September 26, 2022
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The State of Climate Tech Venture Funding

Last week was Climate Week in New York City, and conversations on climate-smart food systems, natural climate solutions, corporate climate action, and innovative policy tools take on new urgency as the world faces deepening scientific and political challenges. Answering these calls to action, Kauffman Fellows who invest in the space are taking bold steps forward.

As Sierra Peterson (KF Class 26) shares in a report written by her firm, Voyager Ventures, the next industrial revolution is here, and it heralds a wave of innovation in energy, materials, hardware, analytics, computing, and biotech. As the world replaces outdated fossil-fueled infrastructure with a new generation of sustainable and simply better technologies, this revolution (should we embrace it) offers the opportunity not just to stabilize the Earth’s climate at livable conditions, but also to raise the standard of living for people around the world. However, this will not happen by itself. It will require the deployment of sustainable technologies at scale, innovation, and invention — plus trillions of dollars of investment — representing a massive opportunity for both climate impact and outsized financial returns.

And in a new white paper, Sherman Williams (KF Class 26) examines how technologies with strong commercial and government use cases are optimized for monetary returns as well as environmental impact. Countries are seeking to leverage clean energy to power themselves in sustainable, cost-effective, and (perhaps most important) independent ways. As energy independence becomes a significant national security issue, venture capital-backed companies, supported by government regulation, incentives, and subsidies, will play a vital role in the development of a more sustainable future.

From improving what works today — wind, solar, and batteries — to applying existing technology to additional industries to inventing new processes and business models, innovative and scalable climate solutions are primed to reshape the global economy, raise the standard of living, and stabilize the climate.

Sherman Williams (Class 26), Sierra Peterson (Class 26), and Gale Wilkinson (Class 23) in NYC ahead of Climate Week

SIG Spotlight: Climate & Sustainability

Kauffman Fellows have been early adopters of planet-positive investing, with around 50 members in our dedicated Climate & Sustainability Special Interest Group (SIG) who have collectively deployed over $300M annually into green startups.

Led by Bennett Cohen (Class 20) and Ali Morrow (Class 25), the Climate & Sustainability SIG meets monthly to develop investment theses, learn from investor and entrepreneur guest speakers, and share deal flow. With each new Kauffman Fellows cohort, the group has grown, reflecting increasing interest and momentum.

The Climate SIG’s vision is to increase the overall level and impact of sustainable investing among Kauffman Fellows by infusing the network with global expertise and opportunities, thereby speeding up entrepreneurial solutions to the climate crisis. Just last week during our NYC Module, the Climate SIG hosted several panels that gave us food for thought.

Kim Zou and Sophie Purdom, Co-Founders of Climate Tech VC

The State of Climate Tech Venture Funding
As the free-flowing venture market retreats, climate tech investment activity — particularly earlier stage — is still on track to increase YoY, even if funding dollars may decrease from the $40B funding peak in 2021. In a panel moderated by Bennett Cohen (Class 20), Kim Zou and Sophie Purdom (co-founders of Climate Tech VC,the leading newsletter on climate and innovation) shared their expertise on the current state, and predictions for the future, of climate tech.

Nat Bullard, BloombergNEF and Voyager Ventures

Decarbonization: Structures, Cycles, Ages
Reaching net zero global emissions is the biggest imaginable challenge for business, technology, and society. It’s also an immense opportunity to create, at every level from company to country. Nat Bullard(BloombergNEF, Voyager Ventures) described the scope and scale of decarbonization and its opportunities from a business perspective: where structural drivers meet cyclical pressures and businesses move into new ages of value creation.

Sean O’Sullivan (SOSV), Andrew Carter (Smallhold), Niya Gupta (Fork & Good), Gabriel Ruimy (Bloom8), Andras Forgacs (Modern Meadow), Ali Morrow (KF Class 25)

Future of Food & Materials: The Opportunity on our Plates
Food is both a cause and a victim of climate change. From the vantage point of pioneering entrepreneurs and investors, Sean O’Sullivan (SOSV), Andrew Carter (Smallhold), Niya Gupta (Fork & Good), Gabriel Ruimy (Bloom8), and Andras Forgacs (Modern Meadow) joined the panel moderated by Ali Morrow (KF Class 25) and discussed the evolution of the food and ag tech market.

Fellows Spotlight: Climate and Sustainability

  • While venture capital funding in cleantech has hit record levels, it’s still dwarfed by investments in fintech and IT. In an interview with the Toronto Star, Shirley Speakman(Class 26) and Alicia Lenis (Class 27) explore the challenges that keep VCs from investing, how much capital is needed to fund the transition to net zero, the technologies that are poised to take off over the next five years, and the opportunities they still see in the market.
  • With the launch of an £84M climate tech fund and the opening of a new London office, Contrarian Ventures is on a mission to close the funding gap for startups fighting climate change. When discussing the new fund, Founder and Managing Partner Rokas Peciulaitis (KF Class 25) offered a bold prediction, “Climate tech is going to be one of the most lucrative and important investment opportunities for the next 30 years.”
  • What gets measured gets managed. Unravel Carbon, a startup founded by Grace Sai (Class 21) and Marc Allen, makes it quick and painless for companies of all sizes to track and manage their carbon footprint. In only seconds, Unravel Carbon’s AI-powered platform converts a company’s accounting data into supply chain carbon data and automatically offers custom climate solutions to help companies reach net zero. In a recent interview on The Climate Conversations, Grace shares how they’re helping Asia’s businesses and supply chains reduce their carbon footprint.
  • Climate Draft is now open to everyone! This member-supported coalition of climate tech startups and VCs is on a mission to collectively bring more top talent, investment, and commercial opportunities into the space. Through educational content, community events, invite-only talent drafts, and more, Climate Draft connects individuals with climate startups that are searching for potential advisors, angel investors, customers, partners, and/or team members.

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