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Expert voices: Valo's Scott Tierney on climate adaptation

an illustration of Scott Tierney of Valo Ventures surrounded by colorful circles

Photo illustration: Tiffany Herring/Axios; Photo: Courtesy of Valo Ventures

There's a woeful lack of investment in climate tech adaptation, says Scott Tierney, partner with venture firm Valo Ventures.

Why it matters: Climate change is already happening, and a warmer world will need new types of infrastructure and services.

Catch up quick: Tierney, co-founder of Google's growth fund CapitalG, launched Valo Ventures 5 years ago after strategizing with the then-CEO of Finnish energy company Fortum, which became one of Valo's largest limited partners.

  • Tierney says he sought to take the playbook he helped develop at CapitalG to focus on climate solutions.
  • The firm looks to lead or co-lead seed or Series A investments of between $3 million and $5 million.

Zoom in: Valo Ventures just made its 20th and final investment out of its $175 million first fund last December.

  • The firm paused investing in 2022, hunkering down through interest rate hikes and valuation fluctuations to support its current portfolio. It resumed investing in 2023.
  • Tierney wouldn't comment on future fundraising but says Valo recently made its first investment from its second fund, backing a geothermal company that the firm says it will discuss more in the second quarter.

This interview was lightly edited for clarity.

What in your view has been the biggest news in climate tech investing so far this year?

  • "We've got thousands of business leaders, policymakers and investors headed to Houston for CERAWeek, the largest annual energy conference, and it happened in a state that just experienced its largest wildfire with over a million acres in the Smokehouse Creek Fire.
  • With the continuing evidence of climate change, it's important that we keep the drumbeat on to accelerate the digitization, decarbonization and adaptation."

What would you add to the narrative?

  • "We're woefully under-invested in adaptation, and I expect this will become an increasing area of time, attention and focus.
  • The expectation is that we're going to have a lot more outages. I worry that that's going to create a public backlash against the energy transition.
  • We're very focused now on carbon-free firm power, and the best sources for firm power are nuclear small modular reactors and next-generation geothermal."

What's one tip for either climate tech investors or founders?

  • "Be ruthless and focus on your unit economics, because it's the unit economics that will really determine whether you've got the ability to scale and to attract more capital."

💡 In three-ish words, the change you would make to climate-tech investing:

  • "Speed, scale and collaboration."

Three fun things:

💼 First job:

  • "My hardest job was working as a roustabout on oil and gas platforms. That was the summer before my freshman year of college."

👑 Proudest investment:

  • "Our first investment that we made is a company called Myst AI.
  • They were purpose-built to use AI for improving renewable energy forecasting, and they successfully sold the business to Snowflake last year."

🤦🏻‍♂️ Facepalm investment or investment you wish you made:

  • "When I was at Moore Capital, I led an investment in a San Diego company at the time called H2o Audio, which had just made it into the Apple stores. It was a phenomenal product.
  • But it was a big lesson. Hardware is a really hard business. And we lost our investment."
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