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Last year, the climate As the venture capital and startup worlds fret about the downturn and scramble to save money, technology seems invincible. In 2022, climate tech investors and founders may not have reached the heights of 2021, but they haven’t fallen off the cliff either.
In the first quarter of the year, we began to see a crack in the firewall that separates climate tech from the broader tech industry: the space fell by more than a third in terms of both deals and funding. .
Still, there are many possible reasons why the sector’s sudden stumble was a misstep and not the start of a downward spiral.
For one, the deflationary law has encouraged some to close deals earlier than expected. Many founders I spoke to said the law signed in August was both welcome and unexpected. Not only does it support new regulations and incentives, but it also brings certain climate technologies into the national conversation.
As a result, some founders felt they had to accelerate their plans. This may have made the pipe a little dry in the new year.
“The correction of climate technology companies has mostly been in the form of SPACs or entities that have declared themselves a winner-take-all entity.” Arch Rao, Founder and CEO, Span
Then SVB collapsed. The bank’s failure didn’t hit climate tech as hard as other sectors, but the bank was friendly to climate tech startups, accounting for 60 percent of its total financing for community solar projects.
But the real impact was felt at a deeper level: SVB’s failure didn’t make running a VC firm or startup any easier, however focused. “If you’re running an operations, enterprise, SVB stuff sets new conventions,” Congruent Ventures managing partner Abe Yokel told TechCrunch+. “You couldn’t make a capital call. You can’t use your line of credit or someone in your syndicate can’t.
Therefore, it is not surprising that Q1 deviated slightly from previous trends, in response to the new regulatory regime between the SVB and the market.
But what does the rest of 2023 look like?
Yokel doubts the pace of transfers will largely continue. “I suspect, based on the consensus count, she’s going to be very stable when she’s gone,” he said. We are seeing a lot of flow from the early stage as well as the mid to late stages.
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