{"id":27612,"date":"2023-03-27T22:25:28","date_gmt":"2023-03-27T22:25:28","guid":{"rendered":"https:\/\/scienceandnerds.com\/2023\/03\/27\/forget-banks-investors-should-be-worrying-about-the-climate\/"},"modified":"2023-03-27T22:25:29","modified_gmt":"2023-03-27T22:25:29","slug":"forget-banks-investors-should-be-worrying-about-the-climate","status":"publish","type":"post","link":"https:\/\/scienceandnerds.com\/2023\/03\/27\/forget-banks-investors-should-be-worrying-about-the-climate\/","title":{"rendered":"Forget banks: Investors should be worrying about the climate"},"content":{"rendered":"

Source:https:\/\/techcrunch.com\/2023\/03\/26\/investors-climate-more-panicking\/<\/a><\/br>
\nForget banks: Investors should be worrying about the climate<\/br>
\n2023-03-27 22:25:28<\/br><\/p>\n

\n

The reports issued<\/span> by the U.N.\u2019s Intergovernmental Panel on Climate Change are usually grim affairs. But even by that standard, last week\u2019s seemed particularly bleak.<\/p>\n

The upshot is that the world has already warmed by 1.1 degrees Celsius, and we\u2019re on track to hit 1.5 degrees Celsius \u2014 the \u201csafe\u201d limit set by the Paris Agreement \u2014 in the early 2030s. So unless we make drastic changes, the world will blow past the amount of warming deemed safe just 10 years from now.<\/p>\n

There\u2019s a good chance that by the time 30- and 40-year-olds hit retirement, the world will be shitting the bed. The hurricanes, heat waves, polar vortices, fires, floods, droughts \u2014 all the things that make us stock the pantry, invest in backup power and beef up our insurance policies \u2014 we\u2019ll be waxing nostalgic about those. Wasn\u2019t it cute how bad we thought things were back then?<\/i><\/p>\n

Where the fuck is the panic?<\/p>\n

To be sure, plenty of people are worried. Problem is, most of them don\u2019t have (or can\u2019t marshal) the sorts of sums required to put a dent in the problem. Meanwhile, those who do are largely sitting out one of the biggest crises \u2014 and one of the biggest opportunities \u2014 of their lifetimes.<\/p>\n

There are a handful of investors who \u201cget it,\u201d but most don\u2019t. Rather than invest in fusion<\/a> or batteries<\/a> or carbon capture<\/a> or grid management tools<\/a>, they seem content plowing their money into ad optimization software, corporate spend cards, corporate SaaS platforms \u2014 CRM, marketing or payments, take your pick! \u2014 or anything to do with the metaverse, really. One after another after another. (Soon, AI chatbots will join the list because, come on, have you seen what happens after the latest toy lands on \u201c60 Minutes<\/a>\u201d? It\u2019s like a bunch of high schoolers rushing to ape the latest TikTok trend.)<\/p>\n

When they\u2019re not busy financing incrementalism, they\u2019re giving failed wunderkinds hundreds of millions of dollars<\/a> or fanning the flames of runs on regional banks<\/a>. Is that what they aspire to?<\/p>\n

It would be less frustrating if venture capitalism weren\u2019t tailor-made to tackle a problem like this. Sizable but manageable risks? Check. Needle-moving technologies? Check. Enormous upsides and the potential to refashion trillion-dollar markets? Check and check.<\/p>\n

Where is everybody?<\/p>\n

Let\u2019s compare two vastly different markets to illustrate the problem. Over here we have software as a service, which investors have lavished with money and attention because those companies produce recurring revenue, which is often steadier and more predictable. Altogether, SaaS companies worldwide raised $122 billion last year, according to PitchBook. In other words, to fund companies that lease software on a monthly basis rather than sell perpetual licenses, VCs invested more money than the entire GDP of Slovakia.<\/p>\n

On the other side we have clean energy, which includes everything from batteries to renewable fuels<\/a>, building electrification<\/a>, solar<\/a>, wind<\/a> and more. Here, investors placed $40 billion worth of bets last year. In case you\u2019re bad at math, investments that eliminate carbon pollution in myriad sectors of the economy were one-third those made just to sell software on a monthly basis<\/i>.<\/p>\n

Venture capitalists once backed companies that took big, consequential swings. In 1946, VC pioneer American Research and Development handed the founders<\/a> of High Voltage Engineering a $200,000 check to develop a fledgling technology known as X-rays to treat cancer. At $2.8 million in today\u2019s dollars, that may not seem like a lot of money. But remember, apart from ARD, venture capital didn\u2019t exist back then.<\/p>\n

Today, those big swings are similarly modest. Probably too modest. Investors should be collectively ramping up their ambitions, but the numbers don\u2019t reflect that. Let\u2019s look at two \u201cbig swing\u201d techs: carbon capture and fusion energy. Last year, global VC firms invested just $4.25 billion in carbon capture and a mere $1.1 billion in fusion energy, per PitchBook. Together, they represent a \u201cget out of jail free\u201d card, allowing humanity to produce enough energy to drive the power-hungry process of reversing nearly 200 years of unchecked carbon pollution.<\/p>\n

Fusion represents perhaps the riskiest bet of them all. The science has progressed rapidly in recent years<\/a>, and many startups express growing confidence in their timelines, but there\u2019s still plenty of risk involved. Yet the technology has such tremendous potential, both for the climate and for returns, that investors should be pouring enormous sums into the market.<\/p>\n

In that way, fusion shows a way forward. Most fusion companies will need a lot of money, and most probably won\u2019t pan out. But those that do will deliver significant returns. Today, the global energy market is worth $10 trillion. If one company could capture even a sliver of that, it would be rewarded with an absolutely stratospheric valuation.<\/p>\n

Given the risky but promising nature of a fusion-heavy portfolio, let\u2019s assume for the sake of argument that investors will need 1,000x return from a winner to cancel out losses from their failed bets. If today\u2019s portfolios assume winners need to return 10x, that means venture capital will need to take 100x more shots. So either firms need to get way bigger or there need to be way more of them. The easiest solution, of course, would be for more firms to dive into fusion. But that would mean that many would fail, too.<\/p>\n

Fortunately, fusion isn\u2019t the only climate tech that\u2019s in need of investment. Opportunities are multiplying by the day. Some are riskier than others, but all of them are bets on the future. And given that all of our futures are tied to the climate, if any of those bets pay off, the returns will accrue not just to investors, but to everyone. In climate tech, venture capital has a chance to get back to its roots \u2014 investing not just for money but to change the world.<\/p>\n<\/p><\/div>\n

<\/br><\/br><\/br><\/p>\n

Science, Tech, Technology<\/br>
\n<\/br>
\nSource:https:\/\/techcrunch.com\/2023\/03\/26\/investors-climate-more-panicking\/<\/a><\/br><\/br><\/p>\n","protected":false},"excerpt":{"rendered":"

Source:https:\/\/techcrunch.com\/2023\/03\/26\/investors-climate-more-panicking\/ Forget banks: Investors should be worrying about the climate 2023-03-27 22:25:28 The reports issued by the U.N.\u2019s Intergovernmental Panel on Climate Change are usually grim affairs. But even by that standard, last week\u2019s seemed particularly bleak. The upshot is that the world has already warmed by 1.1 degrees Celsius, and we\u2019re on track to […]<\/p>\n","protected":false},"author":1,"featured_media":27613,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"pagelayer_contact_templates":[],"_pagelayer_content":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26,17,8],"tags":[],"class_list":["post-27612","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-science","category-tech","category-technology"],"yoast_head":"\nForget banks: Investors should be worrying about the climate - Science and Nerds<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/scienceandnerds.com\/2023\/03\/27\/forget-banks-investors-should-be-worrying-about-the-climate\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Forget banks: Investors should be worrying about the climate - Science and Nerds\" \/>\n<meta property=\"og:description\" content=\"Source:https:\/\/techcrunch.com\/2023\/03\/26\/investors-climate-more-panicking\/ Forget banks: Investors should be worrying about the climate 2023-03-27 22:25:28 The reports issued by the U.N.\u2019s Intergovernmental Panel on Climate Change are usually grim affairs. 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