Clean Energy Meets Its Match: Crux Accelerates Deal Flow

(upbeat music) - Welcome to Super Cool. The show about low carbon innovations now scaling. Each week, we talk with the founders, CEOs, and executives, winning customers, growing revenue, and capturing market share, by turning carbon-cutting ideas into competitive advantage. This is the rise of the low carbon economy, a multi-trillion dollar transformation already underway. I'm your host, Josh Dorfman. Before we get into today's episode, I want to tell you about something new from Super Cool. We've launched a course called the Climate Adoption Playbook. It's built from everything we've learned across more than 60 conversations on the show, stories from the founders and operators, scaling climate solutions at today's most successful climate companies. Through that work, one thing becomes really clear. The companies that scale fastest don't just build great products and technology. They master adoption. They use a set of repeatable levers to win customers, shape demand, and accelerate growth. We've distilled those levers into a practical course that shows you how to do the same, whether you're building in clean energy, circular manufacturing, mobility, or the built environment. If you're building something that needs to scale faster, and you want to eliminate the friction that slows customer adoption down, check out the course. You can find it at getsuper.cool/playbook. Now for today's show. In 2021, I co-founded planted with two engineers from SpaceX to manufacture carbon-negative building materials. We raised a $2 million seed round that year, and then in 2022, raised a $10 million series A. I remember building out the data room for that funding round. Every employee's paperwork, all the background on our ag operations, our production tech, the legal docs, every contract, hundreds of files organized into folders, and then came the due diligence, waves of new requests for missing documents, clarifications, more information, all of it tedious, all of it necessary, and wheeling did it once. Now imagine doing that seven to 10 times for a single solar farm or battery storage project. Welcome to Clean Energy Project Finance. Here's the moment we find ourselves in. Clean energy investment globally is about to hit $2.2 trillion this year, double what's flowing into fossil fuels. That's historic by any measure, but we need to build trillions more to reach the net zero future. The money exists, the projects exist. What's missing is the efficient connection between them. Today, transaction costs run five to 10% on every deal, and developers raise seven to 10 different kinds of capital, development loans, construction loans, bridge loans, tax credits, tax equity, permanent financing, the list goes on. Each round requires different investors looking at mostly the same documents, asking similar questions, all moving through thousands of pages manually. It's paper intensive, expensive, and slow. In 2022, the Inflation Reduction Act altered the rules. It created transferable tax credits, allowing clean energy developers and manufacturers to sell credits they couldn't use because they don't have enough tax liability to take advantage of them. Investors and companies with large tax bills can now buy those credits directly. The law created the mechanism, but the market infrastructure to make those transactions happen efficiently. In other words, the platform, the pricing transparency, and the workflow, that all still needed to be built. And Alfred Johnson was uniquely positioned to build it. He'd started his career at Treasury during the 2008 financial crisis, watching how markets break and how they get rebuilt. He went to BlackRock during the European debt crisis, helping governments and banks navigate financial distress. Then he built and sold a startup. And then in 2020, he got called back to Treasury as Deputy Chief of Staff for Janet Yellen, working on financial markets and technology issues. When the Inflation Reduction Act passed, Alfred wasn't just watching from the sidelines, he was inside the room, understanding exactly what this new market would need to function. And essentially, it was a market design challenge. Thousands of developers would have credits to sell. Thousands of buyers would want them, but without the right infrastructure, those transactions would still be slow, expensive, and opaque. And the clean energy transition they were intended to propel would still struggle to move quickly. So he co-founded Crux, a clean energy capital markets platform built on three pillars. Liquidity to connect buyers and sellers. Market intelligence that provides transparent pricing so everyone knows what deals should cost. An AI-powered software that makes every step of the transaction faster and more efficient. In just two years since founding Crux in 2023, Alfred, the company's CEO and his team, have closed over 120 transactions worth billions of dollars. There are now over 1,000 developers, manufacturers, and investors on the Crux platform. Now, all that pain I experienced that planted raising a series A, that's what Crux is designed to eliminate, but at a scale, orders of magnitude larger. The conversation you're going to hear today also brought me to a new realization, a more nuanced view of how this clean energy transition actually works. Decarbonizing the economy means eliminating fossil fuels from physical infrastructure. Steel, cement, buildings, solar farms, and battery storage plants. But none of those materials get decarbonized, and none of that hardware gets built without capital flowing to it efficiently. Crux is the software layer that makes the hardware build out possible. Here's my conversation with Alfred. (upbeat music) Alfred, welcome to Super Cool. Thanks for having me, Josh, but to be here. One of the things I've heard you say, which strikes a chord with me, given the conversations we're having here on Super Cool, is you talked recently about the fact that, very often when we're trying to affect big change in our society, in the US, in civilization, it's not necessarily that the problem is too big, but that the systems aren't always up to the task, right? I know that's been a kind of a theme through some of your journey in the places you've been, working in treasury and in government and your background. So I just got really excited about the fact that you were key into that, and Crux is setting out to solve a big problem in energy systems that we don't necessarily see in our everyday life. And I just say all that to say welcome, really excited to hear, really excited we're gonna have this big conversation today, or the energy transition around how that gets financed, really how that gets accelerated. I mean, we don't want to go that far back, 'cause Crux is only just a few years old, but take us back a little bit into your background, the decision to get to Crux, and the big problem you're working on. Josh, the very first thing I ever did in my career was walk into the US Treasury Department during the financial crisis, where I had done a summer of investment banking at Morgan Stanley when I was a junior in college, and so I happened to be an Obama's campaign, and I was one of the young campaign kids that they had allocated to the Treasury Department, and my summer investment banking was differentiating enough that I was allocated to the team that was working on the financial crisis response. And it was March of '09. The market was falling every day. It seemed like there was no bottom, and the Treasury had brought in these unbelievably talented people from Wall Street, private equity firms, hedge funds, academia, and everybody was trying to solve the problems of the crisis. And I was 22 and trying to be helpful, and they didn't find me helpful for much of the actual finance of it, but I had been a polycymeager, which I never thought would be of any value, which made me like a reasonable writer. And so they had me write things. They'd had me write the memos and the press releases on the things that we were doing, and it gave me this first exposure into financial markets as the markets were breaking. And then I got called into the White House, had the opportunity to work for Bill Daly, when he was President Obama's Chief of Staff, which is additionally full circle, because Bill is now working with us as a senior advisor. And then when to business school went to BlackRock, they'd established this financial crisis advisory group. I had done financial crisis work within the Treasury Department, so I was a good fit for this group. At the time, the European financial crisis was happening, BlackRock was engaged with the Central Bank of Greece, other governments and banks around the world that were in some form of financial distress. And BlackRock brings this really rich mix of technology and financial markets, expertise to everything they do. So it got to be part of that. But had been an athlete growing up, had always loved small teams. And I saw the chance to go work in startups, a friend asked me to come, they'd raised a series A and brought me in as a head of sales, and just loved being in that small environment, trying to create something big and meaningful, ultimately left that role and started another company called Mobilize. We were doing event management in the context of networks, built that really quickly and sold it in 2020, and then got called back into the Treasury Department, working as the deputy chief of staff, mostly on financial markets and technology related issues did a lot of work on crypto specifically. But felt that pull back into smaller companies, building teams, doing things that were creative and original, left the department and really wanted to work in the climate, clean energy space, but didn't see a lot of places, Josh, that felt like they were a natural fit for me, given that the things that I had done were software and financial markets and Treasury and tax. And then in that period, Congress passed the inflation reduction act, which was this unbelievable new set of programs, most of which were enabled by tax credits for everything. And the tax credits were made to be transferable for the first time, and that created this really interesting market problem and opportunity where we collectively, as an industry, had to figure out how to build this brand new market entirely from scratch. And the thing that made us really curious, I was working with my co-founder from the prior company, Alan Kramer, as we started to look at the idea and got really, really interested in the way that the tax credits form, catalyze, and are a key part of the capital stack for all of these projects. And our view was if we could build a platform that was deeply useful for the transaction of the credits, that we would earn the right to help developers, manufacturers raise other kinds of capital, and we would earn the right to work with investors and tax credit buyers to put capital into projects. And if we could make that interface less onerous, less expensive, less inefficient, and make it work better, we could drive hundreds of billions of dollars of capital into assets that are the ones that we need in order to power reindustrialization, address the climate crisis, and really reach the next level of economic and energy prosperity. - Okay, so just staying on that track, you have the IRA gets passed. So suddenly now there's tax credits. Is the piece that's different is the transferability? 'Cause there's been tax credits, right? You can go back a decade. - Yeah, I'm gonna do a solar thing and you have some investors be like, I'll take the tax credit, but is it just the scope and the how it's applied so broadly in terms of the transferability? Or is that actually, is it new? I don't want to necessarily get go too deep in the weeds on this, but-- - No, first of all, human beings are so interesting, right? Because we like things change, and then we just assume that that's the way that they always were. And they're all of these esoteric elements that have contributed to the design of our incentive system being what it is. And really the sequence of events there is that we as a country have been using tax incentives for energy, for oil and gas, since before World War I. And when there was a oil crisis in the 1970s and there started to be a realization that we need diversification of energy sources, Congress started to use tax credits for wind and solar. And that became a principle way in which those new categories of generation were incentivized over the subsequent decades. And the interesting thing about tax credits is they're useful in the sense that you do a thing and you get the credit. They are ineligant in the sense that not everybody who builds the thing has enough tax liability to be able to use the credit. And so they have evolved all of these structures to help the companies that have the credits and can't use them monetize them, but they were never transferable before. And so what Congress did in the IRA was take some of these credits that had been around for a long time, add a bunch of new credits for things like standalone battery storage and nuclear and advanced manufacturing, critical minerals, all these other categories. And as they were creating this new multi-hundred billion dollar set of credits that would be given to the industry, they had to deal with the fact that many of the companies that would get them couldn't use them. So they created this new mechanism called transferability that allowed for the sale of the credit. In the last two and a half years, that market has formed really quickly. It's now doing about $40 billion of volume per year. The volume is very diversified. And there's much more liquidity and efficiency in that market than there had to be. That has been a remarkably successful east of public policy that is driving a huge volume of dollars into assets. And interestingly, by creating the credit as this transferable instrument that the developer manufacturer gets and can sell to another private party, the government created this private transaction, which gives it a level of remove from government programs. So we have seen as the new administration has come in, they've exercised their priorities on things like the loan program office. And that gives the executive branch a certain level of agency over the way the capital that is allocated to the executive is spent. And in tax credits, it is their programs that exist out there in the world where people are benefiting from them and transacting on them. And that proved pretty durable. In the most recent piece of legislation passed by the House and Senate signed by the president, transferability was retained entirely, even as some changes were made to the credits. - Yeah, I appreciate that explanation. Now let's say today I'm gonna go build out in an advanced manufacturing facility. I wanna get into battery storage. You pick it clean energy fuels, nuclear, geothermal. I'm gonna go build this out. The project's gonna be completed. I'm gonna have spent $3 billion on this new battery storage manufacturing facility, but I haven't made enough money off this thing to actually take advantage of the tax credit that the government's offering. And now with this kind of recent slate of legislation, someone else can come along and be like, oh well, I could sure use that tax credit. Let's figure out how much I'm gonna actually buy it for because it fits a $3 billion credit. I'll give you 2.25 or whatever it is, but let's affect a transaction where both parties can win. And so let's use that to look at the Crux platform and the value that you provide. Because as I understand it now, you're building out Crux as this platform. I don't know if you consider it a marketplace, but you certainly are bringing buyers and sellers together and doing a whole suite of activities in the middle to make it go much smoother to affect these kinds of transactions. I'm gonna have a bunch of questions around that, but let's just start there. What is Crux? What is the product offering? What's the value that you provide? - Crux is three principal things. So we are a capital markets platform where buyers and sellers are able to find each other and transact. We are an intelligence platform that produces market intelligence and integrates it into our operations and our software platform and our software platform drives the action in transactions and is the system of record that people are using to manage the transactions. And we do that thing, the mix of liquidity, intelligence, and efficiency in these private financial transactions. We do that in tax credits, debt, and structured investments principally tax equity where investments are made into the assets and then the credits can be sold. And that solves a significant amount of the problems that the developers, manufacturers have in capitalizing their assets. They need to go raise for every project, seven to 10 different kinds of capital, development loans, construction loans, bridge loans, tax credit sales, tax equity, permanent capital. And generally that capital is coming from different counter parties that are looking at a lot of the same underlying information to make a risk decision and allocate the capital. And so what we are now doing is we partner with companies like the manufacturing firm that you used in your example and developers of renewable generation of all different shapes and sizes and people that are building and processing critical minerals. And we help them to access capital of all different kinds. We help them to sell the tax credits, we help them to access loans, we help them with investments into the assets that they need in order to capitalize their businesses. And that approach really sits in the center of three big themes. The first is the fact that energy demand is rising for the first time in two decades that's prompting a huge amount of development of energy assets. The second big theme is that manufacturing is coming back to the United States and our allies in pretty significant volumes that started with COVID, by the way, and then was extended by the IRA. And then the third big theme is that AI changes the way that financial transactions can be executed. Because AI helps people to process lots of information, understand it, extract the relevant information from it. And we have the advantage, the privilege of getting to build this company from scratch, starting in 2023 with technology, data, and AI at the center of it so that we can help our developer manufacturer customers and investors and tax credit buyers that are using the platform to find the right product, to invest in it, to deeply understand it, and to do the deal. - It's not even really to say like, timing is everything in startups, okay. This is timing because there was a new moment in time. Like there was a new moment in financial history, with this legislation that said, somehow there needs to be a mechanism in the capital markets for clean tech, climate tech, call what you want, where someone's got to build this market and create the liquidity and create the transparency and figure out pricing and how this is all going to work so that these hundreds of billions of dollars or maybe trillions of dollars can actually flow to these hundreds of billions of dollars and eventually trillions of dollars of energy projects that are stuck because, I think, for what you just kind of alluded to, which is crazy, and I actually didn't really know this offer until I was getting ready to talk to you, just how complicated energy project finance is. You talked about these eight to 10 different pools of capital that a developer needs to figure out how we're going to actually underwrite this project. Nobody knows that. Like if you're not in this industry, you have no idea how complicated it is. But if you were going to start this business five years ago, I'm guessing you're going to lower carbon or whoever and they're like, "Mm, nah, "I'm not sure I really see it," right? But if you come two or three years ago, it's like, "Oh, whoa, now this business is really crucial," right? I mean, it's really tapping into this need right now that has so much opportunity. But the other thought that I imagine our listeners will have is, "Okay, well, don't investment banks do this, "so you just like an investment bank?" And as I've heard you say, they're like, "Well, yeah, but if you're talking about like a thousand page, "one off esoteric project and you're trying to now "bring some sort of standardization to this industry, "if you really want to go fast, it's something needs to shift. "Is that a fair way to say it?" I started working on the financial crisis response, right? And studied markets in the context of that. And when you look at efficient markets, efficient markets have certain properties to them. They have a lot of liquidity, the cost to transact are pretty low, there's price transparency in a way that there isn't in efficient markets. And if you look at the private capital markets around energy and manufacturing project assets, those are inefficient markets. And the best way that I would prove that to you is to say that in any one of those five to 10 rounds of capital that the developer manufacturer is accessing, the costs to transact can be as high as five or 10%. It's hard to find the counterparty, it's hard to paper the deal, it's hard to get the capital, it requires a lot of expert advice around the table in order to get it right. And that just means that there's this five to 10% tax on every deal that needs to get done. And a lot of that, again, is paying people that are doing really valuable work in the transactions. But there's a, we're in this moment, where a bunch of things have changed, right? The law changed with the IRA created, all these tax credits made them transferable. Then the law changed again over the summer, took some of the credits away, extended them for others, created other compliance obligations. Then we are in this moment of categorical energy demand expansion is driving a ton of asset infrastructure that is being built at the same time as the US is evaluating the role that we have in the world in the context of rising geopolitical competition, particularly with China, who's been one of our most significant trading partners over the last four decades, that is leading to a restructuring of global supply chains, particularly around some of these critical energy and material components. At the same time that AI, which is one of the driving forces behind the demand expansion is changing the way that messy, document intensive processes can be handled and performed. So when you look back at some of the great companies in history, often great companies in history happen after there's a big regulatory change, there's a big economic change, there's a big technological change. And we have all of those things happening at the same time. And the transactions are still too expensive. So there's this moment where we just need to build trillions of dollars of infrastructure. It needs to be as efficient as possible to build that infrastructure. Software presents this opportunity to do that better. And so what we're going to do at Crux is we're going to build liquidity across all these different capital markets. We're going to build intelligence that helps our counterparties, our clients, our partners to navigate these transactions better and with more awareness of what the market standards are, what fair pricing is, all of those things. And we're going to build the most powerful software engine that has ever been created to help the trillions of dollars of capital reach the trillions of dollars of assets that need the money in order to build the energy system of the future. And that's happening right now. - Okay, it's cool. I get the moment that we're in and I get the ambition. I do find it very interesting. From my background, from thinking about this show, from who we typically talk to. I mentioned we'd start this company planted, looking at, okay, where is carbon today? How do we take carbon out of the system? How do you actually build a climate solution? And in my mind, that's always so tied to, it's physical stuff, right? Carbon is a physical stuff. And so it's conventionally accepted or at least it probably is on people who are working on decarbonizing physical stuff. Like, you can talk all you want about software, but you got to actually decarbonize the physical stuff. And you might actually say, yes, 100% true. But you cannot decarbonize the physical stuff. You can't shift the energy system. Like, you can actually get to zero carbon, concrete, or green steel, or what have you, unless you can finance those projects efficiently at scale and take advantage of the capital mechanisms, the financing mechanism, in this case, the tax credit or layer on debt or streamline the whole process, you're just never gonna get there fast enough. The system is not built for the moment. And we've seen that in other ways. Like, we've had this coming Camuon that's trying to help utilities go much faster in their decision making. Like, the system is just not built, but you're looking at saying, yeah, all these other things about the system are broken, but fundamentally, the finance is not flowing merely fast enough and taking advantage of the tools that exist today for a whole bunch of reasons that you laid out, like, price lack of transparency. You've got these big deals and all these documents. That's gotta get streamlined. AI and software can help with that. Like, we've gotta lubricate this thing financially. So it can just go way faster. >> Yeah, I mean, we have trillions of dollars of potential projects that need to be funded. And we have all of this capital that would fund it. And it's too hard. It's too hard for the developers and manufacturers to raise it, and it's too important. You know, we're looking at rising electricity prices. We're looking at all of the signs of a climate crisis. We're looking at the need to have domestic supply chains for all kinds of different stuff. So we can't afford for it to be so hard to raise that capital. And, you know, when I look around at the things that need to be true in order to achieve the scale of infrastructure build out, that by the way, both sides of the political aisle want. The things that need to be true are good technology, the right tools that can be scaled, the right teams that can build good companies that do that, and a ton of money. And that money needs to be accessible. And if there are roadblocks to getting it, then less stuff will get built. That's just economics. >> Totally. Just help me understand a little bit more. I know you mentioned the three buckets of value that Crooks provides. But let's say I'm the developer. I'm working on a project. I know you have over a thousand different players in the ecosystem on your platform today, probably on the development side, investors, manufacturers. I know you've done 100 plus deals. There's transactions taking place. But if I come to you or I come to Crooks, and I'm working on, again, let's just say, I want to build some component of the battery manufacturing ecosystem. I've got a big project. What is Crooks enabled for me? Do you help me understand the pricing of what I might be looking at, how that deal might come together? Just taking me through the stages of what Crooks does. Because I know it's not just like, hey, sign up and then it's like choose your own adventure, right? You still help companies navigate all these very complex stages. Totally. Designing your capital stack is a complicated undertaking. And it requires a lot of careful planning and modeling and understanding of the market. I'm going to start by telling you the story of our first three product customer. So we launched these new products, debt capital markets and structure investments tax equity over the summer. And one of our partners from last year who sold the bunch of tax credits through us approached us and said, we have this very large portfolio and we're looking for tax equity. And we said, great, that's perfect. We're building the strategy. So we deployed $240 million tax equity into that set of assets. And we are simultaneously supporting the developer on accessing equipment financing for other projects that they intend to build. And what that shows is we're helping that developer raise all different kinds of project capital in order to facilitate the growth of their pipeline and deliver the assets that they intend to deliver. And so the way that our conversation goes with the developers and manufacturers has changed. It used to just be, hey, we're the marketplace for the tax credits. You got tax credits to sell. We're the place that you can sell them. And then we would work with buyers of those credits and people that are bringing buyers to the table. And we would help them to access the inventory. The way that we are now structuring our conversations is, hey, Josh, you're looking to build $3 billion worth of battery storage assets over the next five years. What are all of the different kinds of capital that you need in order to do that? And we want to help you understand the pricing and the terms and the way that those deals come together. And we want to be your partner in helping to raise as much of that capital as we can, so that you can most efficiently build your capital stack around your pipeline and do more. I've heard you talk about how you're building your own LLMs or using LLMs to facilitate different pieces of how that unfolds. So you can take a data room, which can be very complicated. And you can use LLMs to maybe inform that data room or help people just distill what's in that data room. So if I'm a startup and I've got to go raise capital, and I'm talking to a VC, and I've got to do all the planning, and I've got to figure out where do I think our valuation is going to potentially land, even though the VC's just going to tell us where it's going to land. So that's the market. The VC's will tell us what we're worth. And then we'll figure it out. But we're doing that planning. We've got to put a data room together. That gets complicated. Then we've got to get that transaction done. And we've got to manage the transaction post. And as I understand it, Crooks is building the software platform with humans to enable that full process for companies who are coming in and want to get projects all the way through the pipeline. And you're using AI in some really interesting ways to streamline some components of that. And where I'm trying to go with this question, Alfred, is I don't know how you think about growing the platform. If we want to get thousands and thousands of companies into this marketplace, or it's like, well, 20% of the market drives, 80% of the volume, let's go get 20% of the-- I don't know what the dynamics are. But I've heard you talk about-- and I find this very interesting-- when you put a data room together for a company-- and I think this has become possible legal. I don't know all the mechanisms. But you put a data room together for a company. Now, a lot of that can actually be used repeatedly. Or there's just some different dynamics happening that you're leaning into that potentially make your business really big, really strong, and kind of put a motor around it as you have more data, have more transactions, have more stuff on your platform. You raised the idea of, you know, five years ago, I'd gone to lower carbon, and then like, hey, we want to build a capital platform for projects. And the way that we're going to do that is we're going to build a bunch of software that helps people do transactions. And one of the big pieces of that is going to be a data room. They'd be like, you're never going to get entrance into that market. What's the way in which you're going to find credibility and be able to access either side of it? And why would you build a data room? That's so stupid. There are all these data rooms that are out there that are great. And so then the things that happened were the law passed and created a transferability which created this new opportunity to present to value to the market as a place where those transactions would happen, where there wasn't a lot of standardization, there wasn't a lot of transparency, and we could contribute it. And AI presented this opportunity to do things with the underlying project data in different and better ways. So we built the data room and that data room in tax credits is now used in more than 80% of cases because we have enhanced and enriched that data room. We've all sorts of workflow and AI. So you can just dump your documents on us as a developer and LLMs will auto-organize it into a pre-prescribed diligence checklist that we have built at the credit-specific level. So the documents then go into the checklist. And then as the investor, the tax credit investor, or their advisors are looking at the documents, you're looking at a financing on a battery storage project and there are a certain set of documents that show up in every battery storage financing. And we have worked with Norton Rose to specify the questions that should be asked of all of the underlying documents within all of these financing so that we can deliver to the investor directly within the data room, directly within the workflow, a summary of the key terms and the ability to understand and parse the underlying information directly within the workflow. And what that produces is this experience that is liquidity. You're the developer manufacturer or you're the investor, you're able to find the thing that you're looking for. And efficiency, you're able to do the transaction with the support of experts. We have a team that comes from all of the best places in the industry that are there to support you and technology that is facilitating the steps that are laborious and toil some throughout, but not replacing human beings. That's a ridiculous concept in markets like this that require so much expertise, enhancing the experience of human beings to be able to do their work better and faster. And then we are informing all of that with intelligence that we collect from the market. So, you know, we've now done 120 tax credit transactions in the course of that. We've learned a lot of things about what works and what doesn't and what conversations should happen, what documents should be reviewed, what the important things about those documents are. And the more deals we do, the more we learn about the ways that we can enhance the experience and build that intelligence natively back into the platform and the transactions that makes it better for everybody that's using. - I really appreciate that example that is incredibly exciting to hear. As you're talking, I can envision, especially as you keep expanding, where all the parties that are trying to transact these deals from the investor side and then the attorneys and everyone who's getting involved, but really the investors themselves with something like, oh my God, this is such a more pleasant experience of trying to move efficiently through this process. Of course, we're gonna go use crux to try and get this done because we can deploy so much faster with so much less friction, but really with underlying trust, and that's so crucial, of course. - So crucial. - But you can only change this, fix this system, so to speak. You can only scale clean energy finance really at the speed of trust in your platform that everybody feels like this is really delivering all this value in a way of 100% confidence, right? It's just too much in the line. These are, they're huge deals with huge consequence, and it's so fun to watch the delivery of these AI tools 'cause we talk all the time with infrastructure investors that are looking at these assets all the time, and when we ask about AI, it typically follows a similar conversation pattern. They'll say, the firm is really serious about this, and we have a big initiative, and the CIO has bottom number of tools, and we may have co-pilot, and we can now use chat GPT in these instances, but I'm trying to figure out how to do it, and I don't really know the ways that I can apply it directly to the category that I spend my days in, and then we show them what we've built, which is just a fully built container that has the documents there, embeds the context within crux, pulls out the questions that we have seen asked hundreds of times about the documents that are in the data room, and allows them to just see and receive the summary and the information, and then we're launching other cool features, right? So we're gonna launch the ability to chat with that data room in Q4, so you can ask follow-up questions of the document, and what that looks like when we show that existing product in the vision to investors, is they're like, "Oh, this would make my job so much easier. "It'd make it so much better for me to be able "to understand these assets quickly and deploy capital, "and really understand how to configure the system "in order to do that without me having to be my own IT director "and figure out how to connect all of the different pieces "against whatever the firm's policy of using this thing "or that thing. "We've already done it for you." - Yeah, I love that. So one of the things I wanted to ask you, I've heard you say, and I was thinking about it too, I think I understand why, but you've talked about the fact that this is such an exciting opportunity, it's a necessary that there's a market that's built up kind of around tax credits, and then there's all these other financing components that you enable, debt, I think preferred tax equity, the whole suite of projects that you're expanding into, I'm sure that will keep expanding. But I've heard you say, again, I had to think about it, that the tax credit, and really the tax credit transfer, is the crux of the capital stack, right? This is the piece that if you can lock it in, and everyone has confidence around it, because as you said, it's removed from the federal government, but it's backed by the federal government, right? And so it lends far more credibility, it's better for the weighted average cost of capital, it just creates so much more confidence in the deal than a lot of the other financing can cascade and unfold from there. - Yes. - Am I thinking about that properly, and is it playing out how you imagine? - Yes, the tax credit stale. If you're talking about an investment tax credit, the tax credit is earned by the developer, when the project is placed into service. And if we're using rough numbers, you're building a $30 million battery storage project with a 30% investment tax credit. You, as the storage developer, would get $10 million of credit due to you, owned by you, when the project is placed into service. But you get paid for discharging the battery over a long period of time, and so your income doesn't match that, your tax doesn't match that. So that $10 million, if it can be sold into the market, represents this huge receivable to the developer. It's a big influx of capital. And what that means is that it's critical to the financing of the project, because it will take out, in some cases, earlier stage financing, it may be bridged against. So specifically, there would be a loan that is bridged against the forward sale of the tax credit. And at the time that the tax credit is sold, the rest of the capital stack will come together for the ongoing operations of the project. And so it represents this material moment in the project progression, around which all of this other capital forms and changes. And that creates a need of the developer to configure the capital stack around this change. And we are helping them to form more and more of that, so that they're able to raise these successive rounds of capital and build more projects. - Okay, cool. And so then to bring it back to your platform, because now they've done this on crux, they're gonna raise successive rounds of more capital and do more projects. You have all the data around that. You have the intelligence. You have the intelligence that's growing based on what's transacting on your platform, plus you're using whatever the market research mechanisms you guys are using to build out that tool. That's highly, I mean, I didn't really fully appreciate the research seeing some of those reports and understanding how much demand was there. People really wanted to understand what's happening in this market where they didn't have a picture until you put that out there. So there's huge value around that. I know what you want to respond to that, and I'll just ask another question. - Yeah, back to like what is an efficient market? An efficient market requires transparency, right? If you don't have transparency on pricing in terms, then the market is definitionally inefficient. And so one of the first contributions that we made to the market was to aggregate up as much transaction information as we could in order to give buyers and sellers transparency on price. And then we reintegrated that algorithmically into the platform. So when people are looking at a specific credit, we're giving an estimate of what the credit price would be. And all that does is just eliminates all this uncertainty around pricing. Our estimate may be that it's a credit that should sell at 92.4 cents. And the buyer of that credit decides to bid 91 on it. And then the seller and the buyer can have a conversation. But you're at least grounding the conversation on what we think the fair and market price is. And then the market settles were the market settles. - Yeah, totally. You're seeing on this battery storage developer, we talk about the tax credit, unlocks all of this financial opportunity. They're going to then be able to continue to scale up or operate or sell whatever they're going to do that battery storage project. But that now is financially viable. And they're going to be onto the next project. All that's going to flow through Crocs. The data room is largely complete. I mean, it's got to get updated now with kind of the latest, greatest financial information or new project. But the core of their data room is already there. They don't have to go rebuild that thing over and over and over again. And what AI enables in the data room, we can surface a certain suite of information. If it's a battery storage project, if it then becomes something else, our LM's can surface, the information that other kinds of investors might want, it just sounds like there's so much flexibility built into who that now, say why would you build a data room project, but who that can serve within this market. - We just super interesting conversation recently with a super sophisticated developer who was describing that it's harder sometimes to finance existing operating assets than it is new ones. Because they don't know where all the documents are. Different people have them. They're in different old systems, whatever. So you have to take this stuff and put it together and then produce the package and it's the wrong stuff and the investors are asking for more. And it's just a pain. So what if you had all of the information about each project that's raising seven to 10 different kinds of capital in a single place that you could permission the people that you want to to be able to access that information, they're able to easily parse the underlying documentation with the support of embedded expertise in the software so that they can give you a reliable and informed yes-no on whether or not they will give you more capital. And then the next time you go raise another round, you have the stuff that's there in order to facilitate getting the loan or whatever you're getting on the next piece of it. And it just makes the act of raising capital substantially easier. And in the act being easier, it means that you can do more development, means that you can spend more time on the stuff that actually requires strategy and judgment. And Crocs is enabling you to do that with more liquidity, efficiency, and intelligence. - Got it. So you mentioned that you provide in some senses different services, but to enable more transactions. What's your business model? - So we generally monetize on the transactions. So when somebody transactions with us, when we're successful, they will pay us for the success on helping them access that capital. It's generally developers and manufacturers that pay with us and with others that may be intermediating these transactions. And I think in time as our data and software products continue to advance, there may be other value that we generate for developers, manufacturers, and investors and the model may shift. But today we are entirely tied to developer success. We've got it. So all of this value at everything we're talking about is really driving toward, hey, at the end of the day, if we can facilitate transactions, that's why we're here. We're here to speed this up. That's what we should get paid for and let's go build the tools that make that happen as smoothly and as efficiently as possible. - And if we fail, don't pay us. - Yeah, I get it. That sounds like that Stanford football competitive streak in here, right? We should win. And if we win, pay us. - You have to approach these problems with the question of, what do people really need? How do we actually solve a real problem and then listen to them carefully when they tell you what their problem is and then try to build it? And if you can't do it, then you shouldn't get paid. I actually love being aligned to success because it means that we're just aligned to getting the outcome that both sides want. Both sides want to get a good deal done and we are aligned to that. - So now an hour into this conversation, I get it, I'm very excited about it. It's like I said Alfred, I think on a midway through. Rarely do, just with my biases, do I think, oh, software, come on. What are we gonna do? We're gonna make a building more energy efficient, which I'm seeing incredible things happening around it. But really just a software layer stepping into the financial industry to unlock all of this value and get the clean energy transition to move with great speed. I didn't really see that coming. Clearly you guys are growing so fast. You've raised capital quickly. You're building your team quickly. You're transacting. I think it's billions of dollars already and growing up. Hats off, man. Congrats. You're really excited about everything you got going. Josh, I'm a huge fan of what you guys do. It's privileged to be here. Thank you for a great conversation. Thanks so much for listening to my conversation with Alfred. If you enjoyed it and appreciate the way Super Cool brings commerce and climate innovation together, please take a moment to subscribe and leave us a review. It's the best way you can help others who would benefit from these conversations, hear them too. 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