Jamil Wyne is a consultant, investor and author specializing in entrepreneurship, technology and economic development in emerging markets. He has worked with the World Bank, IFC, UN, Clean Energy Venture Group, Schmidt Futures, Ashoka and other organizations.
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dr Abrar Chaudhury is a Research Fellow in Climate Finance at Oxford Said Business School, researching topics such as global environmental change, climate finance, policy implementation, sustainable development and corporate purpose.
While global tech and have financial leaders recommended that the world’s first trillionaire will be someone who fights climate change and so many climate unicorns are on the way, current VC levels are being dwarfed by the staggering amounts of funding needed to give humanity a fighting chance.
As of October, climate tech startups had behaved over $32 billion in 2021 and according to Dealroom and London & Co., US VCs have invested almost $50 billion in climate technology companies between 2020 and 2021. However, depending on who you speak to, climate finance gap is currently between 2.5 and 4.8 trillion dollars.
To put this gap in perspective, all global VC funding (across all sectors, including climate) was flat in 2021 estimated $643 billion, and most countries in the world save for a handful have one GDP under $4 trillion. In addition, the number of climate funds and start-ups has increased significantly some Experts worry about the potential of a bladder, and doubters may argue that traditional VC investment strategies are too risky to make any meaningful contribution to combating climate change.
So where exactly do VCs play a role in global efforts to combat climate change? In fact, much of the investment will go to infrastructure investments, as well as emergency financing, which will not bring corporate-like returns. For the same reason, new policies and national programs will be pushed by governments, and when conditions in certain countries deteriorate, foreign aid agencies will be key players.
Accordingly, we will not look to VCs to write billion-dollar checks, create new policy stimuli, or provide shelter and food to needy populations. However, VC funds and their investment strategies and networks have unique characteristics that give them an important position in this global effort.
Below we outline five key areas where we believe VCs can play a role in combating climate change:
Photo credit: Jamil Wyne and Abrar Chaudhury
Support and mitigation of proven climate technologies
Venture capital plays a critical role in de-risking climate technologies that can help reduce costs, accelerate adoption rates and transform markets to enable a decarbonized future. Any hope of tackling the climate crisis requires helping entrepreneurs mitigate technology risk and scale their innovations quickly and cost-effectively.
