Today, we are joined by Michael Smith, the co-founder and General Partner of Regeneration.VC Fund II of $150M. Regeneration.VC is an early-stage venture fund supercharging consumer-powered climate innovation.
Michael ran marketing & digital for Smith Broadcasting, a group of 20 network TV stations, before selling to Boston Ventures. Shortly thereafter, he followed his lifelong passion for music to become a touring DJ and performed alongside artists including Guns N Roses, Rihanna, Deadmau5 and Diplo.
In 2006, he launched The Playlist Generation, one of the world's largest background music providers. In 2010, he co-founded Creative Space, a real estate firm with a portfolio of 80 adaptive reuse projects between Los Angeles and San Francisco. After successfully exiting both companies in 2015, Michael formed Ponvalley, an environmentally focused family office initiative comprising philanthropy, research, and impact investments. He convened Shared Mission, an emergency climate summit with Former VP Al Gore, General Wesley Clark, the Department of Energy, and Harvard leadership.
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Table of Contents | Scroll ⏬ for all guest show notes ✍️
Episode chapters.
Michael’s journey from DJ to VC.
Learnings from Michael’s journey.
VC clicks. vs. Artist clicks.
Deep dive on Regeneration.VC.
Shout-out.
Biggest learnings in VC.
Tips & tricks for emerging VCs fundraising.
A counterintuitive learned in VC.
This episode is brought to you in partnership with Zero One Hundred Conferences, which organizes LP-GP networking events for PE & VC players in various European regions with a global outreach. In the last 8 years, they have hosted 49 events with 1700+ speakers, 6500+ investors, and 12000+ attendees.
Join the upcoming 0100 Conference CEE to meet 350+ LPs and GPs like 500 Global, CVC Capital Partners, EBRD, EIC, EIF, Erste Group, INVL Asset Management, LGT Capital Partners, MidEuropa, Molten Ventures, PFR Ventures, Schroders, and World Fund, to mention a few.
01:28 From DJ to Venture Capitalist: Michael's Unique Journey
03:34 The Power of Branding in Venture and Music
04:09 Specialization in Climate Tech Investing
14:04 Understanding Circularity in Sustainable Investing
25:02 The Role of LPs and Celebrity Influence in Climate Tech
32:31 Navigating Corporate Partnerships and Impact Goals
45:55 Finding Your Tribe and Embracing Change
48:39 Venture Capital Insights: Specialization and Navigating the Market
50:11 The Art of Perseverance in Venture Capital
52:04 Building Long-Term Relationships in Venture Investing
54:53 The Intersection of Venture Capital and Talent Management
01:01:14 Exploring the Potential of Generative AI in Music and Beyond
01:04:36 The Future of Music: AI's Role and Industry Insights
01:09:30 Venture Capital Meets Music: A Unique Blend of Talents
✍️ Show notes
We always ask our guests to write tweet-style notes for the conversation so we can share them with you all afterward. These are the words of the guest, no alterations made. Feast.
Going from DJ’ing to VC.
I was very lucky to have an amazing career DJing and curating music for a company I founded called The Playlist Generation.
I’m always asked what my DJ name was. I always just went by my real name Michael Smith. I figured I didn’t want to be in a boardroom some time and explaining that I was the guy with a marshmellow on my head. I was represented by William Morris and Pete Tong ran the DJ department.
Back in 2007, he asked me to DJ a show w him, the first electronic music event at SXSW back in 2007. We played together in between a few amazing acts including Bookashade, Damian Lazarus and the headliner was none other than…Deadmau5.
This group of young kids comes up to me while I’m playing and asks me if I was deadmau5. I’m like, he’s the guy over there with the giant mouse on his head.
Learnings from Michael’s journey.
Brand is important and how you represent and carry yourself matters.
We have worked to build a hopeful and encouraging company that gives a bit of hope and faith in a world that is highly challenged. We do believe that everyone of us has a role to play in the climate emergency and that together everything is possible.
VC clicks vs Artist clicks
Understanding how this world works, I have a cynical thesis that networks and social hierarchies and the smart navigation in these drive all industries at the higher echelons, so would love to riff cynically on how ‘the network play of venture’ likely looks the same as that of artists and celebrities
Venture totally has it’s clicks. Silicon Valley is totally guilty of this.
If you didn’t go to a certain school or a certain firm, it’s very hard to crack in. Many venture firms do deals together in cohorts…almost like they were a fund themselves. Generalist in particular are most guilty of this.
Then you have various gatekeepers in the ecosystem that want to see that you’ve checked various boxes. I totally get and appreciate their role, but it makes it very challenging to just break in.
Music was actually more democratic. Sure connections early could help get you gigs, but if you weren’t great and couldn’t keep the party moving, you were quickly out of a job.
Deep dive on Regeneration VC.
Why do you think consumer industries play such a critical role in the climate emergency and why did you move from sunny California to the rain of the Netherlands because of it?
Circularity is required to stand within planetary boundaries.
You can’t get there on energy alone (55% reduction potential)
Materials are the other 45% and 90% of biodiversity loss and water stress comes from consumer industries.
The world is only 7.2% circular according to the latest Circularity Gap Report. This is down from 9.1% 6 years ago - we are going backwards!
What is Consumer ClimateTech?
When we started 4 years ago, much as it is today, the word consumer got an unfavorable reaction in finance circles. Yet there are multi-trillion industries ranging from apparel, food, packaging, electronics, furniture. And multi-national consumer corporates are under great stress from their customers and governments to get in line w the environmental commitments they’ve made
Consumer ClimateTech is the underlying environmental hardware and software technologies required to get material value chains in line with planetary boundaries. We break these up into Design (materials inputs), Use (brand and service platforms) and Reuse (recommerce, waste2value and reverse logistics).
Consumer facing industries are under increasing pressure to start implementing circular solutions given shifting consumer behavior, regulatory pressure and the need to start deploying ‘insetting’ solutions to address scope 3 (upstream and downstream the value chain) emissions. Climate tech venture firms such as Regeneration.VC invest in the enabling technologies and business models to help brands accomplish this.
Why Netherlands?
The Netherlands has the boldest environment pledge to be 50% circular by 2030 and 100% circular by 2050. They have mobilized capital and innovators around the problem and are a circular hotspot
Regeneration partnered w leading NGO Circle Economy Foundation and is working with the government, venture funds in the ecosystem and players like TechLeap to invest and scale action
The EU Circular Economy Action Plan and Scope 3 regulation will fundamentally alter the way consumer industries operate and begin hitting this year with EU Deforestation Regulation, CDDR, EPR, Product Passports, Right to Repair…
Building Capital and Commercial Bridges between US and Europe
In regards to Fund 1, we have very special LPs predominantly consisting of FOs and Foundations
Leonardo DiCaprio (our first investor and strategic advisor to the fund)
Martin Gore of Depeche Mode
Mike Bryan (all time winning tennis doubles champion)
When we were fundraising on our first fund, it was the middle of Covid. One of our LPs suggeste we go on Toniic. I had met their founder Charly Kleissner years earlier and was impressed w them. On one of the calls we had w members, we met Siemon in Amsterdam.
Siemon is an incredibly thoughtful and accomplished entrepreneur prioritizing climate tech. He saw our vision, hired a top impact firm called Commenda to evaluate us and shared the results w the community
It ended up being one of the most successful raises Toniic has had on their platform and around 15% of our fund ended upcoming from Dutch investors. I started visiting Siemon and our other LPs and got to meet and learn more about the incredible scene in the Netherlands. The welcoming and open-minded nature of the community here is THE reason I ended up moving in August w my family.
Biggest learnings in 10 years of life.
Don’t be afraid to move on. 10 years ago I sold my music company and went all in on climate tech. My Mentors told me it was a terrible idea as cleantech had just crashed and I was backable in music and media. I basically had to start over and forge a whole new set of relationships and learnings: professors, nat’l labs researchers, founders, impact investors.
Understand complexity and break it down to simple parts. Dr Julio Friedman of DOE now Carbon Direct was one of those incredibly important new mentors. He helped me understand how to take incredibly complex problems and technologies, break them down into simple and digestible terms and share that learning with others.
Corporates Matter. This best way to derisk a deal is to have real commercial traction and buy in. Don’t spend all your time worrying about the perfect deal or what can go wrong. Corporates on board is the way. Move quicker through the TRL process w partnership and get manufacturing readiness level moving.
Defining Impact. 10 years ago Impact Investing was a fairly exotic concept. Today, there are thousands of players and great confusion around what real impact is and what metrics to use. It differs by country and even state.
Advice for 10 years younger self.
Don’t chase it. Avoid the Crowds: don’t chase the next hot thing. Go deep where you are passionate and find unexpected opportunities. I knew very little about consumer industries. With help from friends, we are now at the cutting edge of applying climate tech to consumer. Applied to our current work, look at Europe. While the case for a circular transition is clear, a large funding gap remains to make this happen. Currently only 1.5% of the loan portfolio of the European Investment Bank are circular investments and mostly in recycling infrastructure. Even though we are early, we see the waves building in the horizon.
Find Your Tribe: In a world of infinite connectivity, it’s never been harder to make real connections. Whether it’s founders, coinvestors, LPs…focus your time on making fewer and higher quality connections. We are in a battle for the future of our planet and we need the right brothers and sisters in arms who will ride to the end with you.
I was a DJ. I can read a room very well. This allows me to quickly pivot, learn and make a conversation work or my message compelling to very different audiences. Even ones that don’t want to hear from me. What you have to say is important. Going into heavy climate talks and saying why food, clothes and consumer products matter w strong backing data is not easy when you are up against nuclear, hydrogen, SAF, DAC…but let’s go. It’s Yes AND.
Tips & tricks for emerging VCs fundraising.
Specialize. You have very little chance to raise a substantial generalist funds in 2024.
Experience. Play to your strengths where you have unfair advantage and experience. Certain jobs, access, relationships, partners…why are you uniquely suited to win and what have you done about insuring success
The mirror. Whenever you are going out, keep empathy for others you are speaking to. It may seem simple that this guy or gal has a lot of Money and your life would be so much better if they gave it to you
This is a marathon, not a sprint. It will probably take you 3X longer to raise a fund and you’ll do with no support. It may look more like a side hustle for awhile. If you are looking for a quick path to the trophy, get out now.
A counterintuitive learned in VC.
The Marriage. Your LPs are more or less 10-30 year partners with you if things go really great. If they don’t go great, and most venture doesn’t work out including many of today’s current firms, be certain you have people who can support and nurture you to where you go next.
The more you give the more you get. By getting the best terms for yourself, you aren’t necessarily getting alignment with your LPs. Always strike a good balance here. Win-Win-Win.
Finance people aren’t always the best early stage investors. You can’t financially engineer your way into early stage success. You’ll need to get in the trenches with your founders and teams and will them forward to great outcomes. You may got lucky on one or two, but you won’t repeatedly win if you don’t do this.
🎓 Upcoming Academy Sessions
Fund Modelling in VC: Assumptions Sheet Construction
🌍 Virtual | 📅 Thursday, May 16 | 🕰️ 11:00 AM - 1:00 PM CET | € 200
This advanced fund modelling session focuses on creating an assumptions sheet for a VC fund model. We'll explore three key areas (Core Assumptions, Asset Development, and Equity Valuation Dynamics) to demonstrate their impact on fund performance.
You'll receive an assumption sheet template one week prior, and the session will focus on examining how assumptions affect fund performance, tailored to the information you provide upon registration.
👋 Upcoming in-person events we’re hosting
There’s nothing we like better than getting Europe’s best and brightest together with good food, drinks, and conversations that go truly deep.
From DJ to VC with the backing of the likes of DiCaprio, Martin Gore & corporate luminaries with Michael Smith, GP of Regeneration.VC