From Clean Tech 1.0 to Climate Tech 2.0: A New Era of Investment Opportunities

Regardless of one’s opinion on the Clean Tech 1.0 investment era, a new climate tech funding boom, referred to as Climate Tech 2.0 is currently underway. A record $37 billion was invested in the sector in 2021 alone, and 2022 is likely to match or near that record amount. This funding is unlikely to abate anytime soon with $300 billion of dry powder raised according to CTVC. Moreover, a recent BCG analysis asserted that some $100 trillion-$150 trillion of additional investment will be necessary by 2050 to accelerate the world to net-zero—representing the largest investment and economic transition in human history.

Advancement in climate tech is more urgently needed today than ever, and there are a variety of tailwinds that make it a more attractive investment category than its predecessor – Clean Tech 1.0 – for the right investor. Consumer attitudes and behavior are dramatically shifting towards sustainability, a fast-growing number of governments and businesses are making net-zero pledges with greater scrutiny, policy support (through economic incentives and sticks) is picking up momentum with powerful monetary levers, and major technological developments are converging towards compelling climate tech solutions that are achieving price parity with non-green solutions. Moreover, the expanded focus of Climate Tech 2.0 opens a wider range of investment opportunities in areas with significant addressable markets that must be actioned urgently to meet 2030 Paris-aligned goals. It will be up to investors to meet the moment by articulating the right theses, building relevant expertise and sophistication to underwrite investments intelligibly, setting investment horizons that befit the technological and commercial readiness of the climate tech category, and supporting portfolio value creation through ecosystem-building and go-to-market partners including corporate champions.