Climate Tech

“When the risk-free rate went from zero to five whole percent, Every long duration asset gets repriced, and climate tech is the ultimate, unfortunately, the ultimate long duration category. A company that needs 10 or even you know, 20 years to reach meaningful …”

“The next year and a half to two years, 18 to 24 months, is just going to be a brutal filtering process. Environment.”

“Yeah, I think we wanted to be somewhat involved with it, and there were a lot of amazing founders building in it, and they're gonna build great things, but they're not gonna get us great VC returns.”

“Where there are times to have some expansive argument, and learn to get out of our own way, and not make an omissions argument that bums people out, but instead make an argument about why this is just better, is I think a discipline we need to get used to.”

“We don't really talk about energy efficiency that much anymore, at least in like, you know, venture climate techie circles. But I think it might make a roaring comeback, actually, because rates are going to cause bills to become really painful for customers.”

“One difference between this time and last time in my mind is that the fall from glory has been a lot steeper and faster, because it was really driven by a political change, the change in administration, and then the swiftness with which that new administration…”

“The big lesson of the current state of affairs in climate tech is that in a lot of the subcategories of the market, Being clean, being green, whatever, is insufficient. Being ex but clean particularly if it's ex but clean and more expensive. Is just not eno…”

“I actually think the world gets worse in the near term because energy will become the fundamental limiter, which means we will frack more. We'll pull more from the ocean because nuclear fission and fusion will still take time to build. You can't build solar pa…”

“I would actually say it even slightly stronger, which is we use this word climate tech like it's an actual good definition of a market segment. When we just talked about like, I sell products to consumers that save the money. I'll sell products to consumers th…”

“AI for material science, great for discovering new materials. The manufacturing scale-up is usually the hard part. So great, I've got this new MOF. I've got to make a lot of it very cheaply. The AI doesn't really help me very much with that. Like, in theory, m…”

“To the extent that there's going to be a big impact of AI on the energy sector, on climate tech, apart from its obvious impact on energy consumption, which we've already talked about ad nauseum here This area, physical AI, is where I think the impact is going …”

“It's a lot easier to be a private company raising VC money to do research, which is ultimately should just be basic research, because the stuff that's going to be competitive and on the market probably can't happen until that first research happens.”

“And listen, I think this remains today the real valley of death. There aren't really any other values of death at this point in my mind. The capital stack for climate tech companies is, is actually pretty strong, even in light of the market having shifted a fa…”

“The challenge is the fact that these companies reach a point where the technology has been proven, but it has not been the risk in the eyes of large scale infrastructure capital, right? Whether that is Infra funds or project finance banks, right? So you need t…”

“There are some areas, though, where I do think that the mousetraps we have are good enough, and actually are likely to get better incrementally on their own, such that funneling a lot of capital into trying to build a differently better mousetrap is probably a…”

“And I think we tend to overestimate a little bit the share of technologies that are really fully viable because we do tend to be based in, in, in geographies where we have a lot of support systems. And because we tend to work with companies who are early adopt…”

“If rates go up and IPO markets dry up and M&A goes away, we all suffer from that just like everybody else does.”

“It didn't, again, fundamentally change anything, at least in climate tech.”

“If you look at climate tech compared to, like, the broader data coming out of PitchBook or Crunchbase, overall venture deployment decreased to a third of what it was in twenty-twenty-two, you know, so instead of being down by 30%, down by 60%.”

“They just don't realize how hard it is to build stuff, to build, to make new factories. This is a fundamental difference between climate tech and software.”

“Thirty-two billion dollars in venture and growth funding globally in climate tech, which was a 30% decline from the prior year.”

“Deal activity was only down three percent, so you could call that even a tapering relative to twenty-twenty-two rather than a significant decline, so Deals are still getting done. Early stage seed series A still getting done, but that absolute dollar amount th…”

“Specific to climate tech, it might not make sense to define success as an absolute dollar in venture investment, because at the end of the day, when we think about all this hardware and, you know, hard tech that needs to develop into projects, you want these c…”

“Series A investment was down 41% compared to twenty-twenty-two. That's the first time we've seen series A investment drop since we started tracking the space, you know, four years ago.”

“This time around, in 23, appetite for food and land use evaporated. There is a distaste for food and land use, in other words, and we saw that That sector was down 55% in investment to three billion this year.”

“It cut in half, so we tracked 50% less exits in twenty-twenty-three, and this was really driven by SPACs finally fizzing out. I think we started to see that happen towards the beginning of twenty-twenty-two but the count of SPACs were, climate tech SPACs were …”

“I tracked at some point, I don't remember exactly what the number was, but like close to 40 companies that I would call climate tech companies that, that successfully merged with SPACs and de-SPACs became public companies. Most of them were pre-revenue and had…”

“And yes, there have been some attempts at solutions here, but I would argue nothing truly scalable yet across technology types that has emerged and is a universal solution.”

“To me, I think one of the biggest climate solutions is FOC, which is a horizontal finance solution that can essentially be the one financial solution to help catalyze them all.”

“It's sort of a subcategory where you're going to see a lot of AI integration into existing products, but there's not going to be this like AI only category and climate tech. It's going to be a part of many of the other existing climate tech categories”

“It, it's not just a technology game. This is not like investing in SaaS or you know, a traditional tech profile. You have to weave your technology into a broader framework that really matters, and that means engaging across policy, technology, investment, and …”

“I have generally been a bit more skeptical than most, I think, that it would change, fundamentally change at least, the things that I spend my professional time on, which is to say climate tech and energy.”

“Up until about six months ago, if you'd asked people in the energy business or in climate tech about the hottest areas of tech innovation, artificial intelligence might have topped the list for some people, but probably wouldn't have gotten into the top five f…”

“I don't think the impact of rising rates on the innovation economy and climate tech is, is over. I think, again, I don't think we can expect that this will pass, and we're going to go back to what it was in 21, early 22.”

“That enabled, that empowered Silicon Valley, that helped make Silicon Valley better at starting really amazing companies, and in climate tech, they were the leading lending partner out there.”

“And it's much more valuable to have that background than to have this specific domain expertise background. Like, those are complimentary, but as a PM, having the solid PM background is the more valuable piece, I would say.”

“What I will say is that I would say climate tech funding has been slower to decline than traditional tech funding in the venture world. So there was a quicker, bigger kind of turn, downturn in broader tech world than there was in climate tech.”

“There already was a big wave of talent coming from traditional tech into climate tech that was happening. It's been happening for years. There've been all these great organizations spun up specifically to help people who are, you know, really high caliber indi…”

“I personally think we are going to see a significant influx of venture capital and support for a lot of these climate tech and, you know, new energy material and manufacturing projects that otherwise may have been held back because the subsidy will kickstart.”

“I think it's pretty easy to make the case that most of what we see today in this space, certainly in the case of renewables, at least would not exist, at least not at the current scale. Had that bill not deployed billions of dollars across an array of technolo…”

“And there is absolutely no question in my mind that the Inflation Reduction Act, should it pass, noting that I am recording this before we know whether it will or not for sure, will be the same, but on steroids.”

“There were like over 600 SPACs raised in twenty-twenty-one. It was, you know, a good chunk of them were climate tech related.”

“Climate is at its core a capital stock turnover problem where we need to deploy Ultimately, pretty low-cost capital. The corpus of it needs to be in order to turn over our brown infrastructure and make it green.”

“So you see this, you know, this dislocation in the market is not a climate tech dislocation. It's a it's candidly going from, like, risk on to seeing a lot of those, you know, risk on bets pull back. I mean, you're seeing it hit Everything from, you know, our …”

“I think the greatest battle in climate tech over the next decade is going to be a race between electrochemistry and biology to solve our biggest climate problems.”

“Probably 80% of the things we need to do in climate tech can be solved either by biologically or electrochemically converting Thing X into thing Y.”

“Like if you can build a company just by pouring, you know, capital on it in one or two years, I mean, you don't have a real moat. Maybe there's, you know, network effects and different things in software, but in climate tech, I mean, your moat comes from funda…”

“I think it's a fair case to be made that SPACs have generated more upside for deep tech in climate tech and in other sectors than they have for any other Type of investment”