Pattern recognition in ClimateTech investing

Last week I posted about a platform technology hiding across 12 climate verticals. I got six different answers from six domain experts. Every one of them was right about their own field. That's the finding: Not one unnamed thesis, but a whole class of platform technologies that climate investors have no categories for. The founders (usually) know they're building cross-vertical IP, but the investors (usually) evaluate them on one vertical, because that's what fits on a TAM slide. A heat exchanger doesn't know if it's inside a data center or a brewery. The underlying physics is the same whether you're moving heat at 60°C or 800°C. The engineering changes, but the principles and the talent don't. A company that masters thermal energy conversion in one temperature range can expand to others faster than a newcomer starting from scratch. Echogen from Ohio started in waste heat recovery using supercritical CO2 cycles. Using the same core physics, they now also sell long-duration energy storage and industrial heat pumps. One engine, three markets = the addressable opportunity tripled. Same pattern with RIFT from the Netherlands: iron powder combustion for industrial heat, just raised €114M, same cycle serves food processing, chemicals, and building materials. And beyond thermal: a CTO in my last thread described his membrane technology spilling from hydrogen into lithium recovery and water treatment. Three verticals no single investor thesis would connect. And I've seen more cases firsthand in my VC advisory experience. The platform was already in the technology. It just wasn't in the pitch deck. If you're a founder: your actual addressable market might be an order of magnitude larger than the one on your TAM slide. If you're an investor: ask yourself whether the startup you're evaluating wins one market or compounds across industries. That's the quiet formula behind the largest technology companies ever built. Climate-tech should and absolutely can produce its own giants.

Blackrock just took a big write-down on its Global Renewable Power Fund III. Because of two ill-fated investments in Northvolt and SolarZero. Surprisingly, a $4.8 billion fund saw its internal rate of return plummet due to just two portfolio companies faltering. This fund was BlackRock's third flagship GRP fund, part of its bet on the energy transition and a push towards renewable energy and infrastructure. Many of the funds’s assets are early-stage climate infrastructure investments in: EV charging, renewable generation, and power storage and transmission. Are they simply making bad investments or is this a prequel to what to expect? What this tells me about climate tech investing: 1. The significant impact of two companies on a $4.8 billion fund suggests that traditional risk models needs reevaluation. The conventional playbook for diversification doesn't quite work in climate tech. When companies in your portfolio are all betting on similar technological advances or regulatory shifts, they tend to sink or swim together. Traditional risk models might be missing these hidden correlations. 2. The Northvolt situation is a wake-up call - throwing money at climate tech isn't enough. These companies need investors who roll up their sleeves and get involved. We're seeing a shift from passive to active investing, where deep operational expertise is just as crucial as the capital itself. 3. SolarZero, a major player in New Zealand Energy Sector, was far from an early-stage startup when BlackRock acquired it in 2022. Despite its 50-year history , something went wrong. It hints at a broader challenge: global funds rushing into new markets might be overlooking local market dynamics and regional complexities in their eagerness to deploy capital in the renewable space. As this sector matures, we need a new framework for resilient investment strategies that can better weather the failures of individual companies while capitalizing on the overall growth trend in clean energy. #climatetech #VC #investment #newbook #fundclimatetech #blackrock Link for the news in the comments.

Spent last week in #Singapore and #HongKong with HSBC Innovation Banking's Global Climate Tech team. One pattern held across every room: "climate" stalled most conversations. "Energy security" restarted them. Post Iran conflict, with the Philippines weeks from running out of oil, ESG language closes wallets fast. Reframe the same technology around security, cost, and reliability, and the tone shifts. A few things that stuck with me: 1️⃣ China is not slow, it has shifted. RMB now accounts for 90 percent of domestic VC and funding is growing. Energy storage deployment is up 300 percent year on year. Robotics doubled. The "copy to China" era is over; semiconductors, new materials, AI, robotics, and storage are where capital flows. The Deepseek moment pulled global investors back after a three year absence. It showed China has not just tech, but also talent. 2️⃣ Southeast Asia's 650 million population story is a trap. Real spending power sits in about 20 cities, combined GDP is Korea sized, and Series A to C is down 50 percent since 2022. Moonshots struggle outside Singapore. What works: incremental tech with 70 to 80% margins and short payback. 3️⃣ Singapore and Hong Kong are not interchangeable. Singapore is the regional HQ and grant machine. Hong Kong is the China gateway and Asia's top sustainable debt market, seven years running. Sophisticated founders and LPs run dual structures. 4️⃣ Singapore is putting real money behind net zero by 2050. The standout for founders is the new SPEED programme, sitting inside an SGD 800M Decarbonisation Grand Challenge and built to back first and second of a kind commercial deployments. The NCCS framing was sharp: Singapore wants to be a living laboratory for scaling #climatetech, not just a grant window. One of the boldest programs I've seen anywhere. Thanks Joel Tee for the great session. 5️⃣ Asia's 5,000 family offices are real capital, but only 10% operate institutionally. Most want to invest alongside funds with cap table access. The next generation is the actual lever for climate allocations. Low double digit returns with impact is the sweet spot. 6️⃣ The missing middle is everywhere. China bifurcates between pre seed and IPO. SEA has a Series A to C gap. That's where European deep tech can differentiate, if we show up with a day one global structure. Takeaway: European climate tech has a technology and credibility story Asia actively wants. It has to land in the local language of the market, which is security, cost, and scale. Singapore is also putting grant capital and pilot sites behind that framing. Huge thanks to Austin Badger, Matthew Hessey, Christopher Ames, Jonathan Yip, Thomas Miles, Kerri L., Natalie Blyth, Esohe Denise Odaro, Chaoni Huang, Alice Suen, Denisa Mulvihill and the wider HSBC team for a genuinely substantive week. Happy to go deeper on any of these topics. I'm in San Francisco this week for Climate Week, ping me if you're around. #venturecapital #innovation #APAC

Excited to share new research published in Nature Communications on 𝗵𝗼𝘄 𝗔𝗜 𝗰𝗮𝗻 𝘁𝘂𝗿𝗻 𝗱𝗲𝗻𝘀𝗲 𝗮𝗰𝗰𝗼𝘂𝗻𝘁𝗶𝗻𝗴 𝗿𝗲𝗽𝗼𝗿𝘁𝘀 𝗶𝗻𝘁𝗼 𝗳𝗼𝗿𝘄𝗮𝗿𝗱-𝗹𝗼𝗼𝗸𝗶𝗻𝗴 𝗶𝗻𝘀𝗶𝗴𝗵𝘁 𝗮𝗯𝗼𝘂𝘁 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗼𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀 — 𝘂𝘀𝗶𝗻𝗴 𝗰𝗹𝗶𝗺𝗮𝘁𝗲 𝘁𝗲𝗰𝗵 𝗮𝗻𝗱 𝗶𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝗼𝗻 (batteries, geothermal, etc.) 𝗮𝘀 𝗮 𝘁𝗲𝘀𝘁 𝗰𝗮𝘀𝗲. In this project, my co-authors Shirley Simiao Lu, Simon Xu, Mark Antonio Awada and I fine-tune a GPT model on millions of sentences of U.S. 10-K business descriptions. The AI-powered approach reveals patterns difficult to discover using traditional analysis, from which technologies are actually driving growth to how seemingly unrelated industries are quietly converging around shared clean-tech innovations. Using climate solutions as the application, we show that AI can: 🔍 𝗗𝗲𝘁𝗲𝗰𝘁 when a firm’s core business is actually providing a “solution,” not just making a generic climate commitment. 📊 𝗤𝘂𝗮𝗻𝘁𝗶𝗳𝘆 opportunity at scale across thousands of firms and dozens of industries, directly from their mandated accounting filings. 📈 𝗟𝗶𝗻𝗸 these AI-based opportunity measures to revenue growth, especially where innovation is supported by patents. 🔄 𝗥𝗲𝘃𝗲𝗮𝗹 how firms from different industries start to converge around similar technologies, and how their stock returns move together when they pivot toward the same themes. If AI can read 10-Ks this way for climate tech, it can do the same for any emerging technology or strategic theme — from AI itself, to health tech, to industrial automation. It’s a new way of using accounting reports as a map of where the real economy is heading. #AI #technology #climatetech #innovation Harvard Business School

What can we learn from the failures of asset-heavy startups when building Climate Tech and Deep Tech at scale? 🌱 The recent wave of collapses in agriculture and food startups provides sobering insights. Critically, it wasn’t the technology that failed — lab results and production worked fine in more than 100 companies that recently shut down. So what went wrong? Looking at the patterns highlighted in the "Autopsy of the Agrifood–Climate Tech Collapse" by Eugen Kaprov (link in comments), several concrete lessons emerge for climate tech and deep tech founders: 1️⃣ Don’t giga-scale before costs are under control. Focus relentlessly on the cost-down curve. 💰 In asset-heavy startups, unit economics are king. Founders must prove contribution margins early and drive costs down aggressively before expanding. Scale alone cannot fix economics – it only amplifies losses if costs remain too high. Every incremental unit should move the business closer to self-sufficiency rather than deeper dependence on external capital. Key takeaway: Don’t aim for a Giga-Factory; build a staircase – and cut costs on each step. 2️⃣ Expand modularly and tie growth to guaranteed demand. 🏗️ A common failure was building large facilities or multiple sites before demand was verified. Modular, incremental production units allow startups to expand only when off-take agreements or contracted revenue justify it. This approach limits upfront capital exposure, reduces operational complexity, and makes each expansion financially sustainable. Key takeaway: Only build what your contracts justify – let demand pull scale, not narrative. 3️⃣ Move beyond VC as early as possible 💳🤝 Long-cycle, capital-intensive hardware startups benefit from strategic equity from corporates or industrial customers. These investors provide patient capital, market access, and alignment with long-term operational goals – anchoring the business to real demand. On top of that, founders can layer debt instruments, asset leasing, asset-based loans, and sometimes working capital for modular deployment without diluting equity. Public guarantees can further de-risk debt, unlocking lower-cost capital that would otherwise be unavailable. Key takeaway: Bring in customers as strategic investors once you have a product. Use debt instruments and guarantees to further reduce VC exposure. Scale should never be the strategy in itself. It is the outcome of aligning unit economics, production strategy, and capital structure. #ScaleupFinance #ClimateTech #DeepTech #Gigafactory Lea Saurin Sascha Steffen Helmut Schoenenberger Florian Egli Julia Reinaud Ann Mettler Jon Fuller Dorothea Ringe Max Vellguth Dr. Heba Aguib Kelsey Emms Paula Schmid Schmidsfelden Jules Besnainou Victor van Hoorn Magnus Agerström Sarah Mackintosh Magdalena Jabłońska Kädi Ristkok Stefan B. Wintels Jörg Goschin Dr. Dominik Steinkuehler Miki Yokoyama Yair Reem Tim Woodcock Wim Reyntiens

Everyone's talking about Rainmatter by Zerodha's ₹1,000 cr fund. But they're missing the real story.👇 The narrative isn't about capital deployment but patient capital meeting impatient problems. When most VCs optimize for quick returns, Rainmatter chose climate tech - a sector where success is measured in decades, not quarters. Three patterns worth noting: 1. Their portfolio is deliberately incomplete: 40 startups, ₹250 cr deployed. That's strategic restraint in a market obsessed with deployment. 2. Climate tech needs patient capital, but founders chase impatient money. The gap isn't in innovation - it's in time horizons. 3. While others build portfolios, they're building knowledge networks. Cross-pollination between startups isn't a perk, it's the product. The most expensive mistakes in venture capital aren't bad bets - they're bets made at the wrong time. Building solutions for India isn't about how fast you can deploy capital. It's about how long you can wait for impact. Fascinating to see a fund optimize for learning velocity over deployment velocity. When everyone's racing to invest, patience becomes your edge. #VentureCapital #CleanTech #StartupIndia #Zerodha

500+ deals analyzed. Five sectors getting funded. Climate tech isn't PR theater anymore, it's an infrastructure play. I just reviewed Q3 2025's angel and VC climate deals. Smart money is flowing into must-have systems, not nice-to-have stories: 𝗖𝗮𝗿𝗯𝗼𝗻 𝗿𝗲𝗺𝗼𝘃𝗮𝗹: Direct air capture, mineralization, industrial scrubbers. Real hardware solving real emissions. 𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗹𝗲 𝗺𝗮𝘁𝗲𝗿𝗶𝗮𝗹𝘀: Bio-based plastics, low-carbon concrete, lab-grown everything. The stuff we actually build with. 𝗔𝗱𝗮𝗽𝘁𝗮𝘁𝗶𝗼𝗻 𝗶𝗻𝗳𝗿𝗮: Seawalls, flood defenses, wildfire systems, resilient ag. Because the climate already changed. 𝗦𝘁𝗼𝗿𝗮𝗴𝗲 + 𝗴𝗿𝗶𝗱: Batteries, thermal storage, AI grid optimization. Making renewable power actually work. 𝗖𝗶𝗿𝗰𝘂𝗹𝗮𝗿 𝗺𝗼𝗱𝗲𝗹𝘀: Waste-to-value, advanced recycling, product-as-a-service. Economics that make sense. The pattern is clear: climate tech is becoming the infrastructure layer, not the virtue signal. VCs aren't funding feel-good stories. They're funding the picks and shovels of the energy transition. If you're a founder, which sector surprises you most, and which one are you quietly building in? Come for the posts, stay for the comments.

Solar panels, batteries, heat pumps. All hardware. All facing the same Series A wall. Here's what survivors do differently. We just analyzed Series A success patterns for hardware startups. 97% fail. The 3% that survive ignore everything software VCs tell them. The Valley Myth That Kills Hardware: "Move fast and break things." "Get users first, revenue later." "Iterate based on feedback." Hardware doesn't work that way. You can't push a firmware update to fix a supply chain. The Data: Successful hardware Series A raises: $12M median at $45M valuation. Required proof: $1-3M revenue or committed pilots. Timeline: 18 months from seed. Burn rate: $200-400K/month. Most die at month 16. What Climate Tech Winners Actually Do: Month 0-3: File patents. Not "someday." Now. While everyone else is "staying stealth," they're establishing IP moats. Month 3-6: Lock manufacturing partners. Before product-market fit. Before big orders. Before they need them. Month 6-9: Hit 1:4 engineer-to-hardware ratio. One engineer maintaining 4+ deployed units. This metric predicts everything. Month 9-12: Prove 50% gross margins. Not projected. Actual. With real production costs. The Uncomfortable Truth: Your beautiful prototype means nothing if you can't manufacture 1,000 units profitably. Eclipse Ventures gets this. They write $5-25M checks specifically for hardware. They don't expect 80% software margins. Lux Capital gets this. They measure manufacturing readiness, not user engagement. Your local accelerator doesn't get this. Stop listening to them. The Pattern We Found: Failed startups: Perfect products, no production partners. Successful ones: Ugly prototypes, signed manufacturing agreements. The gap between prototype and product isn't engineering excellence. It's supply chain intelligence. Which manufacturing partnership are you avoiding while your runway burns? #CleanTech #HardwareStartup #ClimateTech #SeriesA #Manufacturing

In 2024, global climate tech funding dropped sharply by 40% YoY, driven by a notable 61% decline in electric vehicle deals. However, investments surged in grid tech and nuclear energy, powered by increasing energy demands from AI data centers. These top 5 Insights from the CB Insights Climate Tech Report 2024 was interesting. 1. Major Decline in Global Climate Tech Funding (-40% YoY) Global climate tech funding fell 40% year-over-year (YoY) in 2024. Mega-round funding (deals over $100M) saw an even sharper 47% decline. The market still attracted major investments, especially in grid modernization and clean energy for AI data centers. 2.Electric Vehicle (EV) Tech Faces a Severe Downturn (-61% YoY) Investments in EV technology startups plunged by 61% YoY, marking the steepest decline on record. The sector is struggling due to lower consumer demand and higher manufacturing costs. In 2024, there were 243 disclosed deals, down from 630 deals in 2023. 3.Grid and Nuclear Tech are Growing Fastest 7 out of the top 10 high-potential climate tech markets focus on power grids and nuclear energy. AI data centers are driving massive electricity demand, pushing investments in grid storage, small modular reactors (SMRs), and virtual power plants. The median Mosaic score for grid/nuclear companies was significantly higher than other markets. 4.Climate Tech M&A Exits at a 4-Year Low (-25% YoY) 284 climate tech mergers & acquisitions (M&A) were recorded, the lowest since 2020. Companies are becoming more skeptical about ESG (Environmental, Social, Governance) initiatives, leading to fewer strategic acquisitions. 5.U.S. Leads Climate Tech Investments, but Asia and Europe Are Catching Up Q4 2024 regional funding breakdown: • U.S.: $4.5B (139 deals) • Europe: $1.5B (136 deals) • Asia: $0.9B (122 deals) Europe and Asia are increasingl attracting private equity and venture capital for climate innovation. #ClimateTech #InvestmentTrends #Sustainability

✋ Ask Your Corporate Venturing Insiders What strategies can corporate venturing funds use to identify and support entrepreneurs creating solutions to climate change, and how can CVCs leverage their unique position to help these "Impact Scalers" achieve scale? ___ CVCs can play a crucial role in addressing climate change by identifying and supporting entrepreneurs developing innovative solutions: 1. Focus on "Tough Tech" and Deep Tech (Ann DeWitt, Engine Ventures / Supachai Kid Parchariyanon, SeaX Ventures) The Engine, an early-stage venture capital firm, focuses on "tough tech," defined as foundational companies in areas such as material science, chemistry, and nuclear engineering. Similarly, SeaX Ventures, a deep tech fund, recognizes the importance of investing in exponential technologies to drive innovation. CVCs can prioritize investments in these areas to support the development of climate solutions. 2. Develop a Scientific Approach to Strategic Value (Paolo Bavaj, Henkel Tech Ventures) Henkel Tech Ventures emphasizes a data-driven approach to measuring their impact, focusing on metrics such as Henkel revenue generated through startup collaborations. This approach ensures that CVCs demonstrate their strategic value to their parent companies, making the case for continued investment in climate-focused startups. 3. Establish Clear Processes and Frameworks (Kathryn Scheckel, Hines) Hines, a global real estate firm, highlights the importance of robust processes and organizational design to leverage its platform superpowers and support climate tech startups effectively. This includes clear touchpoints, regional liaisons, and internal communication channels. 4. Embrace Collaboration and Open Innovation (Francis Ho, Samsung Catalyst Fund) Samsung Catalyst Fund prioritizes collaboration with startups, recognizing that the real value lies not just in the capital invested but also in the partnership and access to Samsung's resources. This collaborative approach is essential for helping climate tech startups navigate the complexities of bringing their solutions to market. By embracing these strategies, CVCs can effectively identify and support entrepreneurs developing impactful solutions to climate change. Through patient capital, strategic guidance, and access to extensive resources, CVCs can help these innovators achieve scale and drive meaningful progress in the fight against climate change. ___ 👉 Check out the comments below for quotes from your fellow Corporate Venturing Insiders Ann DeWitt, Supachai Kid Parchariyanon, Paolo Bavaj, Kathryn Scheckel, and Francis Ho, with links to their interviews. 🎙️ Want to learn more? Listen to the Corporate Venturing Insider Series for more tips on optimizing your corporate venturing strategy! https://cv-insider.com Read more about "Impact Scalers": https://lnkd.in/gCxaKdrF ❓ Want to ask a question to our Insiders? Add your question as a comment and we'll add it to the queue for a future post.