A&S alum Tom Rand is investing in the future

May 18, 2023 by Coby Zucker - A&S News

Arts & Science alum Tom Rand is fighting the climate crisis, whether he’s investing capital behind the scenes or shutting down climate skeptics on broadcast television.

Rand, who earned his masters and PhD in philosophy while at U of T, is the co-founder of ArcTern Ventures — named after the “small but mighty” Arctic tern bird — a venture capitalist firm investing in companies that target sustainability and climate change solutions.

“I've always been an overeducated observer of climate risk, ever since I was a young man,” Rand says. “My father's a scientist. We’re a scientific family. We’d have table-pounding discussions: ‘Why aren't they listening to the scientists?’”

In 2005, after selling his software company, Voice Courier Inc., Rand started to consider the looming threat of the climate crisis and his role in combatting it. At the same time, he was exercising his new-found freedom to expand intellectually, studying philosophy at U of T.

“I've always been curious about macro issues and the universe and my place in it,” Rand says. “And philosophy seemed like a very good place to ask those big questions and scratch that giant intellectual itch.

“U of T was a great place to do it. It was a very, very strong philosophy department.”

Tom Rand standing at a podium.
Tom Rand is a leading climate activist, investing in climate start-ups and writing about the climate crisis.

Rand says philosophy taught him to accept the endpoint of an argument or evidentiary trail. When it comes to climate, the science, sociology, politics and technology of the issue all point to one conclusion for anyone willing to accept the arguments, says Rand.

“Climate is not a technical issue,” he says. “It is all kinds of issues, intermixed and linked together. And I think that multidisciplinary understanding is something philosophy underpins. To some extent, I think I was uniquely positioned to tie those threads together in ways that others couldn't.”

Since its founding, ArcTern Ventures has grown exponentially, expanding internationally in recent years. But before it was a globe-spanning firm, ArcTern’s first fund targeted small climate start-ups affiliated with MaRS, where Rand was working as the cleantech practice lead.

One of the first companies ArcTern invested in ended up being one of the most successful: HydroStor.

HydroStor is a developer of energy-storage facilities. Since the company was founded in 2010, it has been honing its compressed air energy storage (CAES) technology. One of the biggest problems with renewable energies like wind and solar is that they are intermittent. Energy storage helps solve that problem by collecting surplus energy at peak hours and releasing it during downtime.

Climate is not a technical issue — it is all kinds of issues, intermixed and linked together. And I think that multidisciplinary understanding is something philosophy underpins. To some extent, I think I was uniquely positioned to tie those threads together in ways that others couldn't.

Rand identified CAES’ potential early and injected the capital necessary to get HydroStor off the ground. Since the beginning, the company was helmed by CEO Curtis VanWalleghem.

“Unlike a lot of other investors who are hands off, Tom has been hands-on and helping,” says VanWalleghem, who earned his bachelor of applied sciences and his Rotman MBA at U of T. “We've had many tough times as a company. And he's always been there helping us through it.”

Rand wasn’t the only one to invest personal capital in HydroStor. Every funding round, VanWalleghem put his own money into the company, even mortgaging part of his home five times to help keep the company afloat.

Fortunately for Rand and VanWalleghem, those leaner days are in the past. HydroStor recently announced a funding round of US$250 million. They are backed by Goldman Sachs and the Canadian Pension Plan, and have roughly tripled their staff over the last year. HydroStor has finally started work on facilities across the world, including a $2 billion plant near Kingston, Ont.

“If the world had 12 more Curt VanWalleghem’s, we would solve the climate problem,” Rand says.

HydroStor may be ArcTern’s most promising venture, but it’s still one of many. Rand is proud of ArcTern’s portfolio, and he knows that if even a few of them pan out, the results could be massive.

“If those companies succeed, I can look my kid in the eye and say I went to bat for climate, and that's why I do what I do,” Rand says.

Although ArcTern has been a major part of Rand’s efforts, investing is not the only way he’s been combatting the climate crisis. Rand has established himself as a media pundit, appearing on CBC, in the Toronto Star, BNN Bloomberg and more. He’s written multiple books — most recently, The Case for Climate Capitalism: Economic Solutions for a Planet in Crisis.

“He's an unstoppable force,” VanWalleghem says. “He was one of the first people I knew who really identified climate change and how big of an issue it was going to be. And to think about how he saw that coming and educated himself and then really did something about it — writing books, creating venture funds, backing companies like Hydrostor — it's pretty amazing what he's been able to accomplish.”

Although the conversations around the climate crisis have changed since Rand began his crusade – particularly in the world of business — there's a ways to go. Still, he’s encouraged to see the progress that has been made.

“I don't know what did it,” Rand says. “Whether it was COVID, a little girl called Greta [Thunberg] or some combination of the two, the conversation today is very different than it was five years ago. I would like to think I've been a very small part of that transition.”

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