In the Room with Daniel Betts

This week we are excited to return with another LIVE rendition of The Room Podcast! In front of a live audience at Art Basel in Miami, we are joined by Daniel Betts, founder of Blue Frontier Labs, and Tosh Ernest, Head of SVB Catalyst 2045, a new program started by SVB to further support under-represented founders across every industry.

In this episode, we delve into Daniel’s early career in the energy sector, where he recognized the pressing need for efficient air conditioning solutions. From merging fuel cell technology to founding Blue Frontier Labs, explore the intersection of digital and physical solutions in the cleantech space as Daniel shares his vision for a sustainable future and the transformative impact of investing in cleantech companies.

Plus, Tosh discusses the importance of founders forging strong banking relationships, such as SVB’s partnership with Daniel, to support startups through various stages of growth. Discover how SVB Catalyst 2045 is empowering underrepresented founders and driving innovation in emerging segments, reshaping the landscape of entrepreneurship.

This week’s episode covers topics such as Blue Frontier’s innovative approach to air conditioning, the value of strong banking relationships, and the importance of diversity and inclusion in entrepreneurship

Listen on Apple Podcasts

Theme 1: Blue Frontier’s innovative approach to air conditioning

Growing up in Panama, Daniel Betts had to constantly devise solutions to life’s everyday problems — a skill he says is especially important in developing countries. He credits that experience early in life for his ambition to become a founder.

Betts’ company, Blue Frontier Labs, is a complete rethinking of the efficiency and power sourcing for air conditioning. With his PhD in mechanical engineering and deep subject expertise in thermal sciences from a career in energy, Betts realized the substantial opportunity in the air conditioning market and set out to be a changemaker.

Betts believes that the energy industry’s great modern challenge is finding ways to meet increasing energy demand, sustainably and efficiently. With his first startup, Be Power Tech, he aspired to create both a new fuel cell technology and a new air conditioner. Reflecting on that first startup experience, Betts considers how high of a risk profile those goals represented — goals that inherently depended deeply on each other and challenged a highly mature, ubiquitous industry.

Where Betts hopes to unlock value is in timing the usage patterns of air conditioning to the availability of renewable energy sources from the power grid. Consumer behavior utilizes air conditioning at the wrong time to take advantage of power from sources like solar and wind generation. If Betts could find a way to correct that timing difference with a rethought AC unit, he could bring down the levelized cost of electricity across the board. His initial product offered AC three times more efficient than a conventional unit, effectively expanding access to a broader socioeconomic range of property owners.

Betts is a mission-driven founder, pushing for a product that contributes to both sustainability and makes AC available to everyone who needs it. He hopes Blue Frontier can reduce the fixed and recurring costs of AC to building owners and minimize the infrastructure requirements, both common barriers, making his product accessible in the developed and developing world. One dimension of that value chain is finding a way to charge electricity providers for the cost efficiencies created by the AC unit, a revolutionary business model for startups in his space.

Blue Frontier’s ultimate challenge in the mature air conditioning industry is how resistant to change customers and providers can be. Betts is faced with the contradictory messaging that his unit is “the same but completely different,” offering quality, reliable cooling at less cost. A tailwind helping Blue Frontier is the sense of urgency around cutting emissions in the short-term, which may push potential customers towards their solutions when presented with Blue Frontier’s “overwhelming benefits.”

Betts’ recent successes include a $20M Series A raise, which will enable his team at Blue Frontier to push forward and continue to scale the distribution of their units.

Theme 2: The value of strong banking relationships

The first investor to believe and invest in Betts’ business was the Third Derivative incubator at the Rocky Mountain Institute. The incubator, alongside Hollow Earth Ventures and a F&F investment, put together a $1.75M seed round to provide Blue Frontier with the capital needed to get their idea off the ground.

Betts speaks about explaining not only the trenches (the day-to-day, short-term) to investors while raising funding, but envisioning the cathedral on the other side. This visionary goal is often most inspiring to investors and allows them to see the potential for significant change from their early-stage checks.

Silicon Valley Bank, represented in this conversation by Catalyst 2045’s lead Tosh Ernest, has proven an influential partner for Betts on his startup journey. Ernest distills the value adds of a bank for startups into the ABC’s: availability, bankability and culture. Founders need a true personal relationship with their banker, with the ability to contact the same point person about concerns and questions. The importance of that relationship was seen with the issuance of Paycheck Protection Program (“PPP”) loans during the pandemic in 2020 — often, only founders with proven banking relationships were able to secure that needed relief. Bankability is a straightforward metric of a bank’s ability to fund a true $1B idea, making that scale of capital available. And finally, the C for culture hits on every aspect of a startup that can benefit from network effects and introductions. Having a focused venture bank like SVB allows founders to get in contact with the right people and seek effective advice at every step along the founding journey.

The long-term banking relationship, from the start of an idea through the rapid growth phase, requires a bank that understands the risks and needs of backing startups. Betts emphasizes the help SVB has provided as he continues to scale, whether offering flexibility in predetermined processes, risk management, or growth capital management services.

A strength SVB offers on top of financial services is access to their network and established community, which is equally vital for startups like Blue Frontier.

Theme 3: The importance of diversity and inclusion in entrepreneurship

Betts emphasizes that everyone alive today is living with things, processes and products that need to be transformed for us to live on a sustainable planet. It should be an extremely inspiring time, opening up the capacity to create a new world with improvements across all sectors that truly move the needle.

Entrepreneurship for Betts comes down to thinking about the problem differently. A previously science-fiction-like world can become a reality when founders from a range of backgrounds are able to get backing for their disruptive ideas.

Ernest adds to the conversation, making use of the live audience’s input. She asks: has anyone used a computer, a refrigerator, a home security camera, or stopped at a traffic light today? Does anyone in the audience know someone who has had a heart transplant and uses a pacemaker? Each of these innovations was pioneered by a female, black, or Latinx founder — the target groups for SVB’s Catalyst 2045 initiative.

As part of SVB’s commitment to bringing capital and partnership to the centers of these communities, the bank plans to scale programming in Miami (a 70% Latinx population). Another regional center to focus on supporting black founders will be Atlanta, where many are building the center of a Black Silicon Valley.

Betts and Ernest have both been inspired by entrepreneurial female figures that encouraged them along their professional journeys.

Betts’ female heroes in his life include his grandmother and Dr. Jean Andino, the original faculty member at University of Florida to award him with a fellowship before his PhD. His grandmother was a black woman in Panama during legally segregated Jim Crow times. She, alongside her husband, decided to start their own business regardless of the racial barriers; Betts credits that decision for changing his family’s trajectory for generations to come. Both women were pivotal to Betts’ ability to believe in himself, informed by these extraordinary examples of support and self-belief.

For Ernest, the leadership she experienced at Chase under then-CEO Thasunda Duckett impacted her deeply. She recalls an experience during a meeting when Duckett asked her if she had a NYC-based hair braider. After Ernest told her that she didn’t, having just relocated from London, Duckett paused the meeting to send a text introduction to her own hair braider. Having genuine leaders like Duckett, now the CEO of TIAA, that fully embrace their identities as black women has helped Ernest show up authentically in professional settings in ways she hadn’t previously imagined.