Part 1: Choosing a Climate Problem to Solve

Chapter 1 of The Climate Startup Playbook from Third Sphere

Meaningful Impact

Successful startups are able to grow rapidly to profitably serve large markets. Successful climate-focused startups have to do this and more.

First, for each unit of sales, they need to unlock meaningful progress toward one or more sustainability goals such as GHG mitigation or adaptation or protection of natural systems. And when startups work with hardware, they also need to benefit from ecosystem learning curves that will ensure they can drive down cost per unit. It’s easy to overlook this last point, but cleantech 1.0 failure modes are frequently associated with scaling-up production and manufacturing systems.

What does meaningful progress look like in climate — 1GT of CO2 avoided? 500 million people protected from floods? Secure food supply chains?

Climate mitigation opportunities are well understood in a lot of detail, like electricity generation, transportation, buildings, and industry. We have less clarity on pathways for land use and even less clarity on adaptation and resilience. And there is very little startup activity related to problems like biodiversity, pollution prevention, or eliminating “dead zones” from reactive nitrogen.

There are many impactful ideas, but very few that can transform entire industries within two decades. So we’ll explore why rapid growth into large markets doesn’t just matter for investors but is essential to the 2030 emissions goals that will ensure we keep warming below 2°C.

Science hints at what can and should be done, but customers, investors, and technology play an even larger role in what can be done rapidly and at scale. In the first cleantech era, the main customer group comprised utilities and those selling to utilities. Today, everyone is a potential climate customer. Consumers are capable of very rapid adoption when they’re offered classic disruptive options associated with better, faster, and cheaper solutions. Businesses need to find solutions for resilience and alternatives in face of rapid changes and new pressures to be sustainable. And beyond classic tech early adopters, there are now also climate early adopters, both consumers and businesses who will be willing to pay a premium for early offerings.

Finally, unlike the Internet-driven era of tech companies, hardware will show up in the majority of climate solutions. Already today, the vast majority of climate unicorns work with physical systems as well as software. It’s essential to understand how to reduce hardware risk by benefiting from learning curves already underway in manufacturing. The ecosystem is starting to recognize that building these companies will require different resources. We will be sharing more about best practices for hardware companies in future sections of the playbook.

Coming Soon: Part 2: Planetary Problems — Decarbonization