We’re interested in cities for 3 reasons.
Improving core city sectors like transportation, real estate and energy are central to decarbonization.
Cities are the front lines of adaptation because they’re home to most of the at-risk people and assets.
Higher density communities make decarbonization and climate change adaptation cheaper, per capita. , so Urban Us also focuses on how to make city life more attractive, by addressing negative externalities of city living like public health and traffic congestion.
We founded Urban Us in 2013 because we concluded that startups would play an outsized role in re-imagining the core sectors used to design, build and operate cities. It’s working – our earliest investments are leading the way in areas like electrification of mobility, conservation of water, resilient food supplies and natural hazard simulations.
We had to unlearn lessons from our early days as seed and growth stage investors. We believe some things that might surprise traditional venture capital investors.
- Identify stakeholders and then customers. It’s usually the case that when startups work in cities, there are multiple possible customers. The problem for early stage startups is that some customers are slow to adopt new business models or technologies. One of our first investments, Rachio wanted to sell to water utilities but that proved to difficult early on, so they built a successful consumer product and after they had grown to tens of millions in revenue, they came back to water utility customers
- Sometimes the most impactful tech looks like toys for wealthy customers. It’s been true for PCs, GPS, mobile phones and then smartphones – the wealthiest institutions and people pay high prices to be the first users, but this often paves the way to drive down costs and make technologies available to everyone. We don’t mind looking silly.
- We don’t see policymakers as obstacles but opportunities to guard against unintended consequences. Startups have a role to play in showing how to get from science fiction to real world results. And this helps set more aggressive policy goals and write better regulations. Our portfolio companies routinely benefit from their interactions with policymakers and regulators.
- Venture capital is just one type of capital. Grants, supplier credit, revenue-based finance, asset finance, etc. We encourage our founders to make use of all types of capital and to benefit from the learnings and insights of various different investor groups. Even if you are a venture scale business, why would you sell more of your company?
- Great founders can come from anywhere but access to great customers and investors is still concentrated in a few cities. The Bay Area remains the clear leader for all stages of venture capital. Not so for other types of capital (see point 4). Great customers can be found in many more places. Our team. We has been distributed from the start – we live inlive in SF, NY, LA and DC. More and more of our teams are distributed too.
- Good governance need not mean being a board member. We’ve pioneered different approaches to ensuring that we can be most helpful to founders. This often means we’re not even voting on boards, but we’ve found that we can still help to get teams to the best decisions. And engaging with stakeholders is a good way to avoid unintended consequences (see point 3).
- Top tier financial outcomes and outsized public benefits are achievable. We’ve seen this in our portfolio and in our angel investments before Urban Us. And there is a small but growing universe of funds who can and do achieve outsized financial gains while sharing some benefits with other stakeholders. We want to work with founders who expect both. We believe that a real focus on serving people will lead to great outcomes for founders, their teams and investors. And just as importantly for everyone staring down one of humanity’s greatest challenges – climate change.
Above all, we prioritize our portfolio founders’ success in delivering, rapid, scalable, positive results.