Venture capitalists have yet to join Corporate America in tackling climate change
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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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