The Climate Crisis Is Changing How LA VCs Invest — Here's How

The Climate Crisis Is Changing How LA VCs Invest — Here's How

Many leading venture capitalists in Los Angeles say they've altered their investment strategy because of climate change, and some are responding to the crisis by pouring more cash into clean-tech startups.

A majority, or 60%, of the more than two dozen investors polled by dot.LA said climate change is affecting how they invest.


The trend is fueling a record-setting year for the sector, as investors put billions behind Southern California-based companies such as electric vehicle maker Rivian and home energy storage firm Swell.

As of late October, Pitchbook tracked $6.4 billion in Southern California "climate tech" deals this year — nearly twice as much as in the entirety of 2020. The expansive sector, as mapped out by the data firm, includes everything from clean-energy generation and electric transportation to the development of plant-based proteins (a.k.a fake meat).

By deal size, Rivian and Faraday Future led the pack in SoCal, followed by Swell, nuclear fusion firm TAE Technologies and Bird, the scooter company that just debuted on the New York Stock Exchange.

"I've been actively investing in the space," Thomas McInerney, L.A.-based angel investor and World Wildlife Fund national council member, told dot.LA. "I think venture can change the world. Its role is crucial," he added, and pointed to several investments in startups such as carbon-removal company Charm Industrial and battery-swapping startup Ample.

Most of the venture capitalists polled said the climate crisis has prompted them to fund more clean-tech startups. One investor noted they were on the lookout for "more novel solutions to these problems."

Globally, climate investments have skyrocketed. In the third quarter of 2021 alone, Pitchbook tracked a record $30.8 billion in related deals. "The industry could give rise to 500 to 1,000 unicorns in the coming years," Pitchbook added in its recent climate report.

What Can't Tech Do?

The promising fundraising trend comes as the White House argues that yet-to-be developed tech will play a critical role in the response to the climate crisis.

"I am told by scientists that 50% of the reductions we have to make to get to net zero are going to come from technologies that we don't yet have. That's just a reality," U.S. Climate Envoy and former Senator John Kerry said in May.

But like others skeptical of Kerry's optimism, Dr. Deepak Rajagopal, professor at UCLA's Institute of the Environment and Sustainability, views the environmental problem as less a "technological one but more socio-political at an aggregate level and behavioral at an individual level."

For years experts have warned that tech alone cannot solve the crisis, and emerging tech often yields unexpected outcomes.

"My research on life cycle assessment of technologies always has shown every technology has unintended consequences and it is an ethical question whether the unintended consequences are worth it. You cannot find a solution which does not have some type of negative impacts," Rajagopal told dot.LA

Dr. Greys Sošić of the University of Southern California, whose research includes supply chain sustainability, called the rise in clean tech investments "commendable," but urged a holistic approach.

"I am wondering what is happening with the rest of their investments? Are there any trends toward reducing investments in "dirty" startups? Until this happens, we cannot make a lot of progress," said Sošić. "Just adding some clean tech startups in one's portfolio, without doing additional changes, looks more like greenwashing than a serious effort to help the environment."

Largest Southern California Clean Tech Deals by Size


Data from Pitchbook.

Lead image and infographics by Candice Navi.

Subscribe to our newsletter to catch every headline.

Cadence
Image by Candice Navi

Though Silicon Valley is still very much the capital of venture capital, Los Angeles is home to plenty of VCs who have made their mark – investing in successful startups early and reaping colossal returns for their limited partners.

Who stands out? We thought there may be no better judge than their peers, so we asked 28 of L.A.'s top VCs who impresses them the most.

Read more Show less
Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

https://twitter.com/thebenbergman
ben@dot.la

Pejman Nozad, a founding managing partner at Pear VC, joins this episode of LA Venture to discuss Pear VC's current initiatives, including its accelerator and fellowships. He's seen as one of the most successful angel investors in the area, and for good reason: he has made more than 300 investments in his lifetime.

Read more Show less
Minnie Ingersoll
Minnie Ingersoll is a partner at TenOneTen and host of the LA Venture podcast. Prior to TenOneTen, Minnie was the COO and co-founder of $100M+ Shift.com, an online marketplace for used cars. Minnie started her career as an early product manager at Google. Minnie studied Computer Science at Stanford and has an MBA from HBS. She recently moved back to L.A. after 20+ years in the Bay Area and is excited to be a part of the growing tech ecosystem of Southern California. In her space time, Minnie surfs baby waves and raises baby people.
RELATEDTRENDING
LA TECH JOBS
interchangeLA