Angel Investors Are the Key Resource in the Fight Against Climate Change
The next big market opportunity lies in achieving energy security while preserving our planet. Energy demand is projected to increase by a third by 2020. As humans consume more energy, the impact on our planet is expected to be significant. President Obama has declared Climate Change as the greatest threat facing humankind. This presents a dilemma — how do we enable growth and energy security while preserving the planet? A solution is definitely needed.
Investors have been here before, years ago, when clean technology saw more buzz than demand. The sector cooled off almost as quickly as it heated up, but it’s an important market now for the most dire of reasons.
Climate change is a serious threat with temperatures rising at an absolutely alarming rate, as evidenced in the chart below.1
Source: NASA. This graph illustrates the change in global surface temperature relative to 1951–1980 average temperatures. The 10 warmest years in the 134-year record all have occurred since 2000, with the exception of 1998. The year 2015 ranks as the warmest on record.
Arctic ice, a leading indicator of climate change, has also been melting faster than ever. In March this year, Arctic sea ice extent hit a record low, as per data from the NASA-supported National Snow and Ice Data Center.2
Source: National Snow and Ice Data Center
Islands are sinking and communities are losing their livelihoods. The severity of our global situation has led to world leaders and business luminaries banding together over their concern. This has sufficiently alarmed our politicians the world over, leading to April’s 175-country signing of the Paris Agreement — a “historic turning point” in the efforts to reduce global warming.
But while governments plan to take action, they can’t do it alone. Though promising and encouraging, the large-scale environmental treaty still isn’t enough. Those commitments, which aren’t binding, aren’t even a third of what’s necessary, according to Bill Gates.
Now, more than ever, energy use is critical to driving growth and development all over the world. Demand for energy will continue to rise as the global population increases.3
To curb these runaway issues, governments will step up spending for cleantech innovation. This is likely to throw up tremendous opportunities for entrepreneurs and investors — opportunities to earn a return while making an impact.
We, the leaders in technology, must join the fight to save the planet. Such a powerful global push for clean energy and tech will require innumerable startups to tackle different aspects of such a large and complex issue.
The only way we can provide more energy, while preserving our planet, is by the use of breakthrough technology. That is what we are about at Propel(x) — returns and impact through the use of technology.
Bill Gates himself has already pledged to commit $2 billion to combat climate change, and it’s going to take a lot more to make headway. The budgets for research and development departments within the energy industry are low — extremely low, in fact.
“The [energy] private sector only spends 0.2% [on R&D],” says Gates. “So conservatism of the utilities, the long lead times, the need for scale…it is under-invested in, but the imperative is now very strong.”
Now compare the private energy sector’s paltry R&D spend of 0.2% with the IT or pharmaceutical industry. Both of those each spend roughly 15% on R&D. Gates attributes the miniscule funding of private energy R&D to long development cycles and the infrequency of breakthroughs.
But that can change. More importantly, it needs to change — and it will. This is the time for funding our greatest minds and their best tech ideas to keep our planet from sliding past the point of no return.
We are not the only ones in this fight. The recently launched Breakthrough Energy Coalition is a bold partnership whose members have committed to hundreds of billions of dollars to invest in early-stage clean energy companies. In addition to Bill Gates, its leading lights include Mark Zuckerberg, Marc Benioff, Jeff Bezos, Richard Branson, and Meg Whitman.
The opportunity in the clean energy sector is clear, and the sector is already showing signs of renewed growth: a record $329 B was invested in the clean energy sector in 2015 — nearly six times its 2004 total.
Unsurprisingly, the Propel(x) Survey of Angels showed a growing interest in cleantech — over 48% of our angel investor respondents had invested in ‘Energy & Clean tech’. Overall, more than 53% of our angel investor respondents were interested in this sector.
Given the pressing need and the growing interest in the investor community, we believe this will be a big sector in coming years.
Swati Chaturvedi is the founder and CEO of Propel(x), an online investment platform that brings together investors, startups, and experts to support and invest in breakthrough technologies.
[References]
1. http://climate.nasa.gov/vital-signs/global-temperature
2. http://inhabitat.com/arctic-sea-ice-levels-hit-a-new-winter-low-again
