Meet the investor: Alex Kremer

Alex Kremer is principal at Tin Shed Ventures, the corporate venture capital fund of outdoor clothing brand Patagonia, which invests in environmentally and socially responsible companies.
Q.
How did you end up at Tin Shed Ventures?

A. ‘My background is in investing – most of my experience was doing that in traditional businesses focused on driving profit as big and as quickly as possible. My first exposure to responsible reasons for investing was working with some endowments and foundations that tried to invest for causes bigger than just making a lot of money. That really stuck with me. So, when I went back to get my MBA, I focused on responsible investing and impact investing. There’s a lot of greenwashing that goes on in investing and raising capital so, for me, it was important to find the right group to join. I was very fortunate to stumble upon Tin Shed Ventures as part of Patagonia.’

Q.
What kinds of companies does Tin Shed Ventures invest in?

A. ‘We’re looking for people who are driven by solving an environmental problem. Our initial conversations with entrepreneurs are not about business model or revenue growth. Instead, we ask: “Why are you in business? What drives you as an entrepreneur?” We’re also looking for businesses where there is a strong correlation with the growth of the business and the impact. They see this problem that is harming our planet, they have developed a business idea that can solve it – and that can actually be a viable business.’

Q.
How are the companies you’ve invested in solving environmental problems?

A. ‘One company we’ve invested in is called Bureo. It works with fishermen off the coast of Chile to collect fishnets, one of the biggest sources of plastic pollution in our oceans. They clean the nets, recycle them, and create consumer products out of them like sunglasses and skateboards. We invested in it because it was directly solving a problem: the more product Bureo sells, the more plastic it takes out of the ocean. Another company we’ve invested in can essentially launder clothing without using water. It uses liquid carbon dioxide instead, which also stops microfibres being released into waterways.’

Q.
Do you make use of the innovations or technologies that you invest in?

A. ‘Yes. We very much see our investments as partnerships. We realised that we could use Bureo’s plastic in our hat brims, so now all our hat brims use 100% traceable, recycled fishnets. We see potential in the laundry technology, too, because we do a lot of washing for our Worn Wear programme. We want to help accelerate these innovations that are better for our planet by partnering with them, introducing them to people in our supply chain, and introducing them to people within Patagonia that work on social issues, environmental issues, products, material innovation, and so on.’

Q.
How does Patagonia feel about sharing these innovations with other brands?

A. ‘We very much see ourselves as first movers, but not the final movers. We want to adopt innovations, prove that they’re viable, prove that customers like them, but also prove that it’s good business and hope others will join us. We have conversations with competitors and tell them, “This is our partner, this is how we did it, this is what it cost.” Often, as we bring more brands into the fold, costs come down and the innovation becomes cost-competitive to the market. That’s great for us as investors, it’s great for the planet, and just great for the startup itself.’

Q.
Some people say impact investing isn't a way to make meaningful financial returns.

A. ‘People think you need to be concessionary if you’re doing impact investing. But Patagonia is a business, and our founder has said that every time he does something good for the planet, it’s made him money. We believe business is the way to move the needle in a really big way. So while our mission to save our home planet is our number-one priority, we think that can only come on the investment side through strong financial returns. So we want it all. We want to show a massive environmental impact – and we want to show that our returns are just as good as a traditional venture capital fund.

This article was first published in Courier Issue 37, October/November 2020. To purchase the issue or become a subscriber, head to our webshop.

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