In 2021, US venture capital firms invested a record $56 billion in climate tech startups, according to SVB, up from $14 billion in 2017. That growth was especially pronounced in early stages. The value of Series A investments in climate tech grew 76% to $5.3 billion between 2020 and 2021, while Series B investments doubled to $8 billion. SOSV’s own Climate Tech 100 startup list, heavily weighted to early stage, doubled in value between 2021 and 2022.
Clearly, investors expect that many of those companies will join the ranks of the existing 50 climate tech unicorns. Despite the general VC downturn, the climate category remains strong, if not quite as frothy as last year, even as $13 billion fresh capital reaches the category thanks to 72 new climate funds.
So what are the top funds and investors working on early growth thinking? Which categories and startups are winners, and how does all the new capital change the landscape?
The SOSV Climate Tech Summit (Oct. 25-26) gathered three top early growth VCs to discuss how they evaluate startups crossing into Series A territory and beyond. Check out their conversation below.
Shayle Kann, Partner at Energy Impact Partners, has led investments in decarbonization startups including Boston Metal, which produces steel using electricity, and unicorn Form Energy, which innovates battery technology for electric grids.
Rajesh Swaminathan, Partner at Khosla Ventures, focuses on deep tech investments, building upon a climate portfolio that includes plant-based meat unicorn Impossible Foods and QuantumScape, developer of solid-state EV batteries.
Mona Alsubaei, a Union Square Ventures investment team member, guided her firm’s investment in Brilliant Planet, a startup using algae pools to capture carbon (note: Brilliant Planet will be speaking on our Carbon Capture panel).
What do climate tech startups need to get on the radar of early growth VCs? What innovations and business models are worth scaling?
Shayle Kann is a Partner at Energy Impact Partners and renowned expert on the future of energy and climate. He leads the firm’s efforts in deep decarbonization, investing at the frontier of climate tech. Previously, Kann built and ran GTM Research, the market intelligence arm of Greentech Media, which was acquired by Verisk Analytics (NASDAQ: VRSK) in 2016.
Rajesh Swaminathan is a Partner at Khosla Ventures and has two decades of experience assisting and investing in deep tech startups. He manages investments across renewables generation, storage, hydrogen, industrial decarbonization, plastics, foodtech, healthcare, and advanced manufacturing. Previously, Rajesh led Applied Ventures LLC, the venture capital arm of Applied Materials.
Mona Alsubaei is an investment team member at USV and focuses on its $162 million Climate Fund. Before USV, Mona worked at CrossBoundary, an emerging markets investment advisory firm. Mona started her career in policy and international economics at the United Nations. Born in Jeddah, Saudi Arabia, Mona is a global nomad who has lived and worked in over eight countries.