Current VC levels are dwarfed by the amount of funding needed to give humanity a fighting chance, even though global tech and finance leaders have suggested that the world's first trillionaire will be someone tackling climate change.
Climate-tech companies raised over $32 billion in 2021, according to Dealroom and London & Co. Depending on who you talk to, the climate finance gap is between $2.5 trillion and 4.8 trillion.
The total global VC funding was at an estimated $643 billion, and most countries in the world have a GDP under $4 trillion. Some experts worry about the potential of a bubble, and doubters argue that traditional VC investment strategies are too risky to make a meaningful contribution to addressing climate change.
Where do VCs factor into global efforts to address climate change? Infrastructure and emergency funding will not yield venture-like returns, as a vast portion of the investments will be allocated toward infrastructure. As conditions in certain countries get worse, foreign aid agencies will be crucial players in new policies and national programs.
We won't be looking to VCs to write billion-dollar checks, create new policy incentives, or provide shelter and food to populations in need. VC funds and their investment strategies and networks have unique features that give them an important position in these global efforts.
We believe that VCs can play a role in addressing climate change.
The image was created by Jamil Wyne and Abrar Chaudhury.
Supporting and de-risking proven climate technologies.
De-risking climate technologies can be helped by venture capital, which can help bring costs down, accelerate adoption rates and transform markets to enable a decarbonized future. Helping entrepreneurs to mitigate technology risks and scale their innovations quickly and cost-effectively is the hope of addressing the climate crisis.
All Rights Reserved © 2024
