We will start at the beginning of the entrepreneurial journey, when you—the aspiring climate tech entrepreneur—have identified a problem you want to solve and how you’ll do it. Think of this combination as your climate action, how you'll use your talents to battle climate change.
Before rushing headfirst into forming a climate tech startup, all founders need to pause and answer an important question: Is my climate action best suited (and necessary) to build a climate tech startup?
Climate action is a delightful thing. It is in our nature to want to confront the problems we face. But, in the enormous universe of climate change (i.e., all the problems it creates and the work we need to do to mitigate it), climate action can be a giant trap for aspiring entrepreneurs.
Most folks want to work in climate because they believe it's their moral imperative, and they are passionate and commited to dedicating their time and talents to meaningfully address it. But that passion is like the cheese inside the mousetrap.
And what is that trap? Simply put, your intended climate action, albeit worthy, may not be suitable for a climate tech startup. Climate action can take many forms, some of which are quite different from that of forming a company. Therefore, once an aspiring climate tech founder has identified a climate action, it is best to consider the many forms it can take and evaluate both the problem and the potential solution, ensuring the action should manifest in the form of a climate tech startup.
This may seem like a silly exercise, but here’s my public service announcement for climate tech founders: You need to be very clear about what you are trying to accomplish so that you can determine whether it's uniquely position to establish for-profit, scalable enterprise. Classifying your climate action now will save you time later, so let’s give it a try!
Start by addressing the climate problem you’re aiming to solve. Here’s a great and common example: I want to reduce energy consumption in real estate and identify pathways to net zero building operations. Great idea. Buildings are incredibly large sources of carbon emissions. Reducing energy consumption in buildings is a useful way to reduce our carbon emissions.
The catch is, you can reduce energy consumption in buildings in a lot of different ways:
1. You can take personal action.
2. You can advocate for it.
3. You can write policy it.
4. You can research it.
5. You can run programs promoting it.
6. You can invest in it.
7. You can develop and deploy technology that will make buildings operate more efficiency.
The first six actions are all meaningful ways to address building decarbonization, but those actions do not immediately translate into venture-backed, scalable climate technology (note: the sixth may, but starting an investment firm is its own unique experience; we’ll tackle that topic another time). Take some time to understand each of those actions and what it means to use policy, advocacy, or investment as a means to decarbonize buildings.
Next, you should take your concept (i.e., your solution) and evaluate it against each of these actions folks can take to address the energy use and carbon intensity of buildings. If your concept feels more like an promotion, policy, or research issue, then you’re probably better suited to take your problem and work for government, a 501(c)3 nonprofit, or a 501(c)4 advocacy organization. The U.S. Green Building Council, Rocky Mountain Institute, and municipal planning departments across the U.S. are great examples of organizations doing incredible work charting a course to net zero buildings.
You may even be better off to think about how investment can be a means to propel decarbonization. Renew Energy Partners is doing great work deploying capital into building decarbonization projects.
If, however, your concept is really centered around a tangible good or service (or combination thereof) that could be deployed in buildings or utilized by building owners who would ostensibly pay for your product to manage the energy consumption in their buildings, then your climate action feels destined to become a climate tech company. We invested in one such company recently, Enertiv, who's doing incredible work to decarbonize real estate. You should check them out!
Of course, you’re at the very start of your journey as a climate tech entrepreneur, so this big revelation only means you’ve got years of hard labor ahead, but no one—and I mean no one—wants to spend their time evaluating a climate tech company whose concept is better suited to be a nonprofit. Founders don’t want to be pitching that concept and venture capitalists don’t want to invest in it.