Climate tech’s growing pains with Pale Blue Dot’s Heidi Lindvall
Jul 25, 2024
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Heidi Lindvall, one of the co-founders of the early-stage climate tech fund Pale Blue Dot, discusses the evolving landscape of climate tech in Europe. She highlights the saturation of carbon markets and the need for innovation among existing tools. Lindvall delves into how regulations like the Carbon Border Adjustment Mechanism can drive genuine decarbonization. The conversation also touches on balancing venture capital with the demands of motherhood, emphasizing the importance of supportive environments for entrepreneurs in this field.
The climate tech sector is seeing unprecedented investment growth, but is also marked by a plateau in innovative ideas requiring investors to be more selective.
New regulatory frameworks like the Carbon Border Adjustment Mechanism are influencing how businesses manage carbon emissions, creating fresh investment opportunities within climate risk management.
Deep dives
Growth of Climate Tech Investment
The climate tech sector is experiencing unprecedented investment growth, surpassing other sectors in capital raised during the first half of the year. Early-stage climate tech startups are becoming increasingly abundant, suggesting a burgeoning interest in sustainable solutions. Despite this growth, the ecosystem has seemed to plateau in terms of innovative ideas, with many existing companies returning with similar solutions year after year. Investors now face the challenge of distinguishing the truly innovative startups from those in saturated markets, particularly in areas such as carbon accounting tools.
Saturation in Carbon Markets
Carbon markets have become increasingly crowded, with numerous companies emerging to address carbon accounting and trading. Despite past successes, many investors express skepticism about the long-term viability of startups focusing solely on the carbon market without offering innovative solutions. The emergence of platforms that only rely on carbon credits for monetization raises concerns about sustainability and effectiveness. As a result, there is a hesitancy to invest in new ventures in this field, reflecting a belief that the market is difficult to navigate and already overpopulated.
Emerging Opportunities Beyond Carbon
A notable shift in the climate tech landscape includes the introduction of mechanisms such as the Carbon Border Adjustment Mechanism (CBAM), which is anticipated to influence how businesses manage their carbon emissions. This evolving regulatory framework compels companies to scrutinize their supply chains and emissions profiles more critically, marking a departure from merely offsetting emissions. There are also rising interests in startup challenges related to climate risk management, supply chain transparency, and broader humanitarian concerns. This expanded focus opens new avenues for investors targeting solutions that integrate climate justice and operational risks.
Investment Landscape and Evolving Standards
The overall investment climate for climate tech has transformed, with a growing acceptance that substantial returns can be realized within this sector. Early conversation around whether climate tech was viable for profit has shifted to how to differentiate successful companies in a crowded market. Investors are becoming more selective about their partnerships, emphasizing alignment with ethical practices and sustainability. Furthermore, there is a recognition that diverse skill sets are necessary to solve complex climate challenges, encouraging a more inclusive approach to climate tech innovation and investment.
She’s one of the three founders of Pale Blue Dot, a Malmö-based early-stage climate tech fund which launched in 2020 and backs pre-seed and seed-stage startups reducing and reversing the effects of climate change, in Europe and the US.
Pale Blue Dot came along just ahead of the wave of climate tech funds which launched in Europe amid the tech boom. Its portfolio companies include Ember, a Scottish intercity transport startup; Monta, an app connecting charge point owners and electric car drivers; and Climate X, a platform which helps businesses analyse their exposure to and risks associated with climate change.
On this episode of the pod, we discuss what types of climate tech company Lindvall doesn’t need to see any more of, how Europe can compete with the US and how to balance VC investing with having two newborn babies.
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