The CREO Syndicate, a non-profit organization comprised of family office and foundation members, has released a comprehensive report on private investments in climate solutions. Co-founded by a team at Spring Lane Capital, the report highlights the urgent need for more capital and effort around accelerated deployment of clean technologies. With over 60% of critical clean technologies already at the demonstration stage or further along, the report emphasizes the need for increased investment to deploy these solutions on a larger scale.
The report points out that trillions of dollars will be required to deploy an adequate amount of climate solutions, particularly in areas such as energy, transport, industrial solutions, agrifood and land, and the built environment. A significant funding gap exists in the “missing middle” stage, which falls between early stage venture capital funding and later stage private equity and infrastructure investments. This gap poses challenges for funding pre-commercial demonstration and early commercial deployments of climate solutions.
In the United States, the climate funding landscape is dominated by venture capital, rather than infrastructure investments. While this is not surprising, the report highlights the need for a more diverse capital ecosystem to support the deployment of climate solutions. The report also notes that climate investment returns have been consistent across different sectors, with the exception of growth stage investing, which can be attributed to the over-reliance on venture capital funding in this stage.
The report sheds light on the importance of utilizing a more robust and diverse capital ecosystem for funding climate solutions, rather than solely relying on venture capital and growth equity. By leveraging early stage infrastructure capital and exploring alternative financing structures, investors can better support the deployment of clean technologies. The report emphasizes the need for institutional investors to broaden their understanding of the climate investment landscape beyond traditional venture capital models.
Overall, the report provides valuable insights and data on private investments in climate solutions. The CREO research team is commended for producing such a resourceful report, which has the potential to influence investment strategies within the institutional investor universe. By sharing these lessons more broadly, the report aims to encourage a more holistic approach to funding climate solutions, ultimately contributing to a more sustainable and environmentally friendly future.
