The world needs innovative, scalable solutions to the climate crisis, and it needs them now. These solutions won’t come from politicians, but from creative business founders. Notably, the founders of so-called cleantech start-ups. Equally, these start-ups won’t scale without the backing of the kind of patient capital that government support can guarantee.
Whatever your views on the success or otherwise of the Cop26 meeting in Glasgow last year – and it’s easy to find plenty on both side of the “how much use was it?” fence – one purpose it served was to underline how solutions to the climate crisis don’t lie with politicians and governments, or with financiers, investors and entrepreneurs. The most effective solutions will come from successful coalitions between all these groups. What point is there in governments taxing this behaviour or encouraging another, greener alternative behaviour without the infrastructure, products and services to back that up?
The role of innovators and entrepreneurs in combatting the climate crisis has never been more obvious. Governments, even those informed by the most left field “creatively destructive” policy advisers, will never be creative enough to solve a problem as vast and sticky as the climate crisis. Likewise, cleantech entrepreneurs can innovate their hearts out and conjure up all sorts of clever solutions to elements of the climate crisis, but without the scale offered by major institutional investors and some government backing (so called patient capital), they won’t have any significant impact.
It was therefore heartening to read this week in the latest report from Startup Genome, The Global Startup Ecosystem Report: Cleantech Edition, of an initiative aimed squarely at closing this “scale-up gap”. The Entrepreneurship for Climate movement aims to bring together relevant parties to explore why cleantech start-ups have such a poor record when it comes to scaling. Relatively few reach unicorn status, especially when compared to similar start-ups in other subsectors, such as fintech or healthtech.
One of the major barriers identified is that cleantech solutions often come with a cost disadvantage over the conventional solutions they aim to replace – something Bill Gates has identified as the “green premium”. At The Cleantech Forum in San Francisco this week, Entrepreneurship for Climate launched a four-point action plan or manifesto to help give the cleantech sector the boost it needs:
Creating demand-side policies and getting global governments more aligned on a single set of laws and regulations to encourage wider take-up of cleantech solutions
Mobilizing early-stage capital with global industry expertise and customer relationships
Bringing scaling skills and business experience to passionate Cleantech entrepreneurs
Combining venture investors with foundations and government funds to create larger and more patient capital.
The main point that Entrepreneurship for Climate is making is that there is not a cleantech innovation gap. Rather there is a cleantech scale-up gap. There’s a long way to go and not much time to get there, but this initiative feels like a major step in the right direction and should help encourage more creative, innovative founders to build the fast-growth cleantech businesses the world needs.