Climate technology .. unstoppable progress

Climate technology .. unstoppable progress

“We’re going to have a hibernation period of several years,” Bill Gates warned a group of green development entrepreneurs over the past few days.

At a forum hosted by TechCrunch, a technology and start-up news site, Gates lamented that the success of these entrepreneurs was coming at a bad time. Silicon Valley is preparing for a sharp economic downturn, and could catch clean energy and green technology workers obsessed with repeating the deterioration of the past. Fifteen years ago, venture capitalists began setting up private funds to invest in this sector, but they only disappeared when market conditions deteriorated.

And in recent years, there has been another boom in climate technology with billions of dollars being poured into companies dedicated to renewable energy and reducing emissions.

Now, with markets turning, industry veterans are arguing that there is enough money and a broader and deeper set of financial backers to avoid a recurrence. Bill Lees, managing partner at Primar Energy Ventures, which focuses on technology and communications in the energy sector, believes there is a very strong interest in returning to the first test of clean technology. During this first experiment, solar, wind, and electric cars were too expensive to prove, and Tesla needed a government loan.

This time, renewable energy is cheaper than fossil fuels. A decade ago, Peter Gaidusch, who is in charge of climate affairs at venture capital firm Fifth Wall, worked for Richard Branson’s Virgin Green Fund, an investment vehicle that at the time had $ 220 million and was one of the world’s largest. that time. Gaydosh now works for a company that targets double that amount for a single fund.

The fund invests in companies that develop smart networks, industrial engines and cement production. And Bloomberg New Energy Finance, a clean energy research service, reported that climate technology start-ups raised $ 53.7 billion in 2021, including a large sum of money for electric bikes and artificial chicken manufacturers.

Unlike the previous boom, this influx includes asset managers and large corporations that support climate crisis solutions to achieve environmental, social, and governance goals. This led to huge financial promises yet to be invested, and it was absent in the first clean technology rush. “It’s fundamentally different,” said Jim Capsis, a veteran expert at cleaning technology leader UPower, who also runs consulting firm Ad Hook Group.

There is also a general feeling that the sector may excel while others falter in the application software industry, cryptocurrency technology or business applications. The gas price shock and the war in Ukraine gave a boost to renewable energy. This does not mean that climate technology is immune to damage. In May, stock market investors began withdrawing money from ESG equity funds.

Venture capital financing in the sector slowed down in early 2022, according to a recent report by investment advisory firm Patchbook. Investors are urging climate starters to be more conservative with their money. They talk about “tailoring” and “orienting to quality.”

Voyager Ventures, one of the recent climate-focused funds that raised $ 100 million in April, has supported start-ups working on energy efficiency programs and carbon-neutral nickel production, the price of which varies widely. Volatility in energy markets has only confirmed the value of its portfolio, especially in Europe, says Sarah Sklarsek, co-founder of Voyager Ventures.

“The big trends are just pointing here,” her partner, Sierra Peterson, added. Partners emphasize that they have not changed their strategy despite the recent downturn. The talk did not mention the change of course or the correct size in the forum that TechCrunch has held over the past few days.

Investor Gaydush leads a session entitled “Why the Next Big Entrepreneur of Climate Technology Should Come.” Outside of the session, he said many of his tech-savvy partners’ limited supporters continue to allocate money to climate funds because of corporate and government promises to reduce emissions. And some limited partners relax, but not to the extent they did during the previous cleaning technology crash. He also believes that the sector is now functioning outside the normal market cycles.

“The climate does not care about inflation,” Gaidus said. The oceans are getting hot and the forests are burning. It is still a problem, someone has to solve it, and it creates opportunities. ”

* An American journalist covering technology.

Published by special arrangement with the Washington Post and Bloomberg News Service.

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