Earth Day has always been a signifier of the gratitude and appreciation we have for the earth and the natural environment around us. What started as a national teach-in and protest in 1970, has evolved into an internationally recognized day for action to protect the earth from environmental threats by planting trees and gardens, picking up trash on beaches and in parks, and learning more about the planet.
While Earth Day continues to be an essential way to actively take part in civic engagement, more people than ever before are activating throughout the entire year by making conscious changes to their everyday habits. As climate change continues to wreak havoc on the planet, its inhabitants are insistent on doing what they can to ensure protection for the future. And this continued shift in values has infiltrated the corporate world over the past decade. So much so that the number of climate technology companies being founded and invested in has exploded in recent years. Today, entrepreneurs and investors are taking the lessons learned from the past decade to ensure the solutions and business models they are building are fit to scale in the future.
Cleantech’s Origins in Silicon Valley
Back in 2006, companies focused on developing technology that would solve environmental issues were dubbed as making up the “cleantech” industry. These companies mainly focused on innovations in solar and biofuels and attracted $1.75 billion in VC investments over the next five years. Public awareness and interest in climate change were increasing and the business and investment worlds were following suit. Unfortunately, as it has been thoroughly reported and analyzed, the cleantech 1.0 era turned out to be a bust – with bankruptcies and cheap exits impacting a majority of the companies that had been tech darlings just a few years prior. In the years following, while cleantech innovation did not slow down, investment in the industry did. In fact, less than 10% of cleantech companies founded after 2007 generated returns to cover their initial capital (CTVC).
The New Age of Climate Tech
Around 2018, after the dormant years following cleantech 1.0, climate-focused companies and, perhaps more importantly, investors began to regain traction and confidence. Now deemed “climate tech,” these companies are using the lessons learned from the cleantech 1.0 era to identify better ways of showing ROI and progress as they build and grow. While cleantech companies mainly focused on environmentally friendly alternatives, climate tech companies have sharpened their focus with the prerogative to tackle greenhouse gas emissions and the impacts of global warming. According to CTVC, a publication that analyzes investments within the climate tech industry, since 2020, 289 climate tech companies have exited via M&A, SPAC and IPO, with $400 billion in total enterprise value from the 150 disclosed exits.
*image via CTVC
As the public continues to demand action from governments and corporations when it comes to fighting climate change, the technology industry and investment community must continue to prioritize progress over perfection. We’ve seen this commitment expand in recent years, and with a new generation of entrepreneurs and investors joining the fight, we’re sure to see change happen.
- Emma Wolfe, VP