🌍 At the SOSV Climate Tech Summit, the panel "2024: A New Chapter in Climate VC" brought together three of the most experienced climate investors—Milo Werner (DCVC), Gabriel Kra (Prelude Ventures), and Mike Schroepfer (Gigascale Capital)—to share their insights on the current state of climate tech investing amidst a rapidly shifting landscape.
Despite major funding rounds for companies like Fervo Energy ($244M) and Koloma ($246M), climate tech investment has slowed, with total investment down by 20% and the number of deals decreasing by 26% year-over-year. 🛑
Here are 3 key takeaways that really stood out:
1️⃣ Investment Gap in Industrialization: While climate tech sees about $20B in early-stage funding and $100B in growth-stage funding, only $7B is invested in industrialization—the critical step between pilot projects and early commercialization (post-FOAK). This gap creates a steep decline in startups able to scale, even with a strong operational focus. Closing this gap is crucial for accelerating the growth of climate solutions. 🏭
2️⃣ Challenges in Capital Structure: There's a significant misalignment in the capital landscape—early-stage valuations often conflict with later-stage revenue expectations, and CAPEX requirements aren't being met in the middle. The rising interest rates and high cost of capital are particularly challenging for startups. While larger corporations traditionally use debt to finance this industrialization phase, startups struggle to access these options. 💸
3️⃣ Re-Industrialization & Opportunity: The U.S. has a golden opportunity to address climate change, create equitable jobs, and strengthen supply chain resilience. Supporting climate tech founders during this re-industrialization effort is critical, especially as new technologies seek to transform key industries. Backing these founders is essential to drive impactful climate solutions and long-term change. 💼
Let’s ensure we’re all *rallying behind these climate tech entrepreneurs* to pave the way for innovative, sustainable solutions that tackle the most pressing global challenges.
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