Convective Capital Raises $85 Million Fund to Build Disaster Resilience

As California's fire season kicked off early this year, with flames approaching a former nuclear test site outside Los Angeles, Convective Capital is betting big on disaster resilience. The early-stage venture fund, led by Bill Clerico, has raised an $85 million fund to back startups developing technologies to mitigate the impact of natural disasters. The new fund follows Convective's $35 million fund raised in 2022, which mainly backed wealthy individuals, including Clerico, a co-founder of WePay, which sold to JPMorgan for $300 million in 2017.

This latest fund is largely backed by institutions, including insurance companies and asset managers. Convective's original mission was to develop 'firetech,' investing in firms like Pano, which builds AI-powered cameras to spot fires early; Raine, which builds autonomous aircraft to dump water on fires; Burnbot, a startup creating robots for clearing brush and grasses; and Stand, an insurance company helping homeowners harden their homes against flames. With its new fund, Convective is expanding its mandate beyond wildfires to focus on resilience and risk management in the physical world.

'There's $60 trillion of real estate at high risk from disasters, the U.S. spends a trillion dollars a year mitigating and recovering from disasters, we need a new approach to this,' Clerico told TechCrunch. The first four investments from the new fund are in The Lumber Manufactory, a company building timber mills to help make forest management more economical; Drafted, a company using AI to do home design; Voltaire, a Y Combinator-backed firm building drones to inspect power lines; and Edge Technologies, a company building an insurance product to hedge against volatile commodity prices.

Convective's first fund has invested in companies that earned $100 million of revenue and are worth a collective $2 billion. Clerico said 79% of his first fund's portfolio companies have graduated from seed to Series A, which is much higher than industry benchmarks. A big part of Convective's work has been helping founders connect with customers regarded by many entrepreneurs as tricky to work with, like utilities, insurers, and government agencies.

Clerico says that AI tools are making his early-stage teams more productive, even as the technology enables new ways to spot fires with sensor data or model their behavior in simulations. The industry's wild push to build out data centers is also creating demand for exactly the services his companies supply. '[AI] is putting a lot of demand on the energy system and water system through data center construction,' he said.

'It's not just something in our portfolio, but it's actually creating market opportunity for our portfolio by adding additional stress to our physical systems.' Clerico also notes that a new wave of insurers is emerging to fill the void left by incumbents, creating opportunities for Convective's portfolio companies. As the threat of natural disasters continues to grow, Convective Capital is positioning itself to play a key role in developing innovative solutions to mitigate their impact. With its new fund and expanded mandate, the firm is poised to make a significant impact in the disaster resilience space.