McKinsey expects investment in the industry to explode to between $9 trillion and $12 trillion globally by 2030. Companies with at least one female founder are increasingly creating disruptive technologies to ensure a greener future for the planet, but still, their share of venture dollars in the climate and clean tech space (16.8%) is not keeping up with the overall percentage (20.3%), according to PitchBook’s U.S. VC female founders dashboard. In general female founders raise less per deal than their male counterparts, it is worse in the climate and clean tech industry.
Still, there is cause for optimism. Educational institutions are focusing on climate as an academic endeavor, and women are pursuing these degrees. Women are becoming VCs in the sector, and they are more likely to be funding the next generation of female founders who are saving the planet.
The State of Climate Investment
Even with headwinds like inflation, rising interest rates, supply chain constraints, and reliance on fossil fuel due to energy insecurity, climate-related investments held strong relative to overall venture capital investment in the first quarter of 2023. Venture capital investment is being boosted by unparalleled spending by U.S. and European government spending, policy support, and regulation.
U.S. federal government spending on climate tech is projected to be more than triple this year. Even with reduced venture capital funding between 2021 to 2022, the climate tech sector showed resilience, and more deals were done in 2022 than in 2021.
“We are seeing two exciting trends converge in the climate space through our investing work at Rethink Impact; the passage of the CHIPs Act, the Infrastructure Bill, and the IRA are drawing private capital into the space, while efforts like the Climate Draft and the growing zeitgeist around the urgency of climate change are spurring some of the most talented—and diverse—tech and entrepreneurial leaders in the market to start or join companies tackling climate issues,” said Heidi Patel, a Managing Partner at Rethink Impact. The VC firm is the largest, U.S.-based VC firm investing in female and non-binary leaders using tech to solve the world’s biggest problems.
Historically, it’s been harder for women and BIPOC, who may not be in the networks with access to venture investment opportunities. Yet, they are the ones most likely to be affected by climate change. “[For example], Meena Sankaran grew up in India and experienced just about every waterborne disease before the age of 17,” said Patel. “Her U.S.-based climate tech company, KETOS, was backed by Rethink Impact, Citi Impact, and others to monitor water quality and limit contamination by some of the largest car manufacturers, agricultural producers, and industrial process companies in the world.”
Female Founders Have The Passion And Skills To Address Climate Change
Whether the subject is hurricanes, tornadoes, blizzards, or firestorms, top women scientists and technologies are attracted to solving the existential risk of climate change. Female founders are increasingly at the forefront of developing environmental and sustainability solutions.
Over the past decade, climate- and clean-tech companies with at least one female founder have increased their proportion of dollars raised from 11.9% to 16.8%. In 2014, these companies raised less than $1 billion. By 2022, they raised $3.2 billion ($1.3 in Q1 2023). The proportion of climate- and clean-tech deals with at least one female founder grew from 14.6% in 2014 to 26.5% in 2023. Over the past decade, deals rose from 57 in 2014 to 257 in 2022 (63 in Q1 2023).
There is an influx of women scientists and technologists, building and scaling companies with meaningful climate and sustainable industry implications. This bodes well for seeing more women as founders, and they are particularly well-suited to solving complex challenges.
Contributing to an increasingly diverse pipeline of founders is a growing focus of academic institutions on equipping the next generation with a combination of business and technical skills to scale companies to take meaningful climate action. Last year VC and philanthropist John Doer, and his wife Ann, donated $1.1 billion to Stanford University for a new climate school. Columbia Business School’s Tamer Center for Social Enterprise has seen an influx of students pursuing studies and careers focused on climate and sustainable enterprise. Programs like these are supporting a deeper pipeline of diverse founders in the field.
Women approach problem-solving holistically and systematically. “Research shows that women are particularly adept in utilizing multiple lenses when analyzing challenges and designing solutions,” Patel referenced Julia Boorstin’s book, When Women Lead. “When you couple this strength with the fact that women CEOs tend to spend 25% less capital per month than men while achieving similar growth milestones, how can we not be backing many more women leaders in the climate tech investment ecosystem? Non-linear, complex problems need creative solutions, and women are the best bet out there to do it – particularly when we’re in a funding environment where every dollar counts.”
Whether the times are turbulent or stable, research by Zenger Folkman found that women are better leaders. An analysis by Female Founders Fund revealed that female founders were resilient in navigating the challenging market conditions of 2022 and have not been disproportionately impacted by the market downturn.
Female Founders Are Creating Transformational Climate Technologies
Davida Herzl, CEO and cofounder at Aclima, uses artificial intelligence and machine learning to diagnose the health of our air at hyperlocal levels. The technology is being used to monitor air quality in 10 disadvantaged communities in New York State. Vehicles are equipped with sensors and driven through neighborhoods to collect real-time data so appropriate mitigations can be determined.
Dr. Lisa Dyson, founder and CEO at Air Protein, received her Ph.D. from MIT in 2004. In 2005, she experienced first-hand the devastation of Hurricane Katrina. Inspired by NASA’s work in the 1970s to recycle elements in the air into protein, in 2007, she filed a patent for carbon transformation and, in 2016, had a proof of concept. Solving for climate change often requires complex solutions that have long time horizons.
The company is seeking USDA approval to bring recycled carbon cultivated into food with the taste and texture of chicken, meat, and seafood.
Studies show that farmers lose as much as 40% of their yields, and over application wastes 30% of pesticides, negatively impacting our air, water, and soil. InnerPlant was co-founded in 2018 by Shely Aronov, CEO, to make farming more efficient.
The company has developed genetically modified crops that can communicate their needs for water and pesticides so farmers can act more quickly and precisely meet their needs. Better data gives farmers the tools to increase yields while reducing chemical and water inputs.
Regrow, led by CEO Anastasia Volkova, uses satellite sensing and proprietary soil carbon models to monitor regenerative agriculture efforts on more than 1.2 billion acres of farmland globally. Regrow’s technological leadership on this front drew behemoth customers like General Mills and Cargill to work with Regrow to improve the sustainability of their agricultural supply chains.
Full Harvest, which was started by Christine Moseley, is tackling the food waste crisis, a top contributor to climate change. Full Harvest started by helping food and beverage companies, like Danone, purchase 85 million pounds of surplus and imperfect produce to use in juices, yogurt, soups, and sauces. Now, Full Harvest’s online B2B marketplace has expanded to serve the entire produce supply chain, including Grade #1 products, to help all commercial buyers and sellers of produce, lower their operating expenses and avoid food waste as a core part of their day-to-day business.
Women Are Becoming VCs Focused On Climate and Sustainability
VCs with women general partners (GPs) focused on climate and clean tech include Voyager Capital, which recently raised a $100 million fund, and Buoyant Ventures announced a $76 million fund, as well as Galvanize Climate Solutions. Other firms focused on investing in women founders that have been active in climate tech include Plum Alley Investments, Portfolia, and How Women Invest. Amazon announced last year a $50 million Climate Pledge Fund to invest in climate companies led by women.
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Article Credits: Forbes