Why climate tech needs resilient capital strategies

Venture Capital is not set up for Climate tech. You don't need to spend a lot of time fundraising as an early-stage startup to know this. The rate of VC funds shot up between 2010-2020, valuations were at an all-time high and we started to think we could throw money at anything and it will give us 20 to 30% return annually (IRR). Well just about anything. As long as it was SaaS. Hard tech is a whole new ball game. Green steel and CO2 capture, for example, require substantial investment at an early stage and need more time to break even and scale. VC may eventually come in and play an important role but the early capital stack for climate tech startups looks different than traditional VC-backed companies. To get to product market fit Climate tech start-ups need a combination of the following in their capital stack: -Non-dilutive project Grants: from governments, philanthropic foundations, private grants and prizes -Angel Investors / Syndicates : High net worth individuals, previous founders etc Catalytic Capital: These are funds prioritizing impact potential over financial returns -Rolling funds: funds raised on a rolling quarterly basis, minimizing the hurdle to fund launch. Typically thematically or community-focused, with similar terms to VC deals  -Accelerators/ Incubators/ Fellowships: Programs offering funding and resources such as strategic partnerships, advisors, and workshops to help founders build and iterate on their ideas and technology.  (Kinda like what we are doing with Energy Tech Nexus) You should talk to VCs, but do so knowing that many may not ready to take the cost burden until you have sufficiently derisked your solution. And if that is the case, you have other options. #founder #climatetech #VC #entrepreneurs

Climate risk is increasingly a capital allocation issue, not just a sustainability issue. • Bloomberg’s analysis in this in-depth piece shows the climate moving in less linear and more abrupt ways: record heat across the U.S. and Europe, accelerating sea level rise, heavier rainfall, faster ice melt, and rising concern about major ocean-current disruption. • For business leaders, this moves resilience into the core of strategy: infrastructure, insurance, supply chains, workforce health, real estate, energy demand, and business continuity. • For investors, the diligence question is changing. The issue is no longer only emissions exposure. It is physical risk, asset durability, location strategy, productivity loss, grid stress, water availability, and the cost of adaptation. • The opportunity set is also expanding: grid modernization, clean power, storage, cooling, water systems, climate intelligence, resilient infrastructure, and adaptation finance. The question for boards and investors is becoming more tangible: which assets and business models are prepared for a hotter, more volatile operating environment, and which are still priced for yesterday’s climate? https://lnkd.in/g8apQ_ug

#ClimateAdaptation is moving from side project to balance-sheet priority. McKinsey estimates climate-resilience technologies could represent $600B–$1T in addressable markets by 2030, across building hardening, grid resilience, water systems, wildfire and flood mitigation, supply-chain protection, and risk transfer. We’re already seeing the demand signal that feeds those markets:  premium hikes and FAIR-plan growth push owners toward risk transfer and upgrades; outage spikes drive backup power and grid/storage spend; and code-plus retrofits (impact-rated roofs, debris-resistant openings, WUI) funnel capital into building hardening—the very categories McKinsey sizes. Climate isn’t one more risk... it’s a risk multiplier. First Street’s 11th National Risk Assessment: Portfolio Pressures documents how “idiosyncratic” events are giving way to same-year, multi-hazard hits across regions, lifting portfolio tail losses. To reflect that reality, we incorporate cross-peril and cross-property correlations when producing portfolio loss curves—showing that ≤1% AEP outcomes can be materially higher than single-peril views, which is exactly where capital planning is most exposed. How exposure becomes financial stress. After a hazard, the credit channel runs through a few tight mechanisms: non-renewals and lender-placed insurance raise escrow and DTI; deductibles and sublimits shift more loss to borrowers; unrepaired damage and appraisal haircuts erode equity and push LTV higher; and refi frictions (overlays, comp scarcity, proof of coverage) slow prepayments. These effects are most acute for LMI households with thin buffers, accelerating roll rates and raising LGD. Because they cluster geographically, localized shocks become correlated loss periods at the portfolio level. Why this points to adaptation and resilience. If climate amplifies losses, targeted resilience is a return-on-avoided-loss strategy: flood management that reduces depth and downtime; wildfire mitigation that lowers damage severity and insurance frictions; water and grid upgrades that cut business interruption; building hardening that preserves collateral value and speeds appraisals. The financial translation is straightforward—lower expected loss and tighter tails, better cash-flow durability, improved cure rates, and more stable LTV/DSCR. Connecting market opportunity to portfolio need. The adaptation categories McKinsey highlights line up with where portfolios experience the largest stress multipliers. The job now is to direct capital to site-specific measures with measurable payoff—prioritizing assets and geographies where resilience most improves cash flows, collateral values, and loss distributions while reducing the chance that local shocks scale into portfolio-level credit stress. The aim is simple: quantify climate-to-credit pathways, target interventions with measurable payoff, and finance resilience at scale, so portfolios get stronger while communities face fewer disruptions.

CFOs are rewriting the risk register. Not because the politics changed. Because the numbers did. Carbon exposure is now quantifiable, material to valuation, and on the radar of a growing number of investors. What strikes me is that the CFOs who get this aren't treating it as a compliance problem anymore. They're turning it into a competitive advantage. Because that's exactly what it is. Climate data is reshaping capital allocation decisions from site selection, expansion to major capex. Investors are repricing portfolios through the lens of physical and transition risk. Companies that can demonstrate credible resilience are strengthening their position with customers, shareholders, and teams alike. This is a resilience conversation now. The ones that wait face higher costs later —  compliance, adaptation, supply chain — with fewer options on the table. That's why Greenly | Certified B Corp's UK launch stopped me in my tracks. They took The Economist's iconic format and rebranded it The Ecologist across the London Underground. One message: environmental intelligence belongs on the same shelf as economic intelligence. We just kept them in separate rooms for too long. Greenly didn't just launch a campaign. They closed a gap that's saved us years. Now, more than ever, we need the City’s rigour applied to climate because we are already seeing that the strongest companies aren't trying to "manage climate risk" anymore. They're using climate intelligence to run the business better. That's where resilience becomes a competitive advantage, not a cost centre. How are you seeing this shift play out? AD Image Credit: Greenly | Certified B Corp

One data point worth pausing on… According to the latest Sightline Climate (CTVC) analysis (https://lnkd.in/ezEChF5h), TDK Ventures was the most active corporate VC in climate tech in 2025 by deal count. In that context, being at the top of the list feels less like an accolade and more like a mirror held up to the market. At this point, the scale of what is happening in energy is no longer debatable. AI-driven power demand, grid modernization, electrification, and industrial transformation are converging fast. The need for clean, firm, and resilient energy is no longer cyclical or thematic. It’s structural. Against that backdrop, being highly active shouldn’t feel exceptional. It raises a different question: if this opportunity is so clear, who is choosing not to lean in, or not to stay the course? Most of the technologies that truly move the needle — grid infrastructure, long-duration storage, advanced materials, power electronics, and AI-enabling systems — do not fit neatly into short funding cycles or hype-driven timelines. They demand endurance paired with conviction. We see this firsthand across our 2025 investments and broader portfolio: - Grid-scale and long-duration storage with Peak Energy, including a $500M+ deployment agreement reshaping the economics of the grid - Advanced grid infrastructure and power electronics through Amperesand’s $80M raise for solid-state transformer technology - AI infrastructure at the physical layer, from photonics with Mixx Technologies Inc’ $33M Series A to inference compute with Groq’s $750M recent funding round (and $20B moment) - Electrification at scale, from industrial systems to mobility, including Ultraviolette Automotive’s electric motorcycles in India - Edge and systems intelligence, with EdgeCortix as our first investment in Japan, bringing AI closer to where energy and data meet - Data center and logistics infrastructure, from Nubis Communications’ acquisition by Ciena to Starship Technologies’ $50M Series C for autonomous delivery What is emerging across the ecosystem is a clear divide: 🔹 Plenty of capital is willing to show up early 🔹 Far less capital is willing to remain engaged when progress is nonlinear, engineering-heavy, and occasionally quiet At TDK Ventures, we invest with urgency because the transition demands action, but we approach the work with endurance, mindful that only patient capital has the chance to compound over time. Conviction without endurance fades. Endurance without conviction stalls. From that perspective, this moment is less about volume than about consistency: the responsibility to remain engaged in sectors that matter, even when they are capital-intensive, technically complex, or temporarily out of favor. The work continues. And so does the commitment.

𝗔 𝗻𝗲𝘄 𝗦&𝗣 𝗿𝗲𝗽𝗼𝗿𝘁 𝘀𝘂𝗴𝗴𝗲𝘀𝘁𝘀 𝗼𝘂𝗿 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗺𝗼𝗱𝗲𝗹𝘀 𝗵𝗮𝘃𝗲 𝗮 𝗺𝘂𝗹𝘁𝗶-𝘁𝗿𝗶𝗹𝗹𝗶𝗼𝗻-𝗱𝗼𝗹𝗹𝗮𝗿 𝗯𝗹𝗶𝗻𝗱 𝘀𝗽𝗼𝘁 𝘄𝗵𝗲𝗻 𝗶𝘁 𝗰𝗼𝗺𝗲𝘀 𝘁𝗼 𝗰𝗹𝗶𝗺𝗮𝘁𝗲 𝗰𝗵𝗮𝗻𝗴𝗲. 𝗧𝗵𝗲 𝗽𝗿𝗼𝗯𝗮𝗯𝗶𝗹𝗶𝘀𝘁𝗶𝗰 𝗺𝗼𝗱𝗲𝗹𝘀 𝘀𝘂𝗴𝗴𝗲𝘀𝘁 𝘁𝗵𝗮𝘁 𝗹𝗼𝘀𝘀𝗲𝘀 𝗰𝗼𝘂𝗹𝗱 𝗿𝗲𝗮𝗰𝗵 𝘂𝗽 𝘁𝗼 𝟯𝟯% 𝗼𝗳 𝗴𝗹𝗼𝗯𝗮𝗹 𝗚𝗗𝗣 𝗯𝘆 𝟮𝟬𝟰𝟬. The S&P Global Report "Sustainability Insights: Why Planning For A 2.3°C Warmer World Is Critical This Decade And Next," paints a sharp quantitative picture. Their model predicts that by 2040, it’s very unlikely (2.5% probability) that the global average temperature rise will stay below 1.5ºC compared to the preindustrial average. It finds a 50% chance that cumulative economic costs from warming could reach between 9% and 33% of global GDP by 2040 in an unprepared 2.3°C scenario. Yet, even these multi-trillion-dollar figures could represent a lower bound if tipping points are reached. The frequency and severity of climate hazards will not increase linearly with temperature, and current models struggle to price in future extreme weather events or the crossing of climate tipping points.  The analysis suggests we are not just miscalculating risk, we are fundamentally misunderstanding its nature. Proactive investment in both mitigation and adaptation offers a clear path forward, giving a "triple dividend,". The benefits are threefold: 🔸 𝗔𝘃𝗼𝗶𝗱𝗲𝗱 𝗹𝗼𝘀𝘀𝗲𝘀 𝗳𝗿𝗼𝗺 𝗮𝗱𝗮𝗽𝘁𝗮𝘁𝗶𝗼𝗻 directly reduce damage from physical climate hazards. 🔸 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗴𝗮𝗶𝗻𝘀 generate positive returns through outcomes like lower insurance costs and increased agricultural output, compared to the high-warming scenario. 🔸  𝗦𝗼𝗰𝗶𝗼-𝗲𝗻𝘃𝗶𝗿𝗼𝗻𝗺𝗲𝗻𝘁𝗮𝗹 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘀 would deliver wider community advantages, such as reduced mortality rates and improved flood defences from natural solutions like mangroves. This highlights the critical need for increased investment in climate mitigation and adaptation, a need that is particularly acute in developing nations. 𝗠𝘆 𝗧𝗮𝗸𝗲 The data shows that investing in resilience is not a sunk cost but a high-return strategy that mitigates avoidable losses, creates economic value, and builds a more stable society. It's time to reevaluate our risk frameworks and redirect capital toward resolving one of the most acute environmental, social, and economic problems of our time. #ClimateRisk #SustainableFinance #ClimateAdaptation #Economics #RiskManagement #ESG #ClimateChange #Resilience Source: https://lnkd.in/eayC25-Z ___________ 𝘛𝘩𝘦𝘴𝘦 𝘷𝘪𝘦𝘸𝘴 𝘢𝘳𝘦 𝘮𝘺 𝘰𝘸𝘯. 𝘍𝘰𝘭𝘭𝘰𝘸 𝘮𝘦 𝘰𝘯 𝘓𝘪𝘯𝘬𝘦𝘥𝘐𝘯: Scott Kelly

Impact startups in MENA are growing fast but funding strategies must evolve just as quickly. One of the questions I’m asked most often by founders is: “Where do we start when it comes to raising funds for climate or sustainability-focused ventures in this region?” Here’s how I usually break it down in 4 key pathways I’ve worked with or closely observed, each requiring a clear narrative, regional awareness, and the right positioning: 1. Government-backed innovation platforms These are not just about incubation, they are increasingly designed to de-risk startups and connect them to capital. 🔹 Example: Hub71 (Abu Dhabi) offers access to corporates, sovereign investors, and a growing base of VC partners through its Incentive Program. It's a launchpad for startups aligned with national priorities. 2. Climate-aligned positioning Framing your solution around climate resilience or adaptation is no longer optional—it’s a strategic funding move. 🔹 Example: ALTÉRRA, the $30B climate investment fund launched by the UAE at COP28, is designed to mobilize capital into areas like clean energy, food security, and nature-based solutions. Startups that clearly align with these priorities stand a stronger chance of attracting institutional and private funding. 3. Corporate sustainability partnerships Corporates in MENA are increasingly partnering with startups to accelerate their ESG goals—often offering pilot funding, technical support, or access to infrastructure. 🔹 Example: PepsiCo Middle East has launched several open innovation challenges in the region, focusing on sustainable packaging, water reuse, and food system transformation. These partnerships are a valuable entry point for startups ready to co-create scalable solutions. 4. Strategic VC alignment Venture capital in MENA is increasingly aligning with long-term sustainability themes—especially in climate tech and resource efficiency. 🔹 Example: VentureSouq, a MENA-based VC, launched its Climate Tech Fund I to invest in technologies tackling the climate crisis—from energy and mobility to the circular economy. They’re actively backing companies that blend strong commercial potential with measurable impact. The takeaway? It’s not just about raising funds, it’s about raising strategically. That’s how you align with where capital is moving in the region. If you found this useful, share it with a founder or ecosystem builder working on climate and impact in MENA. Let’s make these conversations more visible ;-) #ClimateFinance #MENA #ImpactStartups #StrategicFunding #GreenTransition #BusinessWithPurpose

Business Climate Resilience 🌎 Climate-related disruptions are increasing in frequency and severity, creating material risks for business operations, supply chains, and local communities. Addressing these challenges requires a structured and forward-looking approach to climate resilience. The World Economic Forum presents a framework that outlines ten key actions across three pillars: enhancing resilience, capitalizing on opportunities, and shaping collaborative outcomes. These actions are designed to help organizations avoid economic loss, drive sustainability-linked value, and strengthen systemic responses. Enhancing resilience involves asset-level climate hazard mapping, crisis response planning, and contingency strategies for workforce productivity during extreme weather. Addressing single points of failure and diversifying service delivery and supply chain models is essential to minimize operational disruption. Capturing new opportunities requires understanding long-term consumption shifts, adapting local business models, and directing R&D toward sustainable materials, circular models, and resilient infrastructure. Climate-smart portfolio strategies can position climate adaptation as a source of competitive advantage. Systemic resilience depends on coordinated action across the value chain. Collaboration with public, private, and grassroots stakeholders can unlock shared value frameworks, support regenerative practices, and enable the deployment of early warning systems and nature-based financial mechanisms. To operationalize these priorities, businesses are encouraged to activate key enablers within 24 months. These include integrating climate risk into enterprise risk management, conducting detailed audits of capabilities, and aligning capital investment decisions with resilience objectives. Data intelligence, scientific partnerships, and responsible use of technology—particularly AI—will be critical to improve foresight, enable adaptive planning, and enhance the quality of strategic decision-making in the context of escalating climate volatility. #sustainability #sustainable #business #esg

What would you do if your business's financial health depended on the weather? That’s not just a hypothetical. Increasingly, climate risks are reshaping how lenders assess the creditworthiness of businesses. Here’s why that matters and what it could mean for your bottom line. Let’s start with a simple truth: Not all loans are created equal. Loans backed by physical assets like commercial real estate tend to have higher recovery rates in case of default. Why? Because there’s a tangible asset something with value to recover, compare that to unsecured loans, where lenders are often left empty-handed if things go south. Now, Layer climate risk onto this equation. Imagine A factory located in a region prone to floods or hurricanes. The more vulnerable the location, the greater the risk that the physical asset could be damaged or even wiped out by extreme weather. That could significantly lower the recovery rate for lenders, turning what might have been a manageable risk into a major financial headache. This is where ESG (Environmental, Social, and Governance) maturity comes into play. Companies with robust climate risk strategies those proactively safeguarding their operations and assets are better positioned to weather the storm. But here’s the kicker: those that aren’t? They might face higher borrowing costs or even find themselves cut off from certain financial institutions altogether. According to the Global Risk Report 2024, climate-related risks are now among the top global risks over the next decade. And in finance, these risks translate directly into higher LGD (Loss Given Default) estimates. For borrowers, this means two things: 1) You’ll pay more to access capital if your ESG profile isn’t up to scratch, 2) You might need to rethink your climate strategy not just for the planet, but for your financial survival. From my perspective, this isn’t just about risk mitigation. It’s about staying competitive in an evolving market. Financial institutions are becoming more selective, and businesses need to adapt. By improving ESG maturity, companies can not only secure better loan terms but also position themselves as resilient players in a world where climate risk is no longer a distant threat but a present reality. The bottom line? Climate risk isn’t just an environmental issue it’s a business issue. And how you respond could make all the difference. What steps is your business taking to adapt to this new financial landscape? Let’s discuss this in the comments. ⬇️

Last week I wrote about running a proper fundraising process. This week is about the decisions most founders get wrong: whether to raise at all, how much, from whom, and what kind of capital. First, raising external capital should be a last resort. Can you grow slower, stretch runway to profitability? Are there grants available? Can you take debt instead of equity to minimise dilution and maintain autonomy? These are the questions worth sitting with before you open a round. Second, do your due diligence on investors. Many founders I talk to are surprised by this. Once investors are on your cap table, it can be a venture-lifelong marriage. Bad investors can make your life hell, hinder decision making, create extra work, or even kill the company. Speak to their portfolio company founders about how they were treated in the good and bad times, and what value they really added versus the promise. Third, raise less than you think you need. A large round and high valuation feels like validation, but it often comes with heavy dilution, super-high expectations, and pressure that compounds founder stress. Far better to raise a smaller amount fast and oversubscribe than face a never-ending process. My preference is milestone-based raising. Raise what you need to hit clearly defined milestones over 18 to 24 months. Under promise, over deliver. Build trust and the next raise happens at a higher valuation with less dilution. Fourth, be deliberate about who you raise from. Most founders chase the biggest name or engage whoever knocks on the door first. Mistake. Prioritise investors who can genuinely help, have strong networks in your sector, can access the best talent, and can introduce partners and customers at C level. At PropertyGuru, that discipline allowed us to select the right partner at each stage, rather than whoever could write the biggest cheque. For climate founders specifically: what kind of capital do you actually need? Climate businesses are mostly physical, with upfront hardware requirements. Equity is expensive for that. Ideally you want a capital stack. Grant capital to fund R&D and de-risk first deployments. Equity to build the IP, team, brand, and operating platform. Debt to finance working capital and the assets. The challenge is that grant and debt capital remain scarce, immature, and heavy on admin in emerging markets. It is one area we collectively need to fix if we want to accelerate green adoption. Founders obsess over valuation. The ones who build the best companies obsess over funding strategy and process. This is part of a weekly series on scaling lessons from building PropertyGuru to NYSE and backing 40+ climate ventures. Follow along if useful.