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A Whole New Ballgame In 2022

Managing Director of Clean Energy Ventures, a VC firm investing in companies commercializing disruptive clean energy technologies.

It goes without saying that 2021 will go down in history as a record year for the climate. Governments committed to new global emissions mandates, including the passage of a $1 trillion U.S. infrastructure bill, billions of which will be dedicated to combatting climate change. Now that we’re in a new year, I expect the next 12 months to bring even more climate milestones as new technologies emerge and trigger vast wealth-creation opportunities for investors and decarbonization at a breakneck pace.

What does frenetic investor interest mean for the climate tech market? I’m the co-founder of a venture capital firm that invests in clean energy technologies, so this is something I’m paying close attention to. As entrepreneurs look to scale and secure more funding in 2022, there are a few considerations I believe will set the winners apart.

1. The industrial tech of the past is the climate tech of the future.

Industrial tech is getting its moment through the lens of climate tech. As we work toward decarbonizing our economy, entrepreneurs must realize their biggest impact might not be from disrupting consumer markets, but from disrupting large industrial processes like cement, hydrogen and agriculture. As investors, my team and I are noticing more companies eyeing climate technologies as a part of their overall business strategy. 

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Innovations that revolutionize our critical infrastructure while helping to meet ambitious climate targets are hot commodities on the market today. Industrial corporations are beginning to pay attention. Entrepreneurs whose approach includes both business impact and emissions reduction for critical infrastructure are poised for substantial investor attention in 2022.

2. Consumers and investors awaken.

From my perspective, 2022 will be the year innovators help consumers understand the implications of the choices they make, including what they buy, how they travel and the services in which they engage. Software enables more information on product choices and can educate consumers about their carbon impact. Likewise, I expect retail and institutional investors will begin to react to improving financial innovations by considering the carbon risks in their portfolios. This will lead to choices that, regardless of carbon legislation, will signal to companies the need for transparent reporting on their carbon risks and demonstrate plans to reduce emissions.

I expect to see investors in climate tech and beyond intersecting with traditional high-tech firms as the consumer-oriented software market heats up.

3. Close the loop where it actually matters.

In 2021, I saw an increase in interest in recycling wind turbines and solar panels, but the market size is incredibly minute compared to other sectors. I’ve also observed that some investors are clamoring for opportunities to secure supply chains for many critical industries.

As we head into 2022 and beyond, entrepreneurs who can find new business opportunities within the circular economy — such as companies focused on leveraging carbon as a feedstock — will be in high demand. If companies are seeking to expand product offerings, the circular economy is one area that will likely bring oversized returns. 

4. Look beyond the U.S. bubble.

Amid growing interest in improving overseas economies, now is the time for entrepreneurs to take a hard look at emerging markets for new low-carbon technology. Whether it’s accelerating solar and wind energy through partnering with farmers or using hydrogen electrolyzers and existing technology to help villages localize zero-carbon fertilizers, I believe there is strong market potential in the emerging markets of Africa, Central America and Asia. 

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Investors can aim to be the first to invest in technologies benefitting emerging markets. I believe these markets, often with less stringent regulations and institutional financing support, will create the opportunity for emerging technologies to leapfrog more developed countries and potentially offer faster, higher returns for companies (and their investors).   

5. Take back control of supply chains.

Supply chains were a major pain point for businesses in 2021. This year, I expect to see businesses invest to build critical supplies — such as batteries, solar panels, wind turbines or charging infrastructure — within our communities across all states. From my perspective, this would provide a strong local multiplier impact, as well as benefits such as introducing more high-quality clean energy jobs at home with greater global competitiveness. 

Entrepreneurs across all sectors, but especially climate tech, cannot afford to be complacent and rely on future policies; they should proactively develop a strong supply chain management strategy as integral to their businesses.

6. Be prepared to show the math.

Companies are wising up to the benefits of being categorized as a climate technology at the same time customers, investors and corporations all realize the value of partnering with, investing in or sourcing from these same companies. Rather than being swept away in the climate wave, entrepreneurs and business leaders need to build an ecosystem of transparency from the ground up. 

All sides of the ecosystem are demanding climate impact transparency, especially the ones that write the big checks. Companies won’t be able to hide behind the “fuzzy math” anymore; entrepreneurs need to voluntarily report exactly how many tons of greenhouse gas emissions can be mitigated by their innovation. This is a universal impact number that can immediately be shared with global accelerators, incubators or venture capitalists.

Innovation will lead the way.

While 2021 has been the year of the Great Resignation, this trend of employees leaving unfulfilling jobs is going to massively impact the climate tech industry. Alongside Gen Z, who has been inundated with climate information since elementary school, I believe the tech and industrial workforces will inevitably mesh into the climate workforce of tomorrow. 

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As the leaders of companies, entrepreneurs have a duty to attract people, capital and customers, and to do so with climate top of mind. As new faces join the fight — adding more diversity, passion and experience to a global opportunity — it’s clear to me that companies that take the reins on building global climate solutions will likely emerge victoriously. For entrepreneurs with mastery over all of the aforementioned elements, I say congratulations; 2022 could be an extraordinary year for you.

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?


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