Why Climate Tech Innovation Is Important?

ClimateAngels | Feb 02, 2023

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The first cleantech bubble emerged in the middle of the 2000s in Silicon Valley start-ups that focused on renewable energy sources like solar, wind, and hydro.

Many of these businesses failed due to factors like cheaper imports from Chinese producers and the limited uptake of cleantech products as a result of low oil and natural gas prices.

However, over two decades later, the industry is making a comeback under the new name “climate tech.” This wave of startups is attempting to reduce carbon emissions from various sources including energy distribution, the built environment, mobility, heavy industry, food production, and land usage.

It shows that climate tech is much more than just clean technology and emphasizes decarbonization across multiple sectors of the economy.

How Is The Venture Capital Funding For Climate Tech Companies?

According to Price Waterhouse Cooper’s (PwC) State of Climate Tech report, approximately $87 billion was allotted for venture capital funding for climate tech businesses from H2 2020 to H1 2021.

This clearly indicates that there is a growing interest in investing in climate tech. However, it’s important to note that investing in climate tech is different from traditional tech investing. While enterprise software as a service (SaaS) platforms and marketplace models are relevant across various climate tech sectors, the bulk of carbon reduction occurs with physical products, manufacturing processes, and deep science innovation.

Hence, a significant amount of attention needs to be placed on research and development (R&D) as it is one of the core tenets of building successful climate tech investment portfolios.

Investors are not the only players in ensuring the success of this second wave of climate tech startups. For R&D innovation to flourish, there needs to be a strong base of academic universities where students can access lab space, equipment, and other resources to conduct product and prototype testing.

India also needs to build her dedicated R&D and deep science incubators for the climate tech sector and create the relevant linkages with industry and policy stakeholders.

In the United States, there are climate tech incubators like Elemental and Joules that take lab innovations to market. Institutions like Stanford’s newly launched Doerr School of Sustainability and Columbia’s Climate School are creating research labs where large global companies are closely monitoring new innovations that will eventually be adopted in their value chains.

Industry networks such as Greentown Labs and MIT’s Climate CoLab facilitate partnerships between startups and multinational corporations that have made science-based climate commitments.

How Is The Future of Climate Tech?

The future of climate tech looks bright as it is being predicted that the next 1,000 unicorns will be in this sector.

Technologies like green hydrogen electrolysers, battery recyclers, green building materials, novel agricultural and circular food systems, energy storage, and more are examples of what the future of climate tech might look like.

It is the right time to drive key stakeholders towards taking the necessary steps to ensure the success of R&D startups operating in the climate tech sector. By doing so, we can help these startups reach a more established commercial path of scale and success.

Should You Invest In Green/Climate Tech?

The case for innovation and R&D in climate tech is strong. It is important for both investors and other key stakeholders to understand that investing in climate tech is different from traditional tech investing and that a significant amount of attention needs to be placed on R&D.

By building a strong base of academic universities, dedicated R&D and deep science incubators, and industry networks, we can ensure the success of the second wave of climate tech startups and pave the way for a greener, sustainable future. Get in touch with Climate Angels experts for more details.

We have a dedicated team of green tech investment analysts. They will help you every step of your dream to earn big rewards while making the world greener, and sustainable for generations to come.