Why VC Won’t Save Us from Climate Collapse
Ariel Beery
Board Chair @ CoVelocity. Advisor & board member for purpose-driven ventures. Engaged in innovation systems, policy development, & implementation.
TL;DR: Our current innovation ecosystem is dependent on venture capital and private equity, and therefore is optimized to create companies that meet their metric of market-beating returns that often profit from negative externalities. Those solutions we need to save humanity cannot be held hostage to those requirements, since our metric is focused on social resilience to climate collapse. If we truly want to avert the catastrophe of climate collapse we need to build a new innovation ecosystem that offers incentives to drive the outcomes we want to see.
Following the IPCC report on the climate collapse ahead of us, there have been a number of well-intentioned, well-covered initiatives declared by venture capitalists and philanthropists who believe they can innovate humanity out of the mess we’ve caused by using the tools that have brought about the digital economic boom.
Unfortunately these investors and philanthropists are either unaware or are unwilling to admit that venture capital (VC), private equity (PE), and philanthropy have largely failed in the development of alternative energy technologies to date. As the MIT Energy Initiative has proven conclusively, venture capital and private equity simply have not worked for the development of long lead-time technologies whose path to commercialization is not very clear.
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Sure, there are a number of factors which may make cleantech investing more successful this decade than it was a decade ago (when VC funds in cleantech lost more than half of all of the money invested). The primary reason this time may be different is the increasing availability of public funds. Investors may indeed find a way to make money by investing in companies who can access those funds, as Elon Musk did with Tesla. That will be all well and good for those investors, but not for humanity.
If our goal is to help humanity avoid total catastrophe, and perhaps save a bit of our ecosystem for future generations, we need to recognize that private capital is poorly suited to the development of any long-lead time technology aimed at accounting for negative externalities.
CEO at untied and Earnr. Agitator for improving the taxpayer and agent experience. Barclays Techstars/Accenture FIL. Please give a reason for reaching out!
3 年Great article. Could we be thinking of nationalisation (in the broadest terms - including as an arms length organisation) of a successful startup as something that is a viable exit?