Mazarine’s “Climate-Tech” Taxonomy
Updated: May 9
This is how we organize Climate-tech deal flow, which we recognize might not align with other venture investors who may bucket deals with a different taxonomy.
Climate-tech has two main 'sides'
“Climate Tech” can be divided into 2 main categories, Mitigation (i.e. reducing the extent/pace of planet warming, with a goal of eventually reversing the warming that has already occurred) and Adaptation (i.e. adjusting to the effects a warmer atmosphere). The Venn below illustrates each side’s technologies verticals, and those at the intersection.
The above Venn is the intellectual property of Mazarine Ventures LLC,
available to all under the Creative Commons (CC) license CC BY-NC.
'Climate Solutions' mostly refers to the mitigation side
At first, venture capital recognized the urgent need to back companies with innovations that help 'transition to a low carbon world'. Then, some VCs realized there is an attractive opportunity in carbon offset markets (eg: innovations that help increase carbon storage). Now, many are starting to realize that even if we stop all GHG emissions today, the warmer atmosphere is already destroying lives and livelihoods, ushering in the need to start investing in innovations that help industry and society deal with a changing climate.
"We are approaching the climate investment opportunity differently from other venture groups.
We believe the most compelling venture opportunity on the adaptation side is in backing early-stage companies with innovations that help everyone adapt to our new climate reality."
~Anders Hallsby, PhD, Partner, Mazarine
The adaptation 'side' is a story of water-risk
Inherently, a warmer atmosphere will have a profound impact on the water cycle, driving changes in the amount of water available (too much / too little) and impacting the quality of the water that is available. Consequently, many of the most important technology innovations for climate adaptation will address water-related risks, but don't quite fit in the so-called 'water industry'.
What about water/wastewater utilities?
Clearly, utilities will face increasing water quality and quantity challenges as the effects of a warmer atmosphere intensify. A drinking water utility in greater Seattle will be affected differently from a wastewater utility in Miami, and both will need to invest in innovations that help them adapt to risks spanning: sea level rise, groundwater salinity, urban flooding/ combined sewer overflow, biostability of drinking water in pipes, harmful algal blooms, and a long-list of climate-change-induced water-related risks unique to water/wastewater utilities.
Mazarine's Point of View
Beyond water/wastewater utilities, climate-change-induced water-related risks are presenting challenges to a wide range of industries spanning agriculture, aquaculture, finance, insurance, real estate, transportation, manufacturing, electric power utilities, mineral processing, and public health & safety. Water/wastewater utilities, as a market, is simply one market our portfolio companies may choose to compete in.
The 2022 Inflation Reduction Act (IRA) catalyzed our interest in what we refer to as Climate Adaptation Tech or "CAT". As a result, we have built a compelling thesis as the foundation of Mazarine Fund III.
Not enough water, too much water, and compromised water quality. These risks create headaches beyond water/wastewater utilities
Whilst fire, heat, and wind are clearly significant climate risks, with a background in 'water', Mazarine's entire focus is on climate-change-induced water-related risks, which brings us into a wide range of industries that wake up to water quantity/quality risks each day.
Water/wastewater on the mitigation side
The pumping of water and treatment of wastewater are responsible for about 10% of global greenhouse gas (GHG) emissions. Mazarine is very bullish on early-stage companies with innovations that help industry and society reduce GHG emissions tied to water/wastewater and realize NetZero goals. Our Fund I and Fund II are backing a number of companies in this realm, including Swirltex, Aquamembranes, and Pani.
Icons in the Venn Mazarine welcomes the opportunity to elaborate on trends and opportunities within each of the icons in this Venn Diagram. We recognize an icon like "Emergency Response Tools' can be understood in many ways.
Syndication As the deal flow on the adaptation side of Climate-Tech is less understood by traditional Climate-Tech investors, Mazarine welcomes opportunities to syndicate investment opportunities in Climate Adaptation Tech (or "CAT"). Please contact us to discuss where and how we might partner to back early-stage companies with innovations that help industry and society deal with our new climate reality.
Register for our Water-tech & Climate Symposium at WEFTEC on Oct 1, 2023 in Chicago. Here.