Subscribe
Share
Share
Embed
Every day, we at Hutchison PLLC work with founders and entrepreneurs as they fight and grind and stress and push to bring their visions to reality. We are inspired by their incredible stories of success, of failure, of reworking and trying again.
Cory E. Sanderson: [00:00:00] It's definitely an overwhelming, daunting thing to think about changing the entire system that the society is built on. But, like, you can't do it all, and, and I think you just have to understand that everyone can just do their own part, and just try your hardest at that part, right? And if we all do our parts, it'll all work out, 'cause we're doing it now this way, so it's, it's easy to see that we can do it the other way.
Trevor Schmidt: Hello, and welcome to the Founder Shares podcast. We're so happy that you've chosen to spend some time with us. I'm your host, Trevor Schmidt. I'm an attorney at Hutchison, a law firm in Raleigh, North Carolina. We work with founders and entrepreneurs start up, operate, get funded, and exit. So, whether you're already an entrepreneur, want to be one someday, or are just
Cory E. Sanderson: fascinated by the stories of how a business goes from idea to success or not such a success, this podcast is for you
Trevor Schmidt: All right.
Well, I am very excited today to be joined by Corey Sanderson of sustaera, a Durham-based climate technology company working to address one of the biggest challenges facing our planet: removing carbon dioxide directly from the [00:01:00] atmosphere. sustaera is developing a novel direct air capture, or DAC technology, designed to permanently remove carbon while lowering the cost and energy requirements that have limited broader adoption of carbon removal technologies.
Corey, welcome to the Founder Shares.
Cory E. Sanderson: Thank you for having me.
Trevor Schmidt: I'm also excited to welcome back an old friend of the, uh, the podcast, my law partner, Josh Hayes. Josh?
Josh M. Hayes: Glad to be back.
Trevor Schmidt: Hey. Uh, you know, you're starting to be a little bit of a regular here, so- That's all right ... well, glad to have you back here. So Corey, before we really get into sustaera, I wanna, uh, talk a little bit about yourself.
Um, let's start with like what did you imagine you'd be doing when you were a kid?
Cory E. Sanderson: Yeah, um, I don't know. Like, like a lot of little, little kids growing up, boys, you know, thought first police officer, firefighter, something like that. And then I think it quickly shifted into, you know, just my enjoyment of building things.
Hmm. Um, building Legos, building puzzles, and trying to put a lot of things together and make something out of it, right? Make something out of nothing. Uh, so I, I, I always saw myself as being in the building, but I didn't know exactly how. You know, I thought maybe [00:02:00] building with my hands, um, you know, building with my mind, um, and so I think it, it kind of has all come together.
Yeah, that's, that's kinda what I was... I didn't have one set thing, let's say. Mm-hmm. But that's what, uh, what kind of inspired me maybe.
Trevor Schmidt: Was there anything from when you were a kid that you built that you look back on and you're like, "Oh, I was so proud of that. I was so excited to have built that"?
Cory E. Sanderson: Th- there's a few, uh, I don't know about, like, building things, but definitely a few things from, you know, growing up and, and, uh, you know, going through school and different projects that you work on, and you're like, "Wow, okay, like, actually it was, did a pretty good, pretty cool thing there."
So, um, yeah, there's a couple biology things, a couple writing things, but nothing of what I'm doing right now. Yeah. So yeah, just kinda tangential, but when I've realized, like, when you enjoy what you're doing, and it's, like, something you're passionate about, then you can do really well with it. That's, I think, the biggest thing about it, so.
Trevor Schmidt: That's for sure. And n- how about entrepreneurship? Was that kind of a part of the idea of building something, or did that come later almost?
Cory E. Sanderson: No, no, it's... I think it's, I've just fallen into that, honestly. [00:03:00] Like, I, I never really thought about being an entrepreneur. In fact, I would say, uh, you know, going through high school and college and e- even right out of college, I, I chose the job out of college intentionally because I knew it would be safe.
I knew it would be low risk. Uh, it's what I wanted and I needed at that time. I, I, I was like, "No, I d- can't imagine, like, starting up a company now." If other people were like, "Yeah, I'm gonna go change the world" and all that stuff, I'm like, you know, "Sounds good. Good on you," but you know, I just needed that safe, stable thing to kind of help transition out of school and, um, uh, you know, give a good paycheck and looks like it has a lot of viability.
But then I think over that time period I've been able to find, like, okay, there's, there's a lot more to me, and I've grown in confidence that, um, entrepreneurship has been something that's opened up.
Trevor Schmidt: Now, was there a moment where that switch happened, where you felt like, "Okay, I can take this leap. I can, I can take the risk"?
Cory E. Sanderson: It was, there was a switch when I was able to take that leap from that comfort job to out in the open, but not, it wasn't straight to an entrepreneur or, like, the being the CEO [00:04:00] right away. Mm-hmm. Right? I've, I've worked my way up to that. Um, it was at the end of my career at Air Products and been developing different technologies and pushing them into the engineering team, and just with the f- pushback that I got from engineering, we're all literally in the same company, and we're like, "We have this really cool thing and it fits what the, what the market needs.
Like, we've been working with the business area, so here's how you, uh, how," you know, how the work I've done, and just got so much pushback and, like, anxiety, and I was just like, "I don't, you know, I'm sorry that I've done some of your job, but, like, I kinda had to to be able to get this thing to the point where we felt like it would make sense, instead of just giving you a pile of, you know, nothing for you to figure out and spend years on."
So, uh, yeah. Uh, that was really the time I was like, "Okay, I'm ready to go do something else," that people value the ability to think further than just the narrow swim lane that you're given- Mm-hmm ... at a large Fortune 500 company.
Trevor Schmidt: Now, how about kind of the, the draw to, to clean tech? Was that something that was always there or did that come later on?
Cory E. Sanderson: Yeah, that's been there since, you know, I'd say even at the beginning of eleme- like, you know, towards beginning my [00:05:00] education in elementary school, learning about, you know, recycling back then, and then turning into middle school and, and high school with my, um, interests, uh, in, you know, thinking about hydrogen and a new economy that's based on that instead of fossil fuels.
And, and then in college I d- I did research with hydrogen, and then, um, later out of school d- joining Air Products we did a bunch of CO2 things, um, carbon dioxide. So yeah, it's, it's been kind of throughout my entire career, has just been, um, I don't know, it's, to me, uh- Y- y- you look at the world and the way we do things, and once you learn, like, how it all happens, you're like, "This doesn't seem sustainable."
And it just, to me, I've realized that really early on, and I was like, "We, I think we can do better as a society." So, like, let's... I, I wanna put my engineering skills and my building kind of skills together towards kinda solving problems in that space.
Trevor Schmidt: Well, good for you also, not only to take that step, but also to not just to be overwhelmed and be like, "Well, there's nothing really we can do about it," so.
Cory E. Sanderson: Some days are like that, you know? Yeah. But it's definitely [00:06:00] an overwhelming, daunting thing to think about changing the entire system that the society is built on. But, like, you can't do it all. And, and I think you just have to understand that everyone can just do their own part. Mm-hmm. And just try your hardest at that part, right?
And if we all do our parts, it'll all work out, 'cause we're doing it now this way, so it's, it's easy to see that we can do it the other way.
Trevor Schmidt: That's great. How about you, Josh? I know you're very interested in working with clean tech companies. What was it about, for you, or what is it about this work that appeals to you?
Josh M. Hayes: Yeah, I mean, I think that, kinda like Corey's saying, like, there are, there are real issues facing the environment today.
Trevor Schmidt: Mm-hmm.
Josh M. Hayes: Um, you know, whatever you think of the causes of those issues and, you know, humanity's role in the c- in those causes, uh, I think we can all agree that we can be part of the solution to, um, to things like climate change.
And I think that innovation and sort of the innovation economy broadly is a key part of those solutions. Um, whether it's finding new sources of [00:07:00] fuel or making existing energies more efficient, making the storage and transmission of those energies more efficient, or trying to do something like Corey's doing and, and tackle the increased carbon in the environment head-on, um, with, uh, direct air capture, which is something that, that Corey can, can speak to much more eloquently than I can.
But it, it's really rewarding being able to work with companies that are, that are- of the same mind, that hold those same values, um, I find that to be a really r- r- rewarding part of the job.
Trevor Schmidt: Now, is that something that you sought out from early on? Like, Cory mentioned, like, when he was a little kid. Like, or is that something newer for you?
Josh M. Hayes: I'd say it's something that's a little bit newer for me. You know, um, I kind of had a broader, broader view of what I wanted to do. Um, there were certain things in law school I knew I didn't wanna do.
Trevor Schmidt: Right.
Josh M. Hayes: And then coming into practice, I knew I wanted to work with companies, and then over time came to realize that the types of [00:08:00] companies that I really like to work with are entrepreneurially driven.
And over time sort of, you know, that funnel narrowing even, even further to folks who are sort of, um, you know, mission-driven, uh, passionate about the work that they're doing, and passionate about, like, the ecology and the environment that we all live in.
Trevor Schmidt: Great. Now, Cory, you, you touched on this a little bit, but what were some of your experiences from kinda like your early professional career that really inform what you're doing today or kind of prompted you to, to do what you're doing today?
Cory E. Sanderson: Yeah, that's a great point. Um, it- there were a couple factors I would say in my early career, uh, going through as an engineer and then, like, designing and building and starting up the facilities to then, you know, taking a step further in the, i- in the development of, of developing these new technologies and seeing them through that, that lifetime.
It, it was never a question of if the tech- well, there was always lots of questions of if the technology work, but [00:09:00] typically the answer was almost always yes, right? Like, you had to solve a lot of problems to get to that yes, but at the end of the day, there's commercial technologies that can help do a lot of this stuff.
And oftentimes the problem that I saw as sitting in the engineering and technology development side is, like, it would fall apart when business development couldn't make the whole project work. The economics didn't work because the source of the CO2 was very distinct and disparate from the sink of the CO2, whether that's physical sequestration, like we're talking about with direct air capture, carbon removal, or utilization into fuels or whatever it ends up being.
It's like you have a power plant making power for a community. That's not necessarily where the CO2 sink is gonna be, right? And so you can't build pipelines, you can't transport it, no one wants to build things, and then it just ends up hitting all these, like, regulatory and financial roadblocks that you can't build around.
Mm-hmm. And you can't go get capital to raise to go, you know, do all that kinda stuff. So I, that's where I saw that failing, specifically with carbon dioxide, [00:10:00] and that's what really set me out when I joined and, and l- left Air Products and joined the, the startup down here is, like, we need to do something differently.
I think point source capture isn't really the way to go. There's, there's a reason why it's not working and not scaling. Let's try direct air capture. Can we take a different approach on that? Direct air capture helps you to, um, be located where the sink is. Uh, w- if you wanna sequester the CO2, create carbon credits, cool.
You can do that right on top of the well. You can, you know, utilize the CO2 into valuable products or whatevers and think about our more sustainable economy going forward instead of pulling all the more fossil fuels out of the ground. So that's all, yeah, that's all possible with direct air capture when y- you can't just think, like, "Let's move the power plant, you know, like 200 miles away and, and go do this over here", right?
Like, yeah, so on, of the fossil fuel kind of burning power plant. So yeah, that, that's really Those things are what I think kind of le- learned me into, um, into this space.
Trevor Schmidt: Okay. [00:11:00] Now for, for those who are just kinda like joining this conversation about carbon capture- Yeah ... and all that, can you just give us a high level, you know, you mentioned point source capture- Yeah
direct air capture, sink. Just a quick kind of o- what- Sure. Of course ... are we talking about there?
Cory E. Sanderson: Yeah. Of course. So, um, like a s- source and sink is just traditional, you know, think about any market, there's gonna be something that generates something, and then a sink is where it goes to. For point source capture, that means an existing, um, emissions point, uh, whether it's a, you know, high temperature or high pressure or low pressure, it doesn't matter.
There's lots of different things. Like, uh, e- every single internal combustion car is a point source of CO2 emissions, right? Okay. If you burn a fossil fuel, you have a point source of emissions. Um, direct air capture is different, where I'm gonna let it be emitted by wherever in the whole world, and then I'll just put a facility down that will take it directly from the air.
So we'll only pass the air f- you know, atmospheric air through the filters that we have, um, to capture the CO2. So it's not dedicated to one specific facility.
Trevor Schmidt: Okay. So it's almost just reducing it at the point of release versus just taking it out after it's already out there.
Cory E. Sanderson: [00:12:00] Correct. Yep. And obviously, there's a big concentration gradient, um, but that's...
And that, that's the problem that we've had to solve, and that's what we've, yeah, very much set out to do is like, yeah, we understand there's a concentration difference, but we still can make it economic and more investable, let's say, because it's not just the economics. It has to also be the full regulation and, and the, um, the, the, the whole project stack.
Trevor Schmidt: You know, we've kinda been dancing around it a little bit here, but tell us what it is that Systair is doing. What is the problem the, the company's trying to solve, and how is it going about it?
Cory E. Sanderson: Yeah. So we are trying to take CO2 out of the air. Um, the way we've gone about it is creating an extremely low-cost way to do that.
It's effectively a filter, uh, that takes CO2 out of the air, similar to the way your HVAC filter will work today, where it takes particulates out of the air. Ours is very selective for CO2. It works at a high efficiency, and it's the other differentiation that we have versus lots of other approaches in the direct air capture market is we have an electrical regeneration method to, once we've captured that CO2, regenerate the sorbent [00:13:00] that's used to pick it up and give us that pure CO2 product that we can use for sequestration, for utilization, and I'll talk about those in a second.
Um, so this filter is a very low-cost way to do it, and it's also extremely low operating cost, and it's very simple to use. It literally works like an HVAC system. Our whole facility, kinda we have a demo here of how that works. Um, if we're gonna do direct air capture of CO2, if we're doing this for the betterment of society, it is at this point in time very much a, um- A nice to have, not a need to have, right?
There's no consumer-based thing that says, "Oh, I need to have carbon dioxide removal in my world," right? Um, that's not the way we're incentivized to, to build our systems, or that our systems are incentivized us to do. So we need to make it super low cost, and that's the approach that we've taken, um, that's very different than other, other folks.
Trevor Schmidt: Now w- you know, kind of in its market implementation, are, are we talking like a big factory here that's sucking it out of the air? Is it something that gets attached to something else that pulls it out of the air?
Cory E. Sanderson: Yeah, so the way we see our system, because it's so simple and low cost, we [00:14:00] don't need to build mega factories to go and do this at a cost economic point, at a unit cost that's, that's what the, uh, market is willing to pay.
We can do that at much smaller scales, so it's a modular approach, is what we call it, and we can do multiple of those at different places, right? Uh, that's the way we kind of see it is like a whole lot of these at a moderate scale, let's call it,
um, that are operating together and, and kind of working in tandem.
Trevor Schmidt: Gotcha. Now, now Josh, I wanted to ask you, how did you first start working with the company? What was your connection there?
Josh M. Hayes: Yeah, so we actually started working with the company at its inception.
Trevor Schmidt: Mm-hmm.
Josh M. Hayes: It was a spinout of a government contracting, uh, company that had a similar focus.
And so we began with your typical corporate incorporation, setting up the stock plan, um, divvying out the cap table, uh, and the equity to the various stakeholders. Uh, we also worked with them through, um, a few different successive rounds of fundraising, which is also [00:15:00] something that we like to do. Um, and I think for us as lawyers, uh, having that context and that history with a client is really helpful.
Um, entrepreneurship, uh, is definitely not a straight line- ... uh, by any means, and it's never, uh, smooth sailing. But having that history, uh, with the founding team, I think can go a long way towards helping to navigate those choppy waters. Um, so started working with them, I wanna say back in 2021, all the way up through today.
Trevor Schmidt: Now, is there anything y- you consider unique or kind of more challenging with kind of like a clean tech company or, or kind of forming and operating one of those or?
Josh M. Hayes: So I think there's a, there's a couple different things that are different from- Some of the other companies that we like to work with, you know, whether it's on sort of the tech or the life science side.
Um, and, and one of those I think that, that Corey sort of demonstrated here is that a lot of clean tech companies actually have to build something-
Trevor Schmidt: Mm-hmm ...
Josh M. Hayes: uh, [00:16:00] physical, right? So there's a hardware component to what they're trying to do. Um, you know, as opposed to, say, uh, an AI-enabled, uh, SaaS company, which, you know, is not easy by any stretch of the imagination, but with AI tools that we have today, you can go pretty quickly from an idea to, uh, development to commercialization and then scaling and fundraising.
Whereas there is a lot that goes into the science and the engineering of a lot of these clean tech companies. Mm-hmm. Um, and that creates additional time, right? Because if, if you fix one part of the device but another part of the device is less efficient as a result, you know, that's a problem that has to get fixed.
Trevor Schmidt: Right.
Josh M. Hayes: And not only do you have to have the engineering and the science down, as Corey mentioned, it has to be economically viable as well, right? It has to be something that people actually want to buy and are willing to pay for. Right. Um, so I think there's some unique challenges, [00:17:00] um, when it comes to clean te- company, clean tech companies, uh, for that reason.
Trevor Schmidt: Now, Corey, I wanted to ask you kind of if you could talk a, a bit about the scope of the problem and, like, w- what impact, you know, the full implementation of what you're doing might, might have on that, that problem.
Cory E. Sanderson: Sure, yeah. Um- Yeah, the scope is massive. Um, you know, we emit, you know, millions and millions of tons of CO2 per year.
You know, 40 million plus I think here just in the United States. Um, our... Of course, we are, um, very clearly I want to state, we do not, um, think that carbon dioxide removal is, like, the only solution. We absolutely have to do abatement first, right? That's like just stop emitting as much as we possibly can.
But the whole point of what our premise is is that eventually there's going to be some fossil fuel-based things that are just so hard to abate, they emit, they, they require such high temperatures that we just can't have another solution to that, that there are gonna be continued emissions into the future [00:18:00] in, in the most sustainable level of economy, um, that we're gonna need some form of carbon dioxide removal to kind of like mitigate sort of h- and balance out how things, how things are going.
So that's the kind of scope. What we aim to do, I mean, our plan is to do, you know, half a million tons by 2040. Um, sorry, 500 million tons, half a gigaton, uh, by 2040 is our goal collectively to help remove from the atmosphere. That already is still like a kind of small slice of the pie, but it would be a massive opportunity for us as a company.
So, you know, trying to balance both what's realistic, um, with, with what's optimistic and, and how can we stretch that. Uh, so yeah.
Trevor Schmidt: Oh, that's exciting. And I, I see here you, you've brought in some of your technology today. Yeah. So tell us, tell us what it is that you brought in.
Cory E. Sanderson: Sure. So this is our tabletop demo unit.
It's just a, a prototype to show to people that we can take to exhibitions, that we can bring to, um, you know, show and tells like this let's say, uh, and, and be able to demonstrate the simplicity of the [00:19:00] technology. Uh, it's... Because our, uh, our, our thing inside of this chamber here is a conductive structured sorbent, that's the technology name that we have for it, it- Um, you bring air across it.
Air is filtering through this filter here. Uh, it passes through the conductive structured sorbent and gets the CO2 picked up. Once that's picked up, in about 20 minutes, we can close these valves here from this demonstration unit and, um, put electricity in through the chamber walls directly into the conductive structured sorbent, and then that releases the, the, the electricity converts to heat directly in situ, and that releases the CO2, which we're able to get as a product.
Uh, this whole process runs in under 30 minutes, and we can just let it go over and over and over again. Uh, so this is our little tabletop demo unit that we're able to show people the simplicity of it. Our competitors can't do this. That's, I think, the big point where we're trying to bring across to, uh, when we go to expo centers or conferences or whatever it ends up being.
Um, all of our other people have kind of two separate things, one [00:20:00] for adsorption and one for desorption. It's one part and one system that does both. It's just a matter of what flow I put across it, a flow of air or a flow of electricity, a current flow. Mm. That's really the focus of this. It's not to actually do much other than really show people kind of the simplicity of it.
Trevor Schmidt: And when the, when the CO2 is kind of pulled out in its full form, like what, what happens to that? What do you do?
Cory E. Sanderson: Yeah, so we, um... That kind of scope ends f- from where our technology, uh, we offer it to our customers. So there's two things that are being evaluated. Our first beachhead market is gonna be carbon sequestration, so that pure CO2 stream would be sold, uh, to the, um, developer who's gonna own that facility and sequester that CO2.
They then go to the market and sell those CO2 credits, and we're just being paid for the equipment and the licensing from that. The other approach is where someone's gonna utilize it. They wanna turn the CO2 and blend it with, um, hydrogen and turn it into, uh, sustainable aviation fuel or something like that.
So those are our kind of two current markets, uh, with the, uh, the focus being the [00:21:00] carbon removal.
Trevor Schmidt: So I guess talk about what are some areas or, like, potential challenges still with the technology as it is today, or what are some of the limitations that you're facing?
Cory E. Sanderson: Um, certainly a limitation right now is being able to convince people that this is different enough.
There's 125 some DAC companies that have been funded since 2020.
Trevor Schmidt: You said DAC? Oh, DAC.
Cory E. Sanderson: Direct air capture companies. Yep. It's an insane amount that have been funded in this, you know, climate tech, clean tech 2.0 kind of funding round, and it's not sustainable. I mean, there's, there's no m- industry in the whole world that has 125 competitors, right?
So you just, um, you can understand that consolidation is, is bound to happen, but also- You know, it's being able to kind of rise above the noise is one of the challenges, I would say, from a marketing and just a visibility standpoint. Um, the other is, yeah, there's still development that we have to do here, and trying to balance, like, what, you know, what investors are looking to see, the risk appetite that they're trying to do, um, [00:22:00] versus the status that we still have to develop, um, and, you know, show these, show to the market, uh, you know, to Josh's point earlier, we have to build something to take it out of the lab and go bigger scale.
But to build something, I need money. But for someone to give me money, they wanna see it working, you know? So it's just the very classic chicken and the egg. Mm-hmm. You know, a valley of death, kind of TRL6 is what they say is where we're at now. So that's, I think, the challenge that, that our company faces right now.
Trevor Schmidt: Now t- talk to me... I, I don't know a whole lot about this technology or this space, but, you know, my understanding is there's some concerns around, like, inefficiency with energy and, and h- tell me a little bit about how this technology addresses that, or is it kinda something that you're still working towards?
Cory E. Sanderson: Yeah, no, absolutely. That's, that's what our technology aims to get at from the get-go, and we've designed out effectively instead of having those things baked in that our competitors are. So most of our other competitors are doing a thermal-based regeneration, so they use something like steam or waste heat.
They'll actually pass, like, a hot stream of gas across their, um, structured sorbent or packed bed or whatever it ends up being to be able to [00:23:00] release the CO2. But when you do that, you're, um, effectively using what's called a, in thermodynamics, a Carnot heat cycle, and it's, like, 30% to 40% heat efficiency at best.
Um, what, what we've done at Cistera is designed in a resistive heating method that is 90% heating efficient. That's completely different than anybody else in the marketplace, right? Like, 3 to 4x better than anybody else, and that is what lowers our energy needs significantly, which then allows us to hit, uh, the, the unit cost that we need.
Trevor Schmidt: That's helpful.
Josh M. Hayes: What's the amount of CO2 that you can actually pull, um, and sort of take from this, this tabletop unit? Like, what sort of volume are we talking about here?
Cory E. Sanderson: Yeah, this one piece right here can do, um, about a quarter of a ton per year of CO2.
Josh M. Hayes: Okay. And, and I guess developmentally, um, would the next stage in development be sort of a, a larger scale of this, of this prototype?
And what kind of, uh, [00:24:00] volume of CO2 would you be looking to remove from the, the environment with that-
Cory E. Sanderson: Yep,
Josh M. Hayes: so then- ... next step in the development?
Cory E. Sanderson: Yeah, thanks. The next step for us is, um, an on-site validation unit that's going to be, uh, sent to different project developer sites. That scale is gonna be 10 tons per year.
And so the, one of the beauties of this technology, because it's just the one part that does absorption and desorption, once we understand it working at this size, it's a linear scaling. And so we can go and say, "It's a l- very low risk. I just have to make bigger things, put it in a d- bigger th- size, uh, unit, and go deploy that to the site," right?
And so it gives us more confidence that we can stand behind what those KPIs or those key performance indicators or how it's gonna behave, and then go demonstrate that, get it signed off by the developer, and then move on to the next scale.
Josh M. Hayes: And these can kind of go anywhere, right? Because you're not tied to, like, a smoke stack.
Cory E. Sanderson: That's right.
Josh M. Hayes: Right? You, you could just have anybody who's interested in sort of a carbon reduction program or element associated with, like, their, their real, real estate or their commercial [00:25:00] property. Like, they could, they could put one of these on their site and be pulling carbon right out of the atmosphere.
Cory E. Sanderson: Yeah. Ideally, we'd be contracting with those s- folks to be buying the carbon removal credits- Right ... um, to offset their emissions. Uh, but it would be located with these major developers that are gonna be located right next to the sequestration well. So developing projects in Canada, developing projects in Western Texas where there's known infrastructure for that sort of, uh, that sort of thing.
Trevor Schmidt: Now I'm curious as, you know, as you're pulling something out, I mean, is there sufficient mar- I mean, if you start to pull enough carbon out, is there, like, a sufficient market to sell the credits or to be able to use it in kind of their additional, you know... You, you talked about combining it with something else- Yeah
to create another product. You know, is there- Is there a limit to that, I guess I should, I should say?
Cory E. Sanderson: Yeah. Um, good question. So yeah, markets, m- market has to be there first before you have anything else, right? The best technology can just completely die if there's no market. Um, carbon dioxide removal market has been growing with new [00:26:00] buyers, uh, one million tons per year over the last three years.
Uh, recently, Frontier, um, brought on Anthropic, um, to be able to an- announce the advanced market commitments of almost a billion dollars of, uh, additional s- um, credit removals that are gonna be contracted. And ju- just last week actually, Eur- European Union, um, introduced mandatory, um, removals via DAC and BICRS, which is a competitive technology, um, starting in 2031 into their emission trading scheme.
So yes, the market is absolutely there. There's new buyers coming in, there's large buyers, and now it's moving, um, I think in the 2030s as, as the market was hoping to kinda see moving it into compliance from voluntary as well.
Trevor Schmidt: Well, and that was gonna be my next question. Is, is most of the kind of the creation of the market from kinda government policies and, and regulations, or, or do you see a, a significant number of companies saying, "You know, raising your hands, this is something we wanna do because- Yeah
it's important to us"?
Cory E. Sanderson: As of right now, it's all voluntary, actually, which is a great thing that we can, like, get it started that [00:27:00] way, um, show that it works, kinda work out all the kinks. Um, but eventually, yeah, to be large scale and fully adopted, I think that, um, we're gonna have, whether it's government, you know, incentives or carrot stick is kind of to be determined, I think, and it'll depend on where you are kinda globally.
But I think eventually that's where the market heads.
Trevor Schmidt: Well, I mean, and it touches on it a little bit, but what are some of the... I mean, when you don't have a market necessarily where people have to have this, or they might not even have a financial incentive to have this- Yeah ... how do you create a business kind of ar- around it?
Cory E. Sanderson: Yeah, it's a great question. I mean, that's, that has been the, um... I don't know. That's the existential question that I ask myself, uh, weekly on how do we, how do we really bring what we think is truly differentiated technology into a market that's still nascent and growing? Um, and, and at the same time, you know, yeah, i- is there a way, let's say, that you can- [00:28:00] arrive at the market at the right time so that it's like, okay, if there were some questions on the market and people aren't sure, it's like this arrives at the right time that y- you can rebuild confidence in the, the continuing growth of that market.
Uh, so yeah, it's, it's definitely a challenging thing. Uh, one pathway that we've thought about is because of our unique ability to use just electric, uh, all electricity and use renewable electricity, we can envision ourselves tied to renewable power, solar or wind, something like that, behind the meter even, um, not even on the grid, and we're using that excess or curtailed power normally that's being thrown away and not utilized, we can use that for carbon dioxide removal.
That's a unique thing that our system can do, so we're trying to come up with different ways and schemes of marketing it, um, of sh- selling it to people that's like, "Hey, this does something else that other people can't do, and there's value in that for you," right? So yeah, it's definitely a unique challenge that our, our company faces.
Trevor Schmidt: Well, and, and as I think about it from an investor side of things as well, kind of like what is that investor pitch [00:29:00] look like? 'Cause it's, in some respects, it's not the same type of an investor model maybe.
Cory E. Sanderson: That's right.
Trevor Schmidt: Or maybe it is. I don't know.
Cory E. Sanderson: Yeah, um, it's, it's definitely a very niche area of venture capital.
Um, there are some venture capital that's out there looking for this. We are also targeting, you know, um, angels and family offices and people, philanthropics, people that are kinda more understanding of the broader scheme. They understand there might be some longer timelines to pay out, but there is still a viable business here, and there is still a market that will be, that will be had, and, and the best technology will win or be a part of that winning solution there.
Um, yeah, so the pitch is, is definitely a little bit more, and it's a, a bit more tailored towards that audience to make sure that we're kind of hitting on, "Hey, this is a viable business. Um, it's because of the differentiated technology. Oh, and no, the market is there, but yeah, we understand it's gonna take a little bit of time to, to grow."
So of course, you're gonna miss a lot of that v- you know, very quick return sort of, um, all [00:30:00] high return venture capital firms, um, quickly just wiped off the books as available funding, but, you know, there's thankfully still people out there that are kind of understanding.
Trevor Schmidt: And Josh, from your side of things, how does that change kind of from the legal representation, you know, as you're working with different types of investors?
You know, does it change what they're asking for, what they're looking for?
Josh M. Hayes: Yeah, I mean, I think we're seeing a lot of the same things that, that Corey just mentioned as far as the kind of- Typical profile of a company that a traditional VC may be looking to invest in, um, you know, is that five to seven years, which aligns with the life of their fund.
Trevor Schmidt: Mm-hmm.
Josh M. Hayes: Right? So limited partners invest in a fund. The VC promises that they'll have some sort of return within the life of the fund, which is anywhere, you know, could be five, 10 y- or five, seven years. Could be, uh, longer than that.
Trevor Schmidt: Mm-hmm.
Josh M. Hayes: Um, and I think it's sometimes difficult for clean technology [00:31:00] companies to fit within that box because, uh, for all the things that we've been talking about, right?
Like, we're, we're building something new. We're building a new market. We have a regulatory environment that is, um, uncertain in a lot of ways. The regulatory landscape has not really caught up to, um, a lot of these clean technologies, I would say including DAC, um, and that's a real challenge. And so I think what you find is investors that, you know, really have two things.
So one, they tend to have an interest in clean technologies and climate technologies for something that's beyond the bottom line, usually related to, um, ecological sustainability and stewardship. And two, they tend to be a little bit more patient capital, right? So they're, they're willing to work with the companies to get them to where they need to be, which is, you know, a, a work- a working, scalable, [00:32:00] and, um, economically viable technology.
Trevor Schmidt: No, I, I think that's helpful. And I guess, Cory, maybe t-touch on that a little bit. He talked about how the regulatory market's uncertain. Kinda what type of regulations do you have to deal with kind of in introducing this type of technology, and, you know, how do you, how does that play into what you're, you're building?
Cory E. Sanderson: The traditional, you know, like Permitting and, and all that kind of stuff that's, that's in place for building any sort of industrial facility. Um, regulatory, there's, there is a, a tax credit available for building these facilities here in the United States. There's also... And that's, uh, on the amount of CO2 you actually take out.
And then there's another one that's in Canada that's based on if you build it, there's a certain amount of capital. It's like an ITC kind of, uh, program, uh, investment tax credit. So there's a q- a few different things here in North America that are incentivizing that, um, that rollout and deployment.
Trevor Schmidt: Tell me a little bit of kind of, uh, the difference in the US market versus internationally.
You talked about some different locations. Are [00:33:00] there other countries that are doing a better job of im- implementing this type of technology?
Cory E. Sanderson: It's really mixed. So there's no one that's doing it great. Mm-hmm. Um, there's, you know, European and Japan that are taking the very, um, forward thinking on the, on the, the market itself, meaning the actual removals and, like, buying the credits and all that kind of stuff, and mandating that cer- companies are doing that by certain timeframes.
But then you have the US and Canada that I think are the really leaders in, like, m- developing the new technologies, and then they have the kind of tax credits to be able to do it, but there's no policy incentives. There's no real regulatory framework that's like, "Oh, well, you have to do it, so let's go build it."
So, so it's kind of like you got the tech and maybe some financial incentives here, and then you got the regulatory stuff over in other places. So it's really a mixed bag.
Trevor Schmidt: Yeah. So I mean, is, is this some- a solution you see kind of being rolled out worldwide? I mean, is this a goal for the company or...?
Cory E. Sanderson: Yeah, eventually, for sure.
Our, our, our initial market is gonna be here in North America because of those incentives that I've mentioned. Um, and then eventually, uh, [00:34:00] especially because a lot of those compliance ones are gonna be allowed to be traded. Again, because we're doing direct air capture, we can kind of do it anywhere in the world, right?
So, um, y- you're gonna go sort of target the geographic locations that are most favorable for the technology from a performance standpoint. That'll lower the cost, and then that'll also help, you know, the most revenue for the project that's being built, and that would also kind of be the most friendly regulatory framework.
So of course, all those Filters would be applied and eventually scaled down to the, where those things could go, but, yeah, globally is definitely an option. Mm. It's just a question of really where does that, where does that end up being implemented is how it all plays out.
Trevor Schmidt: Right. Now I'm, I'm a little curious too, it seems like we're talking about kind of companies with incentives to im- install this.
Is there any sort of a market for almost personal or consumer use? I mean, I think of houses that put up solar panels and kind of try to adjust their carbon footprint like that. Is, is there something like that as an option for, you know, you're gonna see these rolled out in a residence somewhere?
Cory E. Sanderson: Yeah, um, right now that's not our plan.
Mm-hmm. [00:35:00] Uh, there's, it, it's always the question of what do you do with
Trevor Schmidt: the CO2- Okay ...
Cory E. Sanderson: um, that you capture. So right now our two markets that we're focusing on definitely require like an industrial and other business to do that, um, uh, to build that project with. Uh, eventually if we can develop some sort of consumer-based thing to do it of, you know, this is a simple and low-cost thing, I don't think that the price point would be off, but it's really just how do I find something that I can do on a very small scale-
Trevor Schmidt: Right
Cory E. Sanderson: to put out CO2.
Trevor Schmidt: Now I know we talked about it a little bit before we started the podcast today, but you know, w- you talked about raising funds and, you know, it's a tough fundraising environment. And for both of you, kind of like how do you, how do you navigate that, that environment, especially when it can change month to month, year to year, and how do you keep kinda moving forward?
Cory E. Sanderson: Um, yeah, great question. It's, uh, it's my focus right now and it, it's just being able to stay f- Um, driven by the, the opportunities that we have available to us, um, and staying focused on [00:36:00] those, uh, trying to just network and meet as many people as we possibly can, and take every warm introduction or anyone that's willing to have a conversation and just explore that opportunity with them, and take it as far as it can possibly go, and then, and then take that on to the next thing.
So yeah, it's just a, a matter of networking and getting out to know people and, and putting the word out there like, "Hey, we think we have something different here. We'd love to talk to you if you're interested." Um, that's what I've seen and tried and, and it seems to be working so far, but yeah, there's...
It's definitely a challenging thing.
Trevor Schmidt: What do you think, Josh?
Josh M. Hayes: Yeah, I mean, Corey has the hard job here, right? I mean, fundraising is the hardest thing that an entrepreneur is, is ever gonna have to do. Um, and, you know, fundraising within a particular niche area is kind of compounds the challenge. Mm-hmm. One of the things that Corey's doing really well is to navigate this broader ecosystem, and I think that's one of the strengths that we have here in the Research Triangle as well, right?
Because [00:37:00] while from a purely sort of science, research, and development standpoint, I think we can go toe-to-toe with, you know, the big players in the US, the Bostons, the Silicon Valley, but, you know, we're getting a small fraction here in North Carolina of all venture dollars.
Cory E. Sanderson: Mm-hmm.
Josh M. Hayes: And that makes things really difficult when the fuel for your, uh, entrepreneurial endeavor is your, your cash, right?
Cash is king, um, in managing that burn. Um, but one of the things I do think we have as a strength, uh, that offsets, I think, that, that limit to access to capital, not perfectly, right? Because I think you do need to have the cash, but, um, it's, it's the warmness and friendliness of the people in the ecosystem.
Mm-hmm. It's that if there is somebody who maybe isn't in a position to write a check, their willingness to make an introduction to someone who they think may be able to help you in some way. Um, so sort of that, that [00:38:00] friendliness factor or that, um, that camaraderie that comes, I think, from the Research Triangle is a real strength of ours, and I think that Corey's done a good job in sort of mapping and navigating that, that ecosystem.
Cory E. Sanderson: Yeah, I'd, I'd build on that. Th- thank you for the compliment. I would definitely agree that here in the Triangle, um, it's... I- if you put yourself out there and you show you're willing to listen to people, then they're willing to tell you and, and give you some feedback, and it can be honest, and sometimes it's brutal and maybe not what you exactly wanna hear, but you need to hear it, right, at certain times.
Um, and then they're very willing to make introductions and say, "Look, well, I don't know if I'm the right person, but, you know, go talk to so-and-so." And, uh, and yeah, you just start that whole conversation and then just kind of see where it leads. I think it's been fantastic to be able to, to meet people and, uh, and yeah, I, I definitely would say to any entr- entrepreneur out there that's thinking about it is just don't pretend like you know everything.
You know, just be [00:39:00] guard down. Um, most of the time, obviously, be guarded with, like, don't share your secrets and all that stuff. But don't... Yeah, be open and say, like, "I don't exactly know how to do this. I've never done it before." Like, that's okay. You're right. You don't need to pretend, like no one a- asks... In fact, I'd say most people don't wanna hear you say that, then they'll probably put their guard up, um, and not be willing to give you much feedback.
So I found that being super, um, yeah, a good, uh, you know, way that, that I've been able to kind of open a lot of doors.
Trevor Schmidt: So as, you know, we've talked about, I guess, traditional capital in some respects, is there other alternate, like, forms of capital that are available for clean tech companies that y- that you can explore or have explored, like, i- the, the government funding or institution?
What, I mean, how, how does that play out?
Cory E. Sanderson: Yeah. Yeah, definitely. There's, um, there's definitely, uh, I would say, uh, for a couple years ago, there was a lot more government funding. A lot of that's been peeled back recently. There is still some available out there in very, um, specific targeted areas. There's definitely philanthropy out there, um, for different, you know, specific niche things.
It's like, "Oh, [00:40:00] we wanna do blue marine carbon, you know, we wanna help build up the, um, the coastline here in North Carolina, and it also has a restorative thing, and, and we get to remove carbon at the same time." You know, like, I've seen things like that, so yeah, there's lots of things out there, and you just gotta go look and ask and try to figure it out.
Trevor Schmidt: Well, I mean, you mentioned the fact that, uh, the funding position's changed so much in the recent years. How, how do you navigate kind of those swings, I guess? 'Cause it seems like- Four years ago, it may have been a completely different environment and, you know, two years from now it could be something completely different, so...
Cory E. Sanderson: Yeah. I, I think the biggest thing is just stay level-headed.
Trevor Schmidt: Mm.
Cory E. Sanderson: Don't ride the highs too high and don't ride the lows too low. Like, it, it... Everything comes and goes. You have to remind yourself that. So don't, you know, ramp your production up too much. Don't ramp your team up too much. Don't overspend in the high times- Mm
because likely a downturn is coming, and you have to be ready for that, so you have to be able to extend a runway and be there when the market, when your technology's ready and the market's ready, right? And, and those things can match up, so [00:41:00] that's, that's my advice.
Trevor Schmidt: That's, that's great. Uh, I really appreciate that.
And I d- wanna ask you to kind of how do you deal with skeptics, I guess, 'cause I imagine in your field there's a number of them. Kind of some of them are going to be does this technology work? How is it really different than somebody else's? Some of them may be even broader, do we really need to pull carbon out?
How do you navigate all those different kind of people poking at you, I guess?
Cory E. Sanderson: You just try to meet people where they are.
Trevor Schmidt: Mm.
Cory E. Sanderson: I mean, um, I've just found, you know, if I say something, and if I'm saying it to someone's face, I just watch their expressions and maybe I hear what they first have to say, and then I go, "Okay, I gotta, I gotta go to a different mode here," right?
They're not the person that I thought I was pitching to, and I, I hear them and, and try to meet them wherever they are. Um, and, and just try to understand. Even if it's like they're really far away and they definitely don't believe in it, it's like even if I can just have a conversation with this person and have them just try to understand my perspective, and I'll listen to them and have them see that I'm hearing their perspective, even if it moves them just a little bit away from their spot, I think that's, that's what I aim to do anytime I have a skeptic.[00:42:00]
Trevor Schmidt: Yeah. That's great. I'm, I'm interested from both of you, actually, what makes you hopeful for the future in this space that, you know, that we can make a dent in it? 'Cause we talked about at the very beginning it's such a big problem. What makes you hopeful?
Cory E. Sanderson: What makes me hopeful? H- Um- It's a slow grinding process, but I still see people out there doing this, right?
I still see the market growing. I still see technology developers out there pushing things forward. I still see, uh, you know, I would say in the conversations that I have with people and just sort of the openness and willingness of the public is sort of just moving us. There's really slow, it's quite subtle, but I'm still hopeful that I think we're kind of moving in that the right direction.
Trevor Schmidt: How about you, Josh?
Josh M. Hayes: Yeah, I mean, I'm seeing, you know, the quality of entrepreneurs really, really improving as the space matures. Um, I also think it's really heartening to see people, uh, whether they're undergraduate students, graduate students, who are excited [00:43:00] to learn more about and, let's say, develop and devote a PhD to, uh, tackling these types of problems.
I find that sort of forward thinking to be really, really inspiring. Um, you know, like, like Cory said, it's, it, it is a grind. Um, it's not at a point now where there's sort of universal acceptance or acknowledgement that this is the way to go. Um, but I think the types of approaches that, the types of approach that Cory's taking, that sort of yes and, right?
Like, it's not an either/or between sort of the traditional way of thinking about, um, you know, energy solutions. It's, it's, uh, we have a lot of different tools in the toolbox and kind of pressing on as many of those different opportunities as we can, um, and seeing how far we can take them to get the greatest impact.
Trevor Schmidt: Mm-hmm.
Josh M. Hayes: So I, I find that to be, to be [00:44:00] really, um, really hope- uh, makes me really hopeful for the future.
Trevor Schmidt: Now, do you have a, a support group, I guess, of, like, other kind of founders in this space who are kinda also working towards the clean tech goal, and is there kind of strong encouragement amongst that group?
Cory E. Sanderson: Yeah. Yeah, actually, um, we do have a, a newly founded, um, Carolina Climate, um- club. I don't know what the the right term of it would be, uh, where it's other founders and interested parties, um, and we get together, you know, kind of monthly, quarterly, something like that, just to be able to share stories and focus on different things.
Um, we had a dinner last week. It was great. Um, yeah, it's been, it's been good to sort of just, like, coalesce around that part and try to figure out, like, what this is, what does it mean for us, um, and sort of try to build something, you know, in addition to the whole, um, company thing.
Trevor Schmidt: Well, kind of related to that question, I wanted to ask you: what, what do you say success looks like for sustaera?
And maybe kind of on different timelines. Like, what does success look like in the next year? [00:45:00] What does it look like 10 years from now?
Cory E. Sanderson: Yeah. Yeah, in the next year, for us, it's demonstration of our technology externally validated by a third party. Um, build that validation unit, get it out deployed in the field, and get somebody else to put their hands and eyes on it and be like, "Yeah, it's doing what they said it would."
That's, that's success for us. That is, that is a massive unlock that, um, brings validation that you can't get just by telling everybody else yourself. Um, and then yeah, 10 years from now, really hopefully we're the leading supplier of, of this equipment and licensing out to anyone that's interested in doing carbon dioxide removal, carbon dioxide sequestration, um, anything that needs that sort of, um, uh, that technology solution.
Trevor Schmidt: And for the broader kind of, I would say, carbon removal industry, is there, like, a dream or a goal that you see for the industry that you would hope to see within the next five years?
Cory E. Sanderson: I, yeah, I, I don't have anything in particular. I just think that hopefully we can continue to get validation, um, and, like, market recognition that this is a viable thing to do, and people are, are out there and actually trying [00:46:00] to, you know, deliver on what their promises are.
Trevor Schmidt: Love it. So we are the Founder Shares podcast, and so I'd like to ask all of my guests, you know, if you had one piece of advice that you wanted to share with somebody who's thinking about starting a company or kind of r- right in the middle of it, what's, what's that advice for you?
Cory E. Sanderson: My advice would be just really spend the time to think about what it is, what problem you're solving, what m- what market are you solving it for, and make sure you're passionate about those things.
It's, it's such a slog to do this every single day. You have to truly be passionate for it, and you just don't wanna do it if you're not really that into it. I mean, it's, it, that's my advice is just spend the time, be honest with yourself- Right ... and just say, "Is this really what I love? Is this the market that I love?
Is this the technology, the right approach that I'm going for?" And if not, you know, maybe you can pivot or tweak some of those things. Don't give up altogether, but, um, yeah, just really spend that time and just be truthful to yourself.
Trevor Schmidt: I was gonna say, I like that, that kind of side comment, be honest with yourself.
Yeah. You know, it's not d- what you think you'd want to want, but- Yeah ... is it [00:47:00] really what you're into? Right. Now, Josh, you've done this before, but- ... are you coming back with some new advice for somebody starting a company?
Josh M. Hayes: I already gave my, my kind of primary gem in the last episode. You had the first level.
That's right. But, um, but I do wanna build on, on what Corey said, right? Like, I think one thing to really keep as your North Star is to make sure you have a real business, and by that, I mean you have science that's been validated on the one hand that works, and on the other hand, you have a customer base that is interested and willing to buy your product.
Um, and then once you have that, then I think it's important to invest in the types of things that we do, which is making sure that your corporate documentation is all, uh, done correctly, make sure that the intellectual property that you have is owned by the company and not by the individual founders, make sure that everybody's clear on exactly what it is they own, um, and that you're fulfilling your obligations to both internal and external stakeholders, [00:48:00] uh, and documenting all that appropriately.
But I think the key is to make sure that you have the science and the technology that works and the customers that wanna buy it, and then once you have that, it's important to make sure all of the other ducks are in a row.
Trevor Schmidt: I love it. We're gonna start with passion, then we're gonna go to ducks in the row, and then we're gonna- Yeah
build a business. Well, I appreciate you guys taking the time out today. Corey, if somebody's interested in learning more about the company or wants to connect with you about investing, what, I mean, how do they reach out to you?
Cory E. Sanderson: Um, the best way is to reach out to me over email. Um, it's, uh, ces@sustaera.com. Uh, check out the website also, sustaera.com.
Um, yeah, love to talk to anyone that's interested. Fantastic. Look forward to seeing where the company goes. Thank you. Thank you.
Trevor Schmidt: Thanks for listening to this episode of the Founder Shares podcast. If you're a founder or business owner and need legal advice, be sure to check out our team at hutchlaw.com.
That's hutchlaw.com. We have the capacity to help you out with just about any legal need your company may be facing. We're passionate about the innovation economy and ready to help you on your [00:49:00] entrepreneurial journey. I'm Trevor Schmidt, and thanks for listening to the Founder Shares podcast