How Venture Capitalists Can Avoid Another Bloodbath As The Clean Tech 2.0 Boom Kicks Off

Together, these trends have removed technical risks from much of the cleantech industry and laid the groundwork for the development of important new markets. And little has been lost for investors.

From 2013 to 2019, start-up investments in clean tech grew from around $ 420 million to more than $ 16 billion, according to the Informs about PwC. That’s three times the growth rate of venture capital investments in artificial intelligence, a booming market in recent years.

In recent years, several venture capital firms dedicated to climate change have emerged, including Innovative energy companies, Congruent companies, Energy impact partners, G2VP, Greentown Laboratories, Lower carbon capitalYes Power plant.

The field is also attracting significant investment from large venture capital firms such as Softback, Founders Und, Sequoia Capital, Y Combinator and the two companies most closely associated with the first cleantech boom and collapse, Little Perkins

Yes Khosla Ventures. Union Square Ventures Raises $ 100-200 Million Climate Fund, The Wall Street Journal reported earlier this month.

And the companies themselves have started their own funds, including Amazon’s. Climate engagement fund, From Microsoft Climate innovation fundand Unilever Climate and nature fund

Emily Kirsch, founder and CEO of Oakland-based Powerhouse, says Biden’s arrival at the White House could immediately boost the market for electric cars, batteries, and charging infrastructure. During the campaign, the elected president promised to sign a series of “day one” executive orders, including those that would raise fuel economy standards and direct hundreds of billions of dollars in annual government spending towards clean energy and vehicles, says -he.

COURTESY: POWERHOUSE

The purpose of the administration to install 500 million solar panels and 60,000 wind turbines In five years, in part by opening up federal lands to such developments, it will also significantly expand the US renewable energy market. And plans to create a new Department of Energy climate-focused research program known as ARPA-C could accelerate progress in green hydrogen, long-term energy storage. and cleaner ways of producing steel, concrete and products. chemicals, says Kirsch.

what changed

But how different will things be this time around?

Varun Sivaram, a senior researcher at Columbia University’s Center for Global Energy Policy and one of the report’s authors, says there are several ways investors can avoid the above mistakes. They can invest in the later stages, when the technological risk has been addressed; focus on digital and software opportunities that do not require building massive factories or factories; adopt an investment model whose returns are not as rapid; and look for technologies that fit into existing methods of manufacturing products, rather than compete with them.

All of these things happen to varying degrees.

Bill Gates’ billion-dollar Breakthrough Energy Ventures fund, which includes investments from two of the biggest venture capitalists of the latest boom, John Doerr and Vinod Khosla, invests over 20-year cycles. Likewise, the “hard tech” incubator, The Engine, does not intend to get its money back for 12 to 18 years.

The current investment cycle is also much more diverse.

While the first boom was mainly due to cleaning up the energy sector and early efforts to tackle transportation, and particularly focused on thin-film solar, electric cars, and advanced biofuels, capital- risk now has a broader scope. Venture capitalists fund protein replacement companies like Beyond Meat and Impossible Foods; startups developing cleaner methods of producing cement and steel, such as CarbonCure Technologies and Boston Metal; companies working on carbon disposal and recycling, such as Climeworks and Opus 12; companies that support the creation of carbon offsets and markets, such as Pachama, Indigo Ag and Nori