The traditional venture capital model—betting on many startups in the hope that a few will succeed exponentially—has been key to technological development. But when it comes to climate tech, this approach is showing its limits.
According to JPMorgan, replicating that model in the climate sector would require huge sums of money and a risk tolerance that few investors are willing to assume. The reason? Clean technologies are not asset-light like software: they require intensive capital, infrastructure, and time.
🔋 Renewable energy, electric transport, and smart grids are essential to achieving net zero, but current financing is not up to the task. Of the 1T4T200 trillion needed over the coming decades, only 1T4T2 trillion was invested last year.
The challenge is not only economic, but structural: many projects fall into what is known as the "lost middle," a gap between the risk profiles handled by different types of investors.
💡 The solution isn't more VC rounds, but rather adopting project finance and infrastructure models with patient capital and a long-term vision.
Investing in the energy transition is not just an opportunity: it's an urgent necessity. And it requires us to rethink how, where, and with what horizon we invest.
📝 Based on the article “The Silicon Valley Trap” by Alastair Marsh, published in Bloomberg Green.