Karen Sheffield, MBA’s Post

We saw these #Climatetech remarks again and again. See also our recent panels or highlights on those underinvested sectors: #agriculture https://lnkd.in/gkWUhd_3 #builtenvironment https://lnkd.in/g7U_VknP #venturecapital #investments

The problem, Saharova warns, is the misalignment between emissions and venture capital. Forty-eight percent of VC investment in 2022 was into mobility technology, such as e-scooters. Mobility accounts for only 15 percent of emissions, while more polluting industries like manufacturing, food and agriculture, and the built environment are underfunded. “Eighty-five percent of emissions receive only 52 percent of funding,” according to Saharova. https://lnkd.in/d3i3ESRk

#ClimateTech ventures, which offer significant growth potential but differ from traditional technology businesses, face unique obstacles to growth. Solutions such as green steel and carbon removal require substantial early-stage capital and a longer time frame to break even and scale up. But despite these challenges, some climate tech ventures are accessing capital and achieving profitable performance, driven by regulatory support and the urgent need for climate action. A new McKinsey & Company article examines the opportunities and solutions for scaling asset-heavy #sustainability businesses. Read it here: https://lnkd.in/gXa66Paf by Michael Birshan, Lisa Leinert, Tomas Naucler, and Werner Rehm.

Europe has a lot of pre-revenue climate hardware companies which need to ensure there’s a customer base waiting at the end of the capital-intensive build stage. If there isn’t, there’s a risk that we’ll see a repeat of the cleantech bubble, a period of innovation from 2006 to 2013, where companies failed to develop sustainable business models. This article explores the climate techs currently experiencing surging revenues. https://bit.ly/3KEUHD1 #Recruitment #ClimateTech #GR4

Echoing Stephen Armstrong's insights in WIRED, it's clear: green investment often misses key sectors like manufacturing, agriculture, and construction. As Daria Saharova from World Fund points out, we're overlooking tech yet to be developed – tech that's crucial for slashing 46% of emissions. There’s an opportunity for impressive returns – climate tech’s ROI averaged 22% between 2015-2019 – but it’s challenging for VCs to identify viable investments amidst complex market and technological factors. As investors, we have the potential – and obligation – to further innovation in critical but overlooked sectors.

Funding climate solutions is not easy with it being a $200 trillion challenge by 2050. Unlike typical tech ventures, climate tech requires massive investment in infrastructure and long-term commitment. To hit net-zero targets, we need innovative investment strategies, patient capital, and diverse expertise. The green transition demands more than just money; it requires a complete rethink of how we finance and develop climate technologies. #climatetech #VC #sustainableinnovation

A great article that highlights the challenges in the pathway from idea to scale inherent in the climate solutions industries. Covering why funding climate solutions is different. As Mitch Gainer, partner at Yield Capital Partners says “To reduce emissions, we have to change atoms, not just bits. Although a lot of VC funding goes to software (and it should), most of the impact will come in the form of changing real industrial processes." Giving an example of the funding and development journey of Green Cement- where in total, the journey from concept to market took about 15 years and nearly $700 million. Most venture capital funds operate with a 10-year timeline, most tech unicorns in the U.S. (predominantly software companies in sectors such as fintech and e-commerce) require somewhere between 5 and 8 years to reach a one billion dollar valuation, and could need 7-10 years to IPO. Amanda Price is right to call out that we need to rethink on how we finance and develop our climate industries.

To meet our net-zero commitments and scale next-generation climate innovation, we must expand the climate tech capital stack beyond traditional venture capital models. The energy transition is highly R&D-intensive and normally requires significant time to bring technologies to market. This requires a diverse capital stack to support scaling technologies during this time and capital-intensive growth period. Just as entrepreneurs and startups are developing next-generation climate solutions, investors and the climate innovation ecosystem must evolve their funding and policy structures to meet the energy transition's needs. Both dilutive and non-dilutive funding must collaborate across the lifecycle of climate tech companies to de-risk technology and bring new climate solutions to market. Check out the article here: https://hubs.la/Q02J0hBJ0 #climatetech #netzero #venturecapital #energytransition

Precisely because #sustainability offers such a massive opportunity, it evokes the success achieved by technology companies over the past three decades. Yet while software may have eaten the world, its appetite for capital wasn’t voracious. Asset-heavy #climatetech solutions—such as green steel, the removal of carbon from the atmosphere, and new ways to produce and store renewable energy—are different. Unlike software or other asset-light businesses, these climate tech ventures require substantial capital at early stages in their life cycle and need more time to break even and scale up. And in contrast to existing solar and wind energy farms, they face greater commercial uncertainty, including the development and adoption decisions of other players across the value chain. Put another way, capital-intense climate tech ventures aren’t quite a fit for traditional venture capital (VC) (their businesses offer the promise of extraordinary growth and don’t yet have positive cash flow, but need more capital, sooner than VC firms typically provide), aren’t quite a match for private equity (PE) (which tends to invest in businesses that are already cash flow positive), and would appear to be too early in their business building to receive significant bank financing. Like other new ventures across sectors and over time, some will surely fail. Yet encouragingly, several are beginning to access life-giving capital, and some have achieved remarkable, profitable performance. Although the challenges for scaling asset-heavy sustainability solutions businesses are daunting, there are solutions that already work, or can work as a matter of engineering and physics. Climate tech also benefits from favorable regulatory tailwinds—themselves a response to urgent climate change. #Privatecapital, too, can play a critical role in the green transition. In this article, we explore the unique challenges and opportunities of asset-heavy climate tech businesses—and how climate tech can realize its immense potential. #executivedirectors  #culturetransformation #innovation #ceos #ceo #strategytoexecution #nonexecutivedirectors #commmunications #trustbasedleadership  #boardofdirectors #valuersbasedleadership #employeeengagement  #ceo #businessresilence #opportunities #trust #research #businessgrowth #modelling  #people #values #leadership #thoughtleaders #thoughtleadership

While no two ClimateTech innovations are the same, this article does a good job highlighting the funding differences between ClimateTech or Deep Tech and software innovations. Thanks for sharing Ricky Sakai .