Latest / The Startup Exit Podcast with Fexingo: IPOs, Acquisitions, and Founder Liquidity Events / The Convective Capital 85 Million Disaster Resilience Bet
Transcript
- Lucas: So Convective Capital just announced an $85 million fund focused entirely on disaster resilience. And I think this is one of those moments where the venture world is quietly pivoting toward a problem that’s been hiding in plain sight. Luna: Eighty-five million is a decent size — not megafund territory, but serious. What exactly is their thesis? Lucas: Their bet is that climate adaptation — not just mitigation — is going to be a massive commercial opportunity. Mitigation is things like solar panels and batteries. Adaptation is wildfire detection networks, flood modeling platforms, parametric insurance — the stuff that helps you survive what’s already happening. Luna: Right, because we’re already seeing the damage. Last year’s wildfire season in California alone caused over $15 billion in insured losses. Lucas: Exactly. And yet, venture capital has historically been terrible at funding this space. The timelines are long, the buyers are often governments or large insurers, and the exit paths are murky. Convective is essentially saying: that’s changing. Luna: What gives them confidence? Is there some data that suggests exits are becoming more viable? Lucas: A couple of things. First, the public markets are starting to reward thematic funds. Look at ARKK — it’s up 2.5 percent over the past five days. ARKG, the genomics ETF, is up over 8 percent. That tells me investors are hungry for stories that aren’t just AI and mega-cap tech. Luna: So there’s appetite for thematic exposure. But disaster resilience specifically — have we seen any notable exits? Lucas: A few. One example is a company called One Concern, which did flood and seismic modeling — they were acquired by a larger infrastructure firm a couple years back. Another is Pano AI, which does wildfire detection using cameras and AI. They raised Series B and are seen as a potential acquisition target for a utility or a reinsurer. Luna: It feels like the exit path for these companies is often an acquisition by an incumbent, not an IPO. Is that the playbook Convective is betting on? Lucas: I think so. The IPO window for climate adaptation startups is still narrow. But the strategic value to insurers, utilities, and large construction firms is huge. If you’re a reinsurer like Swiss Re, buying a flood modeling startup gives you a direct competitive edge in pricing risk. Luna: And those incumbents have the balance sheets to pay up. So the exit could be a nice multiple, even if it’s not a billion-dollar IPO. Lucas: Right. Convective’s founder, Kevin Koy, used to run the GeoCollaborate lab at UC Berkeley. He’s been in this space for over a decade. The $85 million fund is his third vehicle, and he’s got a track record of early-stage bets that later found homes. Luna: What kind of startups are they actually investing in? Give me a concrete example. Lucas: One that I think is interesting is a company called Sensible Weather. They offer parametric insurance for outdoor events — if it rains on your wedding day, you get paid automatically. It’s a simple product, but the underwriting is complex. They’re essentially packaging climate risk into bite-sized policies that consumers and businesses can buy. Luna: Parametric insurance is growing fast. It’s a much cleaner product than traditional claims-based insurance. And it’s perfect for an exit — either an insurer buys the tech platform or a distribution partner like a travel site acquires them. Lucas: Exactly. And then there’s the wildfire detection space. Companies like Pano AI and Fireball are building networks of cameras and satellites that can spot a fire in minutes. The obvious buyer? A utility that needs to prevent its power lines from sparking the next big fire. Luna: That’s a regulatory-driven need. PG&E essentially got forced into bankruptcy because of wildfire liability. So they have a huge incentive to invest in detection. Lucas: And that’s the thing — disaster resilience startups don’t just have a nice to have product. They have a must-have for a specific set of buyers. That creates a very clear exit funnel, even if it’s not a household name IPO. Luna: But eighty-five million dollars — that’s a lot of capital to deploy into early-stage companies. How many deals are they looking to do? Lucas: They typically lead seed and Series A rounds, investing $2 to $5 million per company. So roughly 15 to 20 portfolio companies over the life of the fund. They’re not spraying and praying — they’re picking specific verticals: wildfire, flood, storm, drought, and heat. Luna: Heat is interesting. We don’t hear as much about heat tech startups. What does that even look like? Lucas: Things like cool roofs, reflective pavements, and personal cooling devices. But also data platforms that help cities identify heat islands and prioritize tree planting. It’s less sexy than wildfire drones, but the market is enormous — every city in the world will need to adapt to higher temperatures. Luna: So the fund is effectively a bet that climate adaptation will become a formal asset class. But I wonder — does the current regulatory environment in the U.S. help or hurt? Lucas: It’s mixed. On one hand, the Trump administration just delayed an AI security executive order, saying they don’t want to get in the way of leading. That suggests a hands-off approach that might also apply to climate tech — less regulation could mean less forced adoption. Luna: But on the other hand, states like California and New York are pushing their own adaptation mandates. And insurance regulators are forcing companies to price risk more accurately, which drives demand for better modeling. Lucas: Exactly. So the push is coming from the bottom up — state-level policy, market pressure, and actual disaster events. That’s a pretty durable tailwind, regardless of who’s in the White House. Luna: Let’s talk about the exit landscape more broadly. We’ve seen a lot of AI and defense tech IPOs, but climate adaptation is still niche. Do you think we’ll see a disaster resilience company go public in the next two years? Lucas: I think it’s possible, but it’ll be a company that has both a government contract and a commercial subscription model. Investors want recurring revenue, not just project-based work. So a company like Jupiter Intelligence, which does climate risk analytics for banks and real estate, could be a candidate. Luna: Jupiter has raised over $100 million from investors including Sequoia and Alphabet’s Gradient Ventures. That’s serious backing. Are they profitable? Lucas: They haven’t disclosed, but they’ve been around since 2015 and have a large customer base including the FDIC and major insurance companies. If they file an IPO in 2027, it wouldn’t surprise me. Luna: So Convective’s $85 million fund is essentially planting seeds for that kind of exit. But what about the founders themselves? Are they seeing liquidity earlier? Lucas: Some are, through secondary sales. Convective has a philosophy of letting founders take some money off the table early, which is unusual for early-stage funds. They argue that climate tech founders often have a mission-driven mindset but still need to pay rent. Luna: That’s smart. It reduces founder burnout and keeps them incentivized to build for the long term rather than chasing a quick flip. Lucas: Exactly. And it also signals to limited partners that the fund is thinking about liquidity, not just waiting for an IPO that may never come. In a space where exits are rare, that’s a practical approach. Luna: Speaking of LPs — who’s putting money into this fund? Is it institutional, family offices, or impact investors? Lucas: According to their SEC filing, it’s a mix. Foundations like the Rockefeller Family Fund, some insurance company balance sheets, and a few high-net-worth individuals with disaster experience. The interesting part is the insurance money — they’re essentially funding the startups that could become their future acquisition targets. Luna: That’s a built-in exit pipeline. If you’re an insurer and you invest in a fund that seeds flood modeling startups, you get first look at acquiring the winners. Lucas: Right. And that’s a structural advantage Convective has over a generic climate tech fund. The LPs are not just passive check-writers — they’re potential acquirers. Luna: Let’s zoom out. The broader venture market in May 2026 is still digesting the post zirp adjustment. We’ve seen some mega-rounds for AI, but early-stage funding overall is down from 2021 peaks. Does this fund signal a rotation toward adaptation? Lucas: I think it’s more of a niche bet than a rotation. The total dollars going into climate adaptation are still tiny compared to AI or even clean energy. But the rate of growth is interesting. According to PitchBook, adaptation investing grew 40 percent year-over-year in 2025, albeit from a small base. Luna: And the catalyst is obvious. Wildfires in Canada, floods in Pakistan, heatwaves in Europe — every year the damages get bigger. At some point, the market has to price that risk, and startups are the ones building the tools to do it. Lucas: That’s the thesis. And Convective is basically saying: we’ll be the ones funding those tools, and we’ll help you exit through the very institutions that need them most. Luna: So for a founder listening right now who’s building a disaster resilience startup, what’s your advice on positioning for an exit? Lucas: Two things. First, get a government or enterprise customer early — that validates the need and makes you a credible acquisition target. Second, build a data moat. The most valuable companies in this space are the ones that own unique datasets, because incumbents can clone your software but not your data. Luna: And if you’re a founder thinking about raising venture capital, do you go to a specialist like Convective or a generalist firm? Lucas: Specialist, every time. Generalists will benchmark your company against SaaS metrics and get confused by long sales cycles. A specialist understands that closing a deal with a state government takes 18 months, and they’ll have the patience for it. Luna: Plus, the specialist’s network is directly relevant. Convective’s LPs include potential acquirers. That’s a huge advantage. Lucas: Right. So $85 million might not move the needle for the entire venture industry, but for the disaster resilience ecosystem, it’s a serious signal. And I’ll be watching to see which of their portfolio companies gets acquired first. Luna: Any early bets you’re tracking? Lucas: I’ve got my eye on a company called Cloud to Street, which uses satellite imagery to map flood risk in real time. They already work with the World Bank and several insurance companies. If anyone in Convective’s portfolio is going to get bought by a Swiss Re or a Munich Re, I’d bet on them. Luna: That’s a good one. And I’m curious to see if the insurance LPs themselves end up making direct acquisitions. Could be a trend we see more of. Lucas: Absolutely. The line between LP and acquirer is getting blurry, and that’s probably a good thing for founders who want liquidity without a traditional IPO process. Luna: Alright, so we’re tracking Convective Capital, $85 million, disaster resilience, and a handful of interesting portfolio companies. Next time we’ll check in on how the fund is deploying and whether any exits materialize. Lucas: Sounds like a plan. For now, I think it’s a space worth watching — especially as the next wildfire season approaches.