Cleantech Funds Scaling Up To Take On Climate Change In 2021

When one faces a seemingly insurmountable problem, a common piece of advice is to break up the job into smaller pieces. Some progress, the thinking goes, is better than doing nothing.

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That, in general, is how startups and their backers have approached the species-threatening specter of climate change. Whether the focus is clean manufacturing, energy efficiency, renewables, sustainable packaging, or a host of other focus areas, the broad bet is that we can take incremental steps to curtail our carbon-spewing ways.

It won’t come cheap. To help with that mission, venture funds focused on clean technology and sustainability have been scaling up this year.

One of the highest profile is Lowercarbon Capital, launched by the husband-and-wife team of Crystal Sacca and Chris Sacca–known for early bets on Uber, Twitter and Stripe. The fund launched with $800 million and a self-described mission to back “kickass companies that make real money slashing CO2 emissions, sucking carbon out of the sky, and buying us time to unf**k the planet.”

Below, we put together a broader list of climate, cleantech and sustainability-focused venture funds that have closed in 2021:

Overall, venture investment around sustainability is far lower than private equity, a much bigger asset class in which stakeholders are upping their allocations to funds that follow stepped-up environmental, social and governance (ESG) standards. Private equity investment in renewables has been especially strong, eclipsing fossil fuel asset funding.

Venture is scaling up in this area as well. Case in point: This spring, Houston-based Energy Transition Ventures officially launched its first fund—the first in Texas dedicated to investing in energy transition technologies.

Climate crisis accelerates

The fundraising comes amid a bleak year for climate change projections. Earlier this month, the United Nations Intergovernmental Panel on Climate Change released its Sixth Assessment Report, with the grimmest findings to date.

According to the report, it is only possible to avoid warming of 1.5°C or 2°C if massive and immediate cuts in greenhouse gas emissions are made. Extreme weather is expected to increase in line with the temperature, and compound effects, such as heat and drought together, may impact society more forcefully.

The publication of the report came amid an already alarming summer with record-setting heat waves in Western North America, flooding in Europe, extreme rainfall in India and China, as well as enormous wildfires in several regions, including the Western United States and Siberia.

A role for startups

Startups, of course, are no match for the wrath of Mother Nature. However, upstarts do have a role to play in developing and scaling the technologies and business models that could help wean us off our fossil fuel-guzzling habits.

Most, for now, are focused on other things. It’s often observed that startups and their investors are habitually less focused on solving big planetary problems and more on straightforward ways to scale businesses. Thus, we see the popularity of buy now, pay later platforms, e-commerce aggregators and grocery delivery services among the unicorn crowd, and the relatively scant presence of climate-focused upstarts.

One is reminded of the quote from Peter Thiel: “We asked for flying cars. Instead we got 140 characters.”

In the climate change context, it would be nice to see startups play a more leading role. If not that, however, it would at least be gratifying to see some of the proceeds from that famously profitable bet on 140 characters or less going toward solving some of the planet’s most pressing problems.

Illustration: Dom Guzman