Aravaipa Ventures was inspired by the smell of clean, crisp Colorado air. Founder Robert Fenwick-Smith (MBA 1988) and his family had moved from France to Boulder in 2007 as he contemplated his next professional move after a successful private equity rollup in the pharmaceutical machinery sector. With the natural beauty of the Rocky Mountains as a backdrop for his career decision, Fenwick-Smith became increasingly interested in climate change and what the business community could do to make a positive impact on the environment. Within six months, he had the answer: Aravaipa Ventures, a fund to support environmentally sustainable technology businesses in Colorado.

Fenwick-Smith had private equity know-how but had never been involved in creating venture funds. It was that lack of direct experience that let him to consider non-traditional approaches specifically suited to the needs of the state’s sustainable tech sector. “When I set up Aravaipa Ventures, I broke every law of what was done commonly by VCs at the time,” Fenwick-Smith says.

The fund was focused narrowly both topically, on climate change, and geographically, on Colorado. The decision to work with local companies was dictated by Fenwick-Smith’s preferred working style and his convictions: He wanted lots of face time with young leaders and the burgeoning companies Aravaipa would fund, while also being mindful of the environmental impacts of his commute. “If I really wanted to be serious about climate change, I couldn’t justify the carbon footprint of getting on an airplane every week,” Fenwick-Smith recalls.

Aravaipa was also an open-ended fund, in part because Fenwick-Smith was uncertain about the interest in initial investment it would attract. In January 2008, when the fund launched, socially responsible investing was in its infancy; the now-common phrase impact investing had been coined just a few months earlier. For the first eight years of the fund’s existence, Fenwick-Smith was raising money, but he couldn’t wait to start contributing to climate change solutions. “We started investing immediately, with the first check we received,” he says. The initial fundraising goal was $4 million; the fund has now raised $25 million.

Aravaipa also had long-term vision. “This isn’t software,” Fenwick-Smith explains. Research, development, and adoption in the sustainable technology sector take time. “I told my investors that most companies we’re going to go into are going to take at least 10 years before we get an exit,” he says. Fenwick-Smith had seen the first sustainable technology boom in the mid-2000s go bust because of short-term thinking. “If I look back on any of my companies, we would have never succeeded in any of them if we thought that we could get in and out in three to five years.”

Among the companies funded by Aravaipa is Lightning Systems. When the fund first invested in the company, it was developing hydraulic hybrid systems for heavy vehicles like UPS trucks. The systems captured the energy created when braking and applied it to acceleration, reducing the demand on the internal combustion engine. The model was similar to that used in hybrid cars, but the heavier vehicles created more energy when breaking and, therefore, greater efficiencies in fuel usage and reductions in emissions. The company, founded in 2008, was making slow but steady progress retrofitting heavy fleet vehicles until the fall of 2017, recalls Fenwick-Smith, who sits on the board as executive chairman. That was the moment companies realized lower emissions would no longer be enough; zero emissions had to be the new goal. “We lost our whole potential business model,” he says.

“Ninety-nine percent of startups die at that stage,” Fenwick-Smith notes. But not Lightning Systems. The company pivoted, using the expertise it had honed in building hybrid systems to create electric powertrains. Two years later, Lightning Systems had become a leader in electric buses and trucks, with fleet orders from companies such as Amazon and DHL. “That is what patient investing and close work with companies allows,” Fenwick-Smith says of Aravaipa’s model. “And the end result is even better for the planet.”

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