In 2017, Candice Ammori was studying for her master’s in Statistics at the University of Michigan, with the goal of pursuing a PhD.
After a diverse career working on social impact in Southeast Asia and as a VP at a VR tech startup in the US, she had become interested in working in AI Ethics and decided to return to her alma mater to pick up the requisite expertise.
But not long into her first semester, the 2017 IPCC report from the UN came out — and everything changed.
The report painted a worrying but also detailed picture of the climate crisis, with rigorous research to back up its findings, of which 3 in particular caught Candice's attention:
- So far, we've already seen ~1.0°C of global warming above pre-industrial levels.
- This number is due to reach 1.5°C between 2030-2052 at the current rate of carbon emission globally.
- A difference of just half a degree, moving from 1.5°C to 2°C, would have catastrophic implications.
To be specific: just half a degree of additional warming beyond the 1.5°C threshold will cause a massive spike in extreme temperatures. There will also be a rise in drought and extreme precipitation, in the commonality and severity of wildfires, and we will see a doubling of the number of species experiencing critical habitat loss — among many other problems.
I realized there is a world of difference between 1.5°C and 2°C
For Candice, this was a nerve-wracking revelation. She realized that the planet was dancing on a knife's edge: a carbon threshold which, once crossed, would multiply the problems we face as a species and as a planet. And this scenario only takes the more conservative estimates into account— more dire projections have predicted up to 6°C in temperature rise in coming years.
From that moment on, Candice decided she wanted to leave the route she was on. After completing her master’s in statistics, she made it her mission to focus fully on understanding and helping tackle the climate crisis through climate tech.
Knowing the world needs more shots on goal in the form of climate tech companies, Candice decided to work on entrepreneurial-focused community building, which she saw as a high-leverage way to make an impact.
I wanted to bring everyone who's talented and interested along with me, help them transition to working on climate.
Today, she pursues that mission by means of On Deck's Climate Tech fellowship, which she built and leads as a Program Director.
What follows is a distillation of Candice’s high-level learnings since pivoting into focusing on climate tech. This article’s goal is twofold:
- To provide a high-level overview of the current burgeoning wave of climate tech: the emerging players, the investing landscape, and the main areas of company-building.
- To empower talented and interested people from all backgrounds with an understanding of how you might be able to transition into climate tech, just like Candice did.
Candice is emphatic that the very complexity of the problem of climate change has created an unmet demand for talent of all types — from policy wonks to hardware engineers, and from corporate consultants to scientists.
All types of people are needed, and all will play a part in building the paramount industry of our times. For those considering a transition into the space, this is a starting resource.
The Scope of Climate Tech
Each year of inaction, the climate problem compounds. In addition to the high-level global average temperature, there are many other indicators.
For example, 2020 saw the busiest hurricane season and the worst wildfire season on record. Climate catastrophes became an almost daily occurrence in that year — a single week in August saw Mumbai go underwater from monsoons, while on the other side of the world Canada's Milne ice shelf completely collapsed.
All of this forms a troubling trend, to say the least. For those paying attention, climate change makes for heartbreaking doom scrolling.
But Candice emphasizes that there are reasons for hope if decisive and urgent action is taken.
A paper published in Nature last year detailed how we might see the world's oceans to healthy levels within the next 30 years. EVs and renewables are starting to see mass-market adoption; even Bentley, the old legacy English automaker, is on track to go fully electric by 2026.
The planet is as resilient as we are as humans — probably more resilient. The future will be different in ways we can't imagine or predict, but I strongly believe there's always hope.
Innovation and the potential for scaling climate tech solutions is one of Candice's biggest reasons for optimism — and why she's so passionate about bringing talented people from all backgrounds into the climate tech industry.
What Is Climate Tech?
Climate tech, in Candice's view, is an industry devoted to tackling the biggest challenges that assail our planet — and one that is starting to see serious scale.
At a high level, a climate tech business is any company accelerating the transition to a more sustainable economy. A 2018 article by Stanford Social Innovation Review broke up climate tech companies into 5 major categories of businesses that:
- Facilitate the move to renewable energy
- Offer zero-emission transportation at scale
- Reduce the carbon impact of buildings & infrastructure
- Provide solutions for sustainable agriculture, forestry, and land use
- Decarbonize industrial processes
To this list, Candice would add a sixth category of businesses that use ML / AI to promote more sustainable practices. Given Candice’s background in statistics, she is convinced of the valuable impact that ML / AI will have on the climate tech space. She’s especially fond of the work Climatechange.ai does to catalyze impactful work at the intersection of climate change and machine learning.
At the end of the day, climate tech is about building business models and scaling tech solutions that make our economy sustainable in whatever form. It's a vast and growing universe.
The Climate Tech Inflection Point
The climate tech ecosystem is currently experiencing an inflection point: a growth and acceleration of interest, capital, and talent. But this resurgence is taking place in the shadow of the last wave of "Cleantech 1.0" companies — companies that conspicuously failed to achieve their mandate.
Lessons From Cleantech 1.0
Cleantech was a term mostly used in the early 2000s for a wave of mostly renewable energy companies more narrowly focused on efficiency.
Capital poured into this space following the dot com bust — investors, having raised a lot of money to invest in Web 1.0 businesses only for the entire category to blow up in their face, were looking for somewhere to put their money, and energy seemed like a promising answer.
Though it sounds great in theory, in practice this led to an overcapitalization of the sector at a time when it was still immature. Startups deep in R&D were a poor fit for venture capital money that has traditionally expected high returns within a short amount of time (3-5 years common to software, instead of the 18-20 years expected in the climate tech space).
While other factors aggravated the mess, this was by far the biggest reason Cleantech 1.0 failed. Investors poured capital into companies that were either not at a commercially scalable place, or were up against huge incumbent players that they couldn't compete against.
Candice points out, for instance, that the reason that LEDs ended up crashing in price was not because of startups, but because of large manufacturers figuring out how to produce them cheaply at scale.
From this experience during the last two decades, the climate tech industry has drawn the following lessons:
- Don't rely on policy. We can't create companies banking on policy change to make the business model work.
- Take your time to understand the science, regulatory landscape, and complexity before investing. You can't dump money in because the space sounds sexy — you have to understand the technology and regulatory landscape behind it.
But Cleantech 1.0 wasn't entirely futile. On the plus side, Candice says that the capital coming from the Obama Administration’s stimulus package to underwrite projects resulted in what later turned out to be very, very important downward price trends, especially in the exponential pricing collapse of solar panels and batteries — both of which are becoming scalable today. Large manufacturers were also able to crash the cost of LEDs, so that today we power much of our lighting with very energy-efficient bulbs.
So although the returns on investment that came out of the Cleantech 1.0 era weren't necessarily great (of $25 billion that went into startups from 2006 to 2011, investors lost more than half their money in the end and more than 90% of companies funded after 2007 didn’t return the capital invested, according to an MIT Energy Initiative analysis in 2016), there were important impacts that are just starting to bear fruit — speaking to the need for patient capital as a necessary pillar of the climate tech ecosystem.
There were notable successes like Tesla, which was one of the only notable successes that came out of the capital from Obama’s stimulus package that went to backing early-stage companies instead of underwriting projects, but they remained the exception to the rule for Cleantech 1.0. This speaks to the risk of investing in an industry before it had reached maturity. But as any early Tesla investor will tell you, the risk is commensurate with the reward.
How Things Have Changed: The Dawning New Era in Climate Tech
Out of the dust of Cleantech 1.0's collapse, a new wave of climate tech has arisen. It is more broadly focused than before and is rising quickly as climate tech sees a new inflection point.
According to Candice, there are least 5 major ways that the current landscape is different.
1. It's as much of a scaling and societal change problem now as it is a technical problem.
While there remain significant barriers to the scale-up of clean technologies, those barriers stem not from the inherent technical challenges of innovation, but rather from the market dynamics within which these technologies have to compete and reach distribution. Beyond these market dynamics, solving the climate problem requires large societal shifts in order to achieve a transition.
2. New types of talent are entering the ecosystem
As climate tech enters the scaling stage, business talent is entering the ecosystem more now than ever before.
Examples include talented investors like Chris Sacca, Clay Dumas, and the rest of Lowercarbon Capital. Unlike during Cleantech 1.0, these new investors are taking their time to learn the science (even going so far as to hire a director of science, Dr. Clea Kolster, who participated in ODCT1). Increasingly, investors are realizing they have to be smart and patient to make an impact in the climate space.
There is also a large group of company-builders from the tech world entering climate tech, bringing in a level of talent that candidly hasn't existed as much in the climate sector before. People who were founders or first 50 employees at tech companies that sold for a lot of money are now starting to become Founders in the climate tech space (similar to the Paypal Mafia effect with the last generation of tech companies — one of whom, Yishan Wong, actually started a “global forest accelerator”.).
3. General vibe of rising energy
Candice observes that, given this influx of fresh talent, there's tremendous interest and enthusiasm in climate tech unlike what we've seen before. People looking to get involved who are so passionate that they are leaving high-paying jobs in tech and other industries just to figure out a path in.
What I love about what's happening now is that there's all this new energy.
This level of influx from company-builders from highly-skilled industries is something that she sees as an encouraging sign. But it's important not to get swept away with the burgeoning enthusiasm — rigorous investigation into companies and market viability is still needed and healthy before starting or investing in something in the space.
4. Ongoing technological advances
In the last 10 years since Cleantech 1.0, the space has seen incredible technical advances and an influx of younger academics explicitly interested in breaking through technological barriers to help our world emit fewer greenhouse gases, as well as capture and store already emitted greenhouse gases more permanently than we have been able to before.
While continuing innovation will be a key part of addressing the climate crisis moving forward, today’s technological world looks massively different to how it did during Cleantech 1.0.
5. The explosion of climate tech investing
The last and perhaps most significant aspect of the inflection in Climate Tech is the surge in investment capital that the space has seen over the past ~6 years.
According to a PWC Report on the State of Climate Tech in 2020, VC investment in Climate Tech grew from a pace of $418 million a year in 2013 to $16.3 billion in 2019, which represents a 40x increase over 6 years. For comparison, that figure is 3x the growth rate of VC investment into AI over the same period and 5x the growth rate of VC in general.
There's still a lot of room to grow — only 6% of total capital invested in 2019 went to climate tech. But the growth rate is encouraging; climate tech is the fastest growing VC sector, and with that, we are seeing a different magnitude and quality of investors coming in.
The challenge with climate tech investing is that it requires patient capital. To do this, VCs need to extend their investment horizons for climate tech in order for those investments to pay off.
Climate-tech-focused firms like Breakthrough Energy Ventures, G2VP, Powerhouse, Greentown Labs, Lowercarbon Capital, Congruent Ventures, and Energy Impact Partners are are examples of investors who have become well-versed in the technical and timeline risks inherent to investing in climate tech.
The rewards for such investors, if their investments pan out, could be quite massive. Commenting on the skyrocketing wealth of Elon Musk, Chamath Palihapitiya went so far as to predict that the world's first trillionaire would be someone working in climate change — whether that ends up being Elon or someone else is an open question.
Climate Tech Companies: Built Differently
Though interest, capital, and energy in the space is ascending, the complexity of building a climate tech company remains an obstacle.
So what's different about building a climate tech company? How are the needs different?
According to Candice, the particular needs of climate tech startups somewhat mirror those working in healthcare; just like healthcare, climate tech companies are working within a complex system with many different players who have a role and a stake in the outcome.
The challenge is that all these actors need to be all sitting at the same table to even diagnose the problem, let alone build a solution, including people who:
- Understand the regulatory framework. Policy plays a huge role, whether working in water or in carbon removal, or if you're applying for grant money or selling into government.
- Can help with different types of investment. Huge capital barriers often confront new climate tech companies, initiatives, and technologies that must be overcome to gain traction. Investing in climate tech is different than investing in normal companies.
- Understand the business landscape & models. Candice stresses that at this point in the maturation of climate tech, scaling distribution of climate solutions in the market is often as or more difficult than solving technical problems.
- Understand the science. Researchers, academics, and climate scientists, and others with deep subject-matter expertise are indispensable parts of any solution.
Assembling these different types of talent together is the first unique challenge of building a climate tech company. Another is the investment process itself.
For a lot of climate tech founders, VC money is just one part of the full portfolio of funding sources they will need to draw from, as climate tech companies can be capital intensive. Though VCs today recognize they have to extend their horizons for expected returns in the space (a model pioneered by Breakthrough Energy Ventures), other sources are often also needed.
Candice notes that a great place that climate tech companies can go to for money is to grants and/or the government. OpenGrants, started by ODCT1 Fellow Sedale Turbovsky, is a great resource for climate companies, as many are eligible for grant funding.
Catalytic Capital, defined by MacArthur Foundation as “investment capital that is patient, risk-tolerant, concessionary, and flexible in ways that differ from conventional investment,” is especially important in the climate tech space.
Prime Coalition is another leader in this space. They are a 501(c)(3) public charity that “partners with mission-aligned investors to support extraordinary companies that combat climate change, have a high likelihood of achieving commercial success, and would otherwise have a difficult time raising adequate financial support to scale.” The climate tech space could use more examples of innovative and useful financial models that aggregate capital from different sources and invest in worthwhile companies over a longer time horizon.
In addition to this, another piece of the investment framework for climate tech that's different is project finance. This is often the best route to go when building long-term infrastructure, industrial projects, and public services. Cash flow from the project pays back the debt and equity coming from project finance.
Generate Capital is an innovator in the project finance space and a big reason solar is as widespread as it is today. It’s founder, Jigar Shah, is the newest Director of the DOE Loan Programs Office, the same office that was responsible for investing in Tesla back during Obama’s days. Having people like him in charge of the program is exciting for climate tech entrepreneurs everywhere.
As mentioned earlier, the business model challenge is also significant. You might assume that some of the biggest barriers for building climate tech companies are related to tech, but in truth the market dynamics in which these technologies have to compete is generally the bigger issue when it comes to building and scaling a climate tech company.
For instance, a common fate for climate tech startups is "death by pilot": a lot of companies are able to get a pilot through the door, but even if that project is successful in theory, there's a big gap between having a successful pilot and building a successful company, and a lot of companies die in that gap. This is one of the major valleys of death for climate tech startups.
It's easy to get overwhelmed when thinking about climate, but it's better to get involved. The first step is taking action. Let any fear that you have around it be a motivator and opportunity to leverage your skills and ingenuity, to develop scale solutions that can help fix it, and to do it in a community of folks hoping to do the same.
Assembling the Team
The makeup of successful founding teams in startups differ according to industry. For climate tech, founding teams should generally have a mix of a few different people:
- A climate scientist or researcher - if it's a deep tech climate company, you need someone who has the depth of knowledge and wants to start a company (maybe they're spinning their PhD project off into a company). Candice notes that Activate Fellowship does a good job of helping founders in this category. They give 2 years of funding and other resources to that type of person to build their company.
- Commercializers and builders - these are often people who have maybe founded a company before and sold it. Jason Jacobs is a great archetype of this. He built and sold Runkeeper in 2016, then became focused full time on climate in 2018, and started a podcast, community, and became an investor. In general, you want someone with startup experience as a counterpart to the scientist.
- (Optional) Technical founders - the founding team may include hardware and/or software engineers, depending on what’s being built.
The Climate Tech Company Landscape: 3 Interesting Categories
Earlier we detailed the 6 categories of climate tech companies that make up the current landscape. Their common theme was helping to transition to a more sustainable economy.
Of those, Candice is particularly excited by the traction we're seeing in the following 3 categories — something that might be worth thinking about if you're transitioning into climate tech but haven't yet decided what to work on in particular:
- Carbon Removal: A lot of the most exciting companies Candice sees are in carbon renewal. The IPCC report said that we can't actually stay at 1.5 degrees celsius of warming without removing some carbon from the atmosphere — it has effectively moved from a nice-to-have to a need-to-have. Interesting stuff happening with carbon removal. Examples:
- Carbon180 - an organization that helps start carbon removal companies.
- Opus 12 - company started by an ODF and ODCT alumna Etosha Cave.
- Machine Learning / AI: This is a general purpose technology that has reached its own inflection point recently, with many yet-to-be-realized applications in climate tech. Candice is excited not only at the prospect of using AI to map what's happening with the climate (weather changes, long-term projects on sea rise, etc.), but is even more interested in the solutions that may come from using ML and robotics to help solve climate challenges. Example companies:
- Renewable Energy: within this space, nuclear is attracting a lot of interest and is a lot less dangerous than is commonly thought, with promise in both fission and fusion (only fission exists right now). The other thing that Candice finds interesting in energy is that the prices of solar and wind have dropped so dramatically that some studies have come out claiming that scaling clean energy appropriately would help us get to carbon net zero fairly quickly. This is more of a business problem than a technical one.
On Deck Climate Tech: How To Get Involved
A common theme in solving climate problems is the need to get people from all backgrounds in the same room, to facilitate communication, problem solving, and sharing of expertise.
On Deck's Climate Tech fellowship was built by Candice for this exact purpose. ODCT is a cross-section of the larger ecosystem that serves to:
- Help people transition into working in the climate tech industry.
- Build a community with other people of diverse backgrounds.
- Accelerate the impact individuals can have on the climate tech space.
- Increase the number of promising climate tech companies started & scaled.
For anyone who wants to start, join, or otherwise support climate tech startups — this is a space for you. If every talented, kind, and giving person with different expertise in the climate space was in a room, that's what this fellowship will be like. Fellow backgrounds have included and can include:
- Successful entrepreneurs and serial founders
- Engineers and science PhDs
- Business leaders
- Corporate managers, consultants and bankers
- Policy wonks
- Investors
In short, anyone who made a commitment to themselves that they're going all in transitioning into climate tech is welcome. Learn more and apply here.
Recommended Resources
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