Climate tech founders face a difficult decision
More than one-fifth of all venture capital investments into climate tech start-ups in 2022 were in deals with participation from oil and gas companies, but accepting those dollars could create a perception problem.
PitchBook notes in a recent post that climate tech founders are facing a conundrum.
According to data it analyzed, the flow of fossil fuel dollars into climate tech venture capital (VC) deals jumped in recent years. More than one-fifth of all VC investment into climate tech start-ups in 2022 was in deals with participation from oil and gas companies: $6.79 billion out of a total $36.47 billion.
That said, accepting checks from “big oil” isn’t a straightforward proposition for some green start-up founders. Why? PitchBook explains that working with a corporate VC at an early stage could scare off customers or other investors by signaling that the start-up is working closely or exclusively with a particular client. That’s according to Wes Selke, Founding Partner at mission-driven investor Better Ventures.
“Investors might speculate that the deal comes with conditions, such as the right of first refusal in the company’s future exit,” Selke said.
The analysis can be found here.