Clean Energy Ventures, a climate tech-focused venture capital firm, took a cautious approach during the pandemic-induced bubble in the startup world. Recognizing the frothiness in the market, they decided to remain disciplined and wait for the right opportunities to deploy their capital. Despite the challenges posed by COVID-19, Clean Energy Ventures successfully raised its second fund, surpassing its initial target of $200 million within six months.
The firm’s ability to attract institutional investors highlights the growing interest in climate tech. These investors see the potential for significant returns while also addressing the urgent need to combat climate change. Clean Energy Ventures plans to allocate 30% to 40% of its second fund for follow-on investments in “pre-growth” companies that have de-risked their technology and entered the early stages of market adoption.
One of the main challenges faced by climate tech startups is the so-called “valley of death” or “first-of-a-kind” problem. These startups often struggle to bridge the gap between developing their technology and achieving commercial success. Clean Energy Ventures aims to address this issue by providing financial instruments and follow-on investments to help promising portfolio companies cross the chasm.
The firm’s focus on early-stage climate tech startups remains unchanged, but they will also consider “pre-growth” investments that involve larger checks and higher valuations. By investing in startups that have already de-risked their technology and have a product in the market, Clean Energy Ventures aims to fill gaps in the market and support the adoption of critical technologies.
The success of Clean Energy Ventures’ fundraising efforts can be attributed to their commitment to greenhouse gas emissions reduction. Institutional investors from various countries, including Turkey, Thailand, and Germany, recognized the importance of supporting climate tech startups and building a manufacturing base in their respective countries.
Overall, Clean Energy Ventures’ approach of remaining disciplined during market volatility and focusing on early-stage climate tech startups has paid off. Their second fund, totaling $305 million, will not only support the development of innovative technologies but also help bridge the gap between research and commercialization. By attracting institutional investors committed to greenhouse gas emissions reduction, Clean Energy Ventures is well-positioned to drive positive change in the climate tech industry.
