1955 Capital’s Andrew Chung: Why ClimateTech Is Heating Up in Venture Capital

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="By IPO Edge Staff” data-reactid=”19″>By IPO Edge Staff

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The climate has long been a hot button topic for politicians and activists, and it is becoming one for investors too. Millennials, now the largest demographic in the United States, are far more likely to choose products, services, companies, and candidates that reduce damage to the environment – or better yet, improve it. In 2018, sustainability-related products grew faster than their conventional counterparts in more than&nbsp;90 percent&nbsp;of Consumer Packaged Goods product categories.” data-reactid=”20″>The climate has long been a hot button topic for politicians and activists, and it is becoming one for investors too. Millennials, now the largest demographic in the United States, are far more likely to choose products, services, companies, and candidates that reduce damage to the environment – or better yet, improve it. In 2018, sustainability-related products grew faster than their conventional counterparts in more than 90 percent of Consumer Packaged Goods product categories.

Environmental advocates are growing more and more concerned, calling attention to the ways the changing climate is damaging wildlife, the world’s most pristine spaces, and the future we are creating for the next generation. The public is starting to listen. Positive climate impact is moving from a “nice to have” to a “must have” characteristic of businesses.

It’s no surprise, then, that entrepreneurs are following suit. Venture capitalists jumping on board, and just as we have FinTech, AdTech, AgTech, and FoodTech – VCs are betting that “ClimateTech” will soon join these emerging and established markets.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="That’s the aim of veteran venture capitalist Andrew Chung’s 1955 Capital, a firm he created to foster technologies in developed countries that can be rapidly commercialized and scaled to solve pressing challenges in the developing world, especially in China. A true serial entrepreneur, Chung started his first company while still at Harvard. After stints at Bain Capital, Lightspeed Ventures, and Khosla Ventures–where he launched a series of ClimateTech businesses over the past 15 years—he and 1955 are armed with more than $200 million in capital commitments to connect new companies with the world’s largest markets.” data-reactid=”23″>That’s the aim of veteran venture capitalist Andrew Chung’s 1955 Capital, a firm he created to foster technologies in developed countries that can be rapidly commercialized and scaled to solve pressing challenges in the developing world, especially in China. A true serial entrepreneur, Chung started his first company while still at Harvard. After stints at Bain Capital, Lightspeed Ventures, and Khosla Ventures–where he launched a series of ClimateTech businesses over the past 15 years—he and 1955 are armed with more than $200 million in capital commitments to connect new companies with the world’s largest markets.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="What is ClimateTech?” data-reactid=”24″>What is ClimateTech?

At the most basic level, ClimateTech is a category of solutions that help combat climate change and to enable governments, corporations, and individuals to take action. ClimateTech encompasses several distinct categories of technology, ranging from tech designed to make cleaner fuel, greener agriculture (a crossover into AgTech), sustainable food products (a crossover into FoodTech), and remove CO2 from the atmosphere.

As these technologies are developed, VCs are paying attention. They’re discovering that the ClimateTech industry is a broad one, with a diverse group of solutions that are ripe for investment.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="CleanTech 2.0” data-reactid=”27″>CleanTech 2.0

ClimateTech can also be seen as a kind of CleanTech 2.0. As recently as 2016, analysts predicted that CleanTech simply couldn’t generate profits. MIT went so far as to declare CleanTech “dead”.  The idea behind the postmortem was simple – researchers believed that there was not enough money or interest in CleanTech to turn a profit. Busts like Solyndra had soured appetites and the risk-reward balance tilted largely against nascent technologies. CleanTech failed to read that memo and has rebounded in a big way.

Now, just a few years later, a massive shift is beginning to impact the industry, one that proves that even the experts don’t always get things right. Massive investments include Bill Gates, Jeff Bezos, and Jack Ma in their $1 billion Breakthrough Energy Ventures, and Jeff Bezos’ $10 billion Earth Fund. And with social change leaders like Greta Thunberg attaining rockstar status, we’re seeing a fresh and widespread interest in ClimateTech.

While policy and social change are all positive indicators, perhaps the most intriguing thing about ClimateTech is its projected future – which researchers now predict to be in the trillions — $4.3 trillion, to be exact – by 2030.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Cleantech lagged because consumers and enterprises didn’t take climate change seriously enough for it to impact their spending,” Chung said. “Now that it is seen as an existential threat to the planet, there is more urgency about solving it by consumers, corporations, governments, and investors. It’s a perfect storm.”” data-reactid=”31″>“Cleantech lagged because consumers and enterprises didn’t take climate change seriously enough for it to impact their spending,” Chung said. “Now that it is seen as an existential threat to the planet, there is more urgency about solving it by consumers, corporations, governments, and investors. It’s a perfect storm.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Following the Money” data-reactid=”32″>Following the Money

It’s a classic case of following the money. When governments, environmental activists, businesses, the general public agree that solutions are desperately needed and that a problem cannot be ignored, you have the makings of a mass market. Investors see the opportunity.