Whither climatetech in 2025? Well, the sector is still a magnet for VC cash but the positive sentiment may have cooled a little over the last twelve months. According to a PWC report – State of Climate Tech – global investment fell to pre-pandemic levels in 2024 and when compared with a year earlier, the value of deals dropped to $56 billion from $78 billion. Arguably, the decline can partly be accounted for by more widespread investor caution. Equally though, startups working in the field may have to look more closely at how their products are positioned in a difficult economic environment.
Most of us want to lead cleaner, greener, less polluting lives but we may not be quite so keen on following up on our good intentions if there is a price to be paid.
And there often is. Electric cars tend to cost more than their petrol-equivalents. The same is true of everyday products such as sustainably made clothes or cleaning fluids. Even environmentally aware consumers may opt for cheaper, more polluting products, at least until the cost-of-living crisis eases.
Meanwhile, businesses face similar dilemmas. They may well baulk at the short-term costs associated with energy-saving or emissions-cutting solutions, even as pressure grows to take rapid steps towards net zero. All of which can make it difficult for climatetech startups to make sales.
So what can be done to make climate-friendly products more attractive to potential buyers? It was a topic that arose when I spoke to Mathew Blain, a principal based at the London office of global cleantech investor, Voyager. The firm is keen to invest more in Europe. However, as Blain explains, its investment strategy focuses on climate technology that reduces emissions without pushing up the cost to customers.
Sidestepping The Green Premium
“We only invest if we see a pathway to the technology being better, faster and cheaper than existing legacy technologies,” he says. “We see huge opportunities in driving more efficient processes. So, we do not invest in green premium companies.”
The green premium tag applies to technology that will involve customers paying out more money to achieve a sustainability benefit. Blain acknowledges that higher costs may be inevitable in the early stages of implementation but a more expensive solution is not sustainable in the longer term.
“If a technology is more expensive at scale, then customers will be investing almost out of the goodness of their hearts. There won’t be a business case,” adds Blain.
In practice then, the green benefit is almost secondary. If a solution offers superior unit economics, it will be good for business as well as being good for the planet.
So what does that look like in practice? Blain cites the example of Packfleet, a London-based courier company that uses electric vehicles. Crucially, part of the offer is a cost-reducing routing system.
All this raises questions about the best way to market solutions that offer both sustainability benefits and greater efficiency. The two aren’t mutually exclusive. Software that audits energy usage will enable businesses to reduce their bills and their emissions. However, too much emphasis on carbon reduction risks alienating buyers who may be primarily focused on driving down costs.
Cost Savings
That’s the view of Guillaume Grimbert, co-founder of Paris-based ad optimisation company, Greenbids.
Grimbert worked for Google in Dublin and during his time there he came to the view that processes through which brands and agencies bid for programmatic ad slots were often very wasteful.
“We realised that there might be a correlation between the carbon emissions of ads and the inefficiency of the process,” he says. “We thought that if we could improve the efficiency, we could also improve the media quality and ensure that we don’t waste carbon resources.”
Established in 2022, Greenbids addresses two groups of customers, namely publishers and media buyers. The idea is that by reducing the number of intermediaries in the chain between buyers and sellers, the former can purchase slots more cheaply and the latter will receive a bigger share of the revenues.
What does that mean in practice? Grimbert cites figures suggesting that for every dollar’s worth of advertising sold publisher’s receive an average of 36 cents. Greenbids says it can deliver more money into the hands of publishers.”
So the pitch to publishers and brands is largely financial. “When we worked at Google, we realised that no one wanted to pay more to reduce their carbon emissions,” says Grimbert. “But reducing inefficiencies correlates with better performance and more carbon reduction.”
Grimbert says the company has made sales because customers recognise the technology is beneficial for their businesses. “We can show them, look, you have reduced cost per view by 20% but you have also reduced carbon emissions by 40%.”
As the urgency of the climate crisis becomes more apparent there is an appetite for climatetech solutions. It is, however, vital to demonstrate a business case.
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