Convective Capital Raises $85 Million Fund to Build Disaster Resilience

Early-stage venture fund expands its mandate to focus on resilience and risk management in the physical world, investing in companies like The Lumber Manufactory and Edge Technologies.

Convective Capital, an early-stage venture fund led by Bill Clerico, has raised a new $85 million fund to build disaster resilience. The fund is largely backed by institutions, including insurance companies and asset managers. This is a significant expansion of Convective's mandate, which was initially focused on "firetech," investing in firms like Pano, which builds AI-powered cameras to spot fires early, and Raine, which builds autonomous aircraft to dump water on fires.

Convective's original mission was to develop the idea of "firetech," investing in firms that can mitigate the impact of wildfires. However, with its new fund, the company is expanding its mandate beyond the threat of wildfire to an evolved thesis focused on resilience to provide risk management in the physical world. This new approach is a response to the growing number of natural disasters in California and around the 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 silver lining is that it's gotten so bad that the private markets can now take over — utilities going bankrupt, insurers leaving big markets, these are very large economic events, and those create markets for new solutions and products."

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.

Still, this is a nascent field, and 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. A big conversation in the field has been how to convince insurers to start investing directly in technologies that can mitigate the impact of disasters. Clerico says that is starting to happen, in part thanks to insurance startups Convective has backed, like Stand and Delos.

Convective's new fund is a response to the growing need for disaster resilience. The company's investment in companies like The Lumber Manufactory and Edge Technologies demonstrates its commitment to providing risk management in the physical world. With its new fund, Convective is well-positioned to capitalize on the growing demand for disaster resilience solutions.

"There's like a wave of new insurers that are stepping into the void left by the incumbents," Clerico said. "That's a really amazing opportunity for us as investors, but also it's provoking a response now from the incumbents, and they need to change the way that they're doing business."

Convective's investment in AI tools is also making its early-stage teams more productive, even as the technology enables new ways to spot fires with sensor data or model their behavior in simulations. However, 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."

With its new $85 million fund, Convective Capital is poised to play a significant role in building disaster resilience in the physical world.