For climate tech investors, the team behind the tech matters
Climate tech success hinges on the technology's capability, the team behind the tech, and their vision for building a viable business and scaling it.
Climate tech innovations need more than cutting-edge technology to succeed and earn investments -- they need teams dedicated to turning their vision into a viable business.
That's according to experts speaking during MIT Technology Review's inaugural ClimateTech conference Wednesday. When deciding which companies will receive investment dollars, investors tend to consider the technology and team as a whole rather than individually, said Carmichael Roberts, co-founder of venture capital firm Material Impact.
"That combination of the technology not just by itself, but put in the context of the folks on that journey to build the company is what we look for," he said during the conference.
Climate tech investment is increasing, thanks in part to the passage of the Inflation Reduction Act (IRA), which has set aside $385 billion for clean energy development, and the $280 billion CHIPS and Science Act of 2022.
Earning investments with innovative tech, strong team
The two main factors Roberts said he considers before investing in a company are technology with the potential to cause significant change and a team passionate enough to bring that vision to fruition.
Material Impact has invested in several companies in the energy category, including Source, a company using hydropanels to collect solar energy and extract drinking water from the air.
Roberts said that for climate tech investments in particular, Material Impact focuses on companies with tools that mitigate climate issues and challenges. He said the company also looks at climate tech that can help get ahead of problems.
Katie RaeCEO and managing partner, The Engine
Katie Rae, CEO and managing partner of venture capital firm The Engine, echoed Roberts on the importance of both the technology and the team to investors.
"If there isn't a team, then the technology is never going anywhere," she said during the conference.
In 2016, MIT founded The Engine to invest not just in advanced technologies, but in educating the scientists behind the technologies on becoming entrepreneurs and bringing their discoveries to market.
"We have to bet on this group of people because the problems we're facing are often solved by cutting-edge technologies," she said.
In addition to supporting creators of new technologies, The Engine invests in technologies. Rae said climate tech that currently has investors excited revolves around the "built environment." She said products such as clean cement, steel production and HVAC systems enabling lower carbon footprints are catching investors' eyes.
Clean energy generation and storage also remain important climate technologies, Rae said.
Impact of federal climate bills
Rae described the IRA as the "most significant bill we've had in 80 years in terms of clean technology."
"Think about how many different industries within clean tech it's going to touch, think about how it's going to help companies scale faster -- it's enormous," she said.
Material Impact's Roberts said the IRA aims to support climate tech projects nationwide, whether through creating clean energy jobs or providing tax credits to research and build new climate tech, which could incentivize states that might not typically be part of the climate conversation to act.
"When you see something like that get passed, it sends a big signal out to every state," Roberts said. "And they're all saying to themselves, 'How are we relevant to that? What are the unique assets we have?'"
Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.