Venture capitalists have yet to join Corporate America in tackling climate change
2020 appears to be the year that Corporate America is serious about addressing climate change, but it remains unclear if venture capitalists plan to join the fight.
The big picture: Many VCs still have painful scars from the mid-to-late aughts, when they lost billions on investments in "cleantech" companies.
- Those deals were largely based on a presumption that federal climate policy, if not also dollars, would move swiftly and strongly in a favorable direction. But that didn't really happen, and VCs became saddled with manufacturing-intensive businesses that they didn't really know how to properly manage.
To be sure, much has changed over the past decade. Renewable energy has become more price viable, there's a more comprehensive capital stack, and there's a wider supply of interested institutional capital (as opposed to before, when it was mostly fueled by a pair of large California pension plans).
But, but, but: I'm still not hearing much interest, outside of the few remaining survivors from the last go-around. And that's a big stumbling block, because fundamental climate solutions like carbon capture will rely on the very sorts of commercialized innovations that venture capital is charged with enabling.
- And, for existing technologies that require greater deployment, both growth equity and private equity have key roles to play.
The bottom line: If Corporate America is really serious, beyond PR-laden lip service, then it must work to convince venture that it will be the change agent — particularly as a customer throughout the supply chain — that the federal government failed to be. It can be done, but it will take more than press releases out of Davos.
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