Eight Lessons from the First Climate Tech Boom and Bust

Bessemer Atlas, November 10, 2022. By Aia Sarycheva, Christopher Wan and Madeline Shue. A post-mortem on CleanTech 1.0 written as instructions for the second attempt.

Key Takeaways

• Don’t rely on altruism to scale. Climate companies need price parity or a second value proposition; the environmental benefit alone does not close deals.
• Innovate on the business model, not just the technology — creative financing and delivery to reduce friction when selling into legacy industries.
• Use regulation as a tailwind, but don’t depend on it. Tax credits and emissions rules accelerate adoption; the economics must work without permanent support.
• Beware supply-chain shocks. Price assumptions about critical materials are where CleanTech 1.0 companies died.
• Invest in engineering problems, not science experiments. Fund known technical challenges; basic science belongs in national labs and universities.
• Beware long horizons and financing risk. The gap between development stages is the killer; diverse capital sources and clear exit paths are survival requirements.
• Falling IoT and robotics costs open a data opportunity across industrial sectors.
• Software for deploying and managing renewable assets offers the most conventionally venture-shaped returns in the category.

Connections

• The spine of The Rise and Fall (and Rise) of Cleantech — it is the “this time is different” argument, made by people willing to enumerate what went wrong the first time.
• Lessons 1 and 5 are the ones that decide the question. Altruism-dependence and science-experiment risk are what actually broke CleanTech 1.0, and they are the two hardest to verify have changed.
• Same publisher as Forecasting 101; both are Bessemer Atlas practitioner pieces.