Funding, labor constraints loom over climate tech sector

Funding constraints and skilled labor shortages are weighing on hardware-focused climate tech startups, which say they need more government funding at a delicate time on Capitol Hill.

Driving the news: That sentiment was shared and debated at the "Expert Voices" climate tech discussion held before the Axios BFD event in San Francisco on Wednesday.

Details: Climate tech founders whose companies are building physical assets, say they're scraping against the ceiling of traditional venture capital.

• “It is incredibly hard to raise money when what you have is hard assets,” said Jon Gordon, co-founder of Universal Hydrogen. “We raised our A, our B, and we're currently raising a C. I don’t know why it’s taken us so long to raise that money.”
• “Investors have lost their tolerance. It’s not about the money being gone. It’s about investors being much more careful with their capital," said Ali Javidan, CEO of Range Energy.

Of note: “No one wants to be a technician anymore," Javidan said. "Finding that talent to scale is very challenging," a comment that earned nods around the table.

• Javidan pointed out that vocational-technical schools are shutting down completely.
• "We need to figure out how to transition the people that work on gas lines to alternative fuels.
• “Hiring an electrical engineer is nearly impossible," Gordon said, with one panelists leaning in and adding "justing hiring an electrician is hard."
• Shannon Miller, CEO Mainspring Energy, said she's seen similar challenges, though she believes California fares better with the supply of skilled labor than other states.

Zoom in: Around the lunch table, panelists agreed that government funding is not just available but necessary to fill in gaps and expand development.

• A change in the White House could impact that funding and government support.
• “The stakes are high. In order to really move money, he (President Biden) needs a second term, " said Brandon Hurlbut, co-founder of Boundary Stone Partners.

The bottom line: Investors are concerned about the disconnect between business and policy.

• "If we don’t have policy working in accordance with us then we are in a lot of trouble," Vaughn Blake of Blue Bear Capital said. “There’s nothing for us to bite on and it’s a lot to digest."