Friday Letter: Climate tech is more than just a name change

As climate tech investing gains momentum, diverse-owned start-ups are the ones showing some of the greatest potential to innovate in the sector, according to our latest cover story.

For our latest cover story on climate tech investing, we set out to pin down what is different this time. Is this just a rebranding of the cleantech name?

Just 10 years ago, cleantech investing was at its peak in terms of dollars going into the sector. Kleiner Perkins, Khosla Ventures, VantagePoint Capital Partners and a host of other firms were jumping into cleantech investing. Going green was on the upswing in venture capital.

Then there was Solyndra’s bankruptcy in September 2011 after the company raised in excess of $1 billion in equity and federal grants. Unfortunately for the cleantech industry, the high-profile failure of Solyndra, as well as Fisker Automotive, stuck with investors for years and green investing declined.

But circumstances have changed. Nearly a decade on, we’re seeing cleantech investing bounce back. Now, it’s known as climate tech, but whatever you call it, Union Square Ventures and Fifth Wall have dedicated funds for it.

Chris and Crystal Sacca have come out of retirement to launch Lowercarbon Capital with their own money. And a host of other firms are also emerging to invest in the sector.

So we tasked Jordan Stutts, a reporter in the PEI Media group, to look into what else has changed besides the name. Stutts came back with a unique angle. The surge goes hand in hand with an uptick in diverse entrepreneurs in the field. And not only are the founders, such as Donnel Baird of BlocPower, representative of this diverse group, but their tech is benefiting low-income communities, a demographic largely ignored 10-plus years ago.

How long-lasting climate tech investing will be remains to be seen. But climate change is here, and it’s impacting us all. That alone should keep investors motivated. And if a byproduct of this is that diverse entrepreneurs stand to benefit, then so much the better.

Tell me what you think. Are you investing in climate tech or have comments on it? You can drop me a note at agoldfisher@buyoutsinsider.com.