Good morning. Fortune Finance Editor Lee Clifford here.
You may recall Anne Sraders writing recently in Term Sheet about the challenges of investing in climate tech. During the flameout of the clean tech boom in the early 2000s, plenty of investors got burned. Now, VCs are trying to square two ideas that often seem at odds: long throw bets on saving the planet, and the near term pressure to generate returns. As Sraders wrote:
It’s a question some VCs like Tess Hatch, a partner focused on deep tech investments at generalist Bessemer Venture Partners, are wrestling with right now. VCs “are feeling good, because we’re investing in impact and good for the world. But as venture investors, we’ve got to make a lot of money really quickly. So is that getting lost in this feeling-good narrative of climate tech?”
As Sraders noted, more than half of the $25 billion invested in the sector between 2006 and 2011 “evaporated.” But as with anything investing-related, where many see peril, there are always those that see huge promise. And a crop of dedicated investors that have doubled down on startups in the sector. Earlier this summer Fortune’s Lucy Brewster dove into the world of seed stage climate tech investing and profiled 13 investors to watch. She worked in partnership with NFX, a seed-stage venture capital firm based in Silicon Valley and the creator of the investor database and network Signal. And she also canvassed investors themselves to see who they are watching and benchmarking themselves against.
She also found a lot of optimism among this group of investors.
Those who stuck it out say we’re only in the early innings of climate tech innovation—and returns. “I think the whole psyche of particularly the American public really started to shift from being either skeptical or disinterested in any of the climate science to now seeing wildfires, floods, hurricanes becoming more and more personally present, not just in the news, but really affecting many Americans,” said Abe Yokell, investor at Congruent Ventures.
“We used to have ‘internet funds’ in the late ’90s, and then everything was an internet fund. I don’t think it’s hyperbolic to say that climate will have a similar impact; everything will have some sort of a climate lens to it,” said Andrew Beebe, investor at Obvious Ventures.
You can read the full story—including all about the 13 investors to watch, their best investments, and how they prefer to be pitched—here.
See you tomorrow,
Lee Clifford
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