Opinion: Time to pivot on climate change

Matt Toner and JF Gauthier: Innovators must take an active role — if not the leading role — in the next round in the fight against runaway climate change.

This year, Vancouver has felt the effects of accelerating climate change: who doesn’t remember being wracked by heatwaves resulting in hundreds of deaths, ruined fruit harvests, dead trees in our urban centres, declining snow caps on our mountains and the resulting wildfires that can release enough CO2 to turn our forests from a carbon sink to a net carbon emitter?

Profound negative climate change is no longer a challenge to be faced by our grandchildren: it is already here, even in pristine British Columbia.

So we are a community that is very much connected to the rest of the world where 85% of the population has been exposed this year to weather events made measurably worse because of climate change. If we are going to manage the effects of climate change — much less overcome it — we will need all hands on deck.

And this means more than just activating the usual players — activists, academics and select politicians — who felt that climate treaties like the Paris Agreement would naturally lead the private sector to readily invest in a cleaner world. But this hasn’t happened as had been hoped… and it has become increasingly clear that like-minded private sector players — investors, entrepreneurs, and startups — must instead lead policymakers to create the market conditions needed to breed a veritable herd of cleantech unicorns.

And, if the statements being made at the COP26 conference are any indication, we need to do this at the speed of a startup.

Time for entrepreneurs to lead

Although Startup Genome is known globally for its work defining, analyzing and advising the policy of innovation ecosystems — Vancouver has slid from #9 in 2012 to #29 in their rankings this year, incidentally — this group has incepted a new global initiative called the Entrepreneurship for Climate movement (E4C)… and they feel it is by far their most important work to date.

Although it is still early days, the E4C movement is already gathering considerable momentum on a global scale, bringing together leading investors, entrepreneurs and policymakers from San Francisco, Montreal, London, Valencia, Berlin and Vancouver. We have catalyzed this group through online events and discussions that have so far featured more than 120 participants from 40 countries.

And there is broad agreement that entrepreneurs and innovators absolutely must take an active role — if not the leading role — in the next round in the fight against runaway climate change.

We draw inspiration from the proposition that the market success of Tesla has done more to drive the adoption of electric vehicles than years of protest and counter-lobbying efforts. Tesla forced the other automakers to adapt, innovate and compete or risk losing out on one of the fastest-growing market segments.

It wasn’t altruism that made EVs a reality — it was capitalism. So let’s work with that.

But if we are going to do so, we must start by addressing the scaleup gap for cleantech startups. Any of these innovative technologies being developed will never create the impact we need without the types of resources needed to scale quickly and forge entirely new markets. Bill Gates has recognized this by creating Breakthrough Energy to demonstrate that getting all of those cleantech innovations that are scattered on the whiteboards of bootstrapped startups around the world into the market is the only way we can hit a viable net-zero economy.

Sobering, but also encouraging. It is a gap we can bridge.

To do so we need to act globally — and across networks — if we are to break down silos and unite our collective expertise, capital and especially public policy. Startup Genome’s research has shown conclusively that these sorts of network multipliers are an overlooked but essential ingredient for innovation success in the cleantech space.

And while much has been made of the interconnectedness of the Silicon Valley ecosystem driving its generational success, we believe that there is an even greater potential that can be unlocked if we can network cleantech expertise on a global scale. This is why we have opted from day one to make sure that the E4C movement had strong roots across North America and Europe, with emerging partnerships in Asia and Africa.

The work ahead

This global expertise needs to surmount four key challenges that face cleantech startups, whatever their location:

1. It is exceptionally challenging to land those early but crucial key customers. Municipalities can be faster moving than their national counterparts in working together to align demand-side policies to enable deployment in interconnected national markets and cultivate winners rather than experiments. This is why programs like the Vancouver Economic Commission’s Project Greenlight hold such promise. 

2. Typically, angel funding is hyper-local, and all but the largest cleantech clusters have a dearth of hands-on expertise. We must mobilize capital with mentorship by building global angel investor syndicates that bring industry expertise and global customer relationships.

3. Bringing scaling skills and business experience to passionate cleantech entrepreneurs may seem obvious or “table stakes” for an undertaking such as this… but this can be a crucial gap for many startups emerging from think tanks or universities.

4. The software venture fund model is mature but not well adapted to cleantech. We need to reinvigorate this model to create larger and more patient capital that combines venture investors with swift-footed foundations and government funds.

When done well, our research shows a strikingly clear correlation on a global scale between privately seeded startups and successful exits. This is because appropriately networked angels bring more than just the ability to write a check: they are able to bring business and industry expertise as well as introductions to significant customers and major channel partners. Not many innovation ecosystems can boast of this, not even Vancouver.

At least, not yet.

This is why a global movement is so essential: it allows the entrepreneur or the investor to leap over geographic distances and connect immediately with the precise opportunity to which they are best suited. We intend to replicate in the aggregate what Silicon Valley has produced in concentrate.

Driving this early success will produce exactly the sort of product/market fit that drives the Series A and Series B funding needed to scale. And the sorts of exits by founders who can then help mentor the next generation of cleantech innovators.

Seven-in-Seven

So this is our goal: to distill all of the above into a movement that produces seven cleantech unicorns in seven years. Lofty, ambitious… but we have to be, because we are running out of time.

Famously, the United Nations Intergovernmental Panel on Climate Change gave us until 2028 to engineer the sorts of solutions to arrest runaway climate change… exactly seven years.  Or the time typically needed to conceive, seed, and scale a startup to unicorn status.

If you are an entrepreneur, an investor, or a policymaker and you want to help make this a reality, now is the time to come together with us. There is an easy first step and that is to sign our Seven-in-Seven Manifesto and share it throughout your networks.  Because the clock is running and disruptive climate change is here.

- Matt Toner is a partner in Vancouver’s Shred Capital and a former deputy leader of the BC Green party. JF Gauthier is a Silicon Valley entrepreneur and founder and CEO of Startup Genome.

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