Playbook for building companies in climate tech

Just like the internet connected the world, climate tech will heal it.

Over the last couple of decades, the Internet has created trillion dollar companies and generated immense value for consumers by connecting every aspect of our lives. The Internet revolution was driven by humanity's core value of finding efficiency through various mediums. The internet has emerged as an exceptional medium, fundamentally changing how we live and interact.

In humanity's quest for survival, climate change presents one of the most difficult challenges of our time. This situation provides a remarkable opportunity to create the next generation of trillion-dollar companies.

Larry Fink, CEO of BlackRock, echoed this sentiment when he stated that the next 1,000 unicorns will emerge from the climate tech sector.

However, this sector is unique: although these companies will generate economic value for shareholders, they also create environmental benefits for everyone on the planet. Tesla has already demonstrated this potential by becoming a trillion-dollar company that has significantly reduced emissions.

Yet, starting up companies in climate tech is challenging. This space demands solutions that is at the intersection of software, deeptech, and hardtech, and requires deep collaboration between entrepreneurs and researchers to create innovative solutions. The strategies that succeeded in the internet tech industry will not suffice for climate tech; new approaches are necessary. Anyone who can solve these challenges can create companies with extremely high moats, which investors will love!

IEA says that 35% of the emissions reductions needed by 2050 will come from technologies not yet at commercial scale. There is an urgent need for startups that can commercialise climate tech solutions.

This article will be helpful for the following personas:

  1. Entrepreneurs - Entrepreneurs from internet startups or general backgrounds who are looking for their next challenge. This playbook will provide insights into various aspects of building a high-moat climate tech company.
  2. Researchers - The backbone of the climate tech movement, whose deep tech expertise is essential for creating next-generation climate tech solutions. This playbook will address how they can build large companies and scale them to achieve the desired impact of their solutions.
  3. Investers (VCs) - Investment is critical for success in the hardtech-focused climate tech sector, which requires substantial, patient capital. This section will offer investors insights into the next generation of value creation and what to look for in climate tech companies.

The playbook will cover the following sections. Each section will be presented as a long-form blog and will be expanded in the coming weeks:

  1. Market - Understanding history of climate tech, what has changed and where is it heading?
  2. Investment - Why do VCs invests in climate tech and what parameters they are looking for to invest?
  3. Build Pathways - Understand what kind of companies can be built in climate tech, understand various pathways.
  4. Team - Team composition for climate tech startup, how to make one and find people.
  5. Business models - What various business models work in climate tech.
  6. Policies - How policies have evolved, their current alignment with climate goals, and strategies for leveraging and influencing these policies.
  7. Risks - Identifying potential risks and strategies for mitigation.
  8. Consumer - What does new age consumer wants, what are the consumer level trends that will govern the direction of innovation.

If you have any questions or suggestions for additional topics to be covered in the playbook, please write to me akill.gupta@gmail.com