Climate finance quiz: Which of these numbers matters most?
VC equity dilution stats. Climate startup fundraising trends. Naked Taoist story.
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Today’s topics.
🤔 Climate quiz: Which of these three numbers matters most when seeking capital or customers?
📈 Climate tech fundraises are high historically, but where is all this money that startups are after?
💰 How much equity will climate tech founders give up today vs. 2018?
⛰️ You and your team view the world differently. [A naked Taoist gives an example.]
1.
🤔 Climate quiz: Which of these three numbers matters most when seeking capital or customers?
If we tell the wrong story, we don’t get what we want.
Little kids know this. Often to the detriment of a parent’s best intentions.
In climate tech, focusing on the rise of global temperatures or the increase in natural disasters is one story.
However, highlighting plans by 2/3 of the world’s biggest companies to address climate risks might be a more convincing one.
Source: Silicon Valley Bank
2.
📈 Climate tech fundraises are high historically, but where is all this money that startups are after?
In recent years, dozens of new funds have been raised, representing tens of billions of dollars of new capital for climate tech startups.
And climate tech fundraises are up 41% relative to 2019, while the broader VC sector is down 19%.
But if you show any climate tech startup CEOs these graphs, they may faint in disbelief.
(Right now, I hope you’re picturing a high-class Victorian woman, with the wrist to forehead, falling unconscious into the embrace of a railroad tycoon’s slick-haired son. You know, the classic fainting image.)
Let’s hope that VC investors don’t wait too much longer to begin deploying this capital. Company valuations are way down, so their investors know it’s time to go bargain shopping. Oh, and the world is burning.
Source: Silicon Valley Bank
Note:
By using the same source more than once in this newsletter, I’m not bored or lazy. Instead, picking just one graph from SVB’s “Future of Climate Tech 2024” report is like asking me to visit just one temple in Japan. (Unfortunately for my kids, that’s impossible.)
3.
💰 How much equity will founders give up today vs. 2018?
It’s all relative.
If we compare a capital raise today vs. 2021, this graph’s title would feel like a slap in the face. Better yet, a punch to the gut.
However, compared to 2018, investors are getting a smaller percentage of the startup’s equity (blue bars) and investing more capital, too (orange circles).
Source: Silicon Valley Bank
4.
⛰️ You and your team view the world differently. [A naked Taoist gives an example.]
One of my favorite Buddhist teachers is Tara Brach, partly due to her use of funny stories to bring 2,500-year-old concepts to life.
Here’s one I heard yesterday:
—
A Taoist master was sitting naked in his mountain hut, meditating.
A group of Confucianists entered the door of his hut, having hiked up the mountain intending to lecture him on the rules of proper conduct.
When they saw the sage sitting naked before them, they were shocked and asked, "What are you doing, sitting in your hut without any pants on?"
The sage replied, "Within me is the entire universe. This little hut is my pants. What are you fellows doing inside my pants?"
—
How could this story be relevant to building a company that’s changing the world?
Maybe it’s not relevant.
But it’s a good balance to the three prior graphs on capital raising.
Or it can remind us how changing our frame of reference can change our attitude and performance at work, at home, and in life.
To that end, here’s another popular story:
—
Long, long ago, there were three bricklayers.
When asked what they were doing, the first one said, "I'm doing what I’ve been told and laying bricks.”
The second replied, "I'm building a wall to earn money to feed my family."
However, the third one said enthusiastically, "I'm building a cathedral."
—
Which bricklayer do you and your team most identify with?
That’s all, y’all.
Make it a great week because it’s usually a choice.
~ Chris
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