Jamil Wyne is an investor, advisor and author who focuses on entrepreneurship and technology in emerging markets. He has worked for the World Bank, IFC and UN, Clean Energy Venture Groups, Schmidt Futures, Ashoka and other organizations.
Dr. Abrar Chaudhury, a climate finance researcher at Oxford Said Business School, studies topics such as global environmental change, climate finance and policy implementation.
Global tech is a growing industryFinancial leaders and other finance professionals Suggestions that the world’s first trillionaire will be someone tackling climate change and that many climate UnicornsDespite the fact that there are many VC funds available, the current VC levels are not sufficient to cover the staggering funding required to give humanity a fighting chance.
As of October, there were climate-tech startups raisedOver $32 billion in 2021, according to Dealroom and London & CoU.S. venture capitalists invested almost $50 billion in climate-tech firms between 2020-2021. However, it depends on who you speak to, the climate finance GapCurrently, the range is $2.5 trillion to $4.8 trillion.
This gap is easily reflected in the total global VC funding for all sectors (including climate) in 2021. Estimate$643 billion. Most countries, besides a few, have attained this figure. GDP under $4 trillion. A sharp rise in the number climate funds and startups has also been observed SomeExperts worry about the potential of a bubbleSome doubters might argue that traditional VC investment strategies are too risky for them to make a meaningful contribution towards addressing climate change.
So how do VCs play into global efforts against climate change? A large portion of the investments will go towards infrastructure investments as well as emergency funding. These investments won’t yield venture-like returns. To the same extent, governments will lead new policies and national programs. As conditions in certain countries worsen, foreign aid agencies will become crucial.
Accordingly, we won’t be looking to VCs to write billion-dollar checks, create new policy incentives, or provide shelter and food to populations in need. However, VC funds with their investment strategies are and their networks are unique and can play a key role in these global efforts.
Below are five areas where we believe VCs have a role to play in addressing climate change.
Supporting and de-risking climate technologies
Venture capital can play a vital role in de-risking climate technologies. It can help bring down costs, accelerate adoption rates, transform markets, and enable a decarbonized world. Entrepreneurs must be able mitigate technology risks and scale innovation quickly and cost-effectively if they are to address the climate crisis.