VC funding in Climate Tech to outperform traditional technology markets globally

Venture capital (VC) funding in climate technology is on the rise, with investors increasingly recognizing the potential for these technologies to outperform traditional markets globally. Climate technology, which includes a wide range of solutions for reducing greenhouse gas emissions and adapting to the effects of climate change, is becoming increasingly important as the world faces the urgent threat of climate change.

One key driver of this trend is the growing awareness of the economic benefits of investing in climate technology. According to a report by the Global Commission on the Economy and Climate (2022) , transitioning to a low-carbon economy could generate up to $26 trillion in economic benefits by 2030. This is largely due to the fact that many climate solutions, such as renewable energy and energy efficiency, can lead to significant cost savings over time.

Another factor driving VC funding in climate technology is the increasing number of government policies and regulations aimed at reducing greenhouse gas emissions. These policies, such as carbon pricing schemes and renewable energy mandates, create a favourable environment for the growth of climate technology companies.

Additionally, a growing number of corporate and institutional investors are also becoming increasingly interested in climate solutions as a means of mitigating their own carbon footprint and achieving sustainability goals.

"2 weeks ago, at the Cambridge Cleantech Investment Day, I was lucky enough to meet with the founders of some incredibly exciting, innovative, British?

technology developers. It was fantastic to learn about the emerging technologies that have the potential to change our world such as a methane from water recovery system (Bluemethane) and fuel agnostic generators being designed right here in Southwark (IPG)". William Owen said.?

Despite the growing interest in climate technology, there are still challenges to overcome. One major challenge is the lack of standardization in the industry, which makes it difficult for investors to assess the potential of different companies and technologies.

In addition, the high costs associated with the development and deployment of many climate solutions can also be a barrier for early-stage companies looking to raise funding.

VC funding in climate technology is on the rise as investors recognize the potential for these technologies to outperform traditional markets globally. Government policies and regulations aimed at reducing greenhouse gas emissions and growing awareness of the economic benefits of investing in climate technology are driving the trend.

?Sources:

BloombergNEF (2023) "The $7 Trillion a year needed to hit Net-Zero goal" Available at: https://about.bnef.com/blog/the-7-trillion-a-year-needed-to-hit-net-zerogoal/#:~:text=The%20transition%20to%20a%20net,the%20latest%20outlook%20from%20BloombergNEF

Black, R (2022) "Climate economics - costs and benefits. What are the costs of climate change, and the costs and benefits of tackling it?" Available at: https://eciu.net/analysis/briefings/climate-impacts/climate-economics-costs-and-benefits#:~:text=The%20Global%20Commission%20on%20the,with%20business%2Das%2Dusual.