Climate Tech is Hot with Investors! And Social Entrepreneurs

Guest Blog

Last month I worked with Chris Zaw (pictured), an entrepreneur at Miller Center for Social Entrepreneurship, helping him to refine his investor pitch. Chris is CEO of Warc Africa, a startup in Ghana that helps small farmers in West Africa use regenerative agriculture, which improves their crop yields and their livelihoods. But it also helps to save the planet from climate change — regenerative agriculture helps to draw-down greenhouse gases and capture carbon dioxide. So it’s good for the company, the farmers, and the planet. #winning

Climate Tech is hot with investors right now. Silicon Valley Bank reports that VC investment in climate tech was up 80% from 2020 to 2021, and 64 new climate funds were formed last year, worth a combined $37B, plus there are funds aimed at adjacent sectors (Convective Capital, for example, is focused on technology for wildfire resilience). And more and more existing venture capital firms are listing Climate Tech as one of their investment areas.

The cynics, of course, will remember that for a hot second 15 years ago, “Clean Tech” was a big buzzword in the venture capital world, encompassing solar and wind power, biofuels, grey water, recycling, etc. But then the recession hit and many of these startups died because the products didn’t materialize, natural gas prices changed the economics of alternative energy, and public subsidies were withdrawn. Clean Tech fell out of favor with investors as they went running off toward some shiny new thing (There’s an old joke that a venture capitalist is what you get when you cross a sheep with a lemming).

But I think the current Climate Tech today is more than just a re-branding of Clean Tech. There’s a realization today that climate change truly is an imminent existential threat, and that all our other environmental concerns really roll up into climate.

But investors, of course, need more of an incentive than just saving the world — they also want to make money. Many Climate Tech startups are working on things that have a very long time horizon and no clear path to market at this time. That can be a tough sell for investors, especially those who are used to the rapid gratification of many software investments.

But there are plenty of climate change technologies that have a proven ability to make a difference right now, and agriculture provides lots of low-hanging fruit (pun intended). The World Bank says that nearly a third of the planet’s greenhouse gas emissions come from agriculture. So investing in regenerative agriculture can have a substantial impact on climate change while improving crop yields and paying dividends to investors. It seems to me that we need to accelerate investment in these areas while also investing in Climate Tech which has a longer time horizon. All of these things will be necessary if we are going to win the climate battle.

In all of this climate stuff is lots of opportunity for entrepreneurs, innovators, and investors (and the planet, hopefully).


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Photo: Chris Zaw, CEO of WARC Africa at Miller Center for Social Entrepreneurship’s Fall 2022 In-Residence