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Startups' financial upsides unchanged following SCOTUS decision

Jul 1, 2022
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Illustration: Gabriella Turrisi/Axios

Startups and venture capital investors may be the least affected by the Supreme Court's ruling in West Virginia v. EPA. In fact, they may stand to benefit in the short and medium term from lower regulatory pressures.

Why it matters: A majority of investor activity in the industry remains contained to private markets as young companies test and scale new technologies in areas like carbon capture.

What's happening: Investors are confident the business case remains for climate technology startups regardless of the regulatory landscape.

  • "For veteran funds who know climate tech well, the financial upside potential remains largely unchanged," Powerhouse founder Emily Kirsch tells Axios.
  • Policy drivers for carbon capture, in particular, remain unaffected by the ruling, The Engine CEO Katie Rae maintains.
  • Mike McClure of Sageview Ventures pointed to the increase in business spending on climate initiatives in recent years absent comprehensive federal policy as an indication that business demand will continue to grow.

Between the lines: There is a societal good argument at play as well, with investors and founders adamant that the ruling will not affect long-term commitments to combatting climate change.

  • "Frankly, continuing in our aggressive path to transform the energy space is simply the right thing to do," Uplight chief strategy officer Justin Segall tells Axios. The startup makes software for utility companies.

Yes, but: A looming recession could change the demand outlook for pricey technology that hasn't been extensively proven, Sozo Ventures managing director Spencer Foust says.

  • "Climate founders will likely start looking more to the EU to grow their businesses," Foust says.
  • "Regulation can help some climate businesses by creating favorable tax incentives or new buyers, but as we saw in the cleantech bust, that can be a double-edged sword," Launch climate investor Molly Wood tells Megan.

The bottom line: "The startup community has seen policy change before, and policy setbacks demand that entrepreneurs innovate around their business models. Entrepreneurs can’t be stopped, but they may be temporarily slowed down in some specific technology categories," Elemental Excelerator CEO Dawn Lippert tells Axios.

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