Amid a substantial contraction in the innovation economy, climate tech has shown notable resilience despite an overall drop in VC funding. While deal activity has stayed robust compared to other sectors, invested capital has decreased by over 50%, primarily due to a decline in deals exceeding $100 million. #climatetech #climateVC #climate
Karen Sheffield, MBA’s Post
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ICYMI: Everything you ever wanted to know about venture capital in climate tech came out last week in Sightline Climate (CTVC)’s 2023 Annual Funding Wrap-Up: The highlights: 💰 2023 investment: Funding in 2023 totaled $32bn, down 30% from 2022, although CAGR remains high since 2020 at 23%. 🤝 Deal count: Overall deal activity decreased for the first time since 2020, with deal count down 3% compared to last year. 📉 Late: Growth investment fell 41% and Series C fell 35%, with deal counts for both down about 30%. 📈 Early: Seed and Series A deal activity tapered, marking the first decline in Series A deal count, down 11%, and a slower growth of Seed deals at 12%. 💸 Round size: Average deal size decreased 28%. As total deal count only fell 3%, smaller rounds were likely driving the overall market funding decline. 🚗 Vertical: Transportation and Energy investment declined, but remained on top. Food & Land Use fell dramatically, down -55%, and was replaced by Industry in the big three. We’re still seeing huge capital entering the early-stage climate space, but pace has slowed dramatically. This year will probably be a difficult one to raise in, depending on how exit markets look, but it may be the valuation adjustment that the space needs in order to keep experiencing the sustained upward trajectory that it needs. Check out the public report here: https://lnkd.in/ed3VyPjd Let us know what else you'd like to see, and become a Sightline client for the full (60+ page) report with way more insights and data! #climatetech #venturecapital #energy #decarbonization #climate
🌏 $32bn and 30% drop as market hits pause in 2023
ctvc.co
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Check out our latest article on the State of the Climate Tech Market where we look at recent investment data and dive into some of the current challenges and opportunities for companies and investors. We are optimistic about the continued growth in this area! Emily Townsend Amie-Louise Corry #goodwinlaw #climatetech #sustainability https://lnkd.in/e2wV2YPz
State of the Climate Tech Market | Insights & Resources | Goodwin
goodwinlaw.com
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Please check out our latest article on the State of the Climate Tech Market below ⬇️ Glad to have been involved in putting this together along side my colleagues Adam Thatcher and Emily Townsend #goodwinlaw #climatetech #spotlightonclimatetech
Check out our latest article on the State of the Climate Tech Market where we look at recent investment data and dive into some of the current challenges and opportunities for companies and investors. We are optimistic about the continued growth in this area! Emily Townsend Amie-Louise Corry #goodwinlaw #climatetech #sustainability https://lnkd.in/e2wV2YPz
State of the Climate Tech Market | Insights & Resources | Goodwin
goodwinlaw.com
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[Published in April 2024] 🌍💰 Climate tech struggles with funding due to high initial capital needs and risk, with only 16% of the sector currently serviced. 🌱🔍 Strategies to make climate tech bankable include demystifying complex tech, de-risking investments, and designing creative funding mechanisms. 🚀🌾 Innovative approaches like extended fund cycles and evergreen funds could bridge the gap to profitability and attract more private investment into climate tech.
Climate tech has a bankability problem, but there are 3 ways to fix that
techinasia.com
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Last week, I attended an insightful webinar hosted by SVB about the future of climate tech. Thank you Dan Baldi for walking us through the climate tech investment insights in the SVB climate tech report, and Alan Neuhauser for facilitating such an engaging discussion. 💡 Here are some key takeaways that resonated with me : 🌱 Navigating Extended Runways for Sustainable Growth Mark Cupta highlighted the importance of extending runways for climate tech startups. With positive tailwinds like the IRA and capital flowing into more mature sectors, startups should focus on growing into later stages to capitalize on these opportunities. 🌱 Leverage Innovative Capital Stack Strategies: Milo Werner emphasized the need for companies to get creative with their capital stacks. This includes leveraging various capital resources such as federal funding, equipment finance, customer financing. Strategies like using revolvers against inventory, designing modular factories and scale up for project finance, and utilizing contract manufacturing can unlock additional capital and expedite project timelines. 🌱 Focusing on Core Economics and Prudent Growth: Joshua Posamentier stressed a return to basics, focusing on core unit economics and sustainable paths to market. In an environment where capital is no longer cheap, a more measured approach to growth is essential. For example, align sales and BD team growth with market traction and adopt deliberate processes to raise subsequent funding rounds. Avoiding the pitfalls of frothy valuations and emphasizing a solid foundation will help startups navigate challenging financial landscapes. 🌱 More selective Investment Criteria: Investors are becoming increasingly selective, as highlighted by Josh. The focus has shifted from momentum plays to ensuring robust unit economics and viable market paths. Investments in the climate tech sector are now more conservative and investors prefer companies that do not rely solely on government subsidies. 📊 SVB's Report on Climate Tech Trends: 🌍 Startups Have Less Capital Available: Fund flow and valuations are down from the peak of 2021 and 2022, though there has been some healthy market correction recently. With runways shortening, more companies will need to raise funds soon to sustain operations. 🌍 Focus on Hard-to-Mitigate Emissions: Climate tech sector now targets emissions in challenging sectors like steel, cement, clean chemicals, and the built environment, supported by incentives. 🌍 A Sector Poised for Exit Activity: As more companies achieve scale and corporate interest grows, the climate tech sector is poised to see increased exit activity, particularly through mergers and acquisitions. If you haven't checked out the SVB future of climate tech report, you can access the report and the webinar here 👉 https://lnkd.in/essJ4ES2 🌍🚀 #ClimateTech #Sustainability #VentureCapital #Startups #Innovation #CleanTech #SVB
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ClimateTech Investor, Sustainability & Innovation Advisor, Change Advocate, Dot Connector, Dad
Great synopsis by Sightline Climate (CTVC) on the challenging #ClimateTech funding environment in 2023 and the potential implications in 2024 of falling interest rates, new policy incentives and regulation, and international competition to attract climate technologies start-ups and projects for both pilots and large-scale deployment of new infrastructure. Few "highlights" from 2023 below: 💰 2023 Investment: Funding in 2023 totaled $32bn, down 30% YoY, although CAGR remains high since 2020 at 23%. 🤝 Deal Count: Overall deal activity decreased for the first time since 2020, with deal count down 3% YoY. 📉 Late Stage: Growth investment fell 41% and Series C fell 35%, with deal counts for both down about 30%. 📈 Early Stage: Seed & Series A deal activity tapered, marking the first decline in Series A deal count, down 11%. 💸 Round Size: Average deal size decreased 28%, propped up in part by #megadeals, with the 10 largest deals representing ~24% of total climate investment in 2023. 🚗 Verticals: Transport & Energy fell, but remained on top. Food & Land Use fell dramatically, down -55%, and was replaced by Industry. 💤 Fewer Repeat Investors: The number of investors who have done 5+ climate deals in 2023 slumped 25% compared to last year. ⛏ Focus on #HardTech: Capital-intensive ‘physical’ climate tech companies made up ~50% of deal activity. Despite traditional venture’s focus on SaaS and asset-light business models, half of the deal activity went to towards physical assets such as #hardware, #deeptech, #biotech, #consumables, and #infrastructure. 🎉 Cumulative: Since the start of 2020, ~2,600 climate tech companies have raised $142bn+ of venture funding across 4,156 deals. If you haven't subscribed to CTVC's newsletter, check it out 👇
🌏 $32bn and 30% drop as market hits pause in 2023
ctvc.co
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Climate tech venture and growth investment dropped 30% to $32bn as the market hit pause in 2023. Climate tech has undergone a visible evolution over the past few years, transitioning from a phase of abundant funding for innovation to capital more focused on large-scale deployments that approach being bankable and 'boring'. The Sightline Climate (CTVC) Climate Tech Investment Trends 2023 Report examines this evolution, with a particular focus on venture and growth investment, which serve as crucial indicators. Get the report 👉 https://lnkd.in/exEPeBVE Highlights 💰 2023 investment: Funding in 2023 totaled $32bn, down 30% from 2022, although CAGR remains high since 2020 at 23%. 🤝 Deal count: Overall deal activity decreased for the first time since 2020, with deal count down 3% compared to last year. 📉 Late: Growth investment fell 41% and Series C fell 35%, with deal counts for both down about 30%. 📈 Early: Seed and Series A deal activity tapered, marking the first decline in Series A deal count, down 11%, and a slower growth of Seed deals at 12%. 💸 Round size: Average deal size decreased 28%. As total deal count only fell 3%, smaller rounds were likely driving the overall market funding decline. 🚗 Vertical: Transportation and Energy investment declined but remained on top. Food & Land Use fell dramatically, down -55%, and was replaced by Industry in the big three. 💤 Fewer repeat investors: The number of investors who have done 5+ climate deals in 2023 slumped 25% compared to last year. 🎉 Cumulative: Since the start of 2020, ~2,600 climate tech companies have raised $142bn+ of venture funding across 4,156 deals. Download the public report with additional charts and commentary here: https://lnkd.in/eCkZ4vYB The full report, 2024 predictions, underlying data, and charts are available for Sightline Climate clients here: https://lnkd.in/eAGNZc5k 👇 Read the report summary here https://lnkd.in/ed5-9WGi
🌏 $32bn and 30% drop as market hits pause in 2023
ctvc.co
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Important read from Jamil Wyne at Forbes about the severe capital gap in funding solutions for the planet and the people on it, and the different types of funds we need to leverage and blend for this to work.
Very excited to get my latest Forbes article out the door! This could be a helpful read for anyone trying to understand the different types of #climatefinance needed to support climate innovation. Many thanks to Stefano Gurciullo, Mitch Gainer, Suma Reddy, Dhruv Jesrani, Cyntia Abarca and Margarita Zulueta for lending their time and expertise here. Here's the story in a nutshell: 1) According to McKinsey & Company and BloombergNEF, we will need over US$200 trillion (!!!) in cumulative financing to power the green transition, a lot of which will go into hard assets (think physical infrastructure, vehicles, energy systems, etc.), between now and 2050 to hit net zero targets. 2) However, a lot of these solutions (think early-stage research projects and pre-seed hardware companies that need significant testing and piloting, "first of a kind" projects that have yet to prove long-term commercial viability, etc.) will need a range of specialized types of funding that. Traditionally, we've funded new ideas via #venturecapital, which we'll continue to need, but the larger "climate capital stack" needs to diversify and evolve quickly. 3) So what exactly is a "capital stack" and how do we build one for climate, and fast? A lot climate solutions will "behave" differently from a funding standpoint - e.g. longer timelines for researching, testing and piloting and ultimately generating returns - and will require a spectrum of investors that have different risk appetites and return expectations. 4) We take a stab at charting out this process in the article by discussing a the funding journey of a hypothetical climate tech startup - GreenCementCo. Long story short, a lot of climate companies/projects will require hard-asset financing, will need to hit unique milestones (both technologically and commercially) to unlock different investors along the way, and their journeys will look much different than those of their peer software companies. 5) We're in very new territory here. Just as we've never had to think about reinventing the economy as a whole to make it cleaner/greener, we've never had to think critically about mobilizing such a wide spectrum of investors in the process, and in such a short amount of time. 6) This process will require new policies, funding structures as well as talent coming into the global financial system. Policy to derisk technologies and launch new funds, new structures and instruments to align with the different phases of climate tech growth, and talent to deploy the capital. This last piece as critical as we sometimes (myself included) get too bogged down in the nuts and bolts of the process and forget that humans ultimately determine how this all plays out.
How To Fund High-Impact Climate Innovations
social-www.forbes.com
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Isthmus Energy Systems is focused on developing agrivoltaic projects at the intersection of energy, agriculture, and sustainability.
need to dive deep into this
Very excited to get my latest Forbes article out the door! This could be a helpful read for anyone trying to understand the different types of #climatefinance needed to support climate innovation. Many thanks to Stefano Gurciullo, Mitch Gainer, Suma Reddy, Dhruv Jesrani, Cyntia Abarca and Margarita Zulueta for lending their time and expertise here. Here's the story in a nutshell: 1) According to McKinsey & Company and BloombergNEF, we will need over US$200 trillion (!!!) in cumulative financing to power the green transition, a lot of which will go into hard assets (think physical infrastructure, vehicles, energy systems, etc.), between now and 2050 to hit net zero targets. 2) However, a lot of these solutions (think early-stage research projects and pre-seed hardware companies that need significant testing and piloting, "first of a kind" projects that have yet to prove long-term commercial viability, etc.) will need a range of specialized types of funding that. Traditionally, we've funded new ideas via #venturecapital, which we'll continue to need, but the larger "climate capital stack" needs to diversify and evolve quickly. 3) So what exactly is a "capital stack" and how do we build one for climate, and fast? A lot climate solutions will "behave" differently from a funding standpoint - e.g. longer timelines for researching, testing and piloting and ultimately generating returns - and will require a spectrum of investors that have different risk appetites and return expectations. 4) We take a stab at charting out this process in the article by discussing a the funding journey of a hypothetical climate tech startup - GreenCementCo. Long story short, a lot of climate companies/projects will require hard-asset financing, will need to hit unique milestones (both technologically and commercially) to unlock different investors along the way, and their journeys will look much different than those of their peer software companies. 5) We're in very new territory here. Just as we've never had to think about reinventing the economy as a whole to make it cleaner/greener, we've never had to think critically about mobilizing such a wide spectrum of investors in the process, and in such a short amount of time. 6) This process will require new policies, funding structures as well as talent coming into the global financial system. Policy to derisk technologies and launch new funds, new structures and instruments to align with the different phases of climate tech growth, and talent to deploy the capital. This last piece as critical as we sometimes (myself included) get too bogged down in the nuts and bolts of the process and forget that humans ultimately determine how this all plays out.
How To Fund High-Impact Climate Innovations
social-www.forbes.com
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Follow the latest trends on #climatecapital from #COP28
Highlights from today’s climate financing discussions - Telesto Strategy at #COP28: - Scaling climate tech requires solving the commercialization gap for climate tech startups through patient public and private financing, especially for HW solutions that need more time before they can compete - Enabling framework and environment need dedicated financing, #ESG readiness and capacity building to meet climate capital opportunity, especially regarding energy offtaking and transmission - Blended financing needs shared vernacular and methods for risk management (especially currency, political) - There is much to be hopeful for as #climatecapital tops the list at COP, the flows of climate finance are growing and hastening. We’re now in the scaling phase and building of the global connective tissue to better connect flows to climate entrepreneurs and projects - Cities will play a growing role in spurring climate innovation as they progress their climate commitments, to do this more effectively they must work to evolve procurement systems to make climate financing more accessible and timely for growing startups - More work needed on #Scope4 method development to better standardize and understand #carbon abatement potential and its ultimate link to #carbonfinancing for investors - A deeper quantitative understanding is needed through repeated lifecycle analyses so money can be better directed to where the emissions are, whether by sector or geography - Fusion is on track to be in energy mix by 2030 - Climate tech ecosystem needs to talk more about its unicorns and multi-billion dollar exits to attract more private funding - Voices of innovators need to balance voices of incumbents during policy development on carbon taxes, prices globally - Climate regulation is here to stay Kudos to Special Representative Dorothy McAulife and the U.S. Department of State Office of Global Partnerships for moderating and convening such an important discussion #CCE U.S. International Development Finance Corporation #ARENA #LACI Shout out to those who shared the VC/LP perspectives: What KOMPAS VC Planet Fund Planet A Ventures European Investment Fund (EIF) Al Waha Venture Capital Fund of Funds Starlight Ventures
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