Climate Insider’s Post

Three central takeaways emerged from the 2024 Climate Business & Investment Conference, which gathered established industry leaders, startups, investors, and researchers to discuss the climate tech market's progress and needed adjustments. Read below to find out more:

"You can’t solve climate with SaaS" , says Matt Rogers in this smart TechCrunch article. His, and the author's, point is that cleantech is fundamentally different than software because each iteration/scale-up requires significant capital investment. This presents a challenge because often the funding needed for early deployments exceeds the amounts available from venture capitalist, but are too risky for private equity. Prime Coalition and Spring Lane Capital are addressing this with 'catalytic capital' and so are we at Ariel Green by offering technology performance insurance (TPI) to manage 'technology risk' and allow low-cost financing to participate in cleantech projects with confidence. https://lnkd.in/gxu54Atp

Interesting take discussing some of the parallels to the post-stimulus (2009) Clean Tech movement. Personally, I see similar patterns of software vendors chasing deployments in highly regulated sectors under the new moniker of "Climate Tech". The heart of Climate Tech comes down to deploying infrastructure. Software can help amplify, accelerate, and rethink how we deploy and utilize infrastructure more efficiently, but we are fundamentally not solving for a software problem.

The "valley of death" represents more than just a financial barrier; it is a critical juncture that could significantly influence the future of our planet's well-being. It is imperative to address the funding gap between the early stages of development and full-scale production to facilitate the success of these crucial technologies. This issue necessitates a collaborative approach involving investors, governments, and the startups themselves to ensure that promising solutions can be effectively brought to market to have a meaningful impact. Thankfully I know some good folks working to on just this issue! Laszlo Horvath Brian E Kurtz David West Smith

A troubling number of space companies went through "The Valley of Death" last year. I view New Space and ClimaTech as very similar. By the time you figure out if the scalability issue is customer-based and not technology-based, it is almost too late. A lot of companies can offer a better product, but better does not mean people will automatically pay for it, especially if there is a "good enough" option that is cheaper or even *GASP* free! There are some commercial weather and commercial space companies finding this out the hard way right now. Weather is "free" we have access to billions of dollars of satellite and terrestrial assets. Having a unique differentiator that is demonstrably more valuable in helping a company's bottom line is the key to scaling and finding paying customers. If we didn't get 5 years under our belt and $200M in NASA and DoD funds to develop our Hurricane Hunter technology, we would have perished in the Valley of Death. It is rough out there. Buckle up founders. www.weathersats.com

“That transition is just a really, really difficult one. It’s not one that VC was designed to navigate, nor is it one that institutional infrastructure investors were designed to take on from a risk perspective,” said Lara Pierpoint, Managing Director of our new catalytic capital program, Trellis Climate.   She sat down with Tim De Chant to discuss the substantial challenges startups encounter in securing the funding needed to build their first-of-a-kind (FOAK) projects. Dive into this insightful article to explore the perspectives of a dozen investors and their proposed solutions to help meet net zero targets by 2050. https://lnkd.in/ehCPPbPf #FOAK #FOAKFinance #CatalyticCapital #ClimateTech

The day isn’t far off when input from anyone affiliated with MIT is going to need an asterisk. Look at the projects listed under the Renewable Energy heading of the MIT Energy Initiative (https://lnkd.in/eedszkrC). Each and every one either undermines renewables by focusing on vulnerabilities or protects fossil fuel by pitching technology that’s compatible with fossil fuels. Same with every other dark money operation at MIT (the Engine, Media Lab, Skoltech, etc). MIT sold its souls to big oil for hundreds of millions of dollars. From hacks to hoaxes (carbon capture, etc). And the saddest part is that MIT alums take phenomenal salaries to sell dead technology in corrupt insider deals and they tell themselves that they’re the adult in the room. MIT startups*

Many of the climate challenges center around energy, which ties them to physical reality as you said well in the article, Matthew Rogers. Additionally, funding can be difficult as these entities are mis-priced; The value they provide to people & biodiversity is distributed globally and not captured by the entity - since really this value “creation” is really just the inverse of harm (in dollars) that polluters are otherwise inflicting on global populations. It’s a classic market failure. While we work on the systemic change to appropriately price the global situation - startups need to look for ways to lower their capital requirements, like utilizing contract manufacturing partners and reducing custom HW requirements where possible. Then, find ways to create additional unique value with the underlying climate tech (exportable power w/ EVs) & pair natively with SW for better moat, higher valuation potential. Help entice capital to enter at this critical junction in order to scale. What other mechanisms are missing that you think could help bridge the gap?

This is a good and important read on #FOAK projects and the ClimateTech Valley of Death, with good insight from some very sharp investors. One often overlooks aspect of this challenge is WHO will build these early commercial projects that are smaller and don't often appeal to top tier EPCs. Developing and building these projects will be a critical, often binary factor in the outcomes. https://lnkd.in/gbedmkmt