, is obvious. Clarity falls within our first “R” of behavioral change, namely Reducing emissions. It does so by providing the precise information needed for cities and companies to assess their air pollution problems and identify potential solutions.
Based on the data, cities and companies can understand and identify when and where air pollution is happening (i.e. hotspots), and understand who is exposed. Customers can also use the data to measure the efficacy of emission reduction policies, justify their investments, and iterate to solutions more efficiently.
But beyond the fit with our thesis, there are three other elements that we found particularly appealing:
Global customer base: For a company at its stage, Clarity has an astoundingly global footprint, with the solution deployed in over 70 cities in over 30 countries. This is testament to the nature of the problem which is global — and the virtues of the Clarity product, which can be used relatively easily by customers anywhere. This is linked to the fact that it is a full stack solution (more below).
Full stack solution: The company provides a full stack solution including the measurement device (a “Node”). This makes it truly plug-and-play, in a difficult and complicated space. Value resides in all components of the solution — the Clarity Node, Clarity Cloud, and Clarity Insights — and customers get all of it for a single subscription price.
Focus on delivering value, not on owning data: One of the most appealing things about Clarity is that the company does not retain ownership of the data. Many tech companies contort themselves to build proprietary moats around data ownership. The data here belongs to the customer while Clarity focuses on delivering value at each layer in the stack.
If you’ve made it to this point, you’ll have noted that I have made no mention of the Clarity team. As early stage investors, so much of our decision revolves around judgment calls about a team. Here I can state that of course we are delighted to partner with this transparent, smart, and dedicated management team.
But as the years go by, I’ve become a tad cynical about overwrought VC announcements about management teams, and vice versa. The Greeks — I am quoting Solon — believed that it was useless to speak of happiness while someone was alive. The true measure of happiness, according to them, can only be measured when a person is dead, and we can look back and evaluate how they lived.
So it is with VC-founder partnerships. Of course we are all delighted — we just began, and it would be extremely peculiar to begin by hating each other :). The true test, however, is for me and the Clarity team to come back here several years hence and talk about how the partnership was a delight from start to finish.
I hope and expect to do so.