Trying to invest in pre/seed climate tech is really hard

You basically need billionaires to get you all the way

https://capitalmonitor.ai/asset-class/equity/vcs-splash-cash-in-climate-tech-but-show-signs-of-herd-mentality/

A few years ago I started to look into climate tech startups, trying to find a few to invest in. I’ve always tried to be climate-conscious and then having a baby really puts the long-term world survival into perspective. Also being part of a tech book club that basically only read sci-fi dystopian novels, aka different ways of predicting the end of our world, inspired me too.

I’ve sadly come to the conclusion though that in order to be successful, you need some billionaires to back you eventually. This is by no means a bad thing (yes a lot of billionaires get negative press) as I couldn’t be happier that they are focusing their efforts and resources on a HUGE problem. It’s just that in my limited knowledge and quest to find something early pre/seed I find investable, they will need to continually raise capital and there aren’t many options as they grow.

Why? Because VCs (myself included) need BIG exits! If you raise capital, the expectation will be that you become and/or sell for $1B+ at least. It’s sometimes hard to balance doing good and growth at all costs in order to achieve both.

Let me also be clear that this is a cry for help and that I want to be completely and utterly proven wrong.

Types of Climate Startups

  • EV/batteries are probably the most popular right now, thanks to Tesla and the electrification of cars. I have no way to diligence these early on and generally, their valuations are very high, to begin with. And after the recent SPACification of so many that turned out to be duds, I feel it will only get harder moving forwards
https://capitalmonitor.ai/asset-class/equity/vcs-splash-cash-in-climate-tech-but-show-signs-of-herd-mentality/
  • Fake meat is a big consumer-focused that was really hot in 2019/2020. We know raising animals requires a huge amount of energy, water and C02 but are substitutes the answer? VCs have poured billions into these startups and we’re still not even sure… I saw a bunch early and their valuations were very high because of all the hype.
  • Carbon removal has been a big one for a while as we know CO2 etc in the atmosphere is bad no question. There are countless ways to do this (in my best Bubba Blue voice)… literally capture it and bury it, put it in cement, make alcohol and diamonds from it, algae blooms and bury it, capture cow farts etc. The biggest problem I have here though is their business model — they sell carbon offsets, which basically just allows any polluting company to purchase and continue polluting. It’s very short term and while you are somewhat “net” zero, the goal is to remove carbon, lower carbon in the atmosphere AND stop other companies from polluting. We invested in neutrl.com to better understand this problem and try to hit the mass consumer right at point of purchase.

If we are serious about averting catastrophic planetary changes, we need to reduce emissions by 45 per cent by 2030. Trees planted today can’t grow fast enough to achieve this goal. And carbon offset projects will never be able to curb the emissions growth, while reducing overall emissions, if coal power stations continue to be built and petrol cars continue to be bought, and our growing global population continues to consume as it does today.

  • Vertical farming sounds really cool but there is a big difference between stacking hydroponics and actually developing real technological efficiencies. Yes, it uses less water, nutrients, and energy but lots of the green aspects of it are because it’s located closer to cities so there is less transportation needed, less gas used, and possibly less wasted produce as well. It’s also usually sold as a premium product too, so the higher price point doesn’t help mass adoption.
  • Analytics for buildings etc so you’re aware of what carbon footprint is. Knowing is definitely half the battle and guilt works pretty well, so if you can show people/corporations their emissions, then maybe they’ll change.
  • Ending single-use plastics will definitely help but no solution has come close to scaling. I often use the same water bottle in my fridge for water but then I order take out and feel ashamed every time. Met a company last year that tried to fix this that lasted only a few months. And how many reuseable bags do you have in every drawer of your house? They made it worse actually. Plastic straws lol… seeing a bunch of algae-based sustainable solutions but have no confidence in their longevity

In doing research I came across a list (met a few) investors that focus on climate tech

And some more here

Please reach out if you’re a pre/seed startup and looking for funding. Email me t@nyvp.com as I want to invest in more.

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