Lubomila Jordanova is the co-founder and CEO of Plan A, one of the cleantech startups in Europe with the fastest growth. The Recursive reached out to her to get a better understanding of the terrain that has been gained towards the net zero transition, what role cleantech startups can play, and which areas to focus on next to leverage opportunities given by the green transition.
The Berlin-based startup with a B2B carbon accounting, decarbonization, and ESG reporting SaaS tool has raised a $3M seed round at the beginning of the year, and is well on its way to scale globally, after raising a $10M Series A in November. Amid its many recognitions this year, Plan A also won a pilot project with Aareal Bank AG in Frankfurt and the Generali SME EnterPRIZE award for 2021.
Lubomila herself, who is also a co-founder of Greentech Alliance, a community connecting 1000+ cleantech companies with key stakeholders, is becoming a strong voice on topics such as climate change, sustainability, and strategies and solutions for businesses on the road to decarbonization, which she tackles in her recently launched newsletter, The Climate of Business. She connected with us from her London office to reflect on this hectic journey.
The Recursive: What are you most proud of as you close a spectacular year with Plan A? What does it mean for the business to grow so fast?
Lubomila Jordanova: We were 15 people at the beginning of the year, and we are 60 now. We had barely any funding, now we have $15 million. There’s just been a lot of things happening to us, including closing a seed round, and six months later closing a Series A.
Our most significant achievements have been along three dimensions. One has been the team. I’m so proud of the team that we’ve built, the type of professionals, and also the kind of humans that we brought onboard. The second thing is related to what our product has been able to achieve for our clients. We’ve been able to now process hundreds of thousands of tonnes of CO2 and get to a 7-8% reduction of emissions on average. And the final thing, which is quite important for the growth that we’re experiencing, is our international exposure. I’m calling now from London, where we just opened an office. In the last six months, we also opened offices in Munich and Paris.
Which are the keys to scaling a startup successfully?
One of the most important elements of being able to expand with a head down that is focused on getting things done is being humble. I think the power of being humble is an underrated part of success. It allows you to really align with your mission and vision without being overshined by what you see is a reflection of yourself through the eyes of others.
The second element is being data-driven. This is probably a cliché in the startup world, but I cannot emphasize enough how important it is to use data to justify making some choices, as well as to be proactive on what the data shows you to improve.
And the final element is just the people-side of the story. I think anyone that has built a company, or is in the process of doing so can say that having a team is a massive difference. It helps expand the capacity of the company to deliver on its own values, which is being able to offer a skillset and expertise that otherwise, if it were just you, you wouldn’t be able to do. So, spending time on exciting people and getting them onboard is another thing we spend time on.
What can technology and startups bring to the table in solving sustainability challenges, and why are they still left out of strategic discussions, such as at COP26?
Having experienced COP26, and being able to meet all the global leaders has definitely confirmed to me that technology is still some sort of an avant-garde solution that is not implemented at scale, or it’s not embedded in the mindset of how we think about addressing climate change.
Having said that, to me, this doesn’t undermine the role of tech. It actually probably amplifies the problem that we need to improve the communication side, as well as the implementation at scale, and achieving economies of scale for all existing tech solutions.
The role of technology is immense, but it’s only going to be realized if we have the capacity to test and expand on any of these solutions as part of implementing them in the real economy. What we have at the moment is thousands of different concepts and ideas and prototypes of things that could be useful, but because they have not been tested enough, we don’t know if they will be able to serve on a larger scale.
I think technology can optimize processes, eliminate waste, save energy, and do a lot of work to enable transparency. And it can allow for places that are affected by climate change to become visible on the map, to be made clear contenders for funding and other types of support. The applications are many, we just need to implement them at scale.
What can governments do to better support the scaling of cleantech solutions?
I think technology and the funding that is needed for it are kind of a self-fulfilling prophecy. You can’t have technology if there is no funding to kick it off, but then you can’t have the funding act effectively on any of the solutions for climate change if there’s no technological response to it.
The European response to COVID and the post-COVID economy have demonstrated that governments understand that it is important to financially support technological solutions with equity-free, grant-type of funding, so that founders can test and scale solutions without losing value.
Is it enough? No. Why? Because beyond the funding, we need to also connect these startups with the possibility of the funding to also lead to commercial relationships. So how can the ecosystem that is around the government also support this implementation at scale?
I think if we go outside of the EU spectrum, there’s definitely a lot of work to be done. The US still relies heavily on private money for climate investments. Then you have Asia, Africa, Latin America, where there’s further work to be done just because these issues are not as visible yet.
What was your overall impression of COP26? Which pledges did you find most ambitious, and, conversely, where was there room for more?
I believe COP26 was a success. Maybe this is a contrary opinion to many that have been shared over the last few weeks. The event was historically a governmental affair, gathering different representatives of governmental bodies to allow them to discuss the issues of climate change, and define a unified agenda. This time there were a lot of private sector players: corporate, startups, even if not too many, and NGO activists. Most of the stakeholders that should have been there were there. And because it managed to gather and invite this audience, I believe that COP26 was a success.
In terms of new pledges, I was excited by the deforestation and methane ones. There was also the Glasgow Alliance for Net Zero Financing setup by Mark Carney, which activated $130 trillion in decarbonization money for reducing the emissions of assets seating within the hands of hundreds of different financial institutions.
What could have been more ambitious, for instance, was the funding for the reparation of countries that are already facing climate change. We need to be connected to one another in addressing the issues, then the responsibility needs to be spread across everyone, with the bigger and heavier lift done by the Western countries, just because we have a big part to play in the creation of these issues altogether. A country like Bangladesh is emitting 1.3% of the CO2 emissions on this planet, yet they’re the ones with some of the worst repercussions, including people dying because of flooding.
Following the summit, the GFANZ coalition was criticized for allowing stakeholders with fossil fuels investments to participate. What do you think of this inclusive approach, that risks taking some pressure off of companies that still fuel climate change?
I’ve had the honor to work extensively with the high-level champion Gonzalo Munoz at COP26. During his tenure, the focus has been on using the deep understanding on climate change, which is about this global scale issue that impacts all of us, and that will wipe out capital of balance sheets, and eliminate some financial assets.
With this effort they aimed at having an inclusive approach, where they would speak the language of the different stakeholders, but ultimately bring them to the same endgame, which is reducing carbon emissions and activating capital for the implementation of climate adaptation and reparation strategies.
And I think they should claim success for the fact that, by comparison, just one and a half years ago, there was actually no allowance to discuss the 1.5°C commitments that were made in Paris, while some countries were even banning this from media communication. We should allow ourselves the possibility to be proud of what has been achieved with, of course, the deep understanding that there’s a lot of work still to be done.
Going further, what do you think will help disincentivize companies from investing in fossil fuels?
I think there’s probably a few years more left in which some companies will try to squeeze out investments in fossil fuels, and make some return on it. But just as the new energy crisis demonstrates, this instability that is ahead of us due to climate change is going to lead to a lot of vulnerability in the way we calculate the possible return on these kinds of assets. So, with this in mind, the biggest disincentives will be seen in the numbers. It will be due to the climate risk, the shift in consumer behavior and employee behavior, as well as changes at the institutional level.
Which challenges will the CEE region need to address – and what opportunities can we leverage?
Ending coal, one of the biggest challenges of Central and Eastern Europe, as well as ending dependency on energy resources that come from elsewhere. We have sunny countries, healthy in terms of nature, even though sometimes with unclean air, and we need to use that. We need to equip our countries to be prepared for the years when distribution of energy sources outside of our boundaries will not be as accessible and lead to a lot of costs.
On a more fundamental level, one of the key elements is education. For a lot of people, the topic of climate change is not top of mind and they don’t connect it to their day-to-day existence, which is a missed opportunity, because there’s a lot of revenue hidden in sustainable business models. We need to educate ourselves on how we can make this leap so that the business side is also covered, and we can withstand any kind of challenges that we might experience due to climate change.
And then the final thing is related to using more innovative vehicles for investment. I know a lot of startups doing amazing stuff on sustainable innovation in Romania and Bulgaria, as we have them as part of the Green Tech Alliance. And it is, to some extent, uncommon that they are so mature in their value proposition, and they are so experienced with technical complex stuff. That is something that should become of importance for institutional investors, VCs, and investors, because it is going to allow for the economies to move in a healthier manner outside of the climate crisis.
What concrete actions would you advise businesses to take in the coming years to prepare for new commitments and regulations?
For businesses, there’s a single most important step that they need to take: start measuring your performance on ESG-related KPIs. There’s three reasons for that.
One, the regulation is going to catch you if you don’t do it. It is going to inevitably become part of your agenda, so the sooner you start, the better.
The second topic is engaging your full value chain on the topic of sustainability and ESG, be it employees, customers, or suppliers. In order for you to achieve any sustainable goal, you have to involve the supply chain stakeholders, because they’re probably making up more than 70% of your emissions, and are responsible for any unclear, or unrefined commitments to ESG.
And then the third one is related to making small steps. You don’t need to climb up Everest, but rather pick a hill and go slowly, but surely. Companies quite often mistaken the sustainability and ESG journey for an utterly complex one, with 300,000 steps, projects, and people. It is a lot simpler. You simply need to have the courage to take the first small step, and start implementing small improvements, which of course will inevitably lead to the significant shift in positioning as a market leader.