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Shayle & Ramez address four core skeptic Qs that flow from the MIT paper line of thinking -- is climate deeptech 1) too capital intensive for VC; 2) unable to land attractive exits; 3) too slow / not a fit w VC time horizons; 4) unable to compete in highly commoditized markets?

Taking each Q in turn starting with #1 - too capital intensive?

Outdated Q to call climate deeptech much more capital intensive - think WeWork, Uber, etc

Follow-on capital commensurate w needs is increasingly available -- see e.g. Helion, Lowercarbon, new EIP fund, etc

and though much more capital means much higher exit expectations ...

Q #2: can you find attractive exits?

Obviously this has changed a ton -- public markets you have SPACs (disproportionately benefiting deeptech ventures?) and even traditional IPOs (TuSimple e.g. even pre commercial scale)

While acquisition landscape also much better last few years e.g. European utilities & oil/gas trying to get a slice of clean tech pie ... though to be fair not many multi-billion $ acquis yet

Q #3: Too long a timeline for VC?

True that enterprise software and similar will always be faster -- but ...

De-carbonizing / green-ing urgency from buyers draws commercial traction forward (easier to get LOIs / even firm orders further in advance, etc.)

Can iterate tech dev faster now than during 1.0 wave - machine learning, new R&D tools (syntehtic bio etc) - even if regulatory constraints and incumbency still slow things down

Even if your pathway is slower by comparison, you can wind up with more defensible moat on the back end -- and there will be subset of capital providers who see that and are willing to align timelines as needed

Plenty of examples of clean tech companies going public before hitting true commercial scale (QuantumScape, ESS) ... and retail investors hunting for next Tesla

Other sectors like biotech are similar timeline / regulatory-wise but proven VC success over decades -- issue is whether size of prize is worth the wait/risk

Q #4: Margin attractiveness / viability of climate deeptech in commoditized markets?

Will Hydrogen Look Like Solar?

Def a real issue and this IS hard ... cost-cost-cost obsession & don't under-estimate the pace of cost decline you'll be facing (speaking of which don't miss Shayle's earlier interview w Raffi Garabedian greentechmedia.com/articles/read/)

greentechmedia.com

This week on The Interchange: applying lessons from solar to the budding green hydrogen industry.

That said, the picture isn't totally bleak as regards competing in a commoditized space ...

More definitive clarity that policy tailwinds are coming in numerous spaces (e.g., energy storage, EVs, etc.)

Niche market footholds exist where you can get traction and be protected from full-on commoditization while you come down the cost curve enough to compete in the main arena

Often you can compete/differentiate on parameters that go beyond just cost

Sustaining a green premium at least for significant stretches of time may be viable - lots of decarbonizing pressure flowing upstream on supply chain given all the benefits that redound to end buyers going green (brand halo, employee concerns, etc.) ...