Investing in founders with scientific breakthroughs that address the climate challenge, at IST cube
By Kavita Surana, Principal at IST cube (Original Post on Medium.com)
I joined the investment team at IST cube, Austria in June 2021, coming from a world of research focused on accelerating climate and energy technology innovation. With the rest of the team, we articulated what climate-tech means in the scope of our deep-tech fund and how we can support start-ups and founders with scientific breakthroughs that address the climate challenge.
Why are we talking about climate-tech?
As a venture investment fund that is committed to science, climate change concerns us at IST cube at our core.
Science has enabled a rich understanding of the complex system that is the Earth’s climate. This year, the Nobel Prize in Physics and the synthesis of physical science evidence from leading climate scientists worldwide have highlighted the linkages between human-induced emissions, the Earth’s climate system, global temperature increase compared to pre-industrial levels, and its devastating impacts.
Science and technology have also offered solutions to the resulting climate challenge. Technological innovation (along with business models, public policies, and behaviours) has enabled the decarbonization of electricity and transportation through solar cells, wind turbines, electric vehicles, energy storage, and efficient lighting.
What about existing technologies?
According to the International Energy Agency (IEA), existing technologies will only lead to half of the emissions reductions needed to meet countries’ net zero emission goals by 2050. The remaining emissions (and any further ambitions) rely on technologies currently at the demonstration, prototype, or concept stage. We need to decarbonize everything from the production to the use of energy — power generation, long- and short-distance transport, energy intensive industries such as iron, steel, and cement, and agriculture — as well as remove carbon dioxide that has already been emitted. (See a long list here from the IEA, organized by the Technology Readiness Level). In parallel, we must ensure that other sustainability goals related to health, equity, and well-being are met.
That’s where climate-tech start-ups that build on science and technology can help. Such start-ups are increasingly central to developing, scaling up, and rapidly bringing to market solutions related to climate and sustainability challenges.
Why do climate-tech start-ups matter now?
Given the climate challenge, climate-tech has become increasingly relevant for a venture fund such as IST cube, focusing on both sound science and a sound business model. Although the first wave of climate-tech investments in the late 2000s frazzled investors because of multiple failures, the convergence of three factors makes climate-tech very different in 2021.
One, the business case for climate technologies has become increasingly robust because of growing and increasingly certain demand. Governments are taking unprecedented action to regulate and reduce emissions in sectors that underpin nearly all aspects of modern life — evident in proposed legislation such as EU’s Fit for 55 that aims to reduce emissions by 55% by 2030 and reach climate neutrality by 2050. Private investments are being held accountable for their sustainability priorities through the EU’s sustainability disclosure regulation and related taxonomy. Corporations are committing to cut their own emissions through targets in line with best practices to avoid greenwashing.
Two, funding from public agencies has created conditions for more climate-tech start-ups and founders. The science that addresses the climate and sustainability challenge propels forward ambitiously, thanks to rapidly expanding research, development, and demonstration funding from the European Union and from countries worldwide — and this has been coupled with efforts to boost entrepreneurship.
Three, investors have learned from past experiences in what measures can de-risk climate-tech start-ups, especially when products are rooted in science and technology (this is also the central theme of my research). Some favourable factors are: start-ups that collaborate with universities or research institutes; those that develop products and components that can eventually be standardized; science that spills over from areas that were not originally developed for climate-tech but offers useful applications (e.g., in lithium-ion batteries, wind power, and silicon photovoltaics); technologies that can reduce emissions at a scale consistent with global needs; and investor teams that can evaluate technological or industry-specific risks rather than the business case alone.
What kind of start-ups are in scope for us at IST cube?
As sector-agnostic science allies, we at IST cube are excited about all scientific breakthroughs that can potentially lead to scalable products. From our perspective, climate-tech is not a sector or vertical. Instead, it is a lens for looking at all kinds of scientific solutions that are relevant to climate and sustainability challenges.
Here are a few illustrative examples of how some recent developments in physical sciences, life sciences, and information and communication technologies (ICTs) would fall into the scope of our fund while addressing climate and sustainability challenges:
- applications of gene editing, synthetic biology, biotechnology, and electrochemistry in hydrogen, industrial processes, and agriculture (more examples here and here)
- advanced materials or processes that reduce resource consumption or improve energy efficiency; help manage waste and recycling; provide alternatives to carbon-intensive steel or cement; enable carbon removal; enable green hydrogen production (more examples here and here)
- applications of computing, sensors, earth observation, and automation that improve or optimize processes across economic sectors including energy, transportation, industry, and agriculture/forestry (more examples here and here)
How do we help climate-tech start-ups and founders?
Our investment team can help navigate the challenges science-driven start-ups and founders face in general and climate-tech start-ups face in particular. Besides capital, we support founders with our expertise in technology transfer, IP law, business development, human resources, and financing as well as connections to academics and industry. We also have deep sectoral know-how and networks that can help with local and international regulation in climate-relevant technologies, understanding climate change scenarios and pathways and how they shape markets, connecting to industries with decarbonization needs, or connecting with resources or organizations that help with emission and impact metrics.
If you have a start-up that is consistent with our approach or if you would just like to find out more, write to me at firstname.lastname@example.org.
Stay tuned for deeper dives on how scientific breakthroughs can meaningfully help address the climate challenge. We’ll discuss perspectives from our portfolio companies, including Vitrealab’s energy-efficient displays that can reduce energy consumption and Ribbon Biolabs’ DNA synthesis that can support groundbreaking work in synthetic biology and biotechnology.