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Venture Capital’s role in backing technology innovations that address Decarb/NetZero (ie: Mitigation) is well understood; but what about VC’s role in backing technology innovations that help industry & society deal with our new climate reality (ie: Adaptation)?
Abstract
Our Point of View (PoV) is that venture capital will start playing a major role in backing early-stage technology companies with innovations that support our collective efforts to deal with our new climate reality. Efforts to stop/slow GHG emissions and 'fight climate change' will necessarily continue; however, venture capital is also starting to back innovations that help industry and society deal with the problem of an already changed climate - as seen in the daily headlines. This 'side' of Climate-tech is less about carbon, and more about heat/fire, wind, and especially water risk.
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Sections
1. Introduction
Some VCs have picked up on not-so-subtle inflection happening in the world around us, namely, planetary warming will blow past 1.5C targets and humanity will enter a chapter of our history where we will need to adapt to a new climate reality. We realize this sounds gloomy and perhaps defeatist. Still, it’s the sober assessment of many working in Climate that VCs need to accelerate investment into the adaptation ‘side’ of Climate-tech. Yet, per a survey of investors Mazarine conducted in late 2022, whilst there is recognition of the equal importance of mitigation and adaptation investments (83%), many VCs struggle with the adaptation side of Climate and typically return to a deal flow of companies with innovations that stop, slow, offset, or sequester carbon emissions. There are several ways to boost VC investment on the adaptation side, namely...
2. What is Climate Adaptation Tech ('CAT')?
A vertical of Climate-tech that includes technology innovations that support industry and society to adapt to our new climate reality. While technology innovations to transition to a low-carbon economy will necessarily continue, some VCs are starting to invest in technologies that help us adapt to an uncertain climate future, with water-related risks being a primary focus. The industry sectors likely to be hardest hit by our uncertain climate future include those with the largest exposure to water-related risks, namely...
3. Climate Adaptation Finance - Making Room for VCs
4. The Role of VCs (and the Technology Companies VCs Back) in Climate Adaptation
5. Shaping an Investment Thesis on the Adaptation 'Side' of Climate-tech
6. CAT Taxonomy & Deal Flow
7. Examples of 'in-market' CAT Deals
8. CAT Tailwinds from the White House
9. The First Mover Advantage for VCs in CAT
Request the full POV from Mazarine here.
We hope this PoV illuminates the growing role of VCs in Climate Adaptation Tech or ‘CAT’ and helps VCs join us in this movement to accelerate investment in innovations that help industry and society deal with our new climate reality.
More on how Mazarine sees opportunity in Climate-Tech here