Read more from the TechCrunch Global Affairs ProjectDue to short-term horizons, CEOs at large companies focus on incremental growth, cost savings and other “market-driven” imperatives and cannot stomach the risks required to develop and commercialize disruptive innovation. Although history is filled with vivid lessons in disruption, big company CEOs still don’t lead. As a result, we continue to find areas where long time horizons, high risks and lack of leadership yield opportunities uniquely tailored to VC. A striking example is that 20 years after Tesla, there are still such opportunities in electrifying the transportation space. For instance, with the EV revolution now underway, the need to recycle EVs and their batteries is becoming critical to sustaining growth; the leadership position in this nascent endeavor to recycle batteries is once more occupied by a startup, Redwood Materials.
Venture investors can push forward climate-friendly disruption in many legacy industries. Take, for instance, the chemical and manufacturing sectors. The incumbent companies in these and other heavy industries are slow to act and culturally inept in reacting to disruption. VC money, on the other hand, is helping to develop technologies that will give them no choice but to adapt, such as sourcing hydrocarbons sustainably by using renewable energy to separate hydrogen from water and carbon from air and combining these elements into all the chemicals that we have until now made from coal, oil and gas. Young companies like Electric Hydrogen and Twelve are doing exactly that.
Venture is also well positioned to provide
funding for experimental technologies, like fusion energy. Outside of
government, there are essentially no incumbent companies in this area, and with
no adjacent companies bold enough to seize the day, the field is reliant on
startups. Several startups have this year attracted more than $500 million each
of investment capital, including Helion Energy and Commonwealth Fusion Systems.
Despite my optimism about our ability to have
an impact, we must remember that tech, let alone venture funding, is only one
piece of the puzzle in addressing climate change. We must scale clean tech
solutions unnaturally fast in order to combat the relentless march of climate
change, and VC is not well structured as a sector to address some of those key
challenges.
