Findings from the Climb23 conference roundtable on climate tech and impact investing

Who is truly leading the charge in the transition to net-zero? Is it small businesses or large corporations? Which investment sectors are hot and how can we create more cohesion between startups and investors to ensure more funds flow into climate tech faster? I spoke to climate tech thought leaders at a Climb23 conference roundtable to find out.

Richard Hagen, Managing Director, Crystal Doors

Change will come from small companies; it won’t be a big company that continues to lead on climate. What we’re seeing now is quantum leaps in technology and quantum leaps in what people want to do. Incremental change is no longer acceptable. That’s where small businesses come into the picture, it’s one small seed that’s going to grow and then become contracted, and it’s up to the investors to find the right ones and back the right ones.

Evan Mainhold, Managing Partner, Hyperlight Ventures

I’m in the process of raising my first venture capital fund. We invest in ventures that create a positive ESG impact. What I see happening is that there’s a lot of regulatory pressure on large organisations to prove their ESG governance – that’s not happened at the level of small businesses. And I don’t actually think that’s the role of entrepreneurs.

I think the role of entrepreneurs is to create new technologies, which ultimately change where we’re going and sell those to big businesses.
ESG is being driven by regulation but it’s also being driven by consumer preference. The data shows that, in fact, consumers will pay more for sustainable products, they won’t pay a premium, but they will pay 5% more. It’s also being driven by this tidal wave of money looking to go into ESG investment. When talking to investors, they’re way more interested if it’s about impact, not just making money.

That’s the investment thesis of our fund, we look to invest in organisations that serve that significant demand that large organisations have for products and services for certain with social and environmental impact.

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Adam Sutcliffe, Head of Mentoring, British Design Fund

Anyone that comes to us that hasn’t got within their plan, an understanding of the effect on the environment and how to minimise it, doesn’t have as much credibility as we would normally expect. So we think that they just haven’t done their job and that immediately reduces their viability or their attractiveness in terms of investment.
The other thing we’re seeing is an expectation in the customers of our investees for companies to work sustainably. For instance, one of our companies makes some components for safety on construction sites, and all of the large clients are saying, “well, what’s the return cycle? What are you going to do with all this plastic?” There was an expectation that they thought that was part of the plan. So it’s almost inevitable that investment will go to those businesses that have properly considered their environmental impact on consumers.
It’s only really when you start banging the ESG drum that everyone goes, ‘yeah, it’s me.’ At BDF, out of 35 pitches, maybe 2 have a strong ESG.

Alex Jones, RapidDCS, Business Development Director

I’ve got a perspective from the construction sector. We have a carbon estimating software that issues pricing on your carbon. What we’re seeing in the market is that 30-40% of carbon comes from construction of the built environment, operations and maintenance, there’s a big obligation on that industry to start being more carbon conscious.

85% of your carbon footprint lies downstream from the supply chain. In all those SMEs, what we’re starting to see is in a competitive market, which has been just ‘who is the cheapest?’ it’s moving to ‘who uses less carbon?’

If you follow the money, banks are lending huge sums to investors who have to demonstrate they’re funding green projects, which means that if you want to build your next hospital, you have to prove that this has gone to a contractor who has done a green job, not just a cheap job. So they’re now looking at supply chains and who in my supply chain is the greenist? And it’s not just carbon, but water, and social value.

Yodaly Sierra-Rubio, Eco2wallet Founder


For bigger companies, and in terms of startup creation or spin-offs, I’ve seen ESG analytics for investment metrics popping up. Those former M&A or PE professionals noticed that there was a gap in the market for those investors who wanted to “greenefy” their portfolios or make deals with a green flavour, and more specifically, to identify a green deal from a brown one. And one of the main issues is that there are way too many sustainable certifications, stamps, or indexes that are circling around the world, so what’s the solution?
To either create a new index and label the project you judge as sustainable as you believe it is while ranking those projects with metrics and offering them to investors, or create software that gathers information from all those certifications, indexes, etc and evaluate the deals in the same way a movie is judged with metrics of IMDB, Rotten Tomatoes, filmaffinity, etc, but with ESG metrics, such as ISO, IEC, GRI, SASB, SDG impact, or any of the other twenty+ ESG standards. In the end, most investors want to invest with solid returns, and positive environmental metrics, and large corporates and startups are moving swiftly to serve this space.

What are barriers to investment in climate tech?

Jason Teng, Partner at Potter Clarkson, UK and European Patent Attorney

I’ve been on both sides of the coin; what I’ve seen is a lot of climate tech startups with a very clever technology, but the problem is they are so invested in their own solution that they refuse to change. But you’ve got to look at the problem the other way around, look at the problem and then look for a solution to that problem, or adapt your solution. However, some people are so invested in the idea that they stay stuck on the same solution. Entrepreneurs need to reflect sometimes and go ‘if no one’s investing in me, perhaps my idea is not right for the problem I’m trying to solve.’ It hurts the ego, but they do need to reflect and look at the problem, if no one’s investing.

Sometimes you have really great people who are so entrenched in their product, you need someone who knows how to take it to market and sell it and then take it to investors and demonstrate the monetisation strategy. Sometimes brilliant ideas are not paired up with the commercial strategy.

Richard Hagan, Managing Director at Crystal Doors

30 people own half the wealth in the world. The Rockefeller family own over £300 billion. We need 50 trillion just in the USA to get to net-zero – what we deserve is community leadership, not exploitative, parasitic leadership. We need venture capitalists and investors who are community leaders.

John Behan, Founder & CEO, OME Capital

The big area that’s been underserved for a decade is energy efficiency. It’s now top of the bill; we’ve gone from 40% of Russian gas imports down to 10%, that’s not coming back and that’s fed through to power prices and gas prices over the last year and businesses have felt that and so now there’s a focus on energy efficiency.

When you talk about sustainability, people think you just build more – but you don’t build your way out of it – and the reason why is because two thirds of all energy is lost from the points of generation to the points of consumption.

So where the focus is over the next decade is yes, build more renewables, but focus on demand reduction. Without demand reduction, you’re not going to get yourself off displacing that Russian gas. It’s the low-hanging fruit, you can make a pretty quick impact and you can see a financial return from that. Learn more here

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