Yet another Trillion Dollar Opportunity?

A Trillion Dollar Opportunity

The changing climate is arguably the most significant challenge facing humanity today. We at Blue Future Partners believe that the resulting problems can only be solved through technology and are very interested in the long-term change the investment world will have to go through arising from this.

The main dilemma of climate change is:

As a result, we at Blue Future Partners see technology as the only real solution to the dilemma of growth. We need to rethink the way we eat, move, live and consume through technology to build a society in harmony with the planet. Thankfully some changes are already underway. This brings huge opportunities for investors and entrepreneurs who work on solving the problems arising from climate change.

But despite this initial failure, climate technologies are looking bright again. The global solar industry is five times bigger today than in 2010 thanks to lower module and networking costs. Energy companies like Tesla are disrupting decade-old and highly polluting industries and have made for one of the best tech investments in recent times. These trends suggest that this time it should be different for climate technologies. Much like many internet business models that failed because of the 2000 crisis made a comeback years later.

This brings us to today. Now we are in the age of “Climate Tech”. While Clean Tech was all about energy startups with hardware products, Climate Tech is used in a broader term. It refers to any technology that decarbonates our economy, including not just energy, but also food, construction and even infrastructure. Climate Tech encompasses not just “direct” climate technology, but also indirect measures like farming software that reduces water consumption.

This categorization raises two important questions. First, all of them are established investment verticals — so is mobility for example still a separate vertical or does it make more sense to understand it as part of Climate Tech now?

We are seeing an interesting phenomenon where different verticals are converging now and can no longer be regarded independently. If an industry significantly contributes to global warming, any efforts to decarbonate it with technology will make it fall under Climate Tech. Two specific examples of this are PropTech and AgriTech, which are both independent verticals but play a huge role in reducing carbon emissions. Even though it makes sense to talk about PropTech independently, it needs to play a significant role in today’s climate conversations.

A second question that arises for investors : to what extent are these verticals actually growing as a result of solving climate challenges? As we will see in the next two paragraphs, there is a massive investment opportunity in Climate Tech and each of the 5 verticals is already seeing significant influx of capital as a result.

Here is an overview of investments into each of the five Climate Tech verticals since 2013.

To sum up, it is inevitable that global energy and resource consumption will continue to rise in the future. At least for the next decades, the world’s population will keep growing and living standards will keep rising. Technology can play a role in slowing the problems arising from the dilemma of growth. We need to rethink our ways of living through technology and drastically transform all areas of our economy to minimize their impact on the planet. This transformation will bring massive opportunities for investors who allocate their capital to help solve this challenge.

In the coming months, we will continue to expand this Climate Tech series. We will explore investment opportunities in the sub sectors of Climate Tech, highlight game changing companies and hopefully foster an ongoing discussion on how we as an investment community can play our part in solving the climate crisis.

Sources:

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