If you’re an entrepreneur in the Clean Tech or Climate Tech sectors, you are part of a rising tide of innovators dedicated to tackling the world’s most pressing environmental challenges. However, building and growing a business in these sectors can be fraught with unique hurdles. We’ll cover insights, suggestions, and strategies to help you navigate the space along with a list of VCs actively investing in Clean Tech and Climate Tech companies.
Understanding the Landscape- same, same, but different
Clean Tech and Climate Tech, although different, share a common purpose: promoting sustainability and addressing environmental challenges. Clean Tech focuses on reducing the environmental footprint of industries, with innovations in energy efficiency, renewable energy, green transportation, and waste management. Climate Tech, on the other hand, zeros in on directly combating climate change through carbon capture, climate modeling and monitoring, and adaptation technologies.
Despite their different orientations, both sectors face similar obstacles and opportunities. Founders must navigate regulatory landscapes, demonstrate market viability through pilot projects, and attract socially conscious customers and impact investors. Understanding these commonalities can provide a blueprint for strategy development.
Related resource: The Future is Green: 15 Climate Tech Startups to Watch This Year
Fundraising and the Capital Conundrum
Clean Tech and Climate Tech startups often require substantial upfront capital for research, development, and deployment of their technologies. Raising funds in these sectors, however, can be challenging, especially when technologies are at early stages, and risk levels are high.
Engage with Specialized Investors: A host of venture capital firms, impact investors, and accelerators specialize in Clean Tech and Climate Tech. They understand the risks, can provide sector-specific guidance, and often have longer investment horizons.
Related Resource: Check out our full list of Clean Tech and Climate Tech VCs here
Leverage Government Grants and Incentives: Governments worldwide are stepping up their efforts to combat climate change. Entrepreneurs should stay updated on relevant grants, subsidies, and incentive programs that can help to offset initial development and deployment costs.
Build Strategic Partnerships: Collaborations with larger corporates or strategic partners can provide not only capital but also vital resources, industry insights, and credibility.
Navigating the Regulatory Landscape: Regulatory and policy environments can be particularly complex for Clean Tech and Climate Tech startups, which often operate at the intersection of technology, environment, and policy. It’s crucial to stay ahead of regulatory changes that could impact your business. Engage early and often with regulators and policymakers, and consider hiring regulatory experts as part of your team or as consultants.
Demonstrating Market Viability: Investors and partners want proof that your technology works and has a viable market. Consider implementing pilot projects that showcase your solution in a real-world context. These pilots can provide valuable data and testimonials, enhance credibility, and serve as powerful tools when negotiating with potential investors or partners.
Crafting a Compelling Narrative: A compelling narrative that resonates with your target audience is key. Be clear about your mission, the problem you’re solving, and the environmental and societal benefits of your solution. This narrative can attract not only investors but also customers, partners, and talent to your cause.
Case Studies: Successful Strategies Clean Tech and Climate Tech Startups Employed to Overcome Challenges
Collaboration & Partnerships
CleanTech startups can collaborate with established companies, research institutions, and other startups to pool resources, share knowledge, and tackle common challenges collectively. Here are some successful examples of this:
Tesla and Panasonic
Tesla, the electric vehicle (EV) pioneer, formed a strategic partnership with Panasonic, a global electronics manufacturer, to collaborate on battery technology development. Panasonic provided expertise in lithium-ion battery cells, which became a critical component of Tesla’s electric vehicles. The partnership allowed Tesla to access Panasonic’s advanced battery technology and scale up production to meet the growing demand for their EVs. This collaboration contributed to Tesla’s success in the EV market and solidified its position as a leader in sustainable transportation.
Panasonic press release: Panasonic and Tesla Reach Agreement to Expand Supply of Automotive-grade Battery Cells
Pilot Projects and Demonstrations
Conducting pilot projects and demonstrations can help showcase the viability and effectiveness of CleanTech solutions to potential customers and investors, easing market adoption.
Moixa’s GridShare Platform
Moixa is a Clean Tech startup that has developed an AI-powered platform called GridShare to manage and optimize home energy storage systems. In early 2023, Moixa launched a pilot project in partnership with ITOCHU Corporation in Japan to demonstrate the platform’s capabilities. By optimizing energy usage, the project showcases how Moixa’s solution can reduce costs for households and contribute to grid stability, paving the way for widespread adoption of renewable energy.
Greentech Media: UK Storage Startup Moixa Raises $6M to Fuel ‘Exponential Growth’ Plans
Regulatory Expertise
Engaging with experts in regulatory affairs and policy can assist startups in navigating complex legal landscapes and advocating for favorable policies.
ChargePoint
ChargePoint, a leading electric vehicle charging network provider, has demonstrated strong regulatory expertise in navigating the ever-evolving landscape of EV charging regulations. By actively participating in discussions with government agencies, utilities, and transportation authorities, ChargePoint has influenced the development of charging infrastructure standards and policies. Their engagement with regulators has helped streamline the deployment of EV charging stations, making it more convenient for EV drivers and contributing to the growth of the electric vehicle market.
ChargePoint Press Release:ChargePoint partners with National Electrical Contractors Association (NECA) to accelerate deployment of electric vehicle charging infrastructure
Accessing Non-Traditional Capital
Exploring funding options beyond traditional venture capital, such as government grants, impact investors, and corporate sustainability funds, can provide crucial financial support. Accessing non-traditional sources of capital is often a vital strategy for Clean Tech and Climate Tech startups. These alternative avenues of funding can offer the substantial upfront capital required for research, development, and deployment of these technologies. Here’s a recent example:
Charm Industrial’s Carbon Sequestration Project with Stripe
Charm Industrial is a climate tech startup that has developed a novel method of carbon sequestration, transforming biomass into a type of oil that can be injected deep underground for long-term storage. In 2022, Charm received significant funding from a somewhat unconventional source – the online payment company, Stripe.
Stripe has pledged to spend at least $1 million per year on carbon removal technologies, and Charm Industrial was one of the companies chosen as part of this initiative. The financial support from Stripe has allowed Charm to convert thousands of tons of biomass into oil and sequester it underground, demonstrating the effectiveness of its solution at a larger scale.
This example not only showcases the growing interest from corporations in supporting Clean Tech and Climate Tech startups but also underscores the potential for these companies to leverage such opportunities. The strategic partnership with Stripe has helped Charm Industrial not just in terms of capital but also in building credibility and increasing visibility in the market.
In seeking non-traditional funding sources, startups can also consider other avenues like green bonds, climate funds backed by governments, crowdfunding platforms, and partnerships with NGOs committed to environmental causes. The key lies in identifying the right opportunity that aligns with your business model and long-term growth strategy.
Stripe Press Release:Stripe commits $8M to six new carbon removal companies
Focus on Impact Metrics
Highlighting the environmental impact and sustainability benefits of the CleanTech solution can attract socially conscious investors and customers.
Patagonia
Patagonia, an outdoor clothing and gear company, places a strong emphasis on impact metrics related to sustainability. The company tracks and publicizes its efforts to reduce carbon emissions, minimize water usage, and promote responsible sourcing of materials. By transparently communicating its environmental initiatives, Patagonia attracts loyal customers who align with their values, and the company’s commitment to sustainability becomes a significant driver of brand loyalty.
Patagonia’s Page: Environmental & Social Footprint
Ecolab
Ecolab, a global provider of water, hygiene, and energy technologies and services, focuses on impact metrics related to water conservation and sustainable operations. The company measures and reports on water savings achieved through its solutions, helping businesses and industries reduce water consumption and environmental impact. By demonstrating the positive environmental outcomes of its services, Ecolab attracts clients who prioritize sustainability, leading to long-term partnerships and business growth.
- Ecolab’s 2030 Impact Goals
- Ecolab Releases 2022 Corporate Sustainability Report, Highlights Progress Toward 2030 Impact Goals
Resources
- Impact Investors and Fund Managers to Know
- Climate Tech’s Evolution: The Maturation to a Competitive, Returns-Focused Thematic Investment Sector
- From Clean Tech 1.0 to Climate Tech 2.0: A New Era of Investment Opportunities
- The climate tech sector is booming—here are the applications VCs are most excited about
- The Database of State Incentives for Renewables & Efficiency (DSIRE)
- For impact investors, the Global Impact Investing Network (GIIN) offers a directory of its members, many of whom are impact investors interested in sustainable technologies.
VCs Investing in Clean Tech and Climate Tech Startups
Lowercarbon Capital
About: Lowercarbon Capital invests in decarbonization technologies across various sectors, including energy, transportation, food, and manufacturing. They fund research and invest in technologies to reduce CO2 in the atmosphere. For too long, the world has ignored the scientists, inventors, and entrepreneurs who are pursuing solutions to lower emissions, remove carbon, actively cool the planet, and save human, animal, and plant life as we know it. We are working to fix that.
Check out their Visible Connect profile here -> Lowercarbon Capital
Thirdsphere
About: Third Sphere works for founders transforming global systems. We’ve made over 100 investments in notable firms like Cove Tool, OneWheel and Bowery Farming. We’re usually a pre-customer investor and offer traditional venture as well as credit finance, along with coaching and connections to over 12,000 customers, investors focused on re-imagining our planet. Our team is ranked in the 99th percentile of climatetech investors on NFX Signal, and Techcrunch named us one of the top 10 VCs founders love the most.
We know that climate is about more than carbon—it’s also about force multipliers like asset finance and distribution. We believe the best climate solutions don’t look like climate solutions at all, just better, faster, and cheaper products and services. We prefer rapid deployment that will get us close to 1.5C in warming while upgrading our systems to make them more resilient. But we’ll also look at moonshot opportunities because we know we need a plan B.
Thesis: A real investment is about more than capital. We invest at the earliest stages, usually pre-customer, stay close to our founders, and work with them from the inception of our relationship so they can build relationships with other founders, investors, and customers.
Check out their Visible Connect profile here -> Thirdsphere
Breakthrough Energy Ventures
About: Launched by Bill Gates, Breakthrough Energy Ventures invests in companies developing technologies to reduce greenhouse gas emissions. Breakthrough Energy is dedicated to helping humanity avoid a climate disaster. Through investment vehicles, philanthropic programs, policy advocacy, and other activities, we’re committed to scaling the technologies we need to reach net-zero emissions by 2050.
Thesis: Breakthrough Energy Ventures provides reliable and affordable power without contributing to climate change.
Check out their Visible Connect profile here -> Breakthrough Energy Ventures
Energy Impact Partners
About: Energy Impact Partners LP (EIP) is a global investment platform that invests in companies shaping the energy landscape of the future. EIP brings together entrepreneurs and the world’s most forward-looking energy and industrial companies to advance innovation. With over $2.5 billion in assets under management, EIP invests globally across venture, growth, credit, and infrastructure – and has a team of over 70 professionals based in its offices in New York, San Francisco, Palm Beach, London, Washington D.C., Cologne, and Oslo.
Thesis: We bring together incumbents and innovators in a differentiated collaborative model to build and scale businesses for substantial impact.
Check out their Visible Connect profile here -> Energy Impact Partners
Generation Investment Management
About: Co-founded by former US Vice President Al Gore, Generation Investment Management focuses on sustainable investments, including Climate Tech. Since its founding in 2004, Generation has played a pioneering role in the development of sustainable and environmental, social and governance (ESG) investing.
Check out their Visible Connect profile here -> Generation Investment Management
Prelude Ventures
About: Prelude Ventures is a venture capital firm partnering with entrepreneurs to address climate change. Since 2013, we have invested in over 40 companies across advanced energy, food and agriculture, transportation and logistics, advanced materials and manufacturing, and advanced computing. We have a long-term commitment to the sector, accept informed risks, and couple a fundamental emphasis on venture-level returns with an understanding of deep-tech and hardware development timelines. Prelude manages capital exclusively for Simons family philanthropic entities and is a founding member of the Breakthrough Energy Coalition.
Thesis: We invest in the low-carbon economy. Check out their Visible Connect profile here -> Prelude Ventures
3×5 Partners
About: In everything we do, we allow our love for each other and for the planet to be our guide. We seek out companies that are delivering advancements in clean air, food, water, shelter, education, healthcare, sanitation, and climate and environmental sustainability. When we find companies that align with our mission, we go beyond due diligence and take the time needed to build relationships grounded in trust, shared vision, transparency, and mutual accountability.
Check out their Visible Connect profile here -> 3×5 Partners
Third Derivative
About: We are building an inclusive, global ecosystem that rapidly finds, funds, and scales climate tech innovation and transforms markets.
Thesis: We are mission driven and market focused. Rising to the climate crisis challenge is a once-in-a-generation, trillion-dollar economic opportunity. That’s why we were founded with purpose: to find, fund, hone, and scale the most-promising technologies to achieve larger, faster reductions in global carbon emissions. Check out their Visible Connect profile here -> Third Derivative
Evergreen Climate Innovations
About: Clean Energy Trust is a cleantech accelerator that fuels innovation to create a healthier environment and more prosperous future. Clean Energy Trust is a 501C3 public charity. Our unique funding model gives us the flexibility to invest early in promising technology and young companies. We invest across the spectrum of cleantech including energy efficiency, agriculture, energy generation, energy storage, and transportation technologies.
Sweetspot check size: $ 100K Check out their Visible Connect profile here ->Evergreen Climate Innovations
Greentown Labs
About: Greentown Labs is a community of climate action pioneers working to design a more sustainable world. As the largest climatetech startup incubator in North America, Greentown Labs brings together startups, corporates, investors, policymakers, and many others with a focus on scaling climate solutions. Driven by the mission of providing startups the resources, knowledge, connections, and equipment they need to thrive, Greentown Labs offers lab space, shared office space, a machine shop, an electronics lab, software and business resources, and a large network of corporate customers, investors, and more. With incubators in Somerville, Mass. and Houston, Texas, Greentown Labs is home to more than 200 startups and has supported more than 500 since the incubator’s founding in 2011. These startups have collectively created more than 24,000 jobs, raised more than $4 billion in funding, and generated more than $9.8 billion in regional economic impact.
Check out their Visible Connect profile here -> Greentown Labs
Future Energy Ventures
About: Future Energy Ventures is a unique venture capital platform that brings together corporate partners and world-class start-ups to shape the future energy landscape. Future Energy Ventures is the venture capital investment and collaboration platform of E.ON, one of Europe’s largest operators of energy networks and energy-related infrastructure and a provider of innovative customer solutions for about 50 million customers.
Thesis: Future Energy Ventures is born from the energy industry, but it understands energy must converge with other sectors to create a sustainable and prosperous future. This is why we go beyond energy to invest in companies solving problems in cities or building frontier technology. The realization of our ambition relies on collaboration and partnerships; between people and companies from many different industries.
Check out their Visible Connect profile here -> Future Energy Ventures
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Related Resource: Clean Tech and Climate Tech VC profiles in our Fundraising CRM
