How Collab Fund uses the ‘Villain Test’ to invest at the intersection of for-profit and for-good

We caught up with Guy Vidra, Partner at Collab Fund before he joins us at the HackSummit in New York to hear how they apply the ‘Villain Test’ to potential investment opportunities, why they’re betting big on Climate Deep Tech and which sectors they’re looking to invest in next.

Collab Fund recap:

• Check size: $1-10M 

• Stage you invest: Seed through Series B

• Size of your fund: Two funds: $125M (Collab V) and $225M (Collab SOS) 

• Industry verticals: climate solutions, food innovation, next gen consumer, industrial transformation, precision health

• Geographies you invest in: Primarily US and Europe

• Portfolio companies include: Brimstone, Seabound, Phaidra, Redwood Materials, Beyond Meat, Upstart, and more 

 Before Collab Fund, Guy Vidra spent his previous two decades as an operator. 

The first ten years were in software, including the early days of mobile technology, at mobile software pioneer, Proteus. 

Here he met his partner and Collab Fund Founder, Craig Shapiro. 

Guy spent the next 10 years in consumer internet/digital media including managing one of the largest divisions of Yahoo.

After leading revenue at XO Group, Guy teamed back up with Craig at Collaborative Fund. 

Collab started as a consumer-focused fund, which led to a depth of understanding around go-to-market. 

Fast forward to today and they apply that decade-plus of experience across industries and categories and support their portfolio companies on their pathway towards commercialization.

Aligning investing with purpose

To help drive his decision-making, Guy leans on a framework that the team uses internally called ‘The Villain Test’. 

Simply put, while looking for businesses that make the world a better place, they always try to look at companies through the lens of a self-interested “villain”. 

It ensures that they're always considering fundamentals such as cost and performance and serves as a proxy for TAM.

Betting big on Climate Deep Tech

Guy describes Climate Deep Tech as “the application of science and innovation to solve the gnarliest problems in the climate crisis.”

To give an example, he highlights Endolith, who are harnessing microbes to process critical minerals and subsequently minimizing tailings, increasing mineral yields all while reducing the reliance on sulfuric acid and consuming less energy. 

Promising Climate Deep Tech Sectors

Guy shares two areas of Climate Deep Tech he is most excited about:

Solutions for legacy industrial businesses that are badly in need of technological innovation for both efficiency and climate, for example Brimstone who are decarbonizing cement or Seabound who are capturing carbon on cargo ships. 

And the application of artificial intelligence in a variety of different use cases, for example Phaidra, where reinforcement learning algorithms dramatically reduce energy consumption and costs for data centers.

Startups preparing to fundraise

Fundraising for ClimateTech companies is on the upswing in 2024, but raising enough capital, and having enough time to build scale are challenges shared by impact startups.

While advice on how to fundraise varies on a case-by-case basis depending on stage and industry of startups, among other factors, Guy points out 3 universal tips:

• Narrative - why is this compelling and why are you the team to build this business?

• Economics - more than ever investors are laser focused on compelling unit economics. 

• Risk - be clear headed and transparent about the risks ahead. 

Getting on Collaborative Fund’s radar 

Guy recommends, “get involved with climate communities, accelerators and other programs and don’t be afraid to just reach out.”

Or reach out in person when you join Guy and hundreds of fellow active VCs at the HackSummit in New York this December 13-14th. 

For the premier US edition, the HackSummit will focus on an intimate and highly curated event - with just 600 attendees and ensure an ideal breakdown across sector, stage, focus and seniority. Ready to join us? Head this way to lock in your ticket.

P.S. Use code DEEPTECH20 to save 20% off your pass.