CHART OF THE WEEK
Climate Tech Deal Count Will Not Stop
Hard truth for climate change skeptics:
They can deny science but they can’t deny deal flow. And venture capital is pouring money into climate tech.
The latest data from CTVC, which tracks funding in climate tech, reveals that climate tech companies raised over $40 billion in 2022—down 3% from 2021, though deal count continues to climb. The dip in funding was mostly in the growth stage (24%) and was mostly offset by an eye-popping 61% increase in Seed and Series A.
Sophie Purdom, who writes CTVC, predicts more, smaller deals in 2023.
It’s an exciting moment—especially in the wake of dropping valuations and massive layoffs across tech. Disenchanted workers, stung by the Great Betrayal, are relocating to climate tech in big numbers. And climate tech, flush with cash, is looking to hire.
Lauren Lyons, COO at Firefly Aerospace and a member of A.Team’s CxO Network, noticed a pattern of the “most talented, fast executing, mission-driven engineers… in aerospace—especially (though not limited to) former SpaceXers—looking to enter the Climate Tech and Clean Energy sectors.”
These are “highly mission-driven people who are noticing an even bigger mission before them, and want to apply their experience of solving massively ambitious technical problems at record speed to what they see as the most pressing existential crisis of our time.”
Investors interviewed by The New York Times claim that this boom is not the same as the cleantech boom of the mid-2000s.
“There were a lot of lessons learned from the first cleantech wave,” said Ben Marcus, an investor at the venture capital firm UP.Partners. “Investors are not just looking to invest in science projects but in real companies.”
Blackrock CEO Larry Fink said, “the next 1,000 billion-dollar start-ups will be in climate tech.”
“Getting to net zero carbon emissions by 2050 is going to require a revolution in the production of everything we produce, and a revolution in everything we consume,” he said. “The process of creating fuel, food and construction materials, with all the needs that we have as humanity, it all has to be reinvented.”
Which is going to require investment several orders of magnitude larger. (Remember: There’s $370 billion marked for climate-related spending in last year’s Inflation Reduction Act.)
Good signs include the falling cost of renewable energy and a new rule from the SEC requiring companies to report their emissions, which means everyone will need better tools to measure their footprint.
As Tim McDonnell at Semafor points out, some of the technologies with the biggest carbon benefit per dollar, including food waste reduction and next-gen solar, remain underfunded relative to electric mobility.
That sounds like a huge opportunity.
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