Climate tech 2.0 vs. cleantech 1.0
Pick a metric, any metric, and climate tech is booming.
Why it matters: Megan moderated a panel yesterday, "Addressing Global Warming: Climate Tech's Goal for a Better World," to gather insights on what drove growth of venture investment to $56 billion last year from $7 billion in 2008.
- The speakers were Form Energy co-founder Mateo Jaramillo, Powerhouse Ventures founder Emily Kirsch, and Silicon Valley Bank managing director Kelly Belcher.
- The key part of the discussion: all the ways our current climate-tech rally is different from the first go-round with cleantech.
These highlights have been edited for length and clarity — but you can check out the full recording, plus the report from Silicon Valley Bank.
The underlying fundamentals:
- The cost of electricity is now lowest coming from renewable energy sources. Ten to 15 years ago, we were projecting forward that that may be the case, but it wasn’t actually true yet. That enables everything else around it. Net-zero pledges, policy changes — those kinds of things weren’t in the realm of being economic. (Form Energy's Jaramillo)
- In 2008, climate tech investing was all about DOE loan guarantees and RPE grants. And in 2022, climate tech is now in every layer of the capital stack. (Powerhouse Ventures' Kirsch)
- There wasn’t a clear path for who was going to be waiting there to write a big check on a hard-tech investment. That’s just very different today, and corporates are playing a really interesting role that they weren’t playing even a few years ago. (Form Energy's Jaramillo)
- That right there signals that there’s patient capital, so it doesn’t need a return in 12 months. (SVB's Belcher)
The types of transactions are also evolving:
- M&A activity is increasing — and the stage of company that’s getting acquired is getting earlier and earlier. (Powerhouse Ventures' Kirsch)
- And not simply SPACs: As more of these companies come into the public markets and we can see value in a company that doesn’t spit off a lot of cash flow, then that makes it more palatable for an investor in the public market. (SVB's Belcher)
- There’s lots of ways to provide liquidity to people who need it without becoming public per se or without going through an acquisition. There are so many levers today that were not there just a few years ago. (Form Energy's Jaramillo)