Here’s why climate tech may avoid repeating clean tech’s failures

About a decade ago, the clean tech boom went bust. Industry darlings were dropping like flies. Solyndra, most famously, shut down after taking a $500 million loan from the U.S. government. Germany’s Q-Cells went bankrupt, too, and was bought by South Korea’s Hanwha. A123 Systems, a battery maker, was snapped up on the cheap by Wanxiang, a Chinese auto parts company. That’s just a partial list.

There are myriad reasons why so many companies went belly up. Some had the right tech at the wrong time. Many relied on venture capital, which typically seeks returns on a timeline that’s unforgivingly brief for deep tech companies. Others were undercut by foreign competitors. Still others succumbed to general market forces that swept across the world during the Great Recession. Whatever the reason, the collapse spooked venture capitalists, who avoided the sector for years despite the potential for enormous long-term gains.

But in the last several years, venture capital has roared back, investing tens of billions of dollars in companies that hope to solve environmental problems. What changed? For one, the name: Clean tech is out. Climate tech is in.

Cynics might deride the change as marketing fluff designed to shed the sins of the past. They’re not entirely wrong. After the last boom-bust cycle, the clean tech label was tarnished. Founders, for all their talk of failing fast and learning from failure, typically don’t like to be connected with that kind of failure, even by semantic association.

Climate tech has an added metric that can apply to any startup in the vertical — carbon reduction.

Yet if you dig a little deeper, it’s apparent that climate tech is more than just clean tech 2.0. It’s both a natural progression and a bottom-up rethink of founding and investing in environmentally friendly startups. Climate tech is how founders and investors can collaborate to bring promising technologies and ideas to market in a way that will produce significant profits while also addressing climate change in a meaningful way.

For those who are deep into climate tech, that won’t be a surprise. But with the recent downturn in the funding world, it’s time to run down the similarities and differences to see whether they suggest this time will be any different.