Jan 17, 2024 · 43m · green-blueprint
Venture investors riff on headwinds, hype, and wildcards of 2023
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this 2023 retrospective, Latitude Media host Stephen Lacey and Prelude Ventures investors Gabriel Kra and Dr. Carly Anderson analyze climate tech's venture capital contraction, real-world manufacturing milestones, overhyped technologies, and emerging political risks entering 2024.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The hosts as informed peer 5.3 Guest teaching 2.1 Guest disagreement 2.1 The hosts pushing back 2.0
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 37:05 Blunt dismissal of fusion hype
Gabriel immediately interrupts Carly's excitement for fusion by labeling it overhyped, prompting an explicit disagreement and spirited technical back-and-forth between the co-guests.
Hardest push from the hosts ▶ 10:31 Defending the examination of SPACsWhen Gabriel complains about having to talk about SPACs again, the host firmly refuses the dismissal, maintaining that the SPAC collapse was the defining narrative of the COVID-era market cycle.
Biggest teaching moment ▶ 33:25 Thermodynamic reality of geologic hydrogenGabriel educates the listeners and host by clarifying that unlike green hydrogen made with electrolyzers (which functions merely as an energy carrier), geologic hydrogen is a primary energy source.
The host holds their own ▶ 27:29 Host demonstrates AI sector knowledgeHost articulates a nuanced technical overview of where machine learning genuinely aids climate tech—materials discovery, manufacturing fault detection, and DER management—grounding the discussion in first-hand industry reporting.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| A Retrospective on Climate Tech Investing in 2023 | 5 | 1 | 2 | 1 | Host opens with data from Sightline Climate and historical press coverage to set up a retrospective on 2023. Guests discuss macro turbulence, bank failures, and exchange mild differences on whether the venture ecosystem has equilibrated. | |
| Venture Contraction and Portfolio Cash Runway Management | 5 | 2 | 2 | 1 | Host introduces specific statistics on deal count and 30% drop in round sizes. Guests explain portfolio cash-preservation strategies pushing runways into 2025 and debate historical commodity cycles. | |
| The Collapse of SPACs and Frozen Liquidity Pathways | 5 | 3 | 3 | 4 | Host brings up the 50% decline in exits and the collapse of SPACs. Gabriel jokingly groans about revisiting SPACs, but the host defends the relevance of the topic as the defining story of recent market froth. | |
| 2023 as the Breakthrough Year of Physical Construction | 5 | 2 | 1 | 1 | Host synthesizes the narrative of 2023 as a pivotal year of hardware deployment and manufacturing. Guests illustrate the point with specific groundbreakings and explain why physical factories distinguish climate tech from software. | |
| Navigating Supply Chain Bottlenecks and Growth Capital Scarcity | 6 | 2 | 2 | 5 | Host actively pushes back against an overly optimistic narrative by raising growth-stage capital scarcity, rising interest rates, and transformer supply bottlenecks. Guests acknowledge these headwinds while noting easing supply chains. | |
| Evaluating Overhyped Sectors: Sustainable Aviation Fuels and AI | 7 | 2 | 2 | 2 | Guests dissect why sustainable aviation fuel is overhyped due to high input costs and CO2 sourcing. When Gabriel claims AI is overhyped in climate, the host steps in with detailed domain expertise from their Transition AI event to outline concrete AI use cases. | |
| Emerging Wildcards: Geologic Hydrogen, Carbon Removal, and Fusion | 5 | 4 | 4 | 2 | Guests unpack wildcards including geologic hydrogen, carbon capture economics, and nuclear fusion. Gabriel bluntly dismisses fusion as overhyped, triggering a spirited technical debate with Carly over commercial timelines and alternative clean baseload technologies. | |
| Key Anxieties for 2024 and Concluding Thoughts | 4 | 1 | 1 | 0 | Host asks for investors' top anxieties going into 2024. Guests articulate deep worries over potential federal policy reversals after the November elections and public messaging risks reminiscent of the Solyndra era. |
Statements from this episode (21)
Kra: Climate tech is not immune to interest rate hikes and dry exit markets
“If rates go up and IPO markets dry up and M&A goes away, we all suffer from that just like everybody else does.”
Kra: The 2023 AI explosion did not fundamentally change climate tech
“It didn't, again, fundamentally change anything, at least in climate tech.”
Kra: Climate tech venture market still has a lot more shakeout ahead
“I'm not sure I do. I think there's a lot more to shake out of the system.”
Kra: Prelude urged portfolio companies to extend cash runway into 2025
“I wanted my companies, if they were looking like they might be cash out in June of 24, June of this year, I wanted them to get to Q one or Q two of 2025, because I thought that's when we would be maybe in some sort of more normal environment.”
Kra: Plant-based meat and consumer climate startups struggled strongly in 2023
“In our portfolio, or, and in the market generally, I think, you know, some of the plant-based meat replacement companies struggled pretty strongly. Consumer-facing companies struggled pretty strongly.”
Anderson: Overall VC deployment fell ~60% in 2023, while climate fell ~30%
“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%.”
Kra: Value commodity startups on 10-15 year prices, not 2-year spikes
“When we're looking at companies that are making a commodity product, I want to look back 10 or 15 years at the commodity price. I don't want to invest against a two-year spike in something. You know, that's what a lot of people did in the polysilicon boom in 2…”
Lacey: Climate Tech Exits Dropped 50% in 2023
“Well, we also saw that exits were down considerably by 50%.”
Kra: QuantumScape Retains Cash to Execute Business Plan
“Like, look at its cash balance sheet. It still has money to execute against its plan, and it wasn't just about getting public and providing liquidity to investors or whomever.”
Anderson: Heirloom and Form Energy broke ground on physical plants in 2023
“Heirloom down in Tracy. Forum broke ground in West Virginia. I know there's a number of plants going up in that area.”
Kra: Five Prelude portfolio factories will come online in 2024-2025
“Easiest to talk about what I see directly in our portfolio, but I think this is indicative of what you'd see across the landscape. I can think of five factories being built that are going to come online in 20, 24, five, right?”
Kra: Physical factory scaling is the core difference between climate tech and software
“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.”
Anderson: Supply chain issues are easing via Canadian and Mexican nearshoring
“Totally agree that the supply chain issues are going to work themselves out. Like, we're seeing that already. We're seeing people get creative about where they're sourcing materials from. We're seeing new manufacturing being set up in Canada and Mexico nearby.”
Kra: Prelude passed on startups lacking future capital plans
“There are companies that we liked many aspects of, but we didn't, declined to do a new investment into them, meaning a first investment into them, because we didn't feel necessarily that the team had an understanding of where their next dollars were going to c…”
Anderson: Startups needing over $1B to scale must be extraordinary to fund
“There's, like you said earlier, a bigger push for profitability near term, and more of a, like, it has to be really special to be excited about starting a journey that is going to take a billion plus dollars to scale.”
Kra: Synthetic aviation fuel is economically unviable without cheap CO2
“You know, even if you have free electricity and free hydrogen, which you don't, and you still need CO₂ at scale, and that cost alone plus some conversion cost kills you here.”
Kra: Geologic hydrogen will gain more momentum through 2025
“Geologic hydrogen. That's the wild card that came out that is going to get bigger in twenty-twenty-four and into twenty-twenty-five.”
Kra: Many DAC startups lack a credible pathway to $100 per ton
“I think eventually investors are going to look at, do you have a credible path to getting to like a hundred bucks a ton? Of removal. And I think there's a large number of players who don't have a credible pathway to getting there, even if you make big assumpti…”
Kra: Commercial grid fusion will not arrive before 2035 to 2040
“In twenty-thirty-five and twenty-forty, we're probably going to see some there in that range. We might see a first commercial reactor producing electrons onto the grid, but I think before that, it's all going to be, if we do well, it's going to be pilots and d…”