What sets apart the founders who persevere through immense challenges and come out stronger on the other side? In this episode, David sits down with Shaun Abrahamson, Co-Founder & Managing Partner at Third Sphere. Shaun shares his unique insights into the high-stakes world of venture investing, particularly in climate tech and hardware, reflecting on the kinds of founders he backs and the unforeseen hurdles they've had to overcome.

Shaun delves into his philosophy on investing in early-stage companies, emphasizing the importance of resilience and adaptability in founders. He also discusses the intricacies of climate tech investment and the lessons he's learned from over two decades in the field.

Takeaways:

The Importance of "Burned Bridges": Shaun explains that he looks for founders who feel they have no option but to succeed, drawing a comparison to immigrants or those without a fallback, which can drive relentless focus and fortitude.
Signals of Early-Stage Investment: Investing at the pre-seed stage involves identifying teams with potential through their work product rather than initial conversations.
Challenges of Climate Tech Investing: The difficulty in obtaining clear customer signals within climate tech is highlighted. Shaun notes that genuine customer commitment is hard to gauge and is essential for moving beyond pilot projects.
Weathering the Storms: Shaun emphasizes that founders who persist through geopolitical challenges, like supply chain disruptions and tariffs, emerge uniquely stronger.

Quote of the Show:

“Portfolio math is brutal because it basically says that most companies don’t matter… it’s very easy to say, it’s very hard for founders to accept they may not be that one or two companies." - Shaun Abrahamson

Links:

LinkedIn: https://www.linkedin.com/in/shaunabe/
Website: https://thirdsphere.com/

Ways to Tune In:

Substack: https://notanotherceo.substack.com/
Spotify:https://open.spotify.com/show/1NQ9oAB2XKlgWeL8iEQXg0
Apple Podcasts:https://podcasts.apple.com/us/podcast/not-another-ceo-podcast/id1751581707
YouTube:https://www.youtube.com/@NotAnotherCEOPodcast

Chapters:

00:00 Intro

01:30 Burned Bridges Mindset

03:47 Early Bets And Bad Logos

06:20 YC Founder Signal Noise

08:48 Work Product Over Pitch

11:32 Climate Hardware Realities

15:39 Lego Building To Revenue

17:29 Tariffs And Supply Chain Chaos

20:02 Founders Forged By Turmoil

23:54 Why Third Sphere Went Climate

26:29 Mission Driven Founder Support

27:26 Belief And Reality Checks

30:41 Direct Feedback As A VC

35:35 Private Credit Replaces Banks

39:15 Founder Updates And Trust

44:29 Portfolio Math Harsh Truths

49:09 Biggest Missed Deal

50:46 Next Decade Climate Bets

53:16 Outro