It’s difficult to build high-growth clean tech companies using venture capital: Despoiling the planet has a much higher return on investment than saving it.
Twenty years ago, there were high hopes for companies aiming to mitigate environmental impacts, but an extended recession, China’s dominance over solar power manufacturing and low natural gas prices were just a few factors that undercut investor expectations and left the industry hobbled for years. Many vaunted products and technology never made it to market.
A 2016 MIT Energy Initiative working paper found that VC is “the wrong model for clean energy innovation.” It takes years to create economies of scale, and not every investor is willing to foot the bill for a decade of R&D.
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“If a new and more diverse set of actors avoids the mistakes of the clean tech VC boom and bust, then they may be able to support a new generation of clean tech companies,” the paper concluded.
That hypothetical cohort is now a reality: A McKinsey report found that climate tech “could attract $ 1.5 trillion to $ 2 trillion of annual capital investment” by 2025.
Senior Climate Writer Tim De Chant spoke to five investors to get their take on the state of the industry in Q3 2022. Their answers shed light on how VCs are reacting to the downturn, which tech may have the greatest potential for impact and what they ‘ re looking for at the moment:
- Pae Wu, General Partner, SOSV; CTO, IndieBio
- Christian Garcia, partner, Breakthrough Energy Ventures
- Rajesh Swaminathan, venture partner, Khosla Ventures
- Andrew Beebe, managing director, Obvious Ventures
- Amy Burr, President, JetBlue Technology Ventures
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During a downturn, sales teams should think like product managers
SaaS sales teams leave no stone unturned in search of greater efficiencies, but their focus is almost always on solving their own problems.
Studying strategies to boost lead generation is great, but sales teams also “should be looking at successful customer experiences and identify what went well in each case,” says Erol Toker, CEO and founder of Truly.co.
How many exchanges were required before a customer got a demo or signed a contract? Are you using lead quotas as a performance benchmark?
“Thinking as a PM means no lead quotas,” according to Toker. “Rather, it means focusing on the customer journey.”
Seeking product-market fit in a down market? Hire freelancers to manage your burn rate
Laying off employees often comes with an opportunity cost that can be hard to make up for later: Remaining staff are demoralized and companies can lose years of institutional knowledge in one afternoon.
To control costs, founders should consider bringing on freelancers to test strategies, manage products and run sales to preserve their cash on hand, writes Dean Glas, co-founder and CEO of SellX.
“In today’s uncertain market, using freelancers is a way for companies to find or deepen product-market fit without betting the farm.”
A 7-step method for running effective pitch meetings
We often run articles with advice for composing pitch decks, but if you need a framework for managing the meeting itself, we’re also here to help.
Nathan Beckord, CEO of Foundersuite.com and host of the “How I Raised It” podcast, shared a seven-step method that helps finders set expectations and connect on a personal level with the investors they’re pitching.
“Even if the investor is not a good fit for your startup, they might just introduce to you their contacts.”
Why it’s so hard to market enterprise AI / ML products and what to do about it
To craft an effective demand generation strategy, organizations need to understand how their customers look for solutions. But what do you do when your category is so new that no one knows how to define it?
The ambiguity around AI and ML creates a major challenge for marketers in this domain, writes Mike Tong, director of strategy and operations for enterprise at B Capital.
To solve for demand generation, Tong advises companies to stay in category creation mode, avoid complexity and choose a specific vertical and problem statement.
“While the current environment is complex, in many ways, it can be freeing for your marketing strategy. Your company can play a role in defining the space it will win one day. ”
How startups should handle the downturn
As investors tighten their purses, runway is now, more than ever, a crucial measure of longevity.
That’s why in the coming downturn, how much cash you have on hand should dictate how aggressive or conservative your plans should be, writes Mike Volpi, a general partner at Index Ventures.
The best advice for handling the downturn should be based on the length of your runway and the efficiency of your business. Runway falls into one of three categories: Two years or more; between one and two years; a year or less.
The corresponding strategy for each would be, respectively, “stay aggressive,” “ruthlessly prioritize,” and “time to trim.”