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Investing for Good with Justin Cochrane, Carbon Streaming

September 14, 2022

Carbon credits are one of the innovative potential solutions to the climate crisis. Justin Cochrane’s goal is to turn his company, Carbon Streaming, into the world’s largest investor of carbon credits. In this episode, we discuss the process of investing for good, the transitions that Justin has been through on his entrepreneurial journey, and why the people he has surrounded himself with have been integral to the success he has achieved so far!

About Justin Cochrane:

Justin Cochrane has over twenty years of financing and investment experience. He took the learning he acquired from the mining and energy space and is now fully focused on using investments to fight climate change through his ESG-principled company, Carbon Streaming, which provides investors with a way to invest in a low-carbon future. 

Episode highlights:

  • Being a founder and being a CEO are two very different roles that require very different skill sets, and each comes with its own set of challenges. Don’t assume that because you can do one, you will automatically be able to do the other. (00:37)
  • Managing all the elements that make up a business is an almost impossible ask for one person (unless you are willing to be permanently burnt out) so building a team around you for support is essential. (02:19)
  • One of the best ways to find quality people who share your vision is through people you trust. Lean on your mentors and advisors; they can help you find the people who will help your company thrive. (06:35)
  • As you add more people to your team, your capabilities are enhanced. Allow your vision to evolve as your company grows. Justin’s initial vision was to create a public company in the carbon capture space; now, he wants Carbon Streaming to become the world’s largest investor of carbon credits! (12:11)
  • The voluntary carbon industry comprises a diverse range of projects (e.g. carbon capture projects, reforestation projects, and energy projects), and the fight against climate change requires 9 trillion dollars of annual investment. If you are passionate about altering our current climate crisis trajectory, there are so many opportunities at your fingertips. (15:43)
  • For Justin, success means knowing that he has created a business that is sustainable in the long term, even when he is no longer at the helm. (33:17)

Justin’s best advice for entrepreneurs:

“The mission evolves as the capability of the team evolves.” (14:02) 

Connect with Justin:

Follow Beyond 8 Figures:

Transcript

[00:01:16] A.J. Lawrence: Well, Carbon Streaming Corporation is really interesting in that they go around the world and they fund carbon offset projects and then turn around and sell the carbon offsets from these projects to large corporations. But what they do is they’re using the public markets. They’re publicly listed in Canada and they go about using the financial markets to fund this opportunity.

[00:01:43] I find it fascinating because this is a different type of value generation than I normally think of from an entrepreneurial. They’re using the financial markets, not from purely a financial modeling opportunity, getting more money out of the process. But by actually helping reduce some carbon outputs and reducing a lot of the damage that some large companies are doing out there. So let’s kind of jump into this with Justin and learn a little bit more about using the financial markets.

[00:02:15] Hello, Justin, thank you so much for coming on the show today.

[00:02:18] Justin Cochrane: Thanks for having me, A.J..

[00:02:19] A.J. Lawrence: No, I’m really excited to have you on. I was just telling the audience a little bit about you, but I really want to kind of explore deeper into what you’re doing and how entrepreneurs can look at this. But first, let’s talk a little bit about you. Where do you see yourself as an entrepreneur these days?

[00:02:37] Justin Cochrane: Great question! I mean, I, in the last seven or eight years now have created a couple of businesses focused really on building out investment businesses, investing in projects that are helping to fight climate change. And and I’ve been the CEO of these two businesses and really trying to build a team around me to support me in achieving these goals.

[00:03:04] And so it’s very much changed from raising capital and starting out the business to now one where it’s much more of a leadership role in guiding the rest of the team and achieving what we’re, you know, achieving our growth objectives.

[00:03:20] It’s been a challenge and it’s a different brawl, but it’s been a lot of fun.

[00:03:24] A.J. Lawrence: Maybe because that is kind of that fun transition. It’s like from maker to manager grower. Talking about leading and growing your team more, what are the things that you are seeing that changes from compared to like earlier on?

[00:03:41] Justin Cochrane: Oh, gosh! That’s a good question. I would say for us, and we are a public company that publicly listed in Canada and looking to list in the US here in the next couple of months, hopefully knock on wood, subject to regulatory review and a crazy market at the same time.

[00:03:59] But for me, it’s really that management of shareholders and the regulatory process, and navigating through the regulatory process. And at the same time, trying to still be focused on growth and investing capital, and doing what we set out to do, which is invest in climate projects around the world.

[00:04:22] So, frankly, it’s trying not to get distracted by some of the little things that don’t matter as much in the long term, in the grand scheme of things but are still vital to the functioning of a public company. And that’s sort of the role we as CEOs, I guess, are always having to manage. But it’s not an easy, frankly. I haven’t found it an easy one to manage because I’m a very hands on person and it just means I’m working longer hours than I probably desire.

[00:04:54] A.J. Lawrence: Yeah, I know that. And it’s like, there’s a bit where the extra hours help and then there’s a point of no return as someone who has done that. You know, crazy, Oh, who needs, I can do four hours of sleep. No problem. And then somehow six months later, lots of other things, complexity always gets you.

[00:05:13] Justin Cochrane: Exactly right. Which is why building that team is vital, which I spent a lot of time in the last 12 months just adding bodies. And because you get to one point where you actually realize this business is going to be successful after all of the initial long hours and effort you put in.

[00:05:35] We’ve now created a sustainable business but in order to actually achieve our objectives, I need to add people, right? And build in expertise and just hire some amazing people. I’ve been very, very fortunate that we’ve been able to do that. So, that’s a really fun time in the business as we go from it was me and one other individual that was running the business for a year and a half, we now have 14 full-time people and are hiring for another few positions. That’s a really fun, fun time. Busy, but very fun time and nice to see the fruits of the early labor, I guess.

[00:06:11] A.J. Lawrence: No, that is a fun time. It’s a really bad movie, but I always remember there’s a Mel Gibson movie, kidnap, something like that, and it starts sort of with I guess he’s the CEO of a company that’s going public and they have like some video. Well, it’s a little, so maybe it was a movie, who knows, of like the early days. And they’re like chasing chickens. And I remember, just referencing, something stupid would happen or like the garbage is overflowing or whatever. And it’s like, oh, this is chasing the chickens. It’s a bittersweet memory, but you’re like, thank God. Yeah, thank God. It’s to the next level.

[00:06:52] I think for a lot of entrepreneurs, this transition is always a little fraught becomes we’d very much start- because we’re able to move things and convince people to kind of transition to this idea of instead of it being you directly utilizing your force of will on the direct stakeholders or player or movement whatever. You now have a team and you’re building your team so they can extend your mission. What do you think has helped the most in that sort of transition for you? You know, now that you’re becoming more of a leader of the overall company?

[00:07:33] Justin Cochrane: Gosh! I think the biggest thing for me is having hired some amazing, amazing people that I can really, really rely on. And one of the biggest challenges that I’ve had in my entire career is let it go, right? It’s relying on other people to do the same sort of level of work or have the same level of dedication that you have and believing that they can have the same quality of output that you might have.

[00:08:05] And I’m a financial guy, right? So my quality of output is presentations, ideas, pitches, negotiating and structuring deals. When we went into this growth phase here at Carbon Streaming, I would say that was the largest challenge, was finding those people. But having now found those people, I find myself letting go and it has made that transition so, so much easier. And again, I would say, in the 14 people we have in our staff, I can’t think of better people in each individual role than the people I have in those roles. So, it’s just been an amazing having the right people.

[00:08:44] And part of having the right people is finding and being able to find the right advisors and people around you who can build that network and provide recommendations. And I’ve been fortunate that I’ve been in this sort of finance, banking industry now for over 20 years and I’ve really developed this network. And that’s, you know, putting that network to work and having an amazing people around you just made all the difference both as employees but also shareholders and business partners and financial advisors and lawyers, and just thosebeing surrounded by people that I really trust has enabled me to build that team. And it’s made a massive difference, I believe.

[00:09:27] A.J. Lawrence: Getting the right people is definitely, but it’s that kind of transition from like, not having them to understanding who they should be and then finding the right people who then kind of make it a little more magical. You know, from that one that kind of points along the like degree of difficulty. It sounds like you had some good advisors, but also you kind of leaned into it a little nicely.

[00:09:54] Justin Cochrane: And they need to be able to see the vision too, right, and believe in the vision. And that’s, you know, we are as a Carbon Streaming Company, as I was mentioning invest in these projects around the world that help fight climate change. So it’s an easy thing to get passionate about as the other side too. And so, these people love what they’re doing. And it’s a new industry.

[00:10:15] Carbon as an investment vehicle is a new industry. So everybody’s learning at the same time, but they also see the vision. And that’s been fun.

[00:10:22] A.J. Lawrence: You were mentioning this has been important to you for a while. This is something that you’ve been working on and kind of coming from and further.

[00:10:31] You mentioned about convincing the team of the vision, we’re convincing its people of the importance of what we’re doing in this vision. Yes, it is a broad, you are looking at probably one of the biggest top two right now in the world of what do we do with our future, you know? And so that helps a lot.

[00:10:54] But at the same time, how do you think your ability to articulate a vision, a mission for your company has changed from the early days to now? Especially as you’re getting bigger and you are engaged by a larger audience.

[00:11:09] Justin Cochrane: I think it goes to, as we add people and I think of it as I add a person on building capacity within the team. And as I build capacity within the team, it expands what we’re capable of. And that includes finding projects around the world, reaching out to new partners that I had never met before. I was on the phone this morning when a partnership with a massive, a fund in Asia, where we might look to partner together. That, I would not be able to have that reach without building that capacity, without building those bodies as we’ve grown.

[00:11:55] The mission has changed because I could see what we’re capable of now versus frankly what I thought we would be doing in the early days, which was just supporting a couple of projects and seeing if I could drum up investor interest in what we were trying to do. Now that we’ve had that success and we’ve listed publicly and we seem to have very, very good brand recognition across the carbon industry, it really, again, sort of expands the mission. I would say it’s gone from a narrower to a larger mission where to where now I wanna be the largest investor in voluntary carbon projects in the world.

[00:12:38] I can actually see us achieving that where, you know, even two and a half years ago that would’ve been a pipe dream of mine. So it’s been, you’re very right, the mission evolves as the capability of the team evolves. And I think that’s probably true of many businesses.

[00:12:56] A.J. Lawrence: You know, I always find it a little bit of the chicken and egg cuz without a doubt, better team allows deeper introspection to what’s capable and sort of the integration of what you’re doing to how people think about things in the space so you can fine tune that. It’s also that same thing of your story has to grow, the vision has to kind of grow even to bring the people in from early days. And that’s what I find so fascinating about what you’re doing.

[00:13:27] I very quickly told the audience a little bit about what you’re doing and Carbon Streaming. Could you maybe, cuz when we were chatting at that time you’re doing a lot sexier than I think I have really fully understood. I kind of took it I think, as you said originally, oh we’re gonna, we’re investing in these things. Can you maybe tell a little bit about how you see yourself being the biggest investor in these volunteer carbon projects and what that really means? Cause that’s pretty big.

[00:13:55] Justin Cochrane: Yeah. So when we look at the voluntary carbon world, the entire industry today, what it is is different types of projects really spread around the world. So it’s forest conservation projects,it might be reforestation projects, carbon capture projects, renewable energy projects in developing countries, agriculture projects, biochar. So there’s these really amazing and fascinating projects. But the one thing they all have in common is they need capital and they need money.

[00:14:28] And they’ve been struggling to raise money for the past decade. It’s becoming easier now, but two and a half years ago, we saw the opportunity to create a public vehicle that would invest in these projects and become long term partners alongside the people that we’re creating and developing these projects.

[00:14:47] And so we use this royalty and streaming business model, which we stole from the mining and energy space. And that’s my background. I was doing that for 15 years before this. Took that model, very, very successful model in mining and energy. And now, we’re applying it to a new commodity in effect, which is carbon.

[00:15:06] And so, as we raise capital from public and private investors, we are looking to invest in projects around the world and really build up our portfolio of investments, diversified across all types of projects in all parts of the world. And through our through our agreements, we will fund the projects and then take delivery of carbon credits on the backend. And then we will go out and sell those carbon credits to corporate, individual, government buyers around the world. And so when I say we’re looking to be the largest player, we want to be the largest investor and eventually reseller of credits around the world to the benefit of our project partners and the communities where they operate. And ultimately of course, the climate, in helping to reduce global emission.

[00:15:58] And again, like how that vision changed early days, we were just looking to see if we could even create a public company that investors would be interested in to invest in a couple of projects. Now, as we’ve grown the team, I’ve got eight full-time people working at sourcing, negotiating, diligencing opportunities around the world. Now, I can see that we could actually become the largest investor and supplier of credits in the voluntary markets.

[00:16:25] A.J. Lawrence: And in one sense, you’re like a typical fund. From you are, you know, as a managed fund, you’re going out and keeping the tires, starting to find if things happen. You’ll achieve the outcomes that you are looking for for your shareholders.

[00:16:41] It’s just there is environment, you know, the carbon, the ability to do, you’re still looking at the overall profit but through this vehicle. I mean, that’s what’s so fascinating. As I’ve been trying to learn more about investing, looking different things, there’s a lot of information, a lot of thought on index funds, indexing, and then some of the research that in the VC space sort of the tiger and the 500s where very few people actually ever outpace the market and the ability to see future returns.

[00:17:19] And it’s the movement to sort of invest across as wide as the Swarth in this. Now, I know criteria and legitimacy is probably a huge thing, but yeah, as moving to the largest investor, do you ever see going towards that index style where it’s like if you get X one in the bank and I don’t know if they’re the right thing, but I’ve seen that in a gazillion bad novels. Do you ever see that kind of a wider or is it still the focus for sequel focus that’s active projects choice?

[00:17:52] Justin Cochrane: Yeah. For us, what makes carbon a bit unique is you’ve gotta be able to find the buyers that ultimately put the highest value on the carbon credit that you might be selling. In every carbon credit, unlike a lot of commodities, precious metals, base metals, unlike those other commodities, many of the carbon credits have these unique community biodiversity aspects that are also attached to the credits, which different buyers place different value on.

[00:18:26] So there is an active, the active side of our business is very much the monetization of the carbon creditsafter they’re delivered to us. And we flow through that revenue back to our project partners so it makes a major difference to our project partners as well. But then of course, finding and diligencing the projects as well. So there’s a very active kind of due diligence process to make sure we’re picking the right projects, and also when we’re going to monetize those credits to make sure we’re finding the right buyers.

[00:19:00] And so there are lots of efforts underway to try and truly commoditize carbon credits, and maybe split out the biodiversity value from the sustainability or community side from the actual carbon emission side. That’s going to be challenging to do. And I would welcome, and very much do welcome, those efforts to try and create these indices, create more price transparency and liquidity in these markets. But it will take some time.

[00:19:32] And if we get there again, I think it would be a tremendous outcome for the industry. Because it means there’s probably more capital, more financing available. Even traditional bank financing could be available once you create these indices. And for us as a business, I don’t see us going there, but certainly for the industry that type of trend could be very positive.

[00:19:56] A.J. Lawrence: You’ll focus on being that act of side, but I could see so much of the marketplace here. You were mentioning the size of the meat in this phase and you are growing, but from early stages here, where do you think you will be going to kind of become that larger player here?

[00:20:18] What’s going to have to happen for you, for the company, for all that? This is a fascinating opportunity and it’s something where it’s like how you’re thinking and approaching it I think the audience would learn a lot from.

[00:20:32] Justin Cochrane: You were mentioning before there are set up very much like a fund and you’re exactly right. We are very much like an investment fund as we’re choosing investments to, quality investments obviously, to make. The beautiful part about being a public company is that’s, in effect permanent capital. So I don’t have the same requirements as a private equity fund in terms of an end of life, 5, 7, 9 year timeframe where I got at going and monetize my investments.

[00:21:02] And so we build our investments and we’re investing over the 20, 30, 40 year time horizons and longer with our project partners. So the way we achieve our growth, and I think as I was mentioning A.J., this is an industry. If you believe McKinsey research, this industry in terms of fighting climate change requires $9 trillion of annual investment, almost 10% of global GDP.

[00:21:25] So it’s a massive, massive undertaking that’s required here. The way we continue to grow our business, and right now we have over a $100 million US in cash on our balance sheet, is continuing to find amazing projects to invest in. And as we invest in those projects, diversify our portfolio.

[00:21:44] As we diversify our portfolio, our cost of capital should come down. As the cost of capital comes down, that means we can find even more economic projects, more accretive projects to invest in for the benefit of our shareholders and put more capital to work. So the way we do that is keep investing, raising capital, whether it’s through partnerships or equity or debt.

[00:22:09] And and just slowly, frankly, continue growing the business. We’re looking to do maybe 5 to 10 investments on an annual basis. So think one a month or one every two months, but picking the right projects to invest in. And at the same time, hopefully, we got a carbon price that’s going higher.

[00:22:28] And I think the beautiful part of the carbon as a commodity is, carbon is being regulated all over the world. You know, 193 governments around the world, countries around the world have signed up to the Paris agreement. Carbon is being regulated, such that we’re reducing emissions and carbon prices are going higher. And so we have this commodity that’s being regulated for a higher price. And I think that’ll be a very positive thing for us as then we hopefully move towards flattening the carbon emissions curve.

[00:23:03] A.J. Lawrence: That’s gonna be fascinating. What’s the typical investment that you guys are doing now in a carbon capture project?

[00:23:11] Justin Cochrane: So we’re looking to invest, for the most part, somewhere between 5 and 20 million dollars. And we invest that capital upfront to support the development of the project, to support the growth of the project, or in some cases to even acquire a project from another developer. But our capital is used to primarily grow and develop these projects around the world. And depending on scale, it’s mostly 5 to 20 million.

[00:23:39] As the carbon price goes up, I would see that range also increasing. And as we get into some of these larger carbon capture projects, projects that are actually pulling carbon out of the atmosphere using these giant fans is a fascinating project in Iceland that is doing this now.

[00:23:57] Occidental announced their efforts to do a direct error, what we call a direct error carbon capture project, about a month ago. These have the potential to be billion dollar investments to actively remove carbon from the atmosphere. And while those aren’t economic today, they heavily rely on government incentives and in some cases, almost charity. As the carbon price goes up, those projects will become economic and we’ll be able to write some bigger checks at the same time.

[00:24:27] A.J. Lawrence: In looking at something like that, it could be fascinating if it can increase, then you know, you literally could have a market to say, okay, don’t drill, don’t pump. You can instead sell off the rights by not looking at that future.

[00:24:44] And that’s exactly, we’re trying to make the greatest example I can think of for why carbon. Why carbon credits, why put a value on carbon?

[00:24:53] When we think about these forest conservation projects or reforestation projects around the world, you’re trying to put a price on trees, right? And trees have the double impact of not only of course being a store of carbon, but they’re also of course, absorbing carbon on an annual basis and creating oxygen. And so trees, or peat swamps, or mangroves have this double or triple effect.

[00:25:21] But it’s trying to put a price of value on those trees that’s greater than the alternative use of that land, right? So whether it’s agriculture or cattle farming or raising the land for Palm oil plantations, whatever the alternate use might be is, trying to put a value on those trees.

[00:25:42] And when you think about these forest conservation efforts around the world, they are in very remote locations where in many cases harvesting that trees, whether it’s for cooking at your next meal or selling them to a local trader to build houses, those trees have value and it’s trying to ultimately create an alternative value that’s higher in encouraging these communities to end deforestation.

[00:26:10] Then, it is getting a lot of that value closer to the use because many people who may have spent winter in Southeast Asia, Indonesia, forest it is huge. You literally can’t breathe for doing (inaudible) , if not.

[00:26:27] Justin Cochrane: That’s exactly right, think of how destructive that is. And our largest project, our largest investment to date is a project called Rimba Raya that was developed 10 years ago in Borneo, Indonesia.

[00:26:40] And not only is it protecting this 47,000 hectares from being turned into a Palm oil plantation, but it’s also supporting a local orangutan habitat with release sites and providing income and other sustainable employment opportunities and education for three communities along this amazing, amazing, pristine peat swamp, low lying peat swamp in Borneo. And we need more projects like that. That’s our largest investment to date, a project that I just adore.

[00:27:10] A.J. Lawrence: Cool. Yeah, that is a huge thing and it is. Pushing it down into those, you know, because there’s always money to be made unfortunately, in different markets. But change really comes from when those that are impacted directly will change their behavior.

[00:27:27] As you’re going about doing this, like I said, I am really fascinated especially as you look to make it grow. You were just talking about the growth of the fund, the company, of the industry, but what’s success for you as an entrepreneur gonna look like and how is that going to be different? Obviously, we’re gonna do good, we’re gonna create this marketplace, we’re gonna expand this and we’ll do well in that process. But what does it mean to you, in trying to achieve this for? What’s successful be for you?

[00:28:00] Justin Cochrane: What I would say for me is having created this public company, this public investment vehicle and added bodies and built up the team. It built up the capacity as I was saying before. For me, success will be the sustainability of this business in the long run, right. And the sustainability of this business without me at the helm, frankly. It’s knowing that we’ve put a business, a platform in place that can continue to invest in projects, find buyers for these carbon credits as they come, as they are delivered to us.

[00:28:40] And ultimately of course, as a public company, return capital to shareholders and make sure we’re making money for our investors and stakeholders as well. And that’s of course a vital part of what we’re doing. And the reason I love this business is, we could do that. And at the same time, I invest in these amazing projects around the world.

[00:29:00] But for me, success will be in 20 years, in 30 years, can I look at this business with somebody else’s running it? And you know, hopefully I’m still on the board, but somebody else is running it and it’s still doing what we set out to do. And maybe, of course it may be doing different things that, I, we can’t even foresee today. But having created kind of a sustainable business that can exist beyond my primary involvement, I think would be success for me.

[00:29:29] A.J. Lawrence: I think it’s an understatement that you’re a fascinating and incredibly important in this space right now, and your ability to bring financial lens and pricing to this. Grow that, I think it will be amazing and help so much. If the audience is interested in learning more or reaching out to you, where can they go?

[00:29:54] Justin Cochrane: So best place to go is our website, so it’s carbonstreaming.com. And you can also find us through any investment portals. In Canada, were listed with the ticker N-E-T-Z, NETZ for NET Zero. But best place would be our website. We’ve got all of our projects out there. We’ve got some fascinating blog and work that we’ve done on carbon credits to sort of educate yourself on carbon credits and would encourage you to get sort of involved and follow our updates through the website.

[00:30:23] A.J. Lawrence: Thank you, Justin. We’ll make sure we have everything in the show notes, put it in our socials.

[00:30:27] It is fascinating. And I was going down a bit of a rabbit holes earlier trying to just familiarize. Thank you so much for being on the show today. I really appreciate it.

[00:30:39] Justin Cochrane: Thanks very much for having me A.J., really enjoyed the discussion.

[00:30:46] A.J. Lawrence: This episode of Beyond 8 Figures is over, but your journey as an entrepreneur continues. So if we can help you with anything, please just let us know. And if you liked this episode, please share it with someone who might learn from it. Until next time, keep growing and find the joy in your journey. This is A.J., and I’ll be talking to you soon. Bye-bye.

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