As climate change accelerates, most climate-focused VC funds focus on mitigation technologies such as solar and wind energy generation. Adapt [us] Capital is taking a different approach, concentrating instead on the growing market tied to adapting to a hotter world.

Founded by Darren Clifford, the firm invests in companies expected to see increasing demand as the climate becomes hotter and more volatile in sectors such as cooling, resilient infrastructure and food systems. In addition to deploying capital, Adapt [us] operates as a venture builder, working hands-on with founders to refine their strategy, scale operations and accelerate execution.

Clifford spent 11 years at McKinsey & Company, where he was part of its Green Business Building practice. Over the past 15+ years, he has scaled ventures as a founder, investor and advisor. In this conversation with Magnitude, Clifford explains why he believes climate adaptation represents one of the largest underfunded investment opportunities in the market today.

Q: Why do you believe climate adaptation is becoming such a big opportunity alongside mitigation?

Darren Clifford: We’re just starting to respond to the unfortunate reality that the weather is getting hotter and more volatile. That’s going to force people to do things differently. Usually there’s a lot of inertia in the world; but this is a forcing mechanism: weather is becoming more volatile. It’s going to drive behavior change. That’s a huge opportunity.

At Adapt [us], we’re believers in human innovation. People will have to change, but if we give them something that is better, faster, cheaper to change to — and that also improves the wellbeing of society — we think we can make sure people can still live a good life regardless of the outcome.

Q: Talk about some of the market gaps that are most interesting to you in adaptation.

Darren Clifford: Here’s one example. It still amazes me how looking at a disruptive solution like air conditioning is not an oversubscribed area. It’s still harder to raise money for these solutions, even though it is so predictable that we are going to need them.

Our first investment was a company called Temperate in the UK. They are bringing passive radiative cooling in a box. Passive radiative cooling has been around on rooftops, but Temperate compresses it into a deployable unit that can be added onto existing HVAC systems and, eventually, into homes.

What they are doing is taking heat energy, which travels as infrared radiation, and directing it out of a home by emitting it at wavelengths the atmosphere lets through. In theory, it can be dramatically more efficient, enabling roughly 20x more efficient air conditioning.

With companies like Temperate, we are still in the stage of selecting winners rather than following hype.

We also like cold supply chain and grid-related opportunities. We invested in a company called Bactery, which develops resilient power solutions.

They have figured out a way of getting energy out of soil. It’s a new, renewable, resilient power supply. Because it’s buried underground, you can flood the ground above it, and it still produces energy. You don’t have the same risk as solar where weather can destroy panels. The grid is going to continue to face pressure, so we still see opportunities there.

But there are also less obvious opportunities, like shifts toward night markets and cold vacation areas.

Q: Why was it important to create both investing capabilities and an incubator under your umbrella?

Darren Clifford: I think an interesting question for a VC firm like ours to ask is: Who is our customer?

If the customer is the LP, then the job is to raise a megafund, attract as much AUM as possible and get exposure to Anthropic-type companies. I don’t blame them; that’s their business.

But Adapt [us] is different. As an emerging manager with a smaller fund, I have a completely different business. Interestingly, my customer can’t be the LP. My customer must be the founder. That’s how I deliver better returns. It’s cash-on-cash returns.

Once you realize that, you start thinking like a startup: What is your customer value proposition? Are you actually solving a problem? Do customers value what you bring?

That same mindset is how we think about building the fund. Cash is fungible — you can get it anywhere. What differentiates a fund is whether you add value.

We try to blend coaching with a venture builder model, using accelerated sprints to help companies. We don’t think we can build the business or run it for them. But we can help them improve.

Many founders in adaptation are strong technically but don’t have the same business-building experience. There isn’t a long history of repeat founders in this space yet. So, my goal is to provide what startups need, which is more than just capital.

Q: What do you look for in founders?

Darren Clifford: I haven’t met a founder who is perfectly “commercial” in the way I would want. Most founders say: “I’ve got the best mousetrap; people will buy it.” And I respond: No, that’s not how it works.

The basics are drive, motivation, hustle and the ability to solve problems — or, more importantly, get problems solved.

We also need founders who are coachable. We can have a relationship and open conversation, but they also need to be willing to tell me when I’m wrong.

There’s a balance. Some founders are too stubborn. They spend six months finding the perfect lawyer. Others are too compliant and just say, “I’ll do whatever you tell me.”

You need enough humility to learn and enough conviction to push back and execute.

And they need resilience, because this is a 5- to 10-year systemic trend. It’s not a short-term cycle.

Q: Many founders struggle with storytelling and packaging their ideas. How do you approach that?

Darren Clifford: Exactly. Most believe in the product and assume people will come. But it doesn’t work that way.

In our model, we invest a small amount upfront — about $50,000 — then work with founders for three months before investing more. During that time, I meet them weekly and ask them, “Have you talked to customers?”

I don’t try to change founders directly. The biggest impact is giving them space to reflect. Over time, they realize that they haven’t actually been talking to customers. Then they engage with customers, and reality changes everything. Customers say: “I don’t need that,” or they don’t respond at all.

That feedback drives behavior change more than anything I could say. So, the best thing I can do is get them into the market talking to real users. Everything else derives from that.

Adaptation companies also need to go international earlier. The customers are global: UK, Southern Europe, Southern US, Middle East, Singapore, India. Part of our job is helping companies expand globally earlier, because that’s where demand is.

Ultimately, we’re not just trying to pick companies: We’re trying to help them succeed in a world where climate conditions are reshaping markets in real time.

Q: Have you had challenges marketing or positioning Adapt [us] Capital itself, since you’re not a traditional climate or impact investor?

Darren Clifford: Yes, definitely.

On the impact side, people want to talk about saving the planet or lowering emissions. I don’t talk about that. I talk about business cases, scalability and demand. Impact is a byproduct.

If I can make air conditioning 10% of the cost it is today, it will massively increase penetration, especially in low-income countries. That improves the world, but the mechanism is cost reduction and scale.

I’ve had to be very deliberate. I made a choice about a year ago to build my personal brand, becoming a speaker and a thought leader on this topic of climate adaptation. Posting multiple times per week on social media, growing my LinkedIn from about 2,000 connections to over 10,000.

The reason is simple: When I reach out to a founder, they take my call.

Q: Where is your funding coming from?

Darren Clifford: As an emerging manager, institutions generally won’t write checks yet. Even when they like the thesis, they often can’t back early funds.

Our base is family offices and high-net-worth individuals, especially those who are more quantitatively minded.

We talk about predictable alpha because of predictable demand shifts. We also talk about resilient beta, because our portfolio benefits as weather becomes more volatile. Institutions like the idea, but they often say, “you’re an emerging manager.”

Q: Where do you want to be in 24 to 36 months?

Darren Clifford: We should have fund one almost fully deployed with about 15 to 20 investments. We’ll be focused on follow-ons and helping companies through their journey, and building a track record to show this is a viable investable space.

Longer term, we believe this can scale to over $1 billion dollars under management through a distributed general partnership model, with each GP managing roughly $50 million and 15 to 20 companies.