Climate tech founders: The future of your venture hinges on these critical questions
I highly recommend you align your entrepreneurial appetite with the type of venture you are looking to pursue. While aiming for big impact and returns is good, it is not necessarily for everyone.
Each founder has their own climate journey. For instance, I founded a climate tech startup which failed. Why? For many reasons — I could cover all of them in a series of articles. For the time being, let’s skip the post-mortem process and reflect on one of them: venture and entrepreneurial profile misfit.
Throughout the process of building my company (here is a hint as to what we were trying to solve), I found myself wondering if the company I was trying to build actually fit my entrepreneurial profile. But I did that a little too late. In other words, I wanted to make a huge impact and build an innovative and profitable business but I was not aware of what it takes to do so. My co-founders and I needed time, resources, and endurance.
Although we were sure that we had the best solution to build the grid of the future, it turned out that we were not so special. Several no’s and a few meetings that ended up with no follow-up hurt our motivation greatly. We discussed a potential pivot, but since we weren’t in sync with regard to the type of company and its desired impact, we couldn’t agree on a solution. Then we decided to put the startup on hold.
So, if you are or want to be a climate tech entrepreneur, I invite you to pause and think about the following questions:
Who are you? Who are your co-founders?
Do you all have a dream to be a climate tech founder?
Do you have the same appetite and the patience to make this dream a reality?
And the most important question:
What kind of venture fits your entrepreneurial profile or appetite?
Don’t laugh. The sooner you will ask yourself those questions and know your answers, the easier it will be for you to share your vision of why you chose to build this particular company.
This exercise, which I did with my co-founders, was actually one of the most decisive moments in my entrepreneurial journey. After the journey has begun, you will have many reasons not to stop and reflect. There is always a fire that needs to be put out somewhere. But the exercise of defining your type of entrepreneurial appetite will probably be the best investment of your time.
Let’s look into risk versus rewards to explain what entrepreneurial appetite is. To state the obvious: easy and quick don’t usually go hand in hand with impactful and big. It is clear that the climate crisis will not be solved by a few lines of code or generative AI bots, but by building the very real and physical infrastructure of tomorrow. If you want to solve a massive problem, you need to have the appetite and the guts to get your hands dirty and do it.
I would like to describe the different types of appetite in different shades of green.
The light green can be a quick and dirty solution, usually involving standalone software-based solutions. For example, a neat piece of software that encourages people to adopt more sustainable behaviours or an algorithm that optimises the route taken by a fleet of commercial vehicles. The installation and integration of a light green venture will include a one-time rollout that is easily imagined from A to Z.
The “normal” green is a venture with a marginal impact on the environment. This type of venture has the potential to avoid a more substantial amount of emissions, but it needs to be extremely unique for it to capture a large market share.
If you want to understand if a company or idea falls under the “normal green” appetite, look for companies that combine some hardware novelty with existing solutions. You might be surprised to see how many similar solutions are out there (i.e. there are many silicon anode companies already and most of them improve batteries by “only” 10–15%).
Deep dark green can often be mistaken for “black” as the founders of moonshot startups can feel like they are fainting from the complexity of the venture. In this category, we see technological breakthroughs, that, if successful, can turn an industry (or industries) upside down. We are talking about fusion, superconductors, solid-state transformers, carbon-free metals.
Let’s be slightly more concrete — carbon-free of course ;)
If you try to generalise the different risk profiles that we see as a climate-first fund, you can argue that all, or at least most, of them are climate-relevant, but not all are equally meaningful. We can divide these ventures into general four categories:
It is important for each founder to understand their personal traits as well as external factors in order to choose a venture that matches their risk appetite. This is because the time horizon for a high-impact climate venture is generally long. However, the impact we want to create will not always be aligned with the valuation of the company, and definitely not coupled with the time to liquidation event. For example, the validation for a solution that needs to be approved by some sort of regulation and then integrated by a utility will have a different time to impact than a solution adopted by individuals. However, the impact and valuation of a utility solution will skyrocket when the product-market fit is finally proven.
The longer and riskier the venture, the greater the reward. Most of the time, this “go hard or go home” approach is not for everyone.
It’s also important for any software veterans entering the climate space to remember that to make meaningful and impactful change, you need to learn new skills and expect slower iterations.
By no means do I encourage everyone to aim high and try to solve only moonshots. Instead, I encourage you to do what is right for you. Let me elaborate on that. Normal and light green ventures are also extremely meaningful. And, let’s face it, a successful venture with a lower level of impact is better than a failed venture with moonshot potential that is not realised.
The sooner you know what kind of entrepreneur you are, the better chance you and your team have of succeeding down the road. And the less likely you will have to face the uncertainties that arise from such questions. Finally, I strongly recommend that you surround yourself with like-minded people (in terms of risk appetite). Even if you don’t become co-founders, these people can support you and help you with the dilemmas that will arise along the way, especially in the ideation and the re-ideation process.
Have you had similar experiences? Epic failures that happened because of a lack of alignment between risk appetite and team goals? It would be great to hear about your experiences and insights.
And for those in climate tech, good luck in your current and future endeavours.
