Can 'deeptech' venture capital solve climate change?

11/11/21 • 51 min

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Can investors win by betting on early-stage innovations in hard-to-decarbonize sectors such as energy, transportation, agriculture and heavy industry?

The answer doesn’t matter only to venture capitalists. If you believe that we need fundamental science and engineering innovation to climb our way out of the climate crisis, it's an important question.

Plenty of reasonable observers say the answer is no. Case in point: The 2016 MIT report Venture Capital and Cleantech: The Wrong Model for Clean Energy Innovation by Ben Gaddy and Varun Sivaram.

But things have changed since “Cleantech 1.0,” the first wave of investment in the sector that resulted in a lot of bankruptcies -- but also some big hits like Tesla, Sunrun, and Nest.

Capital is flowing back into the sector at stunning rates, as venture investors all turn their attention to climatetech. So do the arguments against deeptech climate venture capital hold up today?

To explore this question, Shayle turns to Ramez Naam, another veteran of Cleantech 1.0. Ramez and Shayle go point by point, covering questions such as: Does climatetech take too much capital to scale? Is the time to commercialization too long? Is the exit landscape still relatively unattractive? Will this new climatetech boom lead to another bust?

Catalyst is a co-production of Post Script Media and Canary Media.

Catalyst is supported by Atmos Financial. Atmos offers FDIC-insured checking and savings accounts that only invest in climate-positive assets like renewables, green construction, and regenerative agriculture. Modern banking for climate-conscious people. Get an account in minutes at joinatmos.com.

Can investors win by betting on early-stage innovations in hard-to-decarbonize sectors such as energy, transportation, agriculture and heavy industry?

Plenty of reasonable observers say the answer is no. Case in point: The 2016 MIT report Venture Capital and Cleantech: The Wrong Model for Clean Energy Innovation by Ben Gaddy and Varun Sivaram.

But things have changed since “Cleantech 1.0,” the first wave of investment in the sector that resulted in a lot of bankruptcies -- but also some big hits like Tesla, Sunrun, and Nest.

Capital is flowing back into the sector at stunning rates, as venture investors all turn their attention to climatetech. So do the arguments against deeptech climate venture capital hold up today?

Catalyst is a co-production of Post Script Media and Canary Media.

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Introducing: Catalyst w/ Shayle Kann

Shayle Kann has been thinking about the technology and market fixes for climate change for almost two decades. On Catalyst, he brings on the smartest people in climate tech to think through those hard problems.

This show is about how we overcome the climate challenge. Not just at a theoretical level, but using actual technologies, tackling actual market structures, and accounting for the biggest variable of them all -- money. Subscribe everywhere.

The show is a co-production of Canary Media and Post Script Media.

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And Shayle asks: What does a winner look like? Will a single technology dominate?

Catalyst is a co-production of Post Script Media and Canary Media.

Catalyst is supported by Atmos Financial. Atmos offers FDIC-insured checking and savings accounts that only invest in climate-positive assets like renewables, green construction and regenerative agriculture. Modern banking for climate-conscious people. Get an account in minutes at joinatmos.com.