As we stand at the start of a new year, we can sense a blend of challenges and opportunities in climate tech for 2024. If we’ve learnt nothing else in the last few years, it’s that we can't predict the future. However, we can ask the experts in our community for their insights for the 12 months ahead.
In the spirit of starting the new year informed and inspired, let's dive into an exploration of the thoughts, expectations, and visions for the coming year. From the emergence of new technologies to the shifting investment landscape, from regulatory challenges to groundbreaking innovations, let’s head into the crystal ball with some of Australia’s leading climate tech investors and founders from our community.
Climate Tech Founder Predictions 2024
🔭 1. What is your big focus for 2024?
Phoebe Gardner, Bardee: New facility commissioning, new product launches
Thomas Nann, Allegro Energy: Installing our first pilot battery at the Eraring power station.
Sean Wade-McCue, Powerlake: For me 2024 is about delivering more value by onboarding more users and larger customers.
Rob de Burgh-Day, Brightspace: Commercialization and Capital raising
📊 2. Do you think investment into climate tech will shrink, stay or grow in 2024?
Phoebe Gardner, Bardee: Grow, especially with new investment vehicles and investors entering the space.
Thomas Nann, Allegro Energy: IMHO, because the consequences of climate change are becoming increasingly more obvious, investment will grow. However, especially in energy storage, there is still a technology gap and investment in R&D is urgently required. Unfortunately, I cannot see this growing in the current political climate.
Sean Wade-McCue, Powerlake: I think investment in general will grow in 2024 as interest rates stabilise and come down. Cash is still far from cheap though, so investors will continue looking for proven business models and strong traction. It would be wise for early founders to maintain longer runways and build long-term strategies both with and without raises. Remember The Tortoise and the Hare.
Rob de Burgh-Day, Brightspace: I think it will grow but could be tempered if a wider war breaks out in the Middle East
🗺️ 3. What international markets do you think will be the most interesting in 2024 and why?
Phoebe Gardner, Bardee: America, in specific states, doubling down or playing catch up.
Thomas Nann, Allegro Energy: US and EU because of IRA bill and Green Deal.
Sean Wade-McCue, Powerlake: Energy capture, storage & control. Think about governmental EV growth targets, hot water, thermal insulation, renewable variability, etc. It has been argued that energy is the only real currency.
Rob de Burgh-Day, Brightspace: Asia & USA
👍🏽 4. What's your advice for new climate tech founders for 2024?
Phoebe Gardner, Bardee: There is an amazing community of climate tech founders and supporters ready to welcome you, tap in.
Thomas Nann, Allegro Energy: Keep up the good work!
Sean Wade-McCue, Powerlake: Focus on delivering end-use value while staying open-minded about who your customer(s) might be, whether that's end users (B2C), or businesses which you can integrate with to accelerate delivery (B2B). Technical and other specifics should always come second to user and customer experiences. Map & optimise the experiences you want to offer, and don't forget to recruit users/customers and gather feedback. Stay flexible with tech by creating simple interfaces between systems. Test, test & test. Stay healthy & keep reading!
Rob de Burgh-Day, Brightspace: Learn to bootstrap now and you will be far more competitive when capital markets stabilize in the coming years
Climate Tech Investor Predictions 2024
📊 1. Do you think climate tech investing will shrink, remain the same or grow in 2024?
Rachel Yang, Giant Leap: We’re confident that climate tech investing will grow in 2024. The urgency of the climate crisis means that we need to find solutions now and we know that there is capital out there.
We’re also seeing changes in the regulatory landscape which are likely to catalyse more demand for climate tech solutions. In 2024, mandatory climate-related financial disclosures for large, listed entities will be implemented in Australia, the SEC’s (US) climate-related disclosure rules will be finalised and an increasing number of companies will be required to disclose ESG information in the EU as well.
Other trends that are likely to provide a burning platform to drive further investment into climate tech include extreme weather events, supply chain disruptions and volatility in energy prices.
Whilst the broader economic downturn and geopolitical uncertainties may impact the amount of funding available for startup investment, overall, I think we’ll see climate tech grow.
Sarah Nolet, Tenacious Ventures: Shrink, unfortunately
Phil Morle, Main Sequence: Grow
Ben Lindsay, Investible: 2024 will be a year of growth in climate tech investing; however, it will be pressed to achieve 2022 levels (USD 70.1B). With most climate tech investments concentrated in China, Europe, and North America – the climate tech investment potential of the rest of the world represents further opportunity. That said, with elevated global debt levels and a likelihood of sustained higher interest rates, there is an increased risk debt crises in vulnerable economies over the next several years.
Julia Spicer, Queensland Chief Entrepreneur: Grow!
🤩 2. What categories do you see as getting the most attention this year?
Rachel Yang, Giant Leap:
- Food and agriculture - Technologies to promote sustainable food production and agriculture.
- Circular economy - Solutions to minimise waste and improve resource efficiency.
- Biodiversity and nature conservation - Solutions to support the achievement of global targets to ensure 30% of the world’s natural habitats are protected and under effective restoration.
Sarah Nolet, Tenacious Ventures: Within agri-food, which is our focus, we expect to see a focus on ag autonomy as well as a shift from decarbonization to a focus on adaptation and resilience solution. More broadly, we expect software solutions to attract more capital than deeptech.
Phil Morle, Main Sequence: We'll see more scale investments in the energy transition in particular into utility storage. We will also see more investment into sustainable production using biology as an alternative to animals and fossil fuels. - Phil Morle, Main Sequence
Ben Lindsay, Investible: There are three categories that will continue to be carried over from 2023 with new considerations:
- Reducing mineral supply chain dependency on China
- Further developments in AI
- Resolving issues in Voluntary Carbon Markets (VCM)
The world has continued to show its hand on reducing the China dependency. Europe has partnered with Argentina, Angola and Zambia, and the Biden Administration has unveiled plans to exclude Chinese entities (as well as Russia, North Korea and Iran) from receiving tax credits in the US EV supply chain. 2023 saw India become the world’s most populous country, and we can expect to see 2024 onwards registering this population growth in economic terms – this shift is even felt outside of climate tech where Apple appears to be pushing towards India to reduce its China reliance.
AI will continue to have large influence on manufacturing and service sectors; however, AI as a “market maker” likely won’t create as much value in 2024 with Microsoft, Alphabet, Apple, Tesla, Amazon, Meta and Nvidia driving much of the run-up in equities in 2023. Global financial markets will be searching elsewhere for inspiration. In climate tech investing, AI has already made moves in numerous areas; however, there is also potential for AI to enter the physical realm including the refinement of battery chemistries, form factors to enhance energy storage capacity, and much more.
Lastly, in 2023 we saw big issues with the circa USD 2B voluntary carbon market with upwards of 90% of credits not representing genuine carbon reductions. While some people run away from a fire, others look to put it out.
Julia Spicer, Queensland Chief Entrepreneur: Climate variability/ monitoring will continue to grow. There'll also be more conversations around food supply chains and decarbonisation
💸 3. What do you think the impact of the National Reconstruction Fund will be?
Rachel Yang, Giant Leap: There is a significant funding gap for climate tech startups that are more capex intensive, but these startups are critical for us to be able to transition to net zero. With a $15b fund, the Government has the potential to meaningfully address this funding gap to help startups in key areas such as renewables and agriculture, which could have a significant impact. We’ll need to wait and see to find out the details of the investment mandate (e.g. stage, cheque size, etc) as they have only released the high-level investment mandate at this stage and the devil is always in the detail.
Sarah Nolet, Tenacious Ventures: Many, if not most, much-needed climate tech solutions are transforming atoms and molecules, not just bits and bytes. These solutions will need non-dilutive funding, and the NRF will hopefully provide a source of capital to help Australian climate tech startups scale and be competitive internationally.
Phil Morle, Main Sequence: It is all of our responsibility for it to be a big success. I suspect that the NRF will be learning as they build and we need to help them fill the gaps that will have the biggest impact to deliver sustainable new industries that will last for decades to come. My hope is that it will fill a critical role bridging the 'second valley of death' where venture starts to worry about capex and debt financing is still worried about the risk. Most climate technologies fall into this trap. If we nail this, Australia will have a considerable advantage and have the opportunity to escape our current low margin focus on commodities.
Ben Lindsay, Investible: What I think it will be versus what I hope it will be? Here in Australia, we have a first-of-a-kind (FOAK) funding gap. If Australia wants to have innovative climate tech companies, then we will have to be the first to fund those projects. The NRFC could be poised to help us retain our innovations and talent within our borders with its mix of debt and equity. However, as it remains in its set-up phase, we can only hope to see what the formal process and investment policies are! The impact could be significant.
Julia Spicer, Queensland Chief Entrepreneur: Massive! and positive! Linking to the work that AEA (Australia's Economic Accelerator) will be doing, along with greater emphasis and engagement of and from regions, the NRF will be a key anchor for many opportunities.
👍🏽 4. What's your advice for founders about 2024?
Rachel Yang, Giant Leap: There is still capital out there and companies that can show growth momentum, capital efficiency and scalable solutions will be attractive to investors. I think it will just continue to take longer than expected to pull a round together for the time being, so I would encourage founders to be conservative with their runway and their estimated time frames for capital raising. We are actively investing so come and chat to us!
Sarah Nolet, Tenacious Ventures: Take care of yourself - mentally and physically - so that you can continue to lead your companies. Also, look up the Stockdale Paradox if you haven't - it is very applicable to the current environment.
Phil Morle, Main Sequence: Investor sentiment is still uncertain and investors are still busy helping their current portfolios weather the storm. But there is plenty of capital. So just give yourself more time to find the right investors, land your message and get a deal done.
Ben Lindsay, Investible: Heading into 2024, I have 3 recommendations for founders:
- If Trump is elected and the IRA is ripped up shortly after, what is the impact on your business? Are you positioned to survive without these or other government incentives?
- Unless you knocked your milestones out of the park, you may need to readjust your expectations for a flat or down round. In 2023, we saw an increase in bridge rounds as founders pushed back the re-pricing of their startups. Pairing this up with those who raised end of 2021 and early 2022 and coming to the end of their runways, make sure you’re accounting for the tougher fundraising environment.
- Because of the dynamics outlined above, reach out to investors earlier. With the need for many teams to replenish their funds soon, investors are expecting a busy 2024. The earlier you reach out, the easier it is for us to plan and allocate resources to you.
Julia Spicer, Queensland Chief Entrepreneur: Other than join Climate Salad?! :) join a network, ask for help, offer support, don't overcomplicate it. The world needs the solution that you have developed/ are developing.
Photo by Michael Zittel