Why Embrace Climate Tech: Your Path to a Greener Future?

ClimateAngels | Jan 29, 2023

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While we need favourable policies, grants, and bonds the real need of the hour to combat the impending doom is the deployment of risk capital into Climate Tech.

Angel investors and Syndicates are key pieces of the risk capital deployment puzzle. There are numerous reasons why investors should consider deploying capital into this sector.

Let’s see why?

Why Invest In Climate Tech Startups?

Climate Tech companies and budding startups offer a high potential for alpha-level returns and are the fastest to achieve unicorn status amongst all venture capital (VC) investments groups, with 40% of startups achieving that status in less than 4 years.

Industry analysis also suggests that 31% of Climate Tech Startups raised Series A after the Seed round, compared to 19% for all startups.

Climate Tech startups are the next big disruptors in the market. They are a function of consumer willingness for new products and a constant push from governments across the globe to move towards alternatives.

Both of these factors are playing an important part in increasing the addressable market size for Climate Solutions. In fact, 67% of India’s consumers are willing to purchase plastic-free and eco-friendly products. Only a third of them are actually able to make the shift, owing to a lack of options, a huge gap that climate tech companies are actively covering up.

Furthermore, regulatory tailwinds are also pushing in hard. India has committed now and again to take an imperative stance in the fight against climate change at the COP 27 Summit India put forth a few comprehensive targets.

The government of India has also introduced several subsidies to sweeten the pot for early adopters of Climate technologies. The recent single-use plastic ban has also played an important role in reducing the consumption of plastics and led to the development of alternatives.

As India is a price-sensitive market and lower prices lead to greater adoption and greater returns for investors. Some Climate Tech forerunners like solar energy are already producing electricity at a much cheaper rate than coal or natural gas-based power plants. Several other climate tech sectors like Electric Vehicles are expected to achieve a similar degree of competitiveness in the next 5 years.

The Next 5 Years of Climate Tech

Climate Tech is an innovation-first deep tech sector with technologies that have a market-expanding potential as the climate crisis exacerbates. The technologies in the sector would cater to an ever-increasing total addressable market.

India’s massive and talented pool of engineers has been a major catalyst on the innovation front as well. The sector is also emerging as a successful talent magnet attracting some of the most qualified and capable set of individuals across the world.

In India, the shift towards emerging technologies has been apparent as most second-time entrepreneurs and product managers across the board have shown an active interest in the ecosystem.

Should You Start Investing Now?

There has been a notable interest in and presence of growth-stage funding opportunities. This is a key for Angel Investors as growth-stage investors are able to provide top climate tech startups with adequate capital that they need to scale.

According to Climate Tech VC, $94B of new private climate AUM has accumulated since early 2021 which is a testament to the availability of capital.